Company: GROVW
Filing Date: 2025-03-19
Form Type: 10-K
Source: 0001628280-25-013839
Chunk: 121

Company: Grove Collaborative Holdings, Inc.
Filing Date: 2025-03-19
Form: 10-K
Item: Item 7
Chunk 121
---
 any issuance of HGI Additional Shares in connection with the Measurement Periods such that HGI could utilize, for example, half of the Subscribed Shares to receive further HGI Additional Shares, and leave the remaining half of the Subscribed Shares available to utilize in connection with the remaining Measurement Periods. HGI was required to elect to receive HGI Additional Shares for one Measurement Period, or the right lapsed or was superseded by the next measurement period.

The HGI Additional Shares were accounted for as a liability classified instruments under ASC Topic 480 as the fair value of the obligation to issue the HGI Additional Shares varies inversely to the fair value of our common stock. The HGI Additional Shares liability was measured at each reporting date until settled. Changes in the fair value were recorded in the consolidated statements of operations. The HGI Additional Shares Liability was settled in August 2023.

Structural Derivative Liability

On December 21, 2022, in connection with the closing of the Structural Debt Facility, we issued to the third-party lenders and certain of their affiliates a total of 990,000 shares of our Class A Common Stock (the “Structural Closing Shares”). We recorded a debt discount of $1.1 million related to the issuance of these shares, with a corresponding offset to our Class A Common Stock and additional paid-in capital. Further, had there been outstanding obligations relating to the Structural Debt Facility on July 21, 2025, the Company was to issue to Structural Funds, including certain affiliates, and to Avenue, additional shares of the Company’s Class A Common Stock ("Structural Subsequent Shares”). Pursuant to the related issuance agreements, we agreed to register the Structural Closing Shares and, if applicable, the Structural Subsequent Shares for resale under the Securities Act by filing with the Securities and Exchange Commission one or more registration statements. We have also agreed to give such third-party lenders and relevant affiliates customary “piggyback” registration rights.

We have identified several features within the Structural Debt Facility consisting of the contingent obligation to issue the Structural Subsequent Shares, mandatory and voluntary prepayment features and default interest rate (“Structural Derivative Liability”), which are within the scope of ASC Topic 815 (“ASC 815”) and are required to be bifurcated and accounted for as a compound embedded derivative at fair value.

The Structural Derivative Liability is a compound embedded derivative related to features within the Structural Facility, including an increase in interest rate upon an event of default and the contingent issuance of Structural Subsequent Shares