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Delaware
|
| |
5191
|
| |
81-4895761
|
|
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(State or other jurisdiction of
incorporation or organization) |
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(Primary Standard Industrial
Classification Code Number) |
| |
(I.R.S. Employer
Identification Number) |
|
|
Kenneth R. Koch, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. Chrysler Center, 666 Third Avenue New York, NY 10017 Tel: (212) 935-3000 |
| |
Deanna L. Kirkpatrick
Byron B. Rooney Davis Polk & Wardwell LLP 450 Lexington Avenue New York, New York Tel: (212) 450 4000 |
|
| Large accelerated filer ☐ | | | Accelerated filer ☐ | |
| Non-accelerated filer ☐ | | | Smaller reporting company ☐ | |
| | | | Emerging growth company ☒ | |
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Title of Each Class of Securities to be Registered
|
| | |
Proposed Maximum
Aggregate Offering Price(1)(2) |
| | |
Amount of
Registration Fee |
| ||||||
Common stock, par value $0.0001 per share
|
| | | | $ | | | | | | $ | | | ||
Total
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| | | | $ | | | | | | $ | | |
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Page
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2019
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2018
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(In thousands, except per share amounts)
|
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Income statement data for year ended: | | | | | | | | | | | | | |
Net sales
|
| | | $ | 235,111 | | | | | $ | 211,813 | | |
Gross profit
|
| | | | 27,086 | | | | | | 24,070 | | |
Selling, general and administrative
|
| | | | 43,784 | | | | | | 42,229 | | |
Impairment, restructuring and other(a)
|
| | | | 10,035 | | | | | | 7,169 | | |
Loss from operations
|
| | | | (26,733) | | | | | | (25,328) | | |
Interest expense
|
| | | | (13,467) | | | | | | (11,606) | | |
Net loss attributable to Hydrofarm Holdings Group, Inc.
|
| | | | (40,083) | | | | | | (32,892) | | |
Basic and diluted net loss per share(b)
|
| | | | (0.57) | | | | | | (0.69) | | |
Balance sheet data as of end of period: | | | | | | | | | | | | | |
Cash(c)
|
| | | $ | 32,857 | | | | | $ | 27,923 | | |
Working capital(d)
|
| | | | 40,547 | | | | | | 56,728 | | |
Total assets(e)
|
| | | | 185,651 | | | | | | 174,411 | | |
Long-term debt(f)
|
| | | | 107,932 | | | | | | 100,520 | | |
Total liabilities
|
| | | | 154,471 | | | | | | 126,867 | | |
Convertible preferred stock(g)
|
| | | | 21,802 | | | | | | — | | |
Stockholders’ equity
|
| | | | 9,378 | | | | | | 47,544 | | |
Cash flows provided by (used in): | | | | | | | | | | | | | |
Net cash (used in) provided by operating activities
|
| | | $ | (13,302) | | | | | $ | 4,437 | | |
Net cash used in investing activities
|
| | | | (3,818) | | | | | | (3,312) | | |
Net cash provided by financing activities
|
| | | | 19,900 | | | | | | 25,516 | | |
Net increase in cash, cash equivalents and restricted cash
|
| | | | 4,934 | | | | | | 25,717 | | |
Other data: | | | | | | | | | | | | | |
Adjusted EBITDA(h)
|
| | | $ | (10,174) | | | | | $ | (7,249) | | |
Adjusted EBITDA as a percent of net sales(h)
|
| | | | -4.3% | | | | | | -3.4% | | |
Gross profit as a percent of net sales
|
| | | | 11.5% | | | | | | 11.4% | | |
Capital expenditures(i)
|
| | | | (768) | | | | | | (1,343) | | |
Federal net operating loss carryforwards
|
| | | | 58,000 | | | | | | 35,000 | | |
| | |
2019
|
| |
2018
|
| ||||||
Net loss attributable to Hydrofarm Holdings Group, Inc.
|
| | | $ | (40,083) | | | | | $ | (32,892) | | |
Interest expense
|
| | | | 13,467 | | | | | | 11,606 | | |
Income taxes
|
| | | | (691) | | | | | | (397) | | |
Depreciation and amortization
|
| | | | 6,995 | | | | | | 8,260 | | |
Impairment, restructuring and other
|
| | | | 10,035 | | | | | | 7,169 | | |
Other income, net
|
| | | | (105) | | | | | | (995) | | |
Stock based compensation
|
| | | | 208 | | | | | | | | |
Adjusted EBITDA
|
| | | $ | (10,174) | | | | | $ | (7,249) | | |
Adjusted EBITDA as a percent of net sales
|
| | | | -4.3% | | | | | | -3.4% | | |
| | |
As of December 31, 2019
|
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| | |
Actual
|
| |
Pro forma
|
| |
Pro forma
as adjusted |
| |||||||||
| | |
(in thousands, except for share and per share data)
|
| |||||||||||||||
Cash, cash equivalents and restricted cash
|
| | | $ | 32,857 | | | | | | | | | | | | | ||
Long term debt including current portion: | | | | | | | | | | | | | | | | | | | |
Term loan
|
| | | $ | 83,598 | | | | | | | | | | | | | | |
Revolving credit facility
|
| | | | 23,072 | | | | | | | | | | | | | | |
Other
|
| | | | 1,262 | | | | | | | | | | | | | | |
| | | | | 107,932 | | | | | | | | | | | | | | |
Convertible preferred stock, $0.0001 par value: 50,000,000
shares authorized, 7,007,429 shares issued and outstanding, actual; pro forma and proforma as adjusted: no shares issued and outstanding |
| | | | 21,802 | | | | | | | | | | | | | | |
Stockholders’ equity | | | | | | | | | | | | | | | | | | | |
Common stock, $0.0001 par value: 350,000,000 shares authorized, 69,745,562 shares issued and outstanding, actual; shares issued and outstanding, pro forma; and shares issued and outstanding, pro forma as adjusted
|
| | | | 7 | | | | | | | | | | | | | | |
Additional paid-in capital
|
| | | | 156,174 | | | | | | | | | | | | | | |
Accumulated other comprehensive loss
|
| | | | (144) | | | | | | | | | | | | | | |
Accumulated deficit
|
| | | | (146,659) | | | | | | | | | | | | | | |
Total stockholders’ equity
|
| | | | 9,378 | | | | | | | | | | | | | | |
Total capitalization
|
| | | $ | 139,112 | | | | | | | | | | | | | | |
|
Assumed initial public offering price per share
|
| | | | | | | | | $ | | | |
|
Historical net tangible book per share as of December 31, 2019
|
| | | $ | 0.13 | | | | | | | | |
|
Increase per share attributable to the pro forma adjustments after giving effect to the Preferred Stock Offering
|
| | | | | | | | | | | | |
|
Pro forma net tangible book value per share as of December 31, 2019
|
| | | | | | | | | | | | |
|
Increase in pro forma net tangible book value per share attributable to new investors participating in this offering
|
| | | | | | | | | | | | |
|
Pro forma as adjusted net tangible book value per share after giving effect to this offering and as adjusted for the Preferred Stock Offering
|
| | | | | | | | | | | | |
|
Dilution per share to new investors participating in this offering
|
| | | | | | | | | $ | | |
| | |
Shares Purchased
|
| |
Total Consideration
|
| |
Weighted-Average
Price Per Share |
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Number
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Percent
|
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Amount
|
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Percent
|
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Existing stockholders
|
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|
| | | | % | | | | | $ | | | | | | % | | | | | $ | | | |||||
New public investors
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
Total
|
| | | | | | | | | 100% | | | | | $ | | | | | | 100% | | | | | | | | |
| | |
2019
|
| |
2018
|
| ||||||
| | |
(In thousands, except per share amounts)
|
| |||||||||
Income statement data for year ended: | | | | | | | | | | | | | |
Net sales
|
| | | $ | 235,111 | | | | | $ | 211,813 | | |
Gross profit
|
| | | | 27,086 | | | | | | 24,070 | | |
Selling, general and administrative
|
| | | | 43,784 | | | | | | 42,229 | | |
Impairment, restructuring and other(a)
|
| | | | 10,035 | | | | | | 7,169 | | |
Loss from operations
|
| | | | (26,733) | | | | | | (25,328) | | |
Interest expense
|
| | | | (13,467) | | | | | | (11,606) | | |
Net loss attributable to Hydrofarm Holdings Group, Inc.
|
| | | | (40,083) | | | | | | (32,892) | | |
Basic and diluted net loss per share(b)
|
| | | | (0.57) | | | | | | (0.69) | | |
Balance sheet data as of end of period: | | | | | | | | | | | | | |
Cash(c)
|
| | | $ | 32,857 | | | | | $ | 27,923 | | |
Working capital(d)
|
| | | | 40,547 | | | | | | 56,728 | | |
Total assets(e)
|
| | | | 185,651 | | | | | | 174,411 | | |
Long-term debt(f)
|
| | | | 107,932 | | | | | | 100,520 | | |
Total liabilities
|
| | | | 154,471 | | | | | | 126,867 | | |
Convertible preferred stock(g)
|
| | | | 21,802 | | | | | | — | | |
Stockholders’ equity
|
| | | | 9,378 | | | | | | 47,544 | | |
Cash flows provided by (used in): | | | | | | | | | | | | | |
Net cash (used in) provided by operating activities
|
| | | $ | (13,302) | | | | | $ | 4,437 | | |
Net cash used in investing activities
|
| | | | (3,818) | | | | | | (3,312) | | |
Net cash provided by financing activities
|
| | | | 19,900 | | | | | | 25,516 | | |
Net increase in cash, cash equivalents and restricted cash
|
| | | | 4,934 | | | | | | 25,717 | | |
Other data: | | | | | | | | | | | | | |
Adjusted EBITDA(h)
|
| | | $ | (10,174) | | | | | $ | (7,249) | | |
Adjusted EBITDA as a percent of net sales(h)
|
| | | | -4.3% | | | | | | -3.4% | | |
Gross profit as a percent of net sales
|
| | | | 11.5% | | | | | | 11.4% | | |
Capital expenditures(i)
|
| | | | (768) | | | | | | (1,343) | | |
Federal net operating loss carryforwards
|
| | | | 58,000 | | | | | | 35,000 | | |
| | |
2019
|
| |
2018
|
| |
Year to year change
|
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Net sales
|
| | | $ | 235,111 | | | | | | 100.0% | | | | | $ | 211,813 | | | | | | 100.0% | | | | | $ | 23,298 | | | | | | 11.0% | | |
Cost of goods sold
|
| | | | 208,025 | | | | | | 88.5% | | | | | | 187,743 | | | | | | 88.6% | | | | | | 20,282 | | | | | | 10.8% | | |
Gross profit
|
| | | | 27,086 | | | | | | 11.5% | | | | | | 24,070 | | | | | | 11.4% | | | | | | 3,016 | | | | | | 12.5% | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Selling, general and administrative
|
| | | | 43,784 | | | | | | 18.6% | | | | | | 42,229 | | | | | | 19.9% | | | | | | 1,555 | | | | | | 3.7% | | |
Impairment, restructuring and other
|
| | | | 10,035 | | | | | | 4.3% | | | | | | 7,169 | | | | | | 3.4% | | | | | | 2,866 | | | | | | 40.0% | | |
Loss from operations
|
| | | | (26,733) | | | | | | -11.4% | | | | | | (25,328) | | | | | | -12.0% | | | | | | (1,405) | | | | | | 5.5% | | |
Interest expense
|
| | | | (13,467) | | | | | | -5.7% | | | | | | (11,606) | | | | | | -5.5% | | | | | | (1,861) | | | | | | 16.0% | | |
Loss on debt extinguishment
|
| | | | (679) | | | | | | -0.3% | | | | | | — | | | | | | 0.0% | | | | | | (679) | | | | | | | | |
Other income, net
|
| | | | 105 | | | | | | 0.0% | | | | | | 995 | | | | | | 0.5% | | | | | | (890) | | | | | | -89.4% | | |
Loss before tax
|
| | | | (40,774) | | | | | | -17.3% | | | | | | (35,939) | | | | | | -17.0% | | | | | | (4,835) | | | | | | 13.5% | | |
Income tax benefit
|
| | | | 691 | | | | | | 0.3% | | | | | | 397 | | | | | | 0.2% | | | | | | 294 | | | | | | 74.1% | | |
Net loss
|
| | | | (40,083) | | | | | | -17.0% | | | | | | (35,542) | | | | | | -16.8% | | | | | | (4,541) | | | | | | 12.8% | | |
Net loss attributable to non-controlling interest
|
| | | | — | | | | | | | | | | | | (2,650) | | | | | | | | | | | | | | | | | | | | |
Net loss attributable to Hydrofarm Holdings Group, Inc.
|
| | | $ | (40,083) | | | | | | | | | | | $ | (32,892) | | | | | | | | | | | | | | | | | | | | |
| | |
2019
|
| |
2018
|
| ||||||
Net cash (used in) provided by operating activities
|
| | | $ | (13,302) | | | | | $ | 4,437 | | |
Net cash used in investing activities
|
| | | | (3,818) | | | | | | (3,312) | | |
Net cash provided by financing activities
|
| | | | 19,900 | | | | | | 25,516 | | |
Effect of exchange rate changes on cash and cash equivalents
|
| | | | 2,154 | | | | | | (924) | | |
Net increase in cash, cash equivalents and restricted cash
|
| | | | 4,934 | | | | | | 25,717 | | |
Cash, cash equivalents and restricted cash at beginning of year
|
| | | | 27,923 | | | | | | 2,206 | | |
Cash, cash equivalents and restricted cash at end of year
|
| | | $ | 32,857 | | | | | $ | 27,923 | | |
| | |
Total
|
| |
Less than
1 year |
| |
1-3 years
|
| |
4-5 years
|
| |
More than
5 years |
| |||||||||||||||
Operating lease obligations
|
| | | $ | 22,528 | | | | | $ | 3,950 | | | | | $ | 7,219 | | | | | $ | 3,201 | | | | | $ | 8,158 | | |
Finance lease obligations (including interest)
|
| | | | 894 | | | | | | 484 | | | | | | 403 | | | | | | 7 | | | | | | | | |
Principal payments on long term debt
|
| | | | 109,438 | | | | | | 34,396 | | | | | | 75,011 | | | | | | 31 | | | | | | | | |
Interest payments on long term debt
|
| | | | 12,524 | | | | | | 3,955 | | | | | | 8,565 | | | | | | 4 | | | | | | | | |
Minimum purchase commitments
|
| | | | 17,500 | | | | | | 2,500 | | | | | | 6,500 | | | | | | 8,500 | | | | | | | | |
Total contractual obligations
|
| | | $ | 162,884 | | | | | $ | 45,285 | | | | | $ | 97,698 | | | | | $ | 11,743 | | | | | $ | 8,158 | | |
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Premium Soils
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Non-Soil Growing Media
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Rolling Bench
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PH Meter
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Reverse Osmosis System
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HID Light
System |
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Grow Light
Reflector |
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Grow Light
Ballast |
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LED Light
System |
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Grow Light
Bulb |
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Pruner
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Dripper
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Safety
Gloves |
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Container
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Name
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Age
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Position
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William Toler | | |
61
|
| | Chief Executive Officer and Chairman of the Board | |
Terence Fitch | | |
61
|
| | President | |
John Lindeman | | |
50
|
| | Chief Financial Officer | |
Peter Wardenburg | | |
65
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| | Vice Chairman of the Board | |
Chris Payne | | |
58
|
| | Director | |
Michael Rapoport | | |
53
|
| | Director | |
Adam Stern | | |
56
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| | Director | |
John Tomes | | |
58
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| | Director | |
Name and Principal Position
|
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Year
|
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Salary
($) |
| |
Bonus
($) |
| |
Stock
Awards ($) |
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Option
Awards ($) |
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Nonequity
Incentive Plan Compensation ($) |
| |
Nonqualified
Deferred Compensation Earnings ($) |
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All Other
Compensation ($) |
| |
Total
($) |
| |||||||||||||||||||||||||||
Bill Toler, Chief Executive
Officer and Chairman of the Board(1) |
| | | | 2019 | | | | | | 475,243 | | | | | | — | | | | |
|
(1)
|
| | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 475,243 | | |
Terence Fitch, President(2) | | | | | 2019 | | | | | | 237,945 | | | | | | — | | | | |
|
(2)
|
| | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 237,945 | | |
Peter Wardenburg, Former Chief Executive Officer and Director(3)
|
| | | | 2019 | | | | | | 60,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 60,000 | | |
| | | 2018 | | | | | | 78,462 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 49,085(4) | | | | | | 127,546 | | | ||
Bob Clamp, Chief Operating Officer(5)
|
| | | | 2019 | | | | | | 57,981 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 157,018(5) | | | | | | 214,999 | | |
| | | 2018 | | | | | | 190,385 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 24,751 | | | | | | 215,072 | | | ||
Jeff Peterson, Chief Financial Officer(6)
|
| | | | 2019 | | | | | | 250,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,404 | | | | | | 252,404 | | |
| | | 2018 | | | | | | 237,500 | | | | | | 95,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 332,500 | | |
| | |
Option Awards
|
| |
Stock Awards
|
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Name and Principal Position
|
| |
Number of
Securities Underlying Unexercised Options (#) Exercisable |
| |
Number of
Securities Underlying Unexercised Options (#) Unexercisable |
| |
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
| |
Option
Exercise Price ($) |
| |
Option
Exercise Date |
| |
Number of
Shares or Units of Stock That Have Not Vested (#) |
| |
Market
Value of Shares or Units of Stock That Have Not Vested ($)(1) |
| |
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
| |
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
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Bill Toler, Chief Executive Officer and Chairman of the Board(2)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,882,190 | | | | | | — | | | | | | — | | | | | | — | | |
Terence Fitch, President(3)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,255,420 | | | | | | — | | | | | | — | | | | | | — | | |
Peter Wardenburg, Chief Executive Officer and Director(4)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Bob Clamp, Chief Operating
Officer(5) |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Jeff Peterson, Chief Financial
Officer(6) |
| | | | 149,430 | | | | | | 194,821 | | | | | | — | | | | | $ | 2.50 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Name and Address of Beneficial Owner
|
| |
Number
of Shares Beneficially Owned |
| |
Percentage
of Shares Beneficially Owned Before This Offering |
| |
Percentage
of Shares Beneficially Owned After This Offering |
| |||||||||
5% Stockholders | | | | | | | | | | | | | | | | | | | |
Jack Serruya(1)
|
| | | | 5,789,682 | | | | | | 8.3% | | | | | | | | |
Aaron Serruya(2)
|
| | | | 5,789,682 | | | | | | 8.3% | | | | | | | | |
Michael Serruya(3)
|
| | | | 5,789,678 | | | | | | 8.3% | | | | | | | | |
Simon Serruya(4)
|
| | | | 5,789,682 | | | | | | 8.3% | | | | | | | | |
Directors and Named Executive Officers: | | | | | | | | | | | | | | | | | | | |
William Toler(5)
|
| | | | — | | | | | | — | | | | | | — | | |
Terence Fitch
|
| | | | — | | | | | | — | | | | | | — | | |
John Lindeman
|
| | | | — | | | | | | — | | | | | | — | | |
Bob Clamp
|
| | | | — | | | | | | — | | | | | | — | | |
Jeff Peterson
|
| | | | — | | | | | | — | | | | | | — | | |
Peter Wardenburg(6)
|
| | | | 7,004,606 | | | | | | 10.0% | | | | | | | | |
Chris Payne(7)
|
| | | | 6,998,337 | | | | | | 10.0% | | | | | | | | |
Michael Rapoport(8)
|
| | | | 10,368,045 | | | | | | 14.9% | | | | | | | | |
John Tomes(9)
|
| | | | 6,766,754 | | | | | | 9.7% | | | | | | | | |
Adam Stern(10)
|
| | | | 625,000 | | | | | | * | | | | | | * | | |
All directors and current executive officers as a group (7 persons)(10)
|
| | | | 24,995,998 | | | | | | 35.8% | | | | | | | | |
Name
|
| |
Number of
Shares |
| |||
| | | | | | | |
| | | | | | | |
Total
|
| | | | | |
| | |
Without option
to purchase additional shares exercise |
| |
With full option
to purchase additional shares exercise |
| ||||||
Per Share
|
| | | $ | | | | | $ | | | ||
Total
|
| | | $ | | | | | $ | | | |
| | |
Page
|
| |||
| | | | F-2 | | | |
| | | | F-3 | | | |
| | | | F-4 | | | |
| | | | F-5 | | | |
| | | | F-6 | | | |
| | | | F-7 | | | |
| | | | F-8 | | | |
| | | | F-9 | | | |
| | | | F-48 | | |
| | |
Pro Forma
Stockholders’ Equity as of December 31, 2019 |
| |
December 31,
|
| ||||||||||||
|
2019
|
| |
2018
|
| ||||||||||||||
| | |
(unaudited)
|
| | | | | | | | | | | | | |||
Assets | | | | | | | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | | | | | | | $ | 22,866 | | | | | $ | 27,923 | | |
Restricted cash
|
| | | | | | | | |
|
9,991
|
| | | |
|
—
|
| |
Accounts receivable, net
|
| | | | | | | | |
|
15,246
|
| | | |
|
15,566
|
| |
Inventories
|
| | | | | | | | |
|
50,228
|
| | | |
|
53,200
|
| |
Notes receivable
|
| | | | | | | | |
|
4,796
|
| | | |
|
2,000
|
| |
Prepaid expenses and other current assets
|
| | | | | | | | |
|
1,840
|
| | | |
|
1,903
|
| |
Total current assets
|
| | | | | | | | | | 104,967 | | | | | | 100,592 | | |
Property and equipment, net
|
| | | | | | | | |
|
3,550
|
| | | |
|
4,490
|
| |
Operating lease right-of-use assets
|
| | | | | | | | |
|
18,521
|
| | | |
|
—
|
| |
Intangible assets, net
|
| | | | | | | | |
|
57,406
|
| | | |
|
68,369
|
| |
Other assets
|
| | | | | | | | |
|
1,207
|
| | | |
|
960
|
| |
Total assets
|
| | | | | | | | | $ | 185,651 | | | | | $ | 174,411 | | |
Liabilities, convertible preferred stock and stockholders’ equity | | | | | | | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | | | | | | | |
Accounts payable
|
| | | | | | | | | $ | 17,224 | | | | | $ | 17,064 | | |
Accrued expenses and other current liabilities
|
| | | | | | | | |
|
9,188
|
| | | |
|
6,704
|
| |
Current portion of lease liabilities
|
| | | | | | | | |
|
3,181
|
| | | |
|
—
|
| |
Current portion of long-term debt
|
| | | | | | | | |
|
34,827
|
| | | |
|
20,096
|
| |
Total current liabilities
|
| | | | | | | | | | 64,420 | | | | | | 43,864 | | |
Long-term lease liabilities
|
| | | | | | | | |
|
15,786
|
| | | |
|
—
|
| |
Long-term debt
|
| | | | | | | | |
|
73,105
|
| | | |
|
80,424
|
| |
Deferred tax liabilities
|
| | | | | | | | |
|
—
|
| | | |
|
881
|
| |
Other long-term liabilities
|
| | | | | | | | |
|
1,160
|
| | | |
|
1,698
|
| |
Total liabilities
|
| | | | | | | | | | 154,471 | | | | | | 126,867 | | |
Commitments and contingencies (Note 16) | | | | | | | | | | | | | | | | | | | |
Convertible preferred stock ($0.0001 par value; 50,000,000
shares authorized and 7,007,429 issued and outstanding at December 31, 2019; [ ] shares issued and outstanding on a pro forma basis) |
| | |
|
[ ]
|
| | | |
|
21,802
|
| | | |
|
—
|
| |
Stockholders’ equity | | | | | | | | | | | | | | | | | | | |
Common stock ($0.0001 par value; 350,000,000 and 300,000,000 shares authorized at December 31, 2019 and 2018, respectively; 69,745,562 shares issued and outstanding at December 31, 2019 and 2018; [ ] shares issued and outstanding on a pro forma basis)
|
| | |
|
[ ]
|
| | | |
|
7
|
| | | |
|
7
|
| |
Additional paid-in capital
|
| | |
|
[ ]
|
| | | |
|
156,174
|
| | | |
|
155,966
|
| |
Accumulated other comprehensive loss
|
| | |
|
[ ]
|
| | | |
|
(144)
|
| | | |
|
(1,853)
|
| |
Accumulated deficit
|
| | |
|
[ ]
|
| | | |
|
(146,659)
|
| | | |
|
(106,576)
|
| |
Total stockholders’ equity
|
| | | | [ ] | | | | | | 9,378 | | | | | | 47,544 | | |
Total liabilities, convertible preferred stock and stockholders’ equity
|
| | | | | | | | | $ | 185,651 | | | | | $ | 174,411 | | |
|
| | |
Years ended December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Net sales
|
| | | $ | 235,111 | | | | | $ | 211,813 | | |
Cost of goods sold
|
| | |
|
208,025
|
| | | |
|
187,743
|
| |
Gross profit
|
| | | | 27,086 | | | | | | 24,070 | | |
Operating expenses: | | | | | | | | | | | | | |
Selling, general and administrative
|
| | |
|
43,784
|
| | | |
|
42,229
|
| |
Impairment, restructuring and other
|
| | |
|
10,035
|
| | | |
|
7,169
|
| |
Loss from operations
|
| | | | (26,733) | | | | | | (25,328) | | |
Interest expense
|
| | |
|
(13,467)
|
| | | |
|
(11,606)
|
| |
Loss on debt extinguishment
|
| | |
|
(679)
|
| | | |
|
—
|
| |
Other income, net
|
| | |
|
105
|
| | | |
|
995
|
| |
Loss before tax
|
| | |
|
(40,774)
|
| | | |
|
(35,939)
|
| |
Income tax benefit
|
| | |
|
691
|
| | | |
|
397
|
| |
Net loss
|
| | | | (40,083) | | | | | | (35,542) | | |
Net loss attributable to non-controlling interest
|
| | |
|
—
|
| | | |
|
(2,650)
|
| |
Net loss attributable to Hydrofarm Holdings Group, Inc.
|
| | | $ | (40,083) | | | | | $ | (32,892) | | |
Basic and diluted net loss per share attributable to common stockholders (2018 assumes retroactive conversion of non-controlling interest into controlling interest)
|
| | | $ | (0.57) | | | | | $ | (0.69) | | |
Weighted-average shares used to compute basic and diluted net loss per share attributable to common stockholders
|
| | | | 69,745,562 | | | | | | 51,883,059 | | |
Basic and diluted pro forma net loss per share attributable to common stockholders (unaudited)
|
| | | | [ ] | | | | | | | | |
Weighted-average shares used to compute pro forma basic and diluted net loss per share attributable to common stockholders (unaudited)
|
| | | | [ ] | | | | | | | | |
| | |
Years ended December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Net loss
|
| | | $ | (40,083) | | | | | $ | (35,542) | | |
Other comprehensive income (loss): | | | | | | | | | | | | | |
Foreign currency translation gain (loss)
|
| | |
|
1,709
|
| | | |
|
(2,418)
|
| |
Total comprehensive loss
|
| | | | (38,374) | | | | | | (37,960) | | |
Comprehensive loss attributable to non-controlling interest
|
| | |
|
—
|
| | | |
|
(2,828)
|
| |
Comprehensive loss attributable to Hydrofarm Holdings Group, Inc.
|
| | | $ | (38,374) | | | | | $ | (35,132) | | |
| | | | | | | | | | | | | | |
Controlling Interest
|
| | | | | | | | | | | | | |||||||||||||||||||||||||||||||||
| | |
Convertible Preferred Stock
|
| |
Common Stock
|
| |
Additional
Paid-In Capital |
| |
Accumulated
Other Comprehensive Income (Loss) |
| |
Accumulated
Deficit |
| |
Total
Stockholders’ Equity |
| |
Non-
controlling Interest |
| |
Total
Stockholders’ Equity |
| ||||||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2017
|
| | | | — | | | | | $ | — | | | | | | 37,660,681 | | | | | $ | 4 | | | | | $ | 90,806 | | | | | $ | 484 | | | | | $ | (62,074) | | | | | $ | 29,220 | | | | | $ | 4,071 | | | | | $ | 33,291 | | |
Exchange of new shares for
non-controlling interest in subsidiary |
| | |
|
—
|
| | | |
|
—
|
| | | | | 5,370,648 | | | | | | 1 | | | | | | 12,949 | | | | | | (97) | | | | | | (11,610) | | | | |
|
1,243
|
| | | | | (1,243) | | | | |
|
—
|
| |
Concurrent Offering of shares and warrants for cash
|
| | |
|
—
|
| | | |
|
—
|
| | | | | 4,460,659 | | | | | | — | | | | | | 11,146 | | | | | | — | | | | | | — | | | | |
|
11,146
|
| | | | | — | | | | |
|
11,146
|
| |
Concurrent Offering of shares and warrants for conversion of loan from related party
|
| | |
|
—
|
| | | |
|
—
|
| | | | | 1,633,958 | | | | | | — | | | | | | 4,088 | | | | | | — | | | | | | — | | | | |
|
4,088
|
| | | | | — | | | | |
|
4,088
|
| |
Reverse merger with
Hydrofarm Holdings Group, Inc. as accounting acquiree |
| | |
|
—
|
| | | |
|
—
|
| | | | | 4,000,000 | | | | | | — | | | | | | 1 | | | | | | — | | | | | | — | | | | |
|
1
|
| | | | | — | | | | |
|
1
|
| |
Offering of shares and warrants for cash
|
| | |
|
—
|
| | | |
|
—
|
| | | | | 16,619,616 | | | | | | 2 | | | | | | 41,497 | | | | | | — | | | | | | — | | | | |
|
41,499
|
| | | | | — | | | | |
|
41,499
|
| |
Offering and Concurrent Offering costs
|
| | |
|
—
|
| | | |
|
—
|
| | | | | — | | | | | | — | | | | | | (4,521) | | | | | | — | | | | | | — | | | | |
|
(4,521)
|
| | | | | — | | | | |
|
(4,521)
|
| |
Net loss
|
| | |
|
—
|
| | | |
|
—
|
| | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (32,892) | | | | |
|
(32,892)
|
| | | | | (2,650) | | | | |
|
(35,542)
|
| |
Foreign currency translation
loss |
| | |
|
—
|
| | | |
|
—
|
| | | | | — | | | | | | — | | | | | | — | | | | | | (2,240) | | | | | | — | | | | |
|
(2,240)
|
| | | | | (178) | | | | |
|
(2,418)
|
| |
Balance, December 31, 2018
|
| | | | — | | | | | | — | | | | | | 69,745,562 | | | | | | 7 | | | | | | 155,966 | | | | | | (1,853) | | | | | | (106,576) | | | | | | 47,544 | | | | | | — | | | | | | 47,544 | | |
Proceeds from issuance of Series A Convertible Preferred Stock, net of issuance costs of $1,274
|
| | |
|
4,825,346
|
| | | |
|
15,615
|
| | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | |
|
—
|
| | | | | — | | | | |
|
—
|
| |
Issuance of Series A
Convertible Preferred Stock upon conversion of debt |
| | |
|
2,182,083
|
| | | |
|
7,637
|
| | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | |
|
—
|
| | | | | — | | | | |
|
—
|
| |
Receivable exchanged for issuance of Series A Convertible Preferred Stock
|
| | |
|
—
|
| | | |
|
(1,450)
|
| | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | |
|
—
|
| | | | | — | | | | |
|
—
|
| |
Stock-based compensation expense
|
| | |
|
—
|
| | | |
|
—
|
| | | | | — | | | | | | — | | | | | | 208 | | | | | | — | | | | | | — | | | | |
|
208
|
| | | | | — | | | | |
|
208
|
| |
Net loss
|
| | |
|
—
|
| | | |
|
—
|
| | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (40,083) | | | | |
|
(40,083)
|
| | | | | — | | | | |
|
(40,083)
|
| |
Foreign currency translation
gain |
| | |
|
—
|
| | | |
|
—
|
| | | | | — | | | | | | — | | | | | | — | | | | | | 1,709 | | | | | | — | | | | |
|
1,709
|
| | | | | — | | | | |
|
1,709
|
| |
Balance, December 31, 2019
|
| | | | 7,007,429 | | | | | $ | 21,802 | | | | | | 69,745,562 | | | | | $ | 7 | | | | | $ | 156,174 | | | | | $ | (144) | | | | | $ | (146,659) | | | | | $ | 9,378 | | | | | $ | — | | | | | $ | 9,378 | | |
| | |
Years ended December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Operating activities | | | | | | | | | | | | | |
Net loss
|
| | | $ | (40,083) | | | | | $ | (35,542) | | |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | | | | | | | | | | | | | |
Depreciation and amortization
|
| | |
|
6,995
|
| | | |
|
8,260
|
| |
Provision for doubtful accounts
|
| | |
|
933
|
| | | |
|
534
|
| |
Provision for (benefit from) inventory obsolescence
|
| | |
|
707
|
| | | |
|
(824)
|
| |
Stock-based compensation expense
|
| | |
|
208
|
| | | |
|
—
|
| |
Amortization of inventory step-up of basis
|
| | |
|
—
|
| | | |
|
798
|
| |
Impairment charges
|
| | |
|
5,390
|
| | | |
|
2,716
|
| |
Non-cash operating lease expense
|
| | |
|
3,650
|
| | | |
|
—
|
| |
Amortization of deferred financing costs
|
| | |
|
967
|
| | | |
|
643
|
| |
Loss on debt extinguishment
|
| | |
|
679
|
| | | |
|
—
|
| |
Interest expense and fees capitalized to principal of long-term debt
|
| | |
|
9,644
|
| | | |
|
6,883
|
| |
Payment of interest expense and fees capitalized to principal of long-term debt
|
| | |
|
(2,360)
|
| | | |
|
—
|
| |
Deferred income tax benefit
|
| | |
|
(718)
|
| | | |
|
(899)
|
| |
Other
|
| | |
|
105
|
| | | |
|
(22)
|
| |
Changes in assets and liabilities: | | | | | | | | | | | | | |
Accounts receivable
|
| | |
|
(620)
|
| | | |
|
6,821
|
| |
Inventories
|
| | |
|
2,725
|
| | | |
|
22,043
|
| |
Prepaid expenses and other current assets
|
| | |
|
(9)
|
| | | |
|
509
|
| |
Other assets
|
| | |
|
494
|
| | | |
|
560
|
| |
Accounts payable
|
| | |
|
(1,199)
|
| | | |
|
(5,652)
|
| |
Accrued expenses and other current liabilities
|
| | |
|
2,364
|
| | | |
|
(3,079)
|
| |
Lease liabilities
|
| | |
|
(3,297)
|
| | | |
|
—
|
| |
Other long-term liabilities
|
| | |
|
123
|
| | | |
|
688
|
| |
Net cash (used in) provided by operating activities
|
| | | | (13,302) | | | | | | 4,437 | | |
Investing activities | | | | | | | | | | | | | |
Purchases of property and equipment
|
| | |
|
(768)
|
| | | |
|
(1,343)
|
| |
Issuance of notes receivable
|
| | |
|
(3,050)
|
| | | |
|
(2,000)
|
| |
Other
|
| | |
|
—
|
| | | |
|
31
|
| |
Net cash used in investing activities
|
| | | | (3,818) | | | | | | (3,312) | | |
Financing activities | | | | | | | | | | | | | |
Proceeds from issuance of Series A Convertible Preferred Stock, net of issuance costs
|
| | |
|
14,165
|
| | | |
|
—
|
| |
Proceeds from issuance of convertible debt
|
| | |
|
7,532
|
| | | |
|
—
|
| |
Borrowings under revolving credit facilities
|
| | |
|
256,862
|
| | | |
|
192,903
|
| |
Payments of deferred financing costs
|
| | |
|
(1,697)
|
| | | |
|
—
|
| |
Repayments of long-term debt and revolving credit facilities
|
| | |
|
(256,785)
|
| | | |
|
(220,309)
|
| |
Payments made on financing leases
|
| | |
|
(177)
|
| | | |
|
—
|
| |
Proceeds from Offering and Concurrent Offering
|
| | |
|
—
|
| | | |
|
52,645
|
| |
Payments of offering costs on Offering and Concurrent Offering
|
| | |
|
—
|
| | | |
|
(4,521)
|
| |
Proceeds from loans from related party
|
| | |
|
—
|
| | | |
|
6,000
|
| |
Payments of loans from related party
|
| | |
|
—
|
| | | |
|
(2,000)
|
| |
Other
|
| | |
|
—
|
| | | |
|
798
|
| |
Net cash provided by financing activities
|
| | | | 19,900 | | | | | | 25,516 | | |
Effect of exchange rate changes on cash and cash equivalents
|
| | |
|
2,154
|
| | | |
|
(924)
|
| |
Net increase in cash, cash equivalents and restricted cash
|
| | |
|
4,934
|
| | | |
|
25,717
|
| |
Cash, cash equivalents and restricted cash at beginning of year
|
| | |
|
27,923
|
| | | |
|
2,206
|
| |
Cash, cash equivalents and restricted cash at end of year
|
| | | $ | 32,857 | | | | | $ | 27,923 | | |
Non-cash investing and financing activities | | | | | | | | | | | | | |
Issuance of Series A Convertible Preferred Stock upon conversion of debt and accrued interest
|
| | | $ | 7,637 | | | | | $ | — | | |
Receivable related to issuance of Series A Convertible Preferred Stock
|
| | | $ | 1,450 | | | | | $ | — | | |
Deferred financing costs capitalized to principal of long-term debt
|
| | | $ | 615 | | | | | $ | — | | |
Property and equipment acquired under finance lease obligation
|
| | | $ | 251 | | | | | $ | 279 | | |
Conversion of loan from related party to common shares
|
| | | $ | — | | | | | $ | 4,088 | | |
Supplemental information | | | | | | | | | | | | | |
Cash paid for interest
|
| | | $ | 5,492 | | | | | $ | 4,710 | | |
Cash paid for income taxes
|
| | | $ | 63 | | | | | $ | 613 | | |
| | |
Common Stock
|
| |
Shares Subject
to Warrants |
| ||||||
Offering
|
| | | | 16,619,616 | | | | | | 8,309,807 | | |
Concurrent Offering
|
| | | | 4,460,659 | | | | | | 2,230,329 | | |
Conversion of Loan
|
| | | | 1,633,958 | | | | | | 816,978 | | |
Subtotal
|
| | | | 22,714,233 | | | | | | 11,357,114 | | |
Placement agent warrants
|
| | | | — | | | | | | 1,742,955 | | |
Total
|
| | | | 22,714,233 | | | | | | 13,100,069 | | |
| | |
As previously
reported |
| |
Reclassifications
|
| |
Adjustments
|
| |
As restated
and reclassified |
| ||||||||||||
Accounts receivable, net
|
| | | $ | 16,097 | | | | | $ | — | | | | | $ | (531) | | | | |
$
|
15,566
|
| |
Inventories, net
|
| | | | 53,763 | | | | | | (929) | | | | | | 366 | | | | |
|
53,200
|
| |
Notes receivable
|
| | | | — | | | | | | 2,000 | | | | | | — | | | | |
|
2,000
|
| |
Prepaid expenses and other current assets
|
| | | | 3,403 | | | | | | (1,071) | | | | | | (429) | | | | |
|
1,903
|
| |
Total current assets
|
| | | | 101,186 | | | | | | — | | | | | | (594) | | | | |
|
100,592
|
| |
Property and equipment, net
|
| | | | 5,446 | | | | | | — | | | | | | (956) | | | | |
|
4,490
|
| |
Other assets
|
| | | | 531 | | | | | | — | | | | | | 429 | | | | |
|
960
|
| |
Total assets
|
| | | | 175,532 | | | | | | — | | | | | | (1,121) | | | | |
|
174,411
|
| |
Accrued expenses and other current liabilities
|
| | | | 7,231 | | | | | | — | | | | | | (527) | | | | |
|
6,704
|
| |
Total current liabilities
|
| | | | 44,391 | | | | | | — | | | | | | (527) | | | | |
|
43,864
|
| |
Deferred tax liabilities
|
| | | | 2,342 | | | | | | — | | | | | | (1,461) | | | | |
|
881
|
| |
Other long-term liabilities
|
| | | | 590 | | | | | | — | | | | | | 1,108 | | | | |
|
1,698
|
| |
Total liabilities
|
| | | | 127,747 | | | | | | — | | | | | | (880) | | | | |
|
126,867
|
| |
Accumulated deficit
|
| | | | (106,335) | | | | | | — | | | | | | (241) | | | | |
|
(106,576)
|
| |
Total stockholders’ equity
|
| | | | 47,785 | | | | | | — | | | | | | (241) | | | | |
|
47,544
|
| |
Total liabilities, convertible preferred stock and stockholders’ equity
|
| | | | 175,532 | | | | | | — | | | | | | (1,121) | | | | |
|
174,411
|
| |
| | |
As previously
reported |
| |
Reclassifications
|
| |
Adjustments
|
| |
As restated
and reclassified |
| ||||||||||||
Net sales
|
| | | $ | 212,464 | | | | | $ | — | | | | | $ | (651) | | | | |
$
|
211,813
|
| |
Cost of goods sold
|
| | | | 183,690 | | | | | | 2,813 | | | | | | 1,240 | | | | |
|
187,743
|
| |
Gross profit
|
| | | | 28,774 | | | | | | (2,813) | | | | | | (1,891) | | | | |
|
24,070
|
| |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Salaries and benefits
|
| | | | 16,463 | | | | | | (16,463) | | | | | | — | | | | |
|
—
|
| |
Marketing
|
| | | | 2,584 | | | | | | (2,584) | | | | | | — | | | | |
|
—
|
| |
General and administrative
|
| | | | 18,668 | | | | | | (18,668) | | | | | | — | | | | |
|
—
|
| |
Selling, general and administrative
|
| | | | — | | | | | | 42,055 | | | | | | 174 | | | | |
|
42,229
|
| |
Depreciation and amortization
|
| | | | 7,170 | | | | | | (7,170) | | | | | | — | | | | |
|
—
|
| |
Impairment, restructuring and other charges
|
| | | | 3,244 | | | | | | 4,453 | | | | | | (528) | | | | |
|
7,169
|
| |
Loss from operations
|
| | | | | | | | | | | | | | | | | | | | | | 25,328 | | |
Interest expense
|
| | | | 11,606 | | | | | | — | | | | | | — | | | | |
|
11,606
|
| |
Other expense (income), net
|
| | | | 4,238 | | | | | | (4,436) | | | | | | (797) | | | | |
|
(995)
|
| |
Net loss before tax
|
| | | | (35,199) | | | | | | — | | | | | | (740) | | | | |
|
(35,939)
|
| |
Income tax (expense) benefit
|
| | | | (102) | | | | | | — | | | | | | 499 | | | | |
|
397
|
| |
Net loss
|
| | | $ | (35,301) | | | | | $ | — | | | | | $ | (241) | | | | | $ | (35,542) | | |
|
| | |
As previously
reported |
| |
Reclassifications
|
| |
Adjustments
|
| |
As restated
and reclassified |
| ||||||||||||
Net loss
|
| | | $ | (35,301) | | | | | $ | — | | | | | $ | (241) | | | | |
$
|
(35,542)
|
| |
Other comprehensive loss | | | | | | | | | | | | | | | | | | | | | | | | | |
Foreign currency translation loss
|
| | | | (2,418) | | | | | | — | | | | | | — | | | | |
|
(2,418)
|
| |
Total comprehensive loss
|
| | | | (37,719) | | | | | | — | | | | | | (241) | | | | |
|
(37,960)
|
| |
Comprehensive loss attributable to non-controlling
interest |
| | | | (2,828) | | | | | | — | | | | | | — | | | | |
|
(2,828)
|
| |
Comprehensive loss attributable to Hydrofarm Holdings Group, Inc.
|
| | | $ | (34,891) | | | | | $ | — | | | | | $ | (241) | | | | | $ | (35,132) | | |
| | |
As previously
reported |
| |
Reclassifications
|
| |
Adjustments
|
| |
As restated
and reclassified |
| ||||||||||||
Operating activities | | | | | | | | | | | | | | | | | | | | | | | | | |
Net loss
|
| | | $ | (35,301) | | | | | $ | — | | | | | $ | (241) | | | | |
$
|
(35,542)
|
| |
Depreciation and amortization
|
| | | | 7,170 | | | | | | — | | | | | | 1,090 | | | | |
|
8,260
|
| |
Provision for (benefit from) inventory
obsolescence |
| | | | 724 | | | | | | — | | | | | | (1,548) | | | | |
|
(824)
|
| |
Impairment charges
|
| | | | 3,244 | | | | | | — | | | | | | (528) | | | | |
|
2,716
|
| |
Deferred income tax benefit
|
| | | | — | | | | | | 34 | | | | | | (933) | | | | |
|
(899)
|
| |
Accounts receivable
|
| | | | 6,290 | | | | | | — | | | | | | 531 | | | | |
|
6,821
|
| |
Inventories
|
| | | | 21,203 | | | | | | (342) | | | | | | 1,182 | | | | |
|
22,043
|
| |
Prepaid expenses and other current assets
|
| | | | (262) | | | | | | 342 | | | | | | 429 | | | | |
|
509
|
| |
Other assets
|
| | | | 989 | | | | | | — | | | | | | (429) | | | | |
|
560
|
| |
Accrued expenses and other current liabilities
|
| | | | (2,656) | | | | | | 104 | | | | | | (527) | | | | |
|
(3,079)
|
| |
Deferred tax liabilities
|
| | | | 138 | | | | | | (138) | | | | | | — | | | | |
|
—
|
| |
Other long-term liabilities
|
| | | | (420) | | | | | | — | | | | | | 1,108 | | | | |
|
688
|
| |
Net cash provided by operating activities
|
| | | | 4,303 | | | | | | — | | | | | | 134 | | | | |
|
4,437
|
| |
Investing activities | | | | | | | | | | | | | | | | | | | | | | | | | |
Proceeds from sale of property plant and equipment
|
| | | | 538 | | | | | | (538) | | | | | | — | | | | |
|
—
|
| |
Investment in computer software
|
| | | | (372) | | | | | | 372 | | | | | | — | | | | |
|
—
|
| |
Acquisitions, including shell company through reverse merger, net of cash acquired
|
| | | | (1) | | | | | | 1 | | | | | | — | | | | |
|
—
|
| |
Other
|
| | | | — | | | | | | 165 | | | | | | (134) | | | | |
|
31
|
| |
Net cash used in investing activities
|
| | | | (3,178) | | | | | | — | | | | | | (134) | | | | |
|
(3,312)
|
| |
| | |
For the year ended December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
United States
|
| | |
$
|
194,618
|
| | | |
$
|
169,018
|
| |
Canada
|
| | |
|
44,515
|
| | | |
|
49,147
|
| |
Intersegment eliminations
|
| | |
|
(4,022)
|
| | | |
|
(6,352)
|
| |
Total consolidated net sales
|
| | |
$
|
235,111
|
| | | |
$
|
211,813
|
| |
|
| | |
December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
United States
|
| | |
$
|
2,660
|
| | | |
$
|
3,557
|
| |
Canada
|
| | |
|
890
|
| | | |
|
933
|
| |
Total property and equipment, net
|
| | |
$
|
3,550
|
| | | |
$
|
4,490
|
| |
|
| Level 1 | | | — | | | Valuation based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities. | |
| Level 2 | | | — | | | Valuation techniques based on inputs that are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not in active markets; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived from or, corroborated by, observable market data by correlation or other means. | |
| Level 3 | | | — | | | Valuation techniques with significant unobservable market inputs. | |
| | |
December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Cash and cash equivalents
|
| | |
$
|
22,866
|
| | | |
$
|
27,923
|
| |
Restricted cash
|
| | |
|
9,991
|
| | | |
|
—
|
| |
Cash and cash equivalents, and restricted cash
|
| | |
$
|
32,857
|
| | | |
$
|
27,923
|
| |
| Machinery and equipment | | | 5 years | |
| Leasehold improvements | | | Lesser of useful life or term of the lease | |
| Computer equipment | | | 3 – 4 years | |
| Furniture and fixtures | | | 5 years | |
| Computer software | | | 5 years | |
| Customer relationships | | | 18 years | |
|
Intellectual property and licenses
|
| | 5 – 15 years or the lesser of useful life and term of license | |
| Trade names | | | 2 years | |
| Favorable leases | | | 5 years | |
| | |
2019
|
| |
2018
|
| ||||||
Net loss (2018 assumes retroactive conversion of NCI into controlling interest)
|
| | | $ | (40,083) | | | | | $ | (35,542) | | |
Less: Undistributed earnings allocable to participating securities
|
| | | | — | | | | | | — | | |
Basic and diluted net loss attributable to common stockholders
|
| | | $ | (40,083) | | | | | $ | (35,542) | | |
Weighted-average shares of common stock outstanding for basic and diluted (2018 assumes retroactive conversion of NCI into controlling interest)
|
| | | | 69,745,562 | | | | | | 51,883,059 | | |
Basic and diluted net loss per share attributable to common stockholders
|
| | | $ | (0.57) | | | | | $ | (0.69) | | |
| | |
For the years ended December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Shares subject to warrants outstanding
|
| | | | 13,100,069 | | | | | | 13,100,069 | | |
Shares subject to stock options outstanding
|
| | | | 2,764,240 | | | | | | — | | |
Shares subject to unvested restricted stock units
|
| | | | 6,137,610 | | | | | | — | | |
Shares convertible into common stock
|
| | | | 7,007,429 | | | | | | — | | |
| | |
For the year ended
December 31, 2019 (Unaudited) |
| |||
Net loss
|
| | |
$
|
(40,083)
|
| |
Adjustments to net loss
|
| | |
|
—
|
| |
Net loss used in calculating basic and diluted pro forma net loss per share attributable to common stockholders
|
| | | $ | (40,083) | | |
Weighted-average shares of common stock used to calculate basic and diluted pro forma net loss per share attributable to common stockholders outstanding
|
| | |
|
69,745,562
|
| |
Pro forma adjustment to reflect assumed conversion of all outstanding shares of convertible preferred stock into common stock
|
| | | | [ ] | | |
Weighted-average shares used to compute pro forma basic and diluted net loss per share attributable to common stockholders
|
| | |
|
[ ]
|
| |
Basic and diluted pro forma net loss per share attributable to common stockholders
|
| | | | [ ] | | |
| | |
December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Trade accounts receivable
|
| | |
$
|
16,577
|
| | | |
$
|
16,175
|
| |
Allowance for doubtful accounts
|
| | |
|
(1,776)
|
| | | |
|
(1,227)
|
| |
Other receivables
|
| | |
|
445
|
| | | |
|
618
|
| |
Total accounts receivable, net
|
| | | $ | 15,246 | | | | | $ | 15,566 | | |
|
| | |
December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Finished goods
|
| | |
$
|
54,050
|
| | | |
$
|
56,419
|
| |
Allowance for inventory obsolescence
|
| | |
|
(3,822)
|
| | | |
|
(3,219)
|
| |
Total inventories
|
| | | $ | 50,228 | | | | | $ | 53,200 | | |
| | |
Balance Sheet Classification
|
| |
As of December 31, 2019
|
| |||
Leased assets | | | | | | | | | | |
Operating ROU assets at cost
|
| |
Operating lease right-of-use assets
|
| | |
$
|
21,906
|
| |
Accumulated amortization
|
| |
Operating lease right-of-use assets
|
| | |
|
(3,385)
|
| |
Net book value
|
| | | | | | $ | 18,521 | | |
Finance lease assets at cost
|
| |
Property and equipment, net
|
| | |
$
|
1,060
|
| |
Accumulated amortization
|
| |
Property and equipment, net
|
| | |
|
(375)
|
| |
Net book value
|
| | | | | | $ | 685 | | |
Lease liabilities | | | | | | | | | | |
Current: | | | | | | | | | | |
Operating leases
|
| |
Current portion of lease liabilities
|
| | |
$
|
3,181
|
| |
Finance leases
|
| |
Current portion of long-term debt
|
| | |
|
431
|
| |
Noncurrent: | | | | | | | | | | |
Operating leases
|
| |
Long-term lease liabilities
|
| | |
|
15,786
|
| |
Finance leases
|
| |
Long-term debt
|
| | |
|
368
|
| |
Total lease liabilities
|
| | | | | | $ | 19,766 | | |
| | |
Classification
|
| |
For the year ended
December 31, 2019 |
| |||
Operating lease costs
|
| |
Selling, general and administrative
|
| | | $ | 4,580 | | |
Finance lease costs: | | | | | | | | | | |
Amortization of lease assets
|
| |
Selling, general and administrative
|
| | | | 239 | | |
Interest on lease liabilities
|
| |
Interest expense
|
| | | | 46 | | |
Gain on lease termination
|
| |
Impairment, restructuring, and other
|
| | | | (160) | | |
Sublease income
|
| |
Selling, general and administrative
|
| | | | (369) | | |
Year ending December 31,
|
| |
Operating
|
| |
Finance
|
| ||||||
2020
|
| | |
$
|
3,950
|
| | | |
$
|
484
|
| |
2021
|
| | |
|
3,855
|
| | | |
|
286
|
| |
2022
|
| | |
|
3,364
|
| | | |
|
117
|
| |
2023
|
| | |
|
1,804
|
| | | |
|
7
|
| |
2024
|
| | |
|
1,397
|
| | | |
|
—
|
| |
Thereafter
|
| | |
|
8,158
|
| | | |
|
—
|
| |
Total rental payments
|
| | | | 22,528 | | | | | | 894 | | |
Less portion representing interest
|
| | |
|
3,561
|
| | | |
|
95
|
| |
Total principal
|
| | |
|
18,967
|
| | | |
|
799
|
| |
Less current portion
|
| | | | 3,181 | | | | | | 431 | | |
Long-term portion
|
| | | $ | 15,786 | | | | | $ | 368 | | |
| Weighted-average remaining lease term in years: | | | | | | | |
|
Operating leases
|
| | |
|
7.5
|
| |
|
Finance leases
|
| | |
|
2.4
|
| |
| Weighted-average discount rate: | | | | | | | |
|
Operating leases (for leases expiring after 2019)
|
| | |
|
4.50%
|
| |
|
Finance leases
|
| | |
|
7.17%
|
| |
|
ROU assets and lease obligations recognized upon adoption of ASC 842 on January 1, 2019:
|
| | |||||
|
ROU assets
|
| | |
$
|
24,872
|
| |
|
Operating lease obligations
|
| | |
|
(25,135)
|
| |
| Adjustments from early termination of ROU assets net of lease extensions: | | | | | | | |
|
ROU assets surrendered
|
| | |
$
|
(2,698)
|
| |
|
Lease obligation cancelled
|
| | |
|
2,858
|
| |
|
Gain on early termination of lease obligation
|
| | | $ | 160 | | |
|
Property and equipment acquired under finance lease obligation
|
| | | $ | 251 | | |
| Cash paid for amounts included in lease liabilities in 2019: | | | | | | | |
|
Operating cash flows from operating leases
|
| | |
$
|
(4,225)
|
| |
|
Operating cash flows from finance leases
|
| | |
|
(43)
|
| |
|
Financing cash flows from finance leases
|
| | |
|
(177)
|
| |
| | |
December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Machinery and equipment
|
| | | $ | 3,200 | | | | | $ | 2,870 | | |
Leasehold improvements
|
| | |
|
2,721
|
| | | |
|
2,485
|
| |
Other
|
| | |
|
2,197
|
| | | |
|
2,311
|
| |
Gross property and equipment
|
| | | | 8,118 | | | | | | 7,666 | | |
Less: accumulated depreciation and amortization
|
| | |
|
(4,568)
|
| | | |
|
(3,176)
|
| |
Total property and equipment, net
|
| | | $ | 3,550 | | | | | $ | 4,490 | | |
| | |
December 31, 2019
|
| |
December 31, 2018
|
| ||||||||||||||||||||||||||||||
| | |
Gross
Carrying Amount |
| |
Accumulated
Amortization |
| |
Net Book
Value |
| |
Gross
Carrying Amount |
| |
Accumulated
Amortization |
| |
Net Book
Value |
| ||||||||||||||||||
Finite-lived intangible assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Computer software
|
| | | $ | 7,701 | | | | | $ | (4,136) | | | | | $ | 3,565 | | | | | $ | 7,585 | | | | | $ | (2,524) | | | | | $ | 5,061 | | |
Customer relationship
|
| | |
|
59,375
|
| | | |
|
(8,712)
|
| | | |
|
50,663
|
| | | |
|
64,812
|
| | | |
|
(5,640)
|
| | | |
|
59,172
|
| |
Other
|
| | |
|
1,133
|
| | | |
|
(756)
|
| | | |
|
377
|
| | | |
|
1,675
|
| | | |
|
(431)
|
| | | |
|
1,244
|
| |
Total finite-lived intangible assets, net
|
| | |
|
68,209
|
| | | |
|
(13,604)
|
| | | |
|
54,605
|
| | | |
|
74,072
|
| | | |
|
(8,595)
|
| | | |
|
65,477
|
| |
Indefinite-lived intangible asset: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Trade names
|
| | |
|
2,801
|
| | | |
|
—
|
| | | |
|
2,801
|
| | | |
|
2,892
|
| | | |
|
—
|
| | | |
|
2,892
|
| |
Total Intangible assets, net
|
| | | $ | 71,010 | | | | | $ | (13,604) | | | | | $ | 57,406 | | | | | $ | 76,964 | | | | | $ | (8,595) | | | | | $ | 68,369 | | |
| | |
December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Accrued compensation and benefits
|
| | |
$
|
1,857
|
| | | |
$
|
1,407
|
| |
Costs related to issuance of Series A Convertible Preferred Stock
|
| | |
|
1,239
|
| | | |
|
—
|
| |
Goods in transit accrual
|
| | |
|
1,005
|
| | | |
|
1,775
|
| |
Obligations due under a distribution agreement
|
| | |
|
1,154
|
| | | |
|
—
|
| |
Other accrued liabilities
|
| | |
|
3,933
|
| | | |
|
3,522
|
| |
Total accrued expenses and other current liabilities
|
| | | $ | 9,188 | | | | | $ | 6,704 | | |
| | |
December 31, 2019
|
| |
December 31, 2018
|
| ||||||||||||||||||||||||||||||
| | |
Outstanding
Principal |
| |
Unamortized
Discount and Deferred Financing Costs |
| |
Net Carrying
Amount |
| |
Outstanding
Principal |
| |
Unamortized
Discount and Deferred Financing Costs |
| |
Net Carrying
Amount |
| ||||||||||||||||||
Term loan
|
| | | $ | 85,111 | | | | | $ | (1,513) | | | | | $ | 83,598 | | | | | $ | 80,390 | | | | | $ | (1,173) | | | | | $ | 79,217 | | |
Line of credit
|
| | |
|
23,864
|
| | | |
|
(792)
|
| | | |
|
23,072
|
| | | |
|
20,742
|
| | | |
|
(470)
|
| | | |
|
20,272
|
| |
Other
|
| | |
|
1,262
|
| | | |
|
—
|
| | | |
|
1,262
|
| | | |
|
1,031
|
| | | |
|
—
|
| | | |
|
1,031
|
| |
Total debt
|
| | | | 110,237 | | | | | | (2,305) | | | | | | 107,932 | | | | | | 102,163 | | | | | | (1,643) | | | | | | 100,520 | | |
Current portion
|
| | |
|
34,827
|
| | | |
|
—
|
| | | |
|
34,827
|
| | | |
|
20,420
|
| | | |
|
(324)
|
| | | |
|
20,096
|
| |
Long term
|
| | |
|
75,410
|
| | | |
|
(2,305)
|
| | | |
|
73,105
|
| | | |
|
81,743
|
| | | |
|
(1,319)
|
| | | |
|
80,424
|
| |
Total debt
|
| | | $ | 110,237 | | | | | $ | (2,305) | | | | | $ | 107,932 | | | | | $ | 102,163 | | | | | $ | (1,643) | | | | | $ | 100,520 | | |
| Year ending December 31, | | | | | | | |
|
2020
|
| | |
$
|
34,396
|
| |
|
2021
|
| | |
|
1,819
|
| |
|
2022
|
| | |
|
73,192
|
| |
|
2023
|
| | |
|
31
|
| |
|
Total debt
|
| | | $ | 109,438 | | |
| | |
Finance lease
obligations |
| |
Debt excluding
finance leases |
| |
Total
|
| |||||||||
Current portion
|
| | | $ | 431 | | | | | $ | 34,396 | | | | |
$
|
34,827
|
| |
Long-term
|
| | | | 368 | | | | | | 75,042 | | | | |
|
75,410
|
| |
Total payments due
|
| | | $ | 799 | | | | | $ | 109,438 | | | | | $ | 110,237 | | |
|
| | |
Shares
authorized |
| |
Shares issued and
outstanding, or reserved for issuance |
| ||||||
Convertible preferred stock at $0.0001 par value per share
|
| | | | 50,000,000 | | | | | | 7,007,429 | | |
Common stock at $0.0001 par value per share
|
| | | | 350,000,000 | | | | | | 69,745,562 | | |
Common stock reserved for issuance: | | | | | | | | | | | | | |
Convertible preferred stock
|
| | | | | | | | | | 7,007,429 | | |
Warrants
|
| | | | | | | | | | 13,100,069 | | |
Stock options
|
| | | | | | | | | | 2,764,240 | | |
Restricted stock units
|
| | | | | | | | | | 6,137,610 | | |
|
Volatility
|
| |
30%
|
|
|
Risk-free rate
|
| |
1.37% to 2.49%
|
|
|
Dividend yield
|
| |
Nil
|
|
|
Expected term in years
|
| |
5.0 to 5.62
|
|
| | |
Number
|
| |
Weighted
average exercise price |
| |
Weighted
average grant date fair value |
| |
Weighted
average remaining contractual term |
| ||||||||||||
Granted
|
| | | | 3,231,819 | | | | | $ | 2.50 | | | | | $ | 0.21 | | | | | | | | |
Forfeited
|
| | | | (467,579) | | | | | $ | 2.50 | | | | | $ | 0.21 | | | | | | | | |
Exercised
|
| | | | — | | | | | | — | | | | | | | | | | | | | | |
Expired
|
| | | | — | | | | | | — | | | | | | | | | | | | | | |
Outstanding at December 31, 2019
|
| | | | 2,764,240 | | | | | $ | 2.50 | | | | | $ | 0.21 | | | | | | 9.27 | | |
Exercisable at December 31, 2019
|
| | | | 898,435 | | | | | $ | 2.50 | | | | | $ | 0.21 | | | | | | 9.15 | | |
Unvested at December 31, 2019
|
| | | | 1,865,805 | | | | | $ | 2.50 | | | | | $ | 0.22 | | | | | | 9.33 | | |
Vested and expected to vest at December 31, 2019
|
| | | | 2,764,240 | | | | | $ | 2.50 | | | | | $ | 0.21 | | | | | | 9.27 | | |
|
| | |
Years ended December 31,
|
| |||||||||||||||||||||
| | | | | | | | |
2018
|
| |||||||||||||||
| | |
2019
|
| |
As restated
and reclassified |
| |
Adjustments
|
| |
As previously
reported |
| ||||||||||||
United States
|
| | |
$
|
(30,409)
|
| | | |
$
|
(31,493)
|
| | | | $ | (1,268) | | | | | $ | (30,225) | | |
Foreign
|
| | |
|
(10,365)
|
| | | |
|
(4,446)
|
| | | | | 528 | | | | | | (4,974) | | |
Loss from continuing operations before tax
|
| | | $ | (40,774) | | | | | $ | (35,939) | | | | | $ | (740) | | | | | $ | (35,199) | | |
| | |
Years ended December 31,
|
| |||||||||||||||||||||
| | | | | | | | |
2018
|
| |||||||||||||||
| | |
2019
|
| |
As restated
and reclassified |
| |
Adjustments
|
| |
As previously
reported |
| ||||||||||||
Current: | | | | | | | | | | | | | | | | | | | | | | | | | |
Federal
|
| | |
$
|
—
|
| | | |
$
|
216
|
| | | | $ | 216 | | | | | $ | — | | |
State
|
| | |
|
18
|
| | | |
|
79
|
| | | | | 18 | | | | | | 61 | | |
Foreign
|
| | |
|
9
|
| | | |
|
207
|
| | | | | (127) | | | | | | 334 | | |
Total current
|
| | |
|
27
|
| | | |
|
502
|
| | | | | 107 | | | | | | 395 | | |
Deferred: | | | | | | | | | | | | | | | | | | | | | | | | | |
Federal
|
| | |
|
—
|
| | | |
|
269
|
| | | | | 269 | | | | | | — | | |
State
|
| | |
|
—
|
| | | |
|
—
|
| | | | | — | | | | | | — | | |
Foreign
|
| | |
|
(718)
|
| | | |
|
(1,168)
|
| | | | | (875) | | | | | | (293) | | |
Total deferred tax benefit
|
| | |
|
(718)
|
| | | |
|
(899)
|
| | | | | (606) | | | | | | (293) | | |
Total income tax (benefit) expense
|
| | | $ | (691) | | | | | $ | (397) | | | | | $ | (499) | | | | | $ | 102 | | |
|
| | |
Years ended December 31,
|
| |||||||||||||||||||||
| | | | | | | | |
2018
|
| |||||||||||||||
| | |
2019
|
| |
As restated
and reclassified |
| |
Adjustments
|
| |
As previously
reported |
| ||||||||||||
Effective rate reconciliation | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. federal tax benefit at statutory rate
|
| | |
$
|
(8,563)
|
| | | |
$
|
(7,547)
|
| | | | $ | (155) | | | | | $ | (7,392) | | |
State income taxes, net
|
| | |
|
(1,247)
|
| | | |
|
(1,009)
|
| | | | | 466 | | | | | | (1,475) | | |
Permanent items
|
| | |
|
89
|
| | | |
|
1,692
|
| | | | | (153) | | | | | | 1,845 | | |
Foreign rate differential
|
| | |
|
(891)
|
| | | |
|
(590)
|
| | | | | (477) | | | | | | (113) | | |
Deferred adjustments
|
| | |
|
563
|
| | | |
|
—
|
| | | | | — | | | | | | — | | |
Tax entity classification adjustment
|
| | |
|
—
|
| | | |
|
(1,927)
|
| | | | | 342 | | | | | | (2,269) | | |
Non controlling interest
|
| | |
|
—
|
| | | |
|
433
|
| | | | | — | | | | | | 433 | | |
Valuation allowance
|
| | |
|
9,358
|
| | | |
|
6,370
|
| | | | | (2,663) | | | | | | 9,033 | | |
Other, net
|
| | |
|
—
|
| | | |
|
2,181
|
| | | | | 2,141 | | | | | | 40 | | |
Total income tax (benefit) expense
|
| | | $ | (691) | | | | | $ | (397) | | | | | $ | (499) | | | | | $ | 102 | | |
| | |
As of December 31,
|
| |||||||||||||||||||||
| | | | | | | | |
2018
|
| |||||||||||||||
| | |
2019
|
| |
As restated
and reclassified |
| |
Adjustments
|
| |
As previously
reported |
| ||||||||||||
Deferred tax assets | | | | | | | | | | | | | | | | | | | | | | | | | |
Lease liabilities
|
| | |
$
|
4,836
|
| | | |
$
|
—
|
| | | | $ | — | | | | | $ | — | | |
Accrued expenses
|
| | |
|
1,129
|
| | | |
|
1,385
|
| | | | | 641 | | | | | | 744 | | |
Intangible assets
|
| | |
|
10,602
|
| | | |
|
11,139
|
| | | | | (4,195) | | | | | | 15,334 | | |
Net operating loss
|
| | |
|
17,589
|
| | | |
|
10,312
|
| | | | | 2,972 | | | | | | 7,340 | | |
Inventories
|
| | |
|
3,022
|
| | | |
|
3,434
|
| | | | | 3,248 | | | | | | 186 | | |
Interest expense
|
| | |
|
3,746
|
| | | |
|
989
|
| | | | | (2,118) | | | | | | 3,107 | | |
Other
|
| | |
|
—
|
| | | |
|
104
|
| | | | | 104 | | | | | | — | | |
Deferred tax assets
|
| | |
|
40,924
|
| | | |
|
27,363
|
| | | | | 652 | | | | | | 26,711 | | |
Valuation allowance
|
| | |
|
(34,746)
|
| | | |
|
(25,388)
|
| | | | | 190 | | | | | | (25,578) | | |
Total deferred tax assets
|
| | |
|
6,178
|
| | | |
|
1,975
|
| | | | | 842 | | | | | | 1,133 | | |
Deferred tax liabilities | | | | | | | | | | | | | | | | | | | | | | | | | |
Intangible assets, trade names
|
| | |
|
—
|
| | | |
|
(1,205)
|
| | | | | (34) | | | | | | (1,171) | | |
Property and equipment
|
| | |
|
(1,054)
|
| | | |
|
(1,118)
|
| | | | | (554) | | | | | | (564) | | |
Operating lease right-of-use assets
|
| | |
|
(4,729)
|
| | | |
|
—
|
| | | | | — | | | | | | — | | |
Other
|
| | |
|
—
|
| | | |
|
—
|
| | | | | 1,311 | | | | | | (1,311) | | |
Total deferred tax liabilities
|
| | |
|
(5,783)
|
| | | |
|
(2,323)
|
| | | | | 723 | | | | | | (3,046) | | |
Net deferred tax assets (liabilities)
|
| | | $ | 395 | | | | | $ | (348) | | | | | $ | 1,565 | | | | | $ | (1,913) | | |
|
| | |
As of December 31,
|
| |||||||||||||||||||||
| | | | | | | | |
2018
|
| |||||||||||||||
| | |
2019
|
| |
As restated
and reclassified |
| |
Adjustments
|
| |
As previously
reported |
| ||||||||||||
Deferred income tax assets included in other current assets
|
| | |
$
|
—
|
| | | |
$
|
—
|
| | | | $ | (429) | | | | | $ | 429 | | |
Deferred income tax assets included in other long-term assets
|
| | |
|
395
|
| | | |
|
533
|
| | | | | 533 | | | | | | — | | |
Deferred income tax liabilities
|
| | |
|
—
|
| | | |
|
(881)
|
| | | | | 1,461 | | | | | | (2,342) | | |
Net deferred tax assets (liabilities)
|
| | | $ | 395 | | | | | $ | (348) | | | | | $ | 1,565 | | | | | $ | (1,913) | | |
| | |
December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Balance at beginning of year
|
| | |
$
|
—
|
| | | |
$
|
1,538
|
| |
Change in contingent consideration payable
|
| | |
|
—
|
| | | |
|
(1,538)
|
| |
Balance at end of year
|
| | | $ | — | | | | | $ | — | | |
| | |
For the years ended December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Impairment of intangible assets
|
| | |
$
|
5,390
|
| | | |
$
|
2,716
|
| |
Restructuring costs
|
| | |
|
1,973
|
| | | |
|
3,431
|
| |
Costs related to SEC filings
|
| | |
|
1,080
|
| | | |
|
776
|
| |
Severance costs
|
| | |
|
784
|
| | | |
|
—
|
| |
Costs related to early termination of leases, net of gains
|
| | |
|
337
|
| | | |
|
—
|
| |
Other, net
|
| | |
|
471
|
| | | |
|
246
|
| |
Total impairment, restructuring and other
|
| | | $ | 10,035 | | | | | $ | 7,169 | | |
| | |
Balance as of
beginning of year |
| |
Provision/
(Benefit) |
| |
Deductions
|
| |
Balance as of
end of year |
| ||||||||||||
Year ended December 31, 2019 | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for doubtful accounts
|
| | |
$
|
1,227
|
| | | | $ | 933 | | | | | $ | (384) | | | | |
$
|
1,776
|
| |
Allowance for inventory obsolescence
|
| | |
|
3,219
|
| | | | | 707 | | | | | | (104) | | | | |
|
3,822
|
| |
Year ended December 31, 2018 | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for doubtful accounts
|
| | |
|
2,955
|
| | | | | 534 | | | | | | (2,262) | | | | |
|
1,227
|
| |
Allowance for inventory obsolescence
|
| | |
|
4,618
|
| | | | | (824) | | | | | | (575) | | | | |
|
3,219
|
| |
|
SEC registration fee
|
| | | $ | * | | |
|
Accounting fees and expenses
|
| | | | * | | |
|
Legal fees and expenses
|
| | | | * | | |
|
Printing expenses
|
| | | | * | | |
|
Transfer agent and registrar fees and expenses
|
| | | | * | | |
|
Miscellaneous fees and expenses
|
| | | | * | | |
|
Total
|
| | | $ | * | | |
Exhibit
|
| |
Description
|
|
1.1* | | | Form of Underwriting Agreement. | |
2.1* | | | Amended and Restated Agreement and Plan of Merger, dated August 28, 2018, by and among Hydrofarm Holdings Group, Inc., Hydrofarm Merger Sub, Inc. and Hydrofarm Investment Corp. | |
3.1* | | | Amended and Restated Certificate of Incorporation of Hydrofarm Holdings Group LLC. | |
3.2* | | | Certificate of Designations, Preferences and Rights of the Series A Convertible Preferred Stock of Hydrofarm Holdings Group LLC. | |
3.3* | | | Amended and Restated Bylaws. | |
4.1* | | | Specimen Common Stock Certificate of the Hydrofarm Holdings Group LLC. | |
4.2* | | | Form of Warrant To Purchase Common Stock. | |
4.3* | | | Form of Placement Agent Warrant to Purchase Common Stock. | |
4.4* | | | Registration Rights Agreement from Private Placement, dated August 28, 2018, by and among Hydrofarm Holdings Group LLC and certain of its stockholders identified on the signature pages thereto. | |
4.5* | | | Investor Rights Agreement, dated August 28, 2018, by and among Hydrofarm Holdings LLC and certain of its stockholders identified on the signature pages thereto. | |
5.1* | | | Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. | |
10.1* | | | Loan And Security Agreement, dated May 12, 2017, by and between Hydrofarm Holdings, LLC, and Bank of America, N.A. | |
10.2* | | | Amended and Restated Loan and Security Agreement, dated November 8, 2017, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, WJCO, LLC, EHH Holdings, LLC, SunBlaster LLC, GS Distribution Inc., SunBlaster Holdings ULC, EWGS Distribution Inc., and Bank of America, N.A. | |
10.3* | | | Forbearance Agreement and First Amendment to Amended and Restated Loan and Security Agreement, dated May 18, 2018, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, WJCO, LLC, Hydrofarm Canada, LLC, GS Distribution Inc., Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC, and Bank of America, N.A. | |
10.4* | | | First Amendment To Forbearance Agreement And Second Amendment To Amended And Restated Loan And Security Agreement, dated July 16, 2018, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, WJCO LLC, Hydrofarm Canada, LLC, GS Distribution INC., Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC, and Bank of America, N.A. | |
10.5* | | | Waiver And Third Amendment To Amended And Restated Loan And Security Agreement, dated August 24, 2018, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, Hydrofarm Canada, LLC, GS Distribution Inc., Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC, and Bank of America, N.A. | |
10.6* | | | Fourth Amendment To Amended And Restated Loan And Security Agreement, dated March 15, 2019, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC, and Bank of America, N.A. | |
Exhibit
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Description
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10.7* | | | Fifth Amendment To Amended And Restated Loan And Security Agreement, dated May 31, 2019, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC, and Bank of America, N.A. | |
10.8* | | | Sixth Amendment To Amended And Restated Loan And Security Agreement, dated June 10, 2019, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC, and Bank of America, N.A. | |
10.9* | | | Seventh Amendment To Amended And Restated Loan And Security Agreement, dated June 10, 2019, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC, and Bank of America, N.A. | |
10.10* | | | Credit Agreement dated, May 12, 2017, by and between Hydrofarm Holdings LLC and Brightwood Loan Services, LLC. | |
10.11* | | | Forbearance Agreement and Amendment to Credit Agreement, dated May 18, 2018, by and among Hydrofarm Holdings LLC, Hydrofarm, WJCO LLC, EHH Holdings, LLC, SunBlaster LLC, and Brightwood Loan Services, LLC. | |
10.12* | | | Amendment No. 1 Forbearance Agreement, dated July 16, 2018, by and among Hydrofarm Holdings LLC, Hydrofarm, WJCO LLC, EHH Holdings, LLC, SunBlaster LLC, and Brightwood Loan Services, LLC. | |
10.13* | | | Amendment No. 2 to Credit Agreement, dated November 8, 2017, by and among Hydrofarm Holdings, LLC, Hydrofarm, LLC, WJCO LLC, EHH Holdings, LLC, SunBlaster, LLC and Brightwood Loan Services LLC and the lenders party thereto. | |
10.14* | | | Waiver And Amendment No. 3 to Credit Agreement, dated August 24, 2018, by and among Hydrofarm Holdings LLC, Hydrofarm, EHH Holdings, LLC, SunBlaster LLC, and Brightwood Loan Services, LLC. | |
10.15* | | | Amendment No. 4 to Credit Agreement, dated March 15, 2018, by and among Hydrofarm Holdings LLC, Hydrofarm, EHH Holdings, LLC, SunBlaster LLC, and Brightwood Loan Services, LLC. | |
10.16* | | | Amendment No. 5 to Credit Agreement, dated July 11, 2019, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, and Brightwood Loan Services, LLC. | |
10.17* | | | Loan And Security Agreement, dated July 11, 2019, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC and Encina Business Credit, LLC. | |
10.18+* | | | Intercreditor Agreement, dated July 11, 2019, by and between Brightwood Loan Services, LLC and Encina Business Credit, LLC. | |
10.19+* | | | Employment Agreement, dated April 10, 2017, by and between Hydrofarm Holdings Group LLC and Peter Wardenburg. | |
10.20+* | | | Employment Agreement, dated April 28, 2018, by and between Hydrofarm Holdings Group LLC and Bob Clamp. | |
10.21+* | | | Employment Agreement, dated April 10, 2017, by and between Hydrofarm Holdings Group LLC and Jeffrey Peterson. | |
10.22+* | | | Employment Agreement, dated January 1, 2019, by and between Hydrofarm Holdings Group LLC and Bill Toler. | |
Exhibit
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Description
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10.23+* | | | Employment Agreement, dated March 4, 2019, by and between Hydrofarm Holdings Group LLC and Terence Fitch. | |
10.24+* | | | Offer Letter, dated February 26, 2020, by and between Hydrofarm Holdings Group LLC and John Lindeman. | |
10.25+* | | | Hydrofarm Holdings Group, Inc. 2018 Equity Incentive Plan. | |
10.26+* | | | Form of Hydrofarm Holdings Group, Inc. 2018 Equity Incentive Plan Stock Option Grant Notice. | |
10.27* | | | Form of Director and Officer Indemnification Agreements. | |
10.28* | | | Placement Agency Agreement, dated August 3, 2018, by and among Hydrofarm Holdings Group LLC, Hydrofarm Investment Corp. and A.G.P./Alliance Global Partners, as lead placement agent, and Aegis Capital Corp., as co-placement agent. | |
10.29* | | | Amendment No. 6 to Credit Agreement, dated October 15, 2019, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, and Brightwood Loan Services, LLC. | |
10.30+* | | | Hydrofarm Holdings Group, Inc. 2019 Equity Incentive Plan. | |
10.31+* | | | Form of Hydrofarm Holdings Group, Inc. 2019 Equity Incentive Plan Stock Option Grant Notice. | |
10.32* | | | Second Amendment to Loan And Security Agreement, dated November 26, 2019, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC and Encina Business Credit, LLC. | |
10.33* | | | Third Amendment to Loan And Security Agreement, dated April 3, 2020, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC and Encina Business Credit, LLC. | |
10.34* | | | Fourth Amendment to Loan And Security Agreement, dated May 29, 2020, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC and Encina Business Credit, LLC. | |
10.35* | | | Fifth Amendment to Loan And Security Agreement, dated May 30, 2020, by and among Hydrofarm Holdings LLC, Hydrofarm, LLC, EHH Holdings, LLC, SunBlaster LLC, Hydrofarm Canada, LLC, Eddi’s Wholesale Garden Supplies Ltd., SunBlaster Holdings ULC and Encina Business Credit, LLC. | |
21.1* | | | Subsidiaries of Hydrofarm Holdings Group LLC. | |
23.1* | | | Consent of Deloitte & Touche LLP, independent registered public accounting firm. | |
23.2* | | | Consent of MNP, LLP, independent registered public accounting firm. | |
23.3* | | | Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (included in Exhibit 5.1). | |
24.1* | | | Power of Attorney (included on signature page to initial filing). | |
|
Name
|
| |
Title
|
| |
Date
|
|
|
William Toler
|
| |
Chief Executive Officer and Chairman of the Board
(Principal Executive Officer) |
| |
, 2020
|
|
|
Terence Fitch
|
| | President | | |
, 2020
|
|
|
John Lindeman
|
| |
Chief Financial Officer
(Principal Financial and Accounting Officer) |
| |
, 2020
|
|
|
Chris Payne
|
| | Director | | |
, 2020
|
|
|
Michael Rapoport
|
| | Director | | |
, 2020
|
|
|
Peter Wardenburg
|
| | Vice Chairman of the Board | | |
, 2020
|
|
|
Name
|
| |
Title
|
| |
Date
|
|
|
Adam Stern
|
| | Director | | |
, 2020
|
|
|
John Tomes
|
| | Director | | |
, 2020
|
|