What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-03-07 compared with 2023-03-03 · 492 added, 453 removed, 659 unchanged (59% of the section changed)

35 unchanged sentences

We have served as the Company’s auditor since 2018.

March XX , 2023

The Woodlands, TX

March 7, 2024

Consolidated Balance Sheets

2 unchanged sentences

Cash and cash equivalents $ 14,645 $ 9,737

Accounts receivable, net of allowances of $ 4,603 and $ 41,401 at December 31, 2022 and 2021, respectively

Deferred rents receivable 704 1,678

Note receivable, current portion 2,637 127

Accounts receivable, net 7,199 4,157

Inventory 25,306 19,477

Investments, current 123 251

Deferred rents receivable 630 704

Notes receivable, current portion 52 2,637

Investments, current portion 88 123

Due from related parties 105 29

4 unchanged sentences

Goodwill 11,993 8,079

Note receivable, net of current 7,467 8,987

Investments, net of current portion 221 —

Notes receivable, net of current portion 814 7,467

Operating lease right-of-use assets 9,716 4,931

Finance right-of-use assets 713 46

Finance lease right-of-use assets 3,295 713

Other assets 12,537 1,024

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Total current liabilities 30,862 26,490

Mortgages and notes payable, net of current 25,943 17,262

Operating lease liabilities, net of current 4,173 4,574

Finance lease liabilities, net of current 461 22

Mortgages and notes payable, net of current portion 65,652 25,943

Operating lease liabilities, net of current portion 8,455 4,173

Finance lease liabilities, net of current portion 2,140 461

Other liabilities 100 100

Total liabilities 107,209 57,167

Commitments and contingencies

Mezzanine equity:

4 unchanged sentences

12,432,432 shares authorized;

6,216,216 shares issued and outstanding at December 31, 2022 and 2021

23,000 23,000

1,155,274 and 6,216,216 shares issued and outstanding at December 31, 2023 and 2022, respectively

Total mezzanine equity 19,000 37,725

7 unchanged sentences

Common stock subscribed but not issued;

70,000 and zero shares at December 31, 2022 and 2021, respectively

zero and 70,000 shares at December 31, 2022 and 2021, respectively

Additional paid-in capital 171,144 142,365

21 unchanged sentences

Interest income 270 959

Loss on extinguishment of debt ( 10,431 ) —

Other expense, net ( 1,635 ) ( 127 )

Total interest and other expense, net ( 20,981 ) ( 861 )

Income before income taxes 19,508 23,816

(Loss) income before income taxes ( 6,596 ) 19,508

Provision for income taxes 9,411 5,894

Net income 13,614 7,624

Net (loss) income ( 16,007 ) 13,614

Net income attributable to noncontrolling interests 24 146

Net income attributable to common stockholders $ 13,468 $ 7,225

Net income per share attributable to common stockholders:

Net (loss) income attributable to common stockholders $ ( 16,031 ) $ 13,468

Net (loss) income per share attributable to common stockholders:

Basic $ ( 0.04 ) $ 0.04

9 unchanged sentences

Balances at January 1, 2022 334,030,348 $ 334 — $ — $ 134,920 $ ( 97,392 ) $ ( 1,563 ) $ 36,299

Issuance of subscribed shares 11,413 ( 11,413 ) ( 5 ) 5 —

Release of shares under stock grants 402,203 — — — — — — —

Exercise of stock options 55,000 — — — 10 — — 10

Exercise of warrants 980,062 1 92 93

Amortization of option grants 12,494 12,494

Issuance of stand-alone warrants 832 832

Issuance of warrants with stock 655 655

Conversion of debentures payable to equity 4,610,645 5 1,352 1,357

Conversion of promissory notes to equity 11,399,268 11 3,810 3,821

Common stock issued to settle obligations 71,691 54 54

Common stock issued to purchase property and equipment 750,000 1 704 705

Fees paid with stock 1,234,308 2 1,106 1,108

Common stock returned to the Company ( 79,815 ) ( 10 ) ( 10 )

Equity issuance costs ( 387 ) ( 387 )

Acquisition of interest in subsidiary 100,000 965 ( 975 ) ( 10 )

Distributions to noncontrolling interests ( 410 ) ( 410 )

Net income 7,225 399 7,624

Balances at December 31, 2021 334,030,348 $ 334 — $ — $ 134,920 $ ( 97,392 ) $ ( 1,563 ) $ 36,299

Release of shares under stock grants 402,203 —

Exercise of stock options 55,000 10 10

Cashless exercise of stock options 200,000 — — — — — — —

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Balances at December 31, 2022 341,474,728 $ 341 70,000 $ 39 $ 142,365 $ ( 83,924 ) $ ( 1,511 ) $ 57,310

Common stock subscribed but not issued — — 5,025 2 — — — 2

Issuance of subscribed shares 75,025 — ( 75,025 ) ( 41 ) 41 — — —

Release of shares under stock grants 599,999 1 — — ( 1 ) — — —

Exercise of stock options 487,752 — — — 109 — — 109

Warrants issued in connection with debt — — — — 5,454 — — 5,454

Conversion of preferred stock to common stock 25,304,710 25 — — 18,700 — — 18,725

Common stock issued to settle obligations 400,000 — — — 160 — — 160

Common stock issued under licensing agreement 13,007 — — — 5 — — 5

Common stock issued to purchase property and equipment 740,741 1 — — 299 — — 300

Common stock issued as purchase consideration - Ermont Inc.

6,580,390 7 — — 2,987 — — 2,994

Purchase of minority interest in a subsidiary of the Company 450,000 1 — — 4 — ( 5 ) —

Common stock returned to the Company in connection with a cancelled transaction ( 1,000,000 ) ( 1 ) — — 1 — — —

Distributions to noncontrolling interests — — — — — — ( 158 ) ( 158 )

Stock-based compensation — — — — 1,020 — — 1,020

Net income — — — — — ( 16,031 ) 24 ( 16,007 )

Balances at December 31, 2023 375,126,352 $ 375 — $ — $ 171,144 $ ( 99,955 ) $ ( 1,650 ) $ 69,914

See accompanying notes to the consolidated financial statements.

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Cash flows from operating activities:

Net income attributable to common stockholders $ 13,468 $ 7,225

Net (loss) income attributable to common stockholders $ ( 16,031 ) $ 13,468

Net income attributable to noncontrolling interests 24 146

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization of property and equipment 5,549 3,432

1 unchanged sentence

Stock-based compensation 1,020 6,338

Amortization of standalone warrant issuances — 776

Amortization of warrants attached to debt — 539

Amortization of beneficial conversion feature — 177

Amortization of original issue discount — 52

Amortization of original debt issuance discount 232 —

Amortization of debt discount 2,851 —

Payment-in-kind interest 366 —

Present value adjustment of notes payable — —

Bad debt expense 118 3,752

Obligations settled with common stock 465 696

Loss on obligations settled with equity — 3

Gain on sale of investment — ( 309 )

Write-off of disposed assets 906 —

Gain on finance lease adjustment ( 31 ) —

Write-down of prepaid purchase consideration 200 —

Loss on extinguishment of debt 10,431 —

Loss on changes in fair value of investments 76 1,082

1 unchanged sentence

Changes in operating assets and liabilities:

Accounts receivable ( 6,902 ) ( 4,697 )

Deferred rents receivable 132 262

Accounts receivable, net ( 3,160 ) ( 6,902 )

Inventory ( 5,829 ) ( 5,383 )

Deferred rents receivable 74 132

Other current assets 4,500 ( 5,219 )

8 unchanged sentences

Advances toward future business acquisitions ( 1,125 ) ( 800 )

Acquisition of interest in subsidiary — ( 10 )

Purchases of investments ( 261 ) —

Purchases of cannabis licenses ( 626 ) ( 601 )

Proceeds from sale of investment — 1,475

Issuance of notes receivable ( 879 ) —

Proceeds from notes receivable 99 173

2 unchanged sentences

Cash flows from financing activities:

Proceeds from issuance of preferred stock — 23,000

Equity issuance costs — ( 387 )

Proceeds from issuance of promissory notes — 35

Principal payments of mortgages and promissory notes ( 1,537 ) ( 16,424 )

Proceeds from term loan 29,100 —

Proceeds from Construction to Permanent Commercial Real Estate Mortgage Loan 53,618 —

Proceeds from mortgages — 3,000

Payment of third-party debt issuance costs in connection with debt ( 3,339 ) —

Principal payments of term loan ( 1,800 ) —

Repayment and retirement of term loan, including paid-in-kind interest ( 28,541 ) —

Payment of penalties on early retirement of debt ( 4,251 ) —

Principal payments of mortgages ( 585 ) ( 945 )

Repayment and retirement of mortgages ( 12,595 ) —

Principal payments of promissory notes ( 2,370 ) ( 592 )

Repayment and retirement of promissory notes ( 5,503 ) —

Proceeds from exercise of stock options 109 10

Proceeds from exercise of warrants — 93

Repayment of loans from related parties — ( 1,158 )

Principal payments of finance leases ( 702 ) ( 227 )

1 unchanged sentence

Distributions ( 158 ) ( 259 )

Net cash (used in) provided by financing activities ( 1,013 ) 7,453

Net (decrease) increase to cash and cash equivalents ( 19,946 ) 26,684

Net cash provided by (used in) financing activities 22,983 ( 1,013 )

Net increase (decrease) to cash and cash equivalents 4,908 ( 19,946 )

Cash and cash equivalents at beginning of year 9,737 29,683

5 unchanged sentences

Trade receivables converted to notes receivable $ — $ 750

Purchases of property and equipment with common stock $ 300 $ 705

Conversion of promissory notes $ 400 $ 3,821

Promissory note issued as purchase consideration $ 4,348 $ —

Common stock issued to purchase property and equipment $ 300 $ 300

Conversion of promissory notes to equity $ — $ 400

Present value of promissory notes issued as purchase consideration $ 4,569 $ 4,348

Entry into new operating leases $ 5,604 $ 661

Entry into new finance leases $ 3,235 $ 794

Conversion of debentures payable $ — $ 1,356

Common stock issued as purchase consideration $ 2,994 $ 2,212

Common stock issued to purchase minority interest in a subsidiary of the Company $ 5 $ —

Warrants to issue common stock issued with debt $ 5,454 $ —

Notes payable issued to purchase motor vehicles $ 158 $ —

Common stock issued to settle obligations $ 160 $ 275

1 unchanged sentence

Issuance of common stock associated with subscriptions $ 41 $ —

Return of common stock to the Company $ — $ 10

Conversion of preferred stock to common stock $ 18,725 $ —

Conversion of notes receivable to omnibus long-lived asset $ 10,233 $ —

Liability recorded for building improvements $ 1,997 $ —

See accompanying notes to the consolidated financial statements.

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The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

On March 9, 2023 (the "Ermont Acquisition Date"), the Company acquired the operating assets of Ermont, Inc.

("Ermont"), a medical-licensed vertical cannabis operator located in Quincy, Massachusetts (the "Ermont Acquisition").

The financial results of Ermont are included in the Company's consolidated financial statements since the Ermont Acquisition Date.

On April 27, 2022 (the “Kind Acquisition Date”), the Company acquired Kind Therapeutics USA (“Kind”), the Company's former client in Maryland that holds licenses for the cultivation, production, and dispensing of medical cannabis (the “Kind Acquisition”).

The financial results of Kind are included in the Company's consolidated financial statements for the periods subsequent to the Kind Acquisition Date.

The Company completed two acquisitions during the year ended December 31, 2022 that it recorded as asset purchases.

On May 5, 2022 (the "Green Growth Acquisition Date"), the Company completed the acquisition of 100 % of the equity ownership of Green Growth Group Inc.

(“Green Growth”), an entity that holds a craft cultivation and production cannabis license in the state of Illinois (the “Green Growth Acquisition”).

The financial results of Green Growth are included in the Company's consolidated financial statements for the period subsequent to the Green Growth Acquisition Date.

On December 30, 2022 (the "Greenhouse Naturals Acquisition Date"), the Company completed an asset purchase under which it acquired the cannabis license and assumed a property lease for a dispensary in Beverly, Massachusetts that had never been operational.

Certain reclassifications, not affecting previously reported net income or cash flows, have been made to the previously issued financial statements to conform to the current period presentation.

10 unchanged sentences

Mari Holdings NJ LLC 100.0 %

Mari Holdings NV LLC 100.0 %

Mari Holdings Metropolis LLC 70.0 %

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Vernon LLC 100.0 %

Mari Mfg LLC 100.0 %

Hartwell Realty Holdings LLC 100.0 %

iRollie LLC 100.0 %

Kind Therapeutics USA LLC 100.0 %

ARL Healthcare Inc.

8 unchanged sentences

Noncontrolling interests represent third-party minority ownership of the Company’s consolidated subsidiaries.

Net income attributable to noncontrolling interests is shown in the consolidated statements of operations;

and the value of net assets owned by noncontrolling interests are presented as a component of equity within the balance sheets.

Net income attributable to noncontrolling interests is shown in the consolidated statements of operations and the value of net assets owned by noncontrolling interests are presented as a component of equity within the balance sheets.

Use of Estimates and Judgments

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The fair values of these investments approximate their carrying values.

At December 31, 2022, the Company had $ 0.1 million of cash held in escrow.

At December 31, 2021, the Company had $ 5.1 million of cash held in escrow related to planned business acquisitions, which was primarily comprised of a $ 5.0 million escrow deposit in connection with the Kind Acquisition (see Note 3).

At each of December 31, 2023 and 2022, the Company had $ 0.1 million of cash held in escrow.

The Company’s cash and cash equivalents are maintained with recognized financial institutions located in the United States.

2 unchanged sentences

Fair Value of Financial Instruments

The carrying amounts of the Company's financial instruments approximate their fair values and include cash equivalents, accounts receivable, deferred rents receivable, notes receivable, investments, mortgages and notes payable, and accounts payable.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

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Such evaluations include the review of a client’s outstanding balances with consideration towards such client’s historical collection experience, as well as prevailing economic and market conditions and other factors.

Based on such evaluations, the Company maintained a reserve of $ 4.6 million and $ 41.4 million at December 31, 2022 and 2021, respectively.

The amount recorded at December 31, 2021 was comprised of $ 29.0 million to fully reserve a related party trade receivable from GenCanna Global Inc.

("GenCanna") (see Note 21), $ 11.3 million reserved against a related party trade receivable from Kind (the "Kind Reserve") and $ 1.1 million reserved against the Company's other trade accounts receivable.

The Company wrote off the trade receivable from GenCanna against the reserve in 2022, and the Kind Reserve was eliminated as part of the purchase accounting related to the Kind Acquisition (see Note 3).

Based on such evaluations, the Company maintained reserves of $ 0.8 million and $ 4.6 million at December 31, 2023 and 2022, respectively.

Inventory is carried at the lower of cost or net realizable value, with the cost being determined on a first-in, first-out basis.

24 unchanged sentences

Rental income is generally a fixed amount per month that escalates over the respective lease terms.

Prior to the third quarter of 2022, the Company charged additional rental fees based on a percentage of tenant revenues that exceeded specific amounts;

Prior to the third quarter of 2022, the Company charged additional rental fees based on a percentage of tenant revenue that exceeded specific amounts;

these incremental rental fees were eliminated in connection with new contract negotiations with the Company's client.

2 unchanged sentences

• Management fees – fees for providing the Company’s cannabis clients with comprehensive oversight of their cannabis cultivation, production and dispensary operations.

Prior to the third quarter of 2022, these fees are based on a percentage of such clients’ revenue and are recognized after services have been performed;

Prior to the third quarter of 2022, these fees were based on a percentage of such clients’ revenue and are recognized after services have been performed;

these fees were eliminated in connection with new contract negotiations with the Company's client.

2 unchanged sentences

Research and Development Costs

Research and development costs are charged to operations as incurred.

Research and development costs are expensed as incurred.

Advertising Costs

Advertising costs are expensed as incurred.

Property and Equipment

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The Company evaluates the recoverability of its fixed assets and other assets in accordance with ASC 360-10-15, Impairment or Disposal of Long-Lived Assets .

Impairment of long-lived assets is recognized when the net book value of such assets exceeds their expected cash flows, in which case the assets are written down to fair value, which is determined based on discounted future cash flows or appraised values.

Impairment of long-lived assets is recognized when the net book value of

such assets exceeds their expected cash flows, in which case the assets are written down to fair value, which is determined based on discounted future cash flows or appraised values.

Stock-Based Compensation

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The volatility factors are based on the historical two-year movement of the Company’s common stock prior to an instrument’s issuance date.

The risk-free interest rate is based on U.S.

Treasury rates with maturity periods similar to the expected instruments life on the issuance date.

The risk-free interest rate is based on United States Treasury rates with maturity periods similar to the expected instruments life on the issuance date.

The Company amortizes the fair value of option, warrant issuances and restricted stock units on a straight-line basis over the requisite service period of each instrument.

14 unchanged sentences

The Company follows ASC 850, Related Party Disclosures , for the identification of related parties and disclosure of related party transactions.

In accordance with ASC 850, the Company’s financial statements include disclosures of

material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business, as well as transactions that are eliminated in the preparation of financial statements.

In accordance with ASC 850, the Company’s financial statements include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business, as well as transactions that are eliminated in the preparation of financial statements.

Comprehensive Income

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While not assured, management does not believe, based upon information available at this time, that any loss contingency will have material adverse effect on the Company’s financial position, results of operations or cash flows.

Beneficial Conversion Features on Convertible Debt

Convertible instruments that are not bifurcated as a derivative pursuant to ASC 815, Derivatives and Hedging , and not accounted for as a separate equity component under the cash conversion guidance are evaluated to determine whether their conversion prices create an embedded beneficial conversion feature at inception, or may become beneficial in the future due to potential adjustments.

A beneficial conversion feature is a nondetachable conversion feature that is “in-the-money” at the commitment date.

The in-the-money portion, also known as the intrinsic value, is recorded in equity, with an offsetting discount to the carrying amount of convertible debt to which it is attached.

The discount is amortized to interest expense over the life of the debt with adjustments to amortization upon full or partial conversions of the debt.

Risk and Uncertainties

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(3) BUSINESS COMBINATIONS AND ASSET PURCHASES

Business Combinations

On March 9, 2023, following approval by the Massachusetts Cannabis Control Commission (the "CCC"), the Company acquired the operating assets of Ermont, a medical-licensed vertical cannabis operator located in Quincy, Massachusetts.

The Ermont Acquisition provided the Company with its third dispensary in Massachusetts, substantially completing its build-out to the maximum allowable by state regulations.

As consideration for the Ermont Acquisition, which totaled $ 13.0 million, the Company paid $ 3.0 million of cash, issued 6,580,390 shares of the Company's common stock with a fair value of $ 3.0 million, and issued a $ 7.0 million promissory note (the "Ermont Note" and collectively, the "Ermont Consideration").

The Ermont Note has a six-year term and bears interest at 6.0 % per annum, with payments of interest-only for two years and thereafter, quarterly payments of principal and interest in arrears.

The outstanding balance on the Ermont Note is subject to prepayment in the event the Company raises $ 75.0 million of equity capital.

The Company recorded the Ermont Note at the present value o $ 4.6 million as of the Ermont Acquisition date.

The difference between the resent value and face value of the Ermont Note is being amortized to interest expense through the term of such note.

The Company rebranded the dispensary as Panacea Wellness Dispensary and commenced medical sales immediately after the Ermont Acquisition Date.

The Ermont Acquisition also includes a Host Community Agreement with the city of Quincy to conduct adult-use cannabis sales.

The Company expects to commence adult-use sales upon approval by the CCC.

The Company also plans to expand the existing medical dispensary to accommodate expected increased traffic associated with adult-use sales and to repurpose Ermont's existing cultivation facility for its pheno-hunting activities.

The Company has moved its pheno-hunting activities out of the New Bedford facility to use the freed space to cultivate its Nature's Heritage flower.

The Company's consolidated statement of operations for the year ended December 31, 2023 includes $ 3.8 million of revenue and $ 2.4 million of net loss attributable to Ermont for the period since the Ermont Acquisition Date.

The Ermont Acquisition has been accounted for as a business combination.

The Company did not assume any of Ermont's liabilities.

A summary of the allocation of the Ermont Consideration to the acquired and identifiable intangible assets is as follows (in thousands):

Fair value of consideration transferred:

Cash consideration:

Cash paid $ 3,000

Less cash acquired ( 13 )

Net cash consideration 2,987

Common stock 2,994

Promissory note 4,569

Total fair value of consideration $ 10,550

Fair value of assets acquired:

Property and equipment $ 800

Intangible assets:

Tradename and trademarks 1,063

Customer base 4,642

Goodwill 3,914

Fair value of net assets acquired $ 10,550

The Company is amortizing the identifiable intangible assets arising from the Ermont Acquisition in relation to the expected cash flows from the individual intangible assets over their respective useful lives, which have a weighted average life of 10.71 years (see Note 11).

Goodwill results from assets not separately identifiable as part of the transaction and is not deductible for tax purposes.

The following unaudited pro forma information presents the condensed combined results of MariMed and Ermont for the years ended December 31, 2023 and 2022 as if the Ermont Acquisition had been completed on January 1, 2022, with adjustments to give effect to pro forma events that are directly attributable to the Ermont Acquisition.

These pro forma adjustments include amortization expense for the acquired intangible assets and interest expense related to the Ermont Note.

Pro forma adjustments also include the elimination of acquisition-related and other expense directly attributable to the Ermont Acquisition from the year ended December 31, 2023 and inclusion of these expenses in the previous year.

The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings that may result from the consolidation of the operations of MariMed and Ermont.

Accordingly, these unaudited pro forma results are presented for illustrative purposes and are not intended to represent or be indicative of the actual results of operations of the combined company that would have been achieved had the Ermont Acquisition occurred on January 1, 2022, nor are they intended to represent or be indicative of future results of operations.

These unaudited pro forma results for the years ended December 31, 2023 and 2022 are as follows (in thousands):

Year ended December 31,

Revenue $ 148,948 $ 139,857

Net (loss) income $ ( 17,210 ) $ 6,292

In December 2021, the Company entered into a membership interest purchase agreement with the members of Kind (the "Kind Sellers") to acquire 100 % of the equity ownership of Kind.

Kind was the Company's client in Maryland that holds licenses for the cultivation, production, and dispensing of medical cannabis.

Kind was the Company's client in Maryland that held licenses for the cultivation, production, and dispensing of medical cannabis.

Upon execution of the membership interest purchase agreement, the Company deposited $ 5.0 million into escrow as a contract down payment.

2 unchanged sentences

The Kind Acquisition has allowed the Company to expand its operations into the Maryland cannabis industry and marketplace.

The Kind Acquisition has been accounted for as a business combination and the financial results of Kind have been included in the Company’s consolidated financial statements for the period subsequent to the Kind Acquisition Date.

The Kind Acquisition was accounted for as a business combination and the financial results of Kind have been included in the Company’s consolidated financial statements for the period subsequent to the Kind Acquisition Date.

The Company’s financial results for the year ended December 31, 2022 include $ 8.1 million of revenue and a net loss of $ 1.5 million attributable to Kind.

A summary of the preliminary allocation of Kind Consideration to the acquired assets, identifiable intangible assets and certain assumed liabilities at December 31, 2022 is as follows (in thousands):

A summary of the allocation of Kind Consideration to the acquired assets, identifiable intangible assets and certain assumed liabilities is as follows (in thousands):

Fair value of consideration transferred:

19 unchanged sentences

Fair value of net assets acquired $ 17,952

The valuation of the acquired intangible assets is inherently subjective and relies on significant unobservable inputs.

The Company used an income approach to value the acquired trade name/trademarks, licenses/customer base, and non-compete intangible assets.

The valuation for each of these intangible assets was based on estimated projections of expected cash flows to be generated by the assets discounted to the present value at discount rates commensurate with perceived risk.

The valuation assumptions take into consideration the Company’s estimates of new markets, products and customers and its outcome through key assumptions driving asset values, including sales growth, royalty rates and other related costs.

The Company is amortizing the identifiable intangible assets in relation to the expected cash flows from the individual intangible assets over their respective useful lives, which have a weighted average life of 5.77 years (see Note 11).

Goodwill resulted from assets that were not separately identifiable as part of the transaction and was not deductible for tax purposes.

Concurrent with entering into the Kind membership purchase agreement, the Company entered into a membership interest purchase agreement with one of the members of Kind to acquire such member’s entire equity ownership interest in (i) Mari Holdings MD LLC (“Mari-MD”), the Company’s majority-owned subsidiary that owns production and retail cannabis facilities in Hagerstown, MD and Annapolis, MD, and (ii) Mia Development LLC (“Mia”), the Company’s majority-owned subsidiary that owns production and retail cannabis facilities in Wilmington, DE.

Upon the dismissal in September 2022 of the derivative claims in the DiPietro lawsuit (see Note 21), the Company paid the aggregate purchase consideration of $ 2.0 million, and the transaction was completed, increasing the Company’s ownership of Mari-MD and Mia to 99.7 % and 94.3 %, respectively.

Pro Forma Results

The following unaudited pro forma information presents the condensed combined results of MariMed and Kind for the years ended December 31, 2022 and 2021 as if the Kind Acquisition had been completed on January 1, 2021, with adjustments to give effect to pro forma events that are directly attributable to the Kind Acquisition.

Holdings MD LLC (“Mari-MD”), the Company’s majority-owned subsidiary that owns production and retail cannabis facilities in Hagerstown, MD and Annapolis, MD, and (ii) Mia Development LLC (“Mia”), the Company’s majority-owned subsidiary that owns production and retail cannabis facilities in Wilmington, DE.

Upon the dismissal in September 2022 of the derivative claims in the DiPietro lawsuit (Note 21), the Company paid the aggregate purchase consideration of $ 2.0 million, and the transaction was completed, increasing the Company’s ownership of Mari-MD and Mia to 99.7 % and 94.3 %, respectively.

The following unaudited pro forma information presents the condensed combined results of MariMed and Kind for the year ended December 31, 2022 as if the Kind Acquisition had been completed on January 1, 2021, with adjustments to give effect to pro forma events that are directly attributable to the Kind Acquisition.

These pro forma adjustments include the reversal of MariMed revenue and related cost of sales derived from Kind prior to the Kind Acquisition Date, amortization expense for the acquired intangible assets, depreciation expense for property and equipment acquired by MariMed as part of the Kind Acquisition, and interest expense related to the Kind Notes.

Pro forma adjustments also include the elimination of acquisition-related and other expense directly attributable to the Kind Acquisition from the year ended December 31, 2022 and inclusion of these expenses in the year ended December 31, 2021.

The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings that may result from the consolidation of the operations of MariMed and Kind.

Accordingly, these unaudited pro forma results are presented for illustrative purposes and are not intended to represent or be indicative of the actual results of operations of the combined company that would have been achieved had the Kind Acquisition occurred at the beginning of the period presented or are they intended to represent or be indicative of future results of operations (in thousands):

Year ended December 31,

Accordingly, these unaudited pro forma results are presented for illustrative purposes and are not intended to represent or be indicative of the actual results of operations of the combined company that would have been achieved had the Kind Acquisition occurred on January 1, 2021, nor are they intended to represent or be indicative of future results of operations.

These unaudited pro forma results for the year ended December 31, 2022 are as follows (in thousands):

Revenue $ 136,078

Net income $ 15,823

Valuation of Acquired Intangible Assets

The valuation of the acquired intangible assets is inherently subjective and relies on significant unobservable inputs.

The Company used an income approach to value the acquired trade name/trademarks, licenses/customer base, and non-compete intangible assets.

Asset Purchases

Green Growth Group Inc.

In January 2022, the Company entered into a stock purchase agreement to acquire 100 % of the equity ownership of Green Growth Group Inc.

(“Green Growth”), an entity that holds a craft cultivation and production cannabis license issued by the Illinois Department of Agriculture, in exchange for cash of $ 1.9 million and shares of the Company’s common stock valued at $ 1.5 million.

(“Green Growth”), an entity that holds a craft cultivation and production cannabis license issued by the Illinois Department of Agriculture, in exchange for cash consideration of $ 1.9 million and shares of the Company’s common stock valued at $ 1.5 million.

Concurrently, the Company made a good faith deposit of $ 0.1 million.

2 unchanged sentences

With this license, the Company can cultivate up to 14,000 square feet of cannabis flowers and produce cannabis concentrates.

The Company believes that the acquisition of this cannabis license will allow it to be vertically integrated in Illinois by growing cannabis and producing cannabis products that can be distributed and sold at the Company-owned Thrive dispensaries and sold into the robust Illinois wholesale cannabis marketplace.

The acquisition of this cannabis license allows the Company to be vertically integrated in Illinois by growing cannabis and producing cannabis products that can be distributed and sold at the Company-owned Thrive dispensaries and sold into the robust Illinois wholesale cannabis marketplace.

The Company has allocated the purchase price to its licenses/customer base intangible asset.

The Company recorded $ 0.2 million of amortization expense for the year ended December 31, 2022 for the intangible asset acquired, based on an estimated ten-year life for such asset.

Greenhouse Naturals LLC

In November 2021, the Company entered into an asset purchase agreement with Greenhouse Naturals LLC (the "Greenhouse Naturals Sellers") to acquire the cannabis license and assume the property lease associated with a cannabis dispensary in Beverly, MA.

The purchase price was comprised of 2,000,000 shares of the Company’s common stock

payable at closing and $ 5.1 million in cash, with $ 5.0 million of the cash amount payable post-closing on a monthly basis as a percentage of the dispensary's monthly gross sales.

The purchase transaction (the "Greenhouse Naturals Acquisition") was completed on December 30, 2022 (the "Greenhouse Naturals Acquisition Date").

The Company paid $ 0.1 million of cash and issued 2,000,000 shares of the Company's common stock, with a fair value of $ 0.7 million on the Greenhouse Naturals Acquisition Date, to the Sellers.

The Company issued a note to the Greenhouse Naturals Sellers for the remaining $ 5.0 million of the cash purchase price (the "Greenhouse Naturals Note"), and has recorded the Greenhouse Naturals Note at present value of $ 4.3 million.

The difference between the face value of the Greenhouse Naturals Note and the net present value recorded will be amortized to interest expense over the term of the note.

Upon final inspection by the State of Massachusetts, the dispensary will be able to open, and the Company hopes that this will occur in the first half of 2023.

The Company has allocated the purchase price to a licenses/customer base intangible asset, which has an estimated useful life of 10 years.

MediTaurus LLC

In 2019, the Company acquired a 70.0 % ownership interest in MediTaurus LLC ("MediTaurus), a developer of CBD products sold under the Florance brand name, in exchange for stock and cash aggregating $ 2.8 million.

In September 2021, the Company acquired the remaining 30.0 % ownership interest of MediTaurus in exchange for 100,000 shares of the Company’s common stock, valued at approximately $ 94,000 , and $ 10,000 in cash.

The carrying value of the noncontrolling interest of approximately $ 975,000 was eliminated on the date such remaining ownership interest was acquired, and as there was no change in control of MediTaurus from this transaction, the resulting gain on the bargain purchase was recognized in Additional paid-in capital in the consolidated balance sheets.

As part of this transaction, the initial purchase agreement was amended, eliminating all future license fees and payments to the prior owners of MediTaurus.

The Company has since discontinued sales of its MediTaurus products.

dispensary in Beverly, MA.

The purchase price was comprised of 2,000,000 shares of the Company’s common stock payable at closing and $ 5.1 million in cash, with $ 5.0 million of the cash amount payable post-closing on a monthly basis as a percentage of the dispensary's monthly gross sales.

The Greenhouse Naturals Acquisition was completed on December 30, 2022, upon the Company's payment of $ 0.1 million of cash and issuance of 2,000,000 shares of its common stock, with a fair value of $ 0.7 million, to the Greenhouse Naturals Sellers.

The Company issued a note to the Greenhouse Naturals Sellers for the remaining $ 5.0 million of the cash purchase price (the "Greenhouse Naturals Note"), and has recorded it at the present value of $ 4.3 million.

The difference between the face value of the Greenhouse Naturals Note and the value recorded is being amortized to interest expense over the term of such note.

The final inspection by the Commonwealth of Massachusetts was completed in April 2023, and the Company opened the dispensary on April 25, 2023.

The Company has allocated the purchase price to a licenses/customer base intangible asset, with an estimated useful life of 10 years.

Pending Acquisitions

Allgreens Dispensary, LLC ("Allgreens")

In August 2022, the Company entered into an agreement to purchase 100 % of the membership interests in Allgreens Dispensary, LLC (the "Allgreens Agreement"), a conditional adult-use cannabis dispensary license in Illinois, for $ 2.25 million of cash and $ 1.0 million of promissory notes which the Company will issue to the Allgreens members at the time of closing (the "Allgreens Notes").

Completion of the acquisition is dependent upon certain conditions, including resolution of any remaining legal challenges affecting nearly 200 social equity dispensary licenses, and regulatory approval of the acquisition.

Once the acquisition is complete, which the Company expects to occur in 2023, the Company will have five adult-use dispensaries operating in Illinois.

Under the Allgreens Agreement, the Company made an initial advance payment of $ 250,000 to the Allgreens members, with additional cash payments aggregating $ 2.0 million to be made as specific milestones as defined in the Allgreens Agreement are reached.

The Company will issue promissory notes for the final payment of $ 1.0 million, which is due at closing (the "Allgreens Notes").

The Allgreens Notes will mature one year from the date the dispensary may begin operating.

If the closing conditions are met and the acquisition is completed, which the Company expects to occur in 2024, the Company will have five adult-use dispensaries operating in Illinois.

For the interim period until the acquisition is completed, the Company has entered into a management agreement with Allgreens, under which the management fees are calculated as a percentage of Allgreens' revenue.

In connection with this agreement, the Company recorded expenses related to Allgreens aggregating approximately $ 164,000 in the year ended December 31, 2023 as a component of Investments, net of current portion in the Company's consolidated balance sheet (see Note 9).

Pursuant to the Allgreens Agreement, as of December 31, 2023, the Company had made payments aggregating $ 1.375 million to the Allgreens members, with additional cash payments aggregating $ 0.875 million to be made as specific milestones as defined in the Allgreens Agreement are reached.

The Allgreens Notes will mature one year from the date the dispensary is permitted to commence operations.

Robust Missouri Process and Manufacturing 1, LLC ("Robust")

In September 2022, the Company entered into an agreement to acquire 100 % of the membership interests in Robust Missouri Processing and Manufacturing 1, LLC (the "Robust Agreement"), a Missouri wholesale and cultivator, for $ 0.7 million of cash.

Completion of the acquisition is dependent upon obtaining all requisite approvals from the Missouri Department of Health and Senior Services, which is expected to occur in 2024.

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In 2019, the Company entered into a purchase agreement to acquire 100 % of the ownership interests of The Harvest Foundation LLC (“Harvest”), the Company’s cannabis-licensed client in the State of Nevada.

The purchase price was comprised of the issuance of (i) 1,000,000 shares of the Company’s common stock, in the aggregate, to two owners of

Harvest, as a good faith deposit, which were issued upon execution of the purchase agreement.

The issued shares were recorded at par value.

Such shares were restricted and a portion of these shares could be returned to the Company in the event the transaction did not close.

The purchase price was comprised of the issuance of 1,000,000 restricted shares of the Company’s common stock in the aggregate, to two owners of Harvest as a good faith deposit, which were issued upon execution of the purchase agreement (the "Deposit Shares").

The Company recorded the Deposit Shares at par value at the time of issuance, since the transaction had not yet been consummated.

In addition, $ 1.2 million of the Company’s common stock would be issued at closing and warrants to purchase 400,000 shares of the Company’s common stock, at an exercise price equal to the closing price of the Company’s common stock, would be granted on the day prior to legislative approval of the transaction.

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The CCB accepted the request by the Company, releasing the Company from the liabilities related to this cancelled transaction.

(4) EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the period.

Diluted net earnings per share is determined by using the weighted average number of common and dilutive common equivalent shares outstanding during the period, unless the effect is antidilutive.

In connection with the cancellation of this transaction, the Deposit Shares were returned to the Company in December 2023, and they were restored to the status of authorized but unissued shares of the Company's common stock.

The return of the Deposit Shares was recorded at par value and is included as a component of stockholders' equity in the consolidated balance sheet at December 31, 2023.

(4) (LOSS) EARNINGS PER SHARE

Basic (loss) earnings per share is computed by dividing net (loss) income by the weighted average number of shares outstanding during the period.

For periods in which the Company reports net income, diluted earnings per share is determined by using the weighted average number of common and dilutive common equivalent shares outstanding during the period, unless the effect is antidilutive.

The calculations of shares used to compute net earnings per share were as follows (in thousands):

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Weighted average shares outstanding - diluted 363,403 380,289

(5) ACCOUNTS RECEIVABLE, NET

Accounts receivable, net, consisted of the following (in thousands):

Year ended December 31,

Accounts receivable 7,963 8,760

Allowance for doubtful accounts ( 764 ) ( 4,603 )

Accounts receivable, net 7,199 4,157

The Company maintains an allowance against trade accounts receivable (the "AR Allowance"), and had previously also reserved against cash advanced by the Company to a cannabis-licensed client or working capital purposes (the "WC Reserve"), both of which were reported as components of the allowance for doubtful accounts in the Company's consolidated balance sheets.

The Company's allowance for doubtful accounts activity was as follows (in thousands):

Year ended December 31, Balance at beginning of year Charges to expense Charges (credits) to other accounts Write-offs Balance at end of year

2023 $ 4,603 $ 118 $ — $ ( 3,957 ) $ 764

2022 $ 41,401 $ 3,752 $ ( 11,300 ) $ ( 29,250 ) $ 4,603

The amount reported under "Charges (credits) to other accounts" for the year ended December 31, 2022 represents the elimination of the reserve for trade receivables from a former client of the Company's in connection with the purchase accounting when the Company acquired this client.

Of the amount reported under "Write-offs" for the year ended December 31, 2022, $ 29.0 million represents the write-off of a fully reserved trade receivable from a related party in connection with that party's bankruptcy declaration.

(6) DEFERRED RENTS RECEIVABLE

The Company is the lessor under operating leases which contain rent holidays, escalating rents over time, options to renew, requirements to pay property taxes, insurance and/or maintenance costs, and prior to the third quarter of 2022, contingent rental payments based on a percentage of monthly tenant revenues.

The Company is not the lessor under any finance leases.

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Differences between amounts received and amounts recognized are recorded in Deferred rents receivable in the consolidated balance sheets.

Contingent rentals are recognized only after tenants’ revenues are finalized and if such revenues exceed certain minimum levels.

The Company currently leases or previously leased the following owned properties:

• Delaware – a 45,000 square foot cannabis cultivation, processing, and dispensary facility which is leased to a cannabis-licensed client under a triple net lease that expires in 2035.

• Maryland – a 180,000 square foot cultivation and processing facility which was leased to Kind prior to the Kind Acquisition Date.

• Massachusetts – a 138,000 square foot industrial property, of which approximately half of the available square footage was leased to a non-cannabis manufacturing company (the "Tenant") under a lease that expired in

February 2023.

The Tenant currently continues to rent this space on a month-to-month basis.

The Company subleases the following properties:

• Delaware – a 4,000 square foot cannabis dispensary which is subleased to a cannabis-licensed client under a under a sublease that expires in April 2027.

• Delaware – a 100,000 square foot warehouse, of which the Company developed 60,000 square feet into a cultivation facility that is subleased to a cannabis-licensed client.

The sublease expires in March 2030, with an option to extend the term for three additional five-year periods.

The Company intends to develop the remaining space into a processing facility.

• Delaware – a 12,000 square foot cannabis production facility with offices which is subleased to a cannabis-licensed client.

The sublease expires in January 2026 and contains an option to negotiate an extension at the end of the lease term.

The Company submitted invoices to its rental clients aggregating $ 3.0 million and $ 18.7 million in the years ended December 31, 2022 and 2021, respectively.

Contingent rentals are recognized only after tenants’ revenue is finalized and if such revenue exceeds certain minimum levels.

The Company currently leases a cannabis cultivation, processing and dispensary facility that it owns in Delaware to a cannabis-licensed client under a triple net lease that expires in 2035.

Prior to the Kind Acquisition Date, the Company had leased a cultivation and processing facility that it owns in Maryland to Kind.

The Company had also previously leased a portion of a third owned property in Massachusetts under a lease that expired in February 2023, after which the tenant continued to rent the space on a month-to-month basis through November 2023.

The Company does not intend to lease this space again, as it plans to use this space to expand its cultivation footprint.

The Company currently subleases two properties - a cannabis production facility with offices under a sublease that expires in January 2026 and contains an option to negotiate an extension of the sublease term and a dispensary under a sublease that expires in April 2027.

The Company also subleases a portion of a third property that it developed into a cultivation facility under a sublease that expires in March 2030, with an option to extend the term for three additional five-year periods.

The Company intends to develop the remaining space of this property into a processing facility.

These properties are all subleased to a cannabis-licensed client in Delaware.

The Company received rental payments aggregating $ 2.0 million and $ 3.0 million in the years ended December 31, 2023 and 2022, respectively.

The Company recognized rental revenue on a straight line basis totaling $ 1.5 million and $ 2.9 million for the years ended December 31, 2023 and 2022, respectively.

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First State Compassion Center

The Company’s cannabis-licensed client in Delaware, First State Compassion Center (“FSCC”), issued a 10-year promissory note to the Company in May 2016 for $ 0.7 million, bearing interest at a rate of 12.5 % per annum and maturing in April 2026, as amended (the "FSCC Initial Note").

The monthly payments on the FSCC Initial Note approximate $ 10,000 .

At December 31, 2022 and 2021, the current portions of the FSCC Initial Note approximated $ 85,000 and $ 75,000 , respectively, and were included in Notes receivable, current, in the consolidated balance sheets.

In December 2021, the Company converted financed trade accounts receivable balances from FSCC aggregating $ 7.8 million into notes receivable, whereby FSCC issued promissory notes to the Company aggregating $ 7.8 million (the "FSCC Secondary Notes").

The FSCC Secondary Notes bear interest of 6.0 % per annum and mature in December 2025.

FSCC is required to make periodic payments of principal and interest throughout the term of the FSCC Secondary Notes.

At December 31, 2022, the FSCC Secondary Notes included approximately $ 49,000 of unpaid accrued interest.

The increase in the FSCC Secondary Notes in the year ended December 31, 2022 was attributable to the accreted interest, which increased the value of such notes.

The current portion of the FSCC Secondary Notes aggregated $ 2.5 million at December 31, 2022.

The entire balance of the FSCC Secondary Notes was long-term at December 31, 2021.

In December 2022, the Company converted a short-term loan and other receivable balances from FSCC aggregating $ 750,000 into a note receivable, whereby FSCC issued a promissory note to the Company for $ 750,000 (the "FSCC New Note").

The FSCC New Note bears interest of 6.0 % per annum and matures in December 2026.

FSCC is required to make quarterly interest payments, with the full amount of principal due on December 31, 2026.

Omnibus Agreement

On July 1, 2023 (the "Omnibus Agreement Date"), the Company entered into an Omnibus Agreement with First State Compassion Center ("FSCC"), the Company's cannabis-licensed client in Delaware:

(a) consolidating all amounts owed by FSCC to the Company and its affiliated entities as described below, aggregating $ 11.0 million (the "Omnibus Agreement");

(b) providing for the automatic conversion of all amounts owed by FSCC to the Company, upon the approval of adult cannabis use in Delaware, into 100 % ownership of FSCC's licenses and business;

and (c) extending to FSCC, in the Company's sole discretion, up to an additional $ 2.0 million of working capital loans.

The Omnibus Agreement has a term of five years , with an automatic five-year extension if adult cannabis use is not approved in Delaware by the maturity date, and bears interest, compounded semiannually and payable annually, at the appropriate rate of interest in effect under Sections 1274(d), 482 and 7872 of the Internal Revenue Code of 1986, as amended, as calculated under Rev.

Ruling 86-17, 1986-1 C.B.

377, for the period for which the amount of interest is being determined.

The state of Delaware recently approved the adult use of cannabis, with the implementation period expected to extend through approximately November 2024.

The Omnibus Agreement is reported as a component of Other assets in the consolidated balance sheet at December 31, 2023.

Notes Receivable From FSCC Prior to the Omnibus Agreement Date

The notes receivable from FSCC described below in the aggregate were converted into the Omnibus on the Omnibus Agreement Date:

• FSCC issued a 10 -year promissory note to the Company in May 2016 for $ 0.7 million, which bore interest at a rate of 12.5 % per annum and matured in April 2026, as amended (the “FSCC Initial Note”).

The monthly payments on the FSCC Initial Note were approximately $ 10,000 .

At December 31, 2022, the current portion of the FSCC Initial Note was approximately $ 85,000 , and is included in Notes receivable, current portion, in the consolidated balance sheet.

• In December 2021, the Company converted financed trade accounts receivable balances from FSCC aggregating $ 7.8 million into notes receivable, which was net of the $ 1.3 million debt issuance discount recorded in connection with the conversion, whereby FSCC issued promissory notes aggregating $ 7.8 million to the Company (the “FSCC Secondary Notes”).

The FSCC Secondary Notes bore interest at a rate of 6.0 % per annum and matured in December 2025.

FSCC was required to make periodic payments of principal and interest throughout the term of the FSCC Secondary Notes.

At December 31, 2022, the FSCC Secondary Notes balance included approximately $ 49,000 of unpaid accrued interest.

The Company had granted FSCC an interest holiday in 2023 from January 1, 2023 through the Omnibus Agreement Date and accordingly, no interest was accrued in 2023.

At December 31, 2022, the current portion of the FSCC Secondary Notes aggregated $ 2.5 million.

• In December 2022, the Company converted amounts due from FSCC aggregating $ 750,000 into a note receivable, whereby FSCC issued a promissory note to the Company for $ 750,000 (the "FSCC New Note").

The FSCC New Note bore interest at a rate of 6.0 % per annum and matured in December 2026.

FSCC was required to make

quarterly interest payments, with the full amount of principal due on December 31, 2026;

however, the Company had granted FSCC an interest holiday for the six months ended June 30, 2023.

At December 31, 2022, the entire balance of the FSCC New Note was long-term.

• In the second quarter of 2023, the Company converted $ 879,000 due from FSCC into a note receivable.

In March 2021, the Company was issued a promissory note in the principal amount of approximately $ 894,000 (the "Revised Healer Note") from Healer LLC, an entity that provides cannabis education, dosage programs, and products developed by Dr.

Dustin Sulak ("Healer").

The principal balance of the note represents previous loans extended to Healer by the Company totaled $ 800,000 , plus approximately $ 94,000 of accrued interest through the Revised Healer Note issuance date.

The principal balance of the note represents previous loans extended to Healer by the Company totaling $ 0.8 million, plus approximately $ 94,000 of accrued interest through the Revised Healer Note issuance date.

The Revised Healer Note bears interest of 6.0 % per annum and requires quarterly payments of interest through its April 2026 maturity date.

The Company has the right to offset any licensing fees payable by the Company to Healer in the event Healer fails to make any payment when due.

In March 2021, the Company offset approximately $ 28,000 of licensing fees payable to Healer against the principal balance of the Revised Healer Note, reducing the principal amount to approximately $ 866,000 .

In 2021, the Company offset approximately $ 28,000 of licensing fees payable to Healer against the principal balance of the Revised Healer Note, reducing the principal balance to approximately $ 866,000 .

At each of December 31, 2023 and 2022, the total amounts of principal and accrued interest due under the Revised Healer Note were approximately $ 866,000 , of which approximately $ 52,000 was current.

High Fidelity Inc.

In August 2021, a $ 250,000 loan, which bore interest of 10.0 % per annum, to High Fidelity inc., an entity with cannabis operations in the State of Vermont, was repaid in full.

(8) INVENTORY

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The Company's investments at December 31, 2023 and 2022 were all classified as current and were comprised of the following (in thousands):

Investment - current:

WM Technology Inc.

Total investments $ 123 $ 251

The Company did not have any noncurrent investments at December 31, 2022 or 2021.

(formerly Terrace Inc.)

In December 2021, Terrace Inc., a Canadian cannabis entity in which the Company had an ownership interest of 8.95 % (“Terrace”), was acquired by Flowr Corp.

FLWPF), a Toronto-headquartered cannabis company with operations in Canada, Europe, and Australia (“Flowr”).

Under the terms of the transaction, each shareholder of Terrace received 0.4973 of a share in Flowr for each Terrace share held (the "Flowr Investment").

The investment in Flowr was carried at fair value, with changes in fair value recorded as a component of Other expense, net, in the consolidated statements of operations.

The Company recorded losses of $ 0.3 million and $ 1.1 million in the years ended December 31, 2022 and 2021, respectively.

The loss recorded in the year ended December 31, 2022 is comprised of the loss on the change in the Flowr Investment for the year, plus the $ 61,000 write-off of the remaining fair value of the Flowr Investment in December 31, 2022 arising from Flowr's bankruptcy filing and delisting from the exchanges on which it traded.

The loss recognized in the year ended December 31, 2021 represented the change in the fair value of the investment in Flowr for that year.

Investments - noncurrent:

Artis LLC (d/b/a Little Dog) $ 57 $ —

Allgreens 164 —

Total investments - noncurrent $ 221 $ —

The Company did not have any noncurrent investments at December 31, 2022.

WM Technology Inc.

(formerly MembersRSVP LLC)

In January 2021, the Company and MembersRSVP LLC, an entity that develops cannabis-specific software ("MRSVP), in which the Company owned a 23.0 % membership interest, entered into an agreement under which the Company returned membership interests comprising 11.0 % ownership in MRSVP in exchange for a release of the Company from any further obligation to make any incremental investments or payments to MRSVP and certain other non-monetary consideration.

In addition to the reduction of the Company's ownership interest to 12.0 %, the Company relinquished its right to appoint a member to MSRVP's board of directors.

As a result, the Company no longer had the ability to exercise significant influence over MRSVP, and accordingly, as of January 1, 2021, the Company discontinued accounting for this investment under the equity method.

In September 2021, MRSVP sold substantially all of its assets pursuant to an asset purchase agreement.

In furtherance of the transaction, the Company received cash proceeds of $ 1.5 million, representing the Company’s pro rata share of the cash consideration received by MRSVP upon the closing of the transaction.

The cash proceeds reduced the Company's MRSVP investment balance to zero and resulted in a gain of $ 0.3 million, which was reported as a component of Other expense, net, in the Company's consolidated statement of operations for the year ended December 31, 2021.

In February 2022, the Company received 121,698 shares of common stock of WM Technology Inc.

(the "MAPS Shares"), a technology and software infrastructure provider to the cannabis industry, which represented the Company's pro rata share of the additional consideration received by MRSVP pursuant to the asset purchase agreement, which had a fair value of approximately $ 953,000 at the time of receipt.

The Company recognized a loss of $ 0.8 million in the year ended December 31, 2022, which is included as a component of Other (expense) income, net, in the consolidated statement of operations.

This amount represents the decrease in the fair value of the MAPS Shares for the period from the Company's receipt of such shares in February 22, 2022 through December 31, 2022.

MAPS) (the "WMT Shares"), a technology and software infrastructure provider to the cannabis industry, which represented the Company's pro rata share of the additional consideration pursuant to a 2021 asset purchase agreement between the

Company and Members RSVP LLC.

The Company recognized losses of approximately $ 35,000 and $ 0.8 million in the years ended December 31, 2023 and 2022, respectively, which amounts represent the changes in the fair value of the WMT Shares, and which are included as components of Other (expense) income, net, in the consolidated statements of operations.

Artis LLC (d/b/a Little Dog)

In April 2023, the Company purchased a 49 % interest in Artis LLC, d/b/a Little Dog ("Little Dog"), a cannabis delivery service (the "Little Dog Investment") for approximately $ 98,000 of cash.

The Company recognizes changes in the fair value of the Little Dog Investment based on its proportional share of Little Dog's net income (loss).

During the year ended December 31, 2023, the Company recognized a loss in the Little Dog Investment of approximately $ 41,000 , which is included as a component of Other (expense) income, net, in the consolidated statement of operations.

In connection with the pending acquisition of Allgreens and the management agreement the Company entered into with Allgreens for the interim period prior to the completion of the acquisition (see Note 3), the Company recorded expenses related to Allgreens aggregating approximately $ 164,000 for the year ended December 31, 2023 as a component of Investments, net of current portion.

In December 2021, the Company received shares of Flowr Corp.

common stock (the "Flowr Stock") arising from the sale of the Company's ownership interest in Terrace Inc., which was sold to Flowr Corp.

FLWPF).The Flowr Stock was recorded at fair value, with changes in fair value recorded as a component of Other (expense) income, net, in the consolidated statements of operations.

The Company recorded a loss of $ 0.3 million in the year ended December 31, 2022, comprised of the loss on the change in the Flowr Investment for the year, plus the $ 61,000 write-off of the remaining fair value of the Flowr Investment in December 2022 arising from Flowr's bankruptcy filing and delisting from the exchanges on which the Flowr Stock traded.

(10) PROPERTY AND EQUIPMENT

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During the years ended December 31, 2023 and 2022, additions to property and equipment totaled $ 20.4 million and $ 18.6 million, respectively.

Of the additions to property and equipment, $ 0.3 million and $ 0.7 million of such additions in the years ended December 31, 2022 and 2021, respectively, were paid for by the issuance of Company common stock.

Of the additions to property and equipment, $ 0.3 million of such additions in each of the years ended December 31, 2023 and 2022, were paid for by the issuance of Company common stock.

Depreciation expense for the years ended December 31, 2023 and 2022 was $ 5.5 million and $ 3.4 million, respectively.

(11) INTANGIBLE ASSETS AND GOODWILL

The Company's acquired intangible assets at December 31, 2022 consisted of the following (in thousands):

The Company's acquired intangible assets at December 31, 2023 and 2022 consisted of the following (in thousands):

December 31, 2023 Weighted

period (years) Cost Accumulated

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8.84 $ 21,179 $ 4,167 $ 17,012

December 31, 2022 Weighted

period (years) Cost Accumulated

amortization Net

Trade name and trademarks 3.00 $ 2,041 $ 453 $ 1,588

Licenses and customer base 8.94 13,260 675 12,585

Non-compete agreements 2.00 42 14 28

8.13 $ 15,343 $ 1,142 $ 14,201

Estimated future amortization expense for the Company’s intangible assets at December 31, 2023 was as follows (in thousands):

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Balance at January 1, $ 8,079 $ 2,068

Ermont Acquisition 3,914 —

Kind Acquisition — 6,011

Balance at December 31, $ 11,993 $ 8,079

Goodwill is reviewed on an annual basis for impairment.

Based on these reviews and other factors, the Company determined there was no goodwill impairment in the years ended December 31, 2022 and 2021.

Goodwill is tested on an annual basis for impairment.

The Company performs its annual goodwill impairment test as of December 31.

Based on these tests, the Company determined that there was no goodwill impairment in the years ended December 31, 2023 and 2022.

(12) TERM LOAN

Credit Agreement

On January 24, 2023 (the "Term Loan Date"), the Company entered into a Loan and Security Agreement, by and among the Company, subsidiaries of the Company from time to time party thereto (collectively with the Company, the “CA Borrowers”), lenders from time to time party thereto (the “CA Lenders”), and Chicago Atlantic Admin, LLC (“Chicago Atlantic”), as administrative agent for the Lenders (the "CA Credit Agreement").

Proceeds from the CA Credit Agreement were designated to complete the build-out of a new cultivation and processing facility in Illinois, complete the build-out of a new processing kitchen in Missouri, expand existing cultivation and processing facilities in Massachusetts and Maryland, fund certain capital expenditures, and repay in full the Kind Notes incurred in connection with the Kind Acquisition, which repayment occurred on January 24, 2023 (see Note 13).

The remaining balance, if any, was expected to be used to fund acquisitions.

Principal, Security, Interest and Prepayments

The CA Credit Agreement provided for $ 35.0 million in principal borrowings at the CA Borrowers’ option in the aggregate and further provided the CA Borrowers with the right, subject to customary conditions, to request an additional incremental term loan in the aggregate principal amount of up to $ 30.0 million, provided that the CA Lenders elected to fund such incremental term loan.

$ 30.0 million of loan principal was funded at the initial closing (the "Term Loan"), which amount was reduced by an original issuance discount of $ 0.9 million (the "CA Original Issuance Discount").

The Company had the option, during the six-month period following the initial closing, to draw down an additional $ 5.0 million, which it did not elect to do.

The loan required scheduled amortization payments of 1.0 % of the principal amount outstanding under the CA Credit Agreement per month commencing in May 2023, and the remaining principal balance was due in full on January 24, 2026, subject to extension to January 24, 2028 under certain circumstances.

The CA Credit Agreement provided the CA Borrowers with the right, subject to specified limitations, to incur (a) seller provided debt in connection with future acquisitions, (b) additional mortgage financing from third-party lenders secured by real estate currently owned and acquired after the closing date, and (c) additional debt in connection with equipment leasing transactions.

The obligations under the CA Credit Agreement were secured by substantially all of the assets of the CA Borrowers, excluding specified parcels of real estate and other customary exclusions.

The CA Credit Agreement provided for a floating annual interest rate equal to the prime rate then in effect plus 5.75 %, which rate could be increased by 3.00 % upon an event of default or 7.50 % upon a material event of default as provided in the CA Credit Agreement.

At any time, the Company could voluntarily prepay amounts due under the facility in $ 5.0 million increments, subject to a three -percent prepayment premium and, during the first 20 -months of the term, a “make-whole” payment.

Representations, Warranties, Events of Default and Certain Covenants

The CA Credit Agreement included customary representations and warranties and customary events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to material indebtedness, and events of bankruptcy and insolvency.

The CA Credit Agreement also included customary negative covenants limiting the CA Borrowers’ ability to incur additional indebtedness and grant liens that were otherwise not permitted, among others.

Additionally, the CA Credit Agreement required the CA Borrowers to meet certain financial tests.

The Company was in compliance with the CA Credit Agreement covenants at all times while the Term Loan was outstanding.

Warrant Issuance

The CA Credit Agreement provided for 30 % warrant coverage against amounts funded under the facility, priced at a 20 % premium to the trailing 20 -day average price on the closing date of each such funding.

At the initial closing, upon funding of the initial $ 30.0 million under the facility, the Company issued to the CA Lenders an aggregate of 19,148,936 warrants

to purchase shares of the Company’s common stock at $ 0.47 per share, exercisable for a five-year period following issuance.

The Company recorded the warrants at present value of $ 5.5 million as a component of Additional paid-in capital on the consolidated balance sheet as of January 24, 2023, and discounted the Term Loan amount by $ 5.5 million (the "CA Warrant Discount").

The Company was amortizing the CA Warrant Discount to interest expense over the term of the CA Credit Agreement.

Prepaid Debt Issuance Costs

The Company incurred $ 1.8 million of third party costs (i.e., legal fees, referral fees, etc.) in connection with the Term Loan that were recorded as a discount to the Term Loan (the "CA Third-Party Costs Discount").

The Company was amortizing the CA Third-Party Costs Discount to interest expense over the term of the CA Credit Agreement.

Repayment and Retirement of Term Loan

On November 16, 2023 (the "Payoff Date"), the Company repaid and retired the Term Loan (the "Term Loan Payoff") using proceeds from a new $ 58.7 million loan entered into on the same day (see Note 13).

The Term Loan Payoff amount totaled $ 32.7 million, comprised of $ 28.5 million for the outstanding principal, $ 3.7 million for the make-whole payment, $ 0.2 million for accrued unpaid interest and $ 0.3 million for transaction-related fees.

The Company recognized a loss of $ 10.2 million in connection with the Term Loan Payoff, which is the primary component of Loss on extinguishment of debt in the consolidated statement of operations for the year ended December 31, 2023.

Interest Amortization

The Company recorded $ 2.1 million of aggregate interest amortization from the Term Loan Date to the Payoff Date related to the CA Original Issuance Discount, CA Warrant Discount and CA Third Party Costs Discount.

(13) MORTGAGES AND NOTES PAYABLE

The Company's mortgage balances at December 31, 2022 and 2021 were comprised of the following (in thousands):

The Company's mortgages and notes payable balances at December 31, 2023 and 2022 were comprised of the following (in thousands):

Construction to Permanent Commercial Real Estate Mortgage Loan ("CREM Loan") $ 52,083 $ —

Bank of New England

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Vernon, IL property — 801

Total mortgages payable 20,519 18,214

Mortgages payable, current portion ( 1,491 ) ( 1,400 )

Mortgages payable, net of current $ 19,028 $ 16,814

In November 2017, the Company entered into a 10-year mortgage agreement with Bank of New England in the amount of $ 4.9 million (the “Initial Mortgage”) for the purchase of a 138,000 square foot industrial property in New Bedford, MA, within which the Company has built a 70,000 square foot cannabis cultivation and processing facility.

Pursuant to the Initial Mortgage, the Company made monthly payments of (i) interest-only from the mortgage date through May 2019 at a rate equal to the prime rate plus 2.0 %, with a floor of 6.25 % per annum, and (ii) principal and interest payments from May 2019 to July 2020 at a rate equal to the prime rate on May 2, 2019 plus 2.0 %, with a floor of 6.25 % per annum.

In July 2020, at which time the Initial Mortgage had a remaining principal balance of $ 4.8 million, the parties consummated an amended and restated mortgage agreement, secured by the Company’s properties in New Bedford, MA and Middleborough, MA in the amount of $ 13.0 million and bearing interest of 6.5 % per annum that matures in August 2025 (the “Refinanced Mortgage”).

Proceeds from the Refinanced Mortgage were used to pay down the Initial Mortgage and approximately $ 7.2 million of promissory notes as described below.

The outstanding principal balance of the Refinanced Mortgage was $ 12.1 million and $ 12.5 million, respectively, at December 31, 2022 and 2021, of which approximately $ 382,000 and $ 358,000 , respectively, was current.

The Company maintains another mortgage with Bank of New England for the 2016 purchase of a 45,070 square foot building in Wilmington, DE, which was developed into a cannabis seed-to-sale facility and is currently leased to the Company’s cannabis-licensed client in that state.

The mortgage matures in 2031, with monthly principal and interest payments at a rate of 5.25 % per annum through September 2021, with the rate adjusting every five years to the then prime

rate plus 1.5 % with a floor of 5.25 % per annum.

For the remainder of 2022, the interest rate on this mortgage remained at 5.25 %.

Promissory note issued as purchase consideration - Ermont Acquisition 2,591 —

Promissory note issued as purchase consideration - Greenhouse Naturals Acquisition 4,190 4,348

Promissory note issued as purchase consideration - Kind Acquisition — 4,802

Promissory notes issued to purchase motor vehicles 178 48

Total mortgages and notes payable 66,375 29,717

Mortgages and notes payable, current portion ( 723 ) ( 3,774 )

Mortgages and notes payable, net of current $ 65,652 $ 25,943

On November 16, 2023, Mari Holdings MD LLC, Hartwell Realty Holdings LLC, Kind Therapeutics USA, LLC, ARL Healthcare Inc., and MariMed Advisors, Inc., each a wholly-owned direct or indirect subsidiary of the Company (collectively, the "CREM Borrowers") entered into a Loan Agreement (the "CREM Loan Agreement"), by and among the CREM Borrowers, and Needham Bank, a Massachusetts co-operative bank (the "CREM Lender") pursuant to which the CREM Lender loaned to the CREM Borrowers an aggregate principal amount of $ 58.7 million (the "CREM Loan Transaction").

The Company has fully guaranteed the obligations of the CREM Borrowers under the CREM Loan Transaction and pledged to the CREM Lender its equity ownership in each CREM Borrower.

The CREM Lender has a first priority security interest in all of the CREM Borrowers' operating assets in Maryland and Massachusetts and first priority mortgages on the CREM Borrowers' properties owned in Maryland and Massachusetts.

The CREM Loan Transaction matures in ten years and has an interest rate for the initial five years of 8.43 % per annum.

The interest rate will reset after five years to the FHLB Rate (the Classic Advance Rate for Fixed Rate advances for a period of five years for an amount greater than or equal to the loan amount, as such rate is defined and published by the Federal Home Loan Bank of Boston), plus 3.50 %.

The Company will make interest-only payments for the first twelve months of the term of the loan, with payments thereafter based upon a twenty-year amortization schedule.

The CREM Lender initially released $ 52.8 million to the CREM Borrowers (the "Initial CREM Distribution").

The remaining proceeds of $ 5.9 million will be held in escrow to complete the expansion of the Company's Hagerstown, Maryland cultivation facility (the "Hagerstown Facility").

Any unused proceeds will be released to the Company after completion of the Hagerstown Facility expansion.

The Company used $ 46.8 million of the Initial CREM Distribution to fully repay certain of its outstanding debt.

These payments were comprised of $ 32.7 million to pay off the Term Loan, $ 11.9 million to pay off the mortgage with Bank Of New England for the New Bedford, MA and Middleborough, MA properties, and $ 2.2 million to reduce the outstanding balance of the note issued by the Company in connection with the Ermont Acquisition.

The Company incurred bank closing costs and third party costs (i.e., legal fees, etc.) aggregating $ 1.5 million in connection with the CREM Loan Transaction, which have been recorded as a discount to the Loan Transaction (the "CREM Closing Costs Discount"), and which are being amortized to interest expense over the term of the CREM Loan Transaction.

The Company recorded nominal interest amortization in the year ended December 31, 2023 related to the CREM Closing Costs Discount.

The CREM Loan Agreement includes customary representations and warranties and customary events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to material indebtedness, and events of bankruptcy and insolvency.

The CREM Loan Agreement also includes customary negative covenants limiting the CREM Borrowers' (but not the Company's) ability to incur additional indebtedness and grant liens that are otherwise not permitted, among others.

The CREM Loan Agreement also requires the CREM Borrowers to meet certain periodic financial tests.

Bank of New England (New Bedford, MA and Middleborough, MA)

The Company maintained an amended and restated mortgage secured by the Company’s properties in New Bedford, MA and Middleborough, MA in the original amount of $ 13.0 million and bearing interest of 6.5 % per annum that would mature in August 2025 (the “Refinanced Mortgage”).

The outstanding principal balance of the Refinanced Mortgage was $ 12.1 million at December 31, 2022, of which approximately $ 382,000 was current.

On November 16, 2023, the Company used $ 11.9 million of the proceeds from the CREM Loan Transaction to pay the outstanding principal of the Refinanced Mortgage, and such mortgage was retired.

The Company recorded a loss of $ 0.2 million on the early repayment of the Refinanced Mortgage, which amount is included as a component of Loss on extinguishment of debt in the Company's consolidated statement of operations or the year ended December 31, 2023.

Concurrent with the repayment of the Refinanced Mortgage, the Company refinanced the properties through the CREM Loan and accordingly, effective November 16, 2023, the mortgage on these properties is held by Needham Bank, which mortgage matures in 2033 and which outstanding amount is included as a component of the CREM Loan outstanding balance.

Bank of New England (Wilmington, DE)

The Company maintains a mortgage with Bank of New England for the 2016 purchase of a building in Wilmington, DE, which was developed into a cannabis seed to sale facility and is currently leased to the Company’s cannabis-licensed client in that state.

The mortgage matures in 2031, with monthly principal and interest payments at a rate of 5.25 % per annum, with the rate adjusting every five years to the then prime rate plus 1.5 % with a floor of 5.25 % per annum.

At December 31, 2023 and 2022, the outstanding principal balance on this mortgage was $ 1.2 million and $ 1.3 million, respectively, of which approximately $ 133,000 and $ 126,000 , respectively, was current.

In May 2016, the Company entered into a mortgage agreement with DuQuoin State Bank (“DSB”) for the purchase of properties in Anna, IL and Harrisburg, IL, which the Company developed into two 3,400 square foot free-standing retail dispensaries.

DuQuoin State Bank (Anna, IL and Harrisburg, IL)

On May 5 th of each year of the mortgage agreement, this mortgage is due to be repaid unless it is renewed for another year at a rate determined by DSB’s executive committee.

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At December 31, 2023 and 2022, the outstanding principal balance on this mortgage approximated $ 719,000 and $ 750,000 respectively, of which approximately $ 27,000 and $ 36,000 , respectively, was current.

DuQuoin State Bank (Metropolis, IL)

In July 2021, the Company purchased the land and building in which it operates its cannabis dispensary in Metropolis, IL.

The purchase price consisted of 750,000 shares of the Company’s common stock, which were valued at $ 0.7 million in the aggregate on the date of the transaction, and payoff of the seller’s remaining mortgage of $ 1.6 million.

In connection with this purchase, the Company entered into another mortgage agreement with DSB in the amount of $ 2.7 million that matures in July 2041 and initially bears interest at a rate of 6.25 % per annum, which rate is adjusted each year based on a certain interest rate index plus a margin.

In connection with this purchase, the Company entered into an additional mortgage agreement with DSB in the amount of $ 2.7 million that matures in July 2041 and initially bears interest at a rate of 6.25 % per annum, which rate is adjusted each year based on a certain interest rate index plus a margin.

As part of this transaction, the seller was provided with a 30.0 % ownership interest in Mari Holdings Metropolis LLC (“Metro”), the Company’s subsidiary that owns the property and related mortgage obligation, reducing the Company’s ownership interest in Metro to 70.0 %.

At December 31, 2022 and 2021, the outstanding principal balance on this mortgage was $ 2.5 million and $ 2.7 million, respectively, of which approximately $ 77,000 and $ 73,000 , respectively, was current.

At each of December 31, 2023 and 2022, the outstanding principal balance on this mortgage was $ 2.5 million, of which approximately $ 46,000 and $ 77,000 , respectively, was current.

DuQuoin State Bank (Mt.

In July 2022, Mari Holdings Mt.

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Vernon Mortgage").

Vernon Mortgage has a 20 -year term and initially bears interest at the rate of 7.75 %, subject to upward adjustment on each annual anniversary date to the Wall Street Journal U.S.

Prime Rate (with an interest rate floor of 7.75 %).

The proceeds of the loan are being utilized for the build-out of the property and other working capital needs.

The current portion of the DSB Mt Vernon Mortgage was approximately $ 68,000 at December 31, 2022.

Vernon Mortgage has a 20 -year term and initially bears interest at the rate of 7.75 %, subject to upward adjustment on each annual anniversary date to the Wall Street Journal United States Prime Rate (with an interest rate floor of 7.75 %).

The proceeds of the loan are being utilized for the build-out of the property and other working capital purposes.

The current portion of the DSB Mt.

Vernon Mortgage was approximately $ 48,000 and $ 68,000 at December 31, 2023 and 2022, respectively.

South Porte Bank (Mt.

In February 2020, the Company entered into a mortgage agreement with South Porte Bank for the purchase and development of a property in Mt.

Pursuant to the amended mortgage agreement, the mortgage shall be repaid in monthly installments of principal and interest of approximately $ 6,000 which began in August 2021 and continues through its maturity in June 2023, at which time all remaining principal, interest and fees shall be due.

Vernon, IL (the "South Porte Bank Mortgage").

Beginning in August 2021, pursuant to an amendment to the South Porte Bank Mortgage, the monthly payments of principal and interest aggregated approximately $ 6,000 , with such payment amounts effective through June 2023, at which time all remaining principal, interest and fees were due.

On May 26, 2023, the Company repaid the outstanding balance on the South Porte Bank Mortgage, which totaled approximately $ 778,000 .

In January 2024, the Company refinanced this property and entered into a $ 1.2 million mortgage with DSB.

Promissory Notes

Promissory Notes Issued by the Company and its MariMed Hemp Inc.

In February 2020, the Company and MariMed Hemp Inc., its wholly-owned subsidiary (“MMH”), amended a secured $ 10.0 million promissory note (the “$10.0M Note”) issued to an unaffiliated party (the “Noteholder”) earlier in 2020.

The $10.0M Note, which provided for the repayment of principal plus a payment of $ 1.5 million (the “$1.5M Payment”), was amended, whereby the Company and MMH issued a restated promissory note maturing in June 2020 in the principal amount of $ 11.5 million (the “$11.5M Note”), comprised of the principal amount of the $10.0M Note and the $1.5M Payment.

The $11.5M Note bore interest at a rate of 15.0 % per annum, requiring periodic interest payments and minimum amortization payments of $ 3.0 million in the aggregate, which the Company made in the first half of 2021.

The Company entered into a second amendment agreement with the Noteholder in June 2020, whereby (i) $ 352,000 of outstanding principal of the $11.5M Note was converted into 1,900,000 shares of the Company’s common stock (which did not result in a material extinguishment gain or loss as the conversion price approximated the price of the Company’s common stock on the second amendment agreement date), and (ii) the Company and MMH issued a second amended and restated promissory note in the principal amount of approximately $ 8.8 million, comprised of the outstanding principal and unpaid interest balances of the $11.5M Note, plus an extension fee of approximately $ 330,000 , bearing interest at a rate of 15.0 % per annum and which matured in June 2022 (the “$8.8M Note”).

In addition, the Company issued three-year warrants to the Noteholder to purchase up to 750,000 shares of common stock at an exercise price of $ 0.50 per share.

The fair value of these warrants on the issuance date of approximately $ 66,000 was recorded as a discount to the $8.8M Note, and amortized to interest expense over the life of the $8.8M Note.

The Company made a required principal payment of $ 4.0 million in July 2020, with a portion of proceeds of the Refinanced Mortgage discussed above, and additional principal payments aggregating $ 0.6 million in the year ended December 31, 2020.

Accordingly, the carrying value of the $8.8M Note was $ 4.2 million at December 31, 2020.

The Noteholder had the option to convert the $8.8M Note, in whole or in part, into shares of the Company’s common stock at a conversion price of $ 0.30 per share, subject to certain conversion limitations.

This non-detachable conversion feature had no intrinsic value on the agreement date, and therefore no beneficial conversion feature arose.

In March 2021, the Noteholder converted $ 1.0 million of principal and approximately $ 10,000 of accrued interest into 3,365,972 shares of the Company’s common stock, reducing the carrying value of the $8.8M Note to $ 3.2 million.

The Company entered into a third amendment agreement with the Noteholder in April 2021, whereby the Company and MMH issued a third amended and restated promissory note in the principal amount of $ 3.2 million (the “$3.2M Note”), which bore interest at the rate of 0.12 % per annum and which would mature in April 2023.

The Noteholder had the option to convert, subject to certain conversion limitations, all or a portion of the $3.2M Note into shares of the Company’s common stock at a conversion price of $ 0.35 per share, subject to adjustment.

The third amended agreement resulted in a decrease in the fair value of the embedded conversion feature of the $3.2M Note, and accordingly, no accounting was required for such conversion feature.

On or after the one-year anniversary of the $3.2M Note issuance date, upon twenty days prior written notice to the Noteholder, the Company had the right to prepay all of the outstanding principal and unpaid interest of the $3.2M Note, along with a prepayment premium equal to 10.0 % of the principal amount being prepaid.

The Noteholder remained entitled to convert the $3.2M Note during such notice period.

On or after the one-year anniversary of the $3.2M Note issuance date, the Noteholder has the right to require the redemption in cash of up to $ 125,000 of principal and unpaid interest thereon per calendar month.

In 2021, the Noteholder converted $ 2.8 million of principal on the $3.2M Note into 8,033,296 shares of the Company’s common stock, reducing the carrying value of the $3.2M Note to $ 0.4 million at December 31, 2021.

All note conversions were effected in accordance with the terms of their respective note agreements, and accordingly, the Company was not required to record a gain or loss on such conversions.

In the first quarter of 2022, the Noteholder converted the remaining principal balance of $ 0.4 million into 1,142,858 shares of the Company's common stock and the $3.2M Note was retired.

The note conversion was effected in accordance with the terms of the note agreement, and accordingly, the Company was not required to record a gain or loss on this conversion.

Promissory Notes Issued Pursuant to an Exchange Agreement

In February 2020, pursuant to an exchange agreement (see Note 13), the Company issued two promissory notes in the aggregate principal amount of $ 4.4 million, bearing interest at 16.5 % per annum and maturing in August 2021 (the “$4.4M Notes”), in exchange for a loan in the same amount.

At December 31, 2021, the principal and accrued interest balance of the $4.4M Notes was $ 4.6 million.

In March 2021, utilizing a portion of the proceeds from the Hadron transaction (see Note 13), the $4.4M Notes were paid in full, along with accrued interest through the repayment date.

Promissory Notes Issued for Operating Liquidity

In April 2020, the Company entered into a note extension agreement (the “Initial Extension Agreement”) with the unaffiliated holder (the “Holding Party”) of a secured $ 6.0 million promissory note (the “$6.0M Note”) issued by the Company in 2020.

The $6.0M Note bore interest at a rate of 13.0 % per annum and required the payment of a service fee of $ 0.9 million (the “Service Fee”).

Pursuant to the Initial Extension Agreement, (i) the $6.0M Note’s due date was extended to September 2020, and the $6.0M Note was modified to include unpaid accrued interest of $ 845,000 through the modification date and interest at a rate of 10.0 % per annum (the “$6.8M Note”), and (iii) a new convertible note in the amount of $ 900,000 (the “$900k Note”) was issued evidencing the Service Fee, bearing interest at a rate of 12.0 % per annum.

The Company satisfied the $900k Note and accrued interest of $ 20,100 in full as of the June 2020 maturity date by the payment in July 2020 of $ 460,050 in cash, representing one-half of the principal and accrued interest, and the issuance in June 2020 of 2,525,596 shares of the Company’s common stock, in payment of the other half of the principal and accrued interest.

Prior to the issuance of the $6.0M Note, the Company raised $ 3.0 million from the issuance of a secured promissory note to the Holding Party in 2019, bearing interest at a rate of 10.0 % per annum (the “$3.0M Note”).

The maturity date of the $3.0M Note, initially in March 2020, was extended for an additional six months in accordance with its terms, with the interest rate increasing to 12.0 % per annum during the extension period.

Pursuant to the Initial Extension Agreement, the maturity date of the $3.0M Note was extended to December 2020.

The Company and the Holding Party entered into a second note extension agreement in October 2020 (the “Second Extension Agreement”) whereby the Company (i) paid $ 1.0 million of principal and all outstanding accrued interest of approximately $ 333,000 on the $6.8M Note;

(ii) issued an amended and restated senior secured promissory note in the principal amount of $ 5.8 million (the “$5.8M Note”) to replace the $6.8M Note;

and (iii) amended and restated the $3.0M Note (the “New $3.0M Note”, and together with the $5.8M Note, the “Amended Notes”).

The Amended Notes bore interest at a rate of 12.0 % per annum with initial maturity dates in September 2022.

In consideration of the Second Extension Agreement, the Company (i) issued four-year warrants to the Holding Party’s designees to purchase up to 5,000,000 shares of the Company’s common stock at an exercise price of $ 0.25 per share;

(ii) paid the Holding Party a fee of $ 100,000 ;

and (iii) extended the security interest in certain Company properties and the pledge of certain equity interests to secure the Amended Notes.

The Company recorded a discount on the Amended Notes of approximately $ 573,000 based on the fair value of such warrants on the issuance date, of which approximately $ 75,000 was amortized as of the end of 2021, with the remainder to be amortized over the life of the Amended Notes.

The Company made a required principal payment of $ 400,000 on the $5.8M Note in February 2021.

In March 2021, utilizing a portion of the proceeds from the Hadron transaction (see Note 13), the Amended Notes were paid in full, along with accrued interest through the repayment date.

Additionally, the remaining discount of approximately $ 450,000 on these notes was fully amortized on the payment date.

Promissory Note Conversion

In the first quarter of 2022, a noteholder converted the outstanding principal balance of $ 0.4 million into 1,142,858 shares of the Company's common stock and such note was retired.

The Company did not record any gains or losses arising from this conversion.

Promissory Notes Issued as Purchase Consideration

Ermont Acquisition

In connection with the Ermont Acquisition, the Company issued the Ermont Note (see Note 3), totaling $ 7.0 million.

The Ermont Note matures in March 2029 and bears interest at 6.0 % per annum, with payments of interest-only for two years , and quarterly payments of principal and interest in arrears thereafter.

The outstanding balance on the Ermont Note is subject to prepayment in full in the event the Company raises $ 75.0 million or more of equity capital.

The Company recorded the Ermont Note at a present value of $ 4.6 million.

This amount is net of the $ 2.4 million recorded as a debt discount, which is being accreted through the term of the Ermont Note to interest expense.

As discussed above, on November 26, 2023, the Company used $ 2.2 million of the proceeds from the CREM Loan Transaction to reduce the outstanding balance of the Ermont Note.

The fair value of the Ermont Note was $ 2.6 million at December 31, 2023, all of which was recorded as noncurrent, as the first scheduled principal payment is not due until two years after the Ermont Acquisition Date.

Greenhouse Naturals Acquisition

In connection with the Greenhouse Naturals Acquisition, the Company issued the Greenhouse Naturals Note (see Note 3) to the Greenhouse Naturals Sellers.

The Greenhouse Naturals Note had an outstanding balance of $ 5.0 million at December 31, 2022, including $ 0.7 million recorded as a debt discount, which will be accreted through the term of the note.

At December 31, 2022, $ 0.9 million was recorded as current.

In connection with the Greenhouse Naturals Acquisition, the Company issued the Greenhouse Naturals Note (see Note 3) totaling $ 5.0 million, to the Greenhouse Naturals Sellers, payable on a monthly basis as a percentage of the monthly gross sales of the Company's Beverly, Massachusetts dispensary (the "Beverly Dispensary").

The Company recorded $ 0.7 million as a debt discount, which is being accreted to interest expense through the term of the Greenhouse Naturals Note.

The difference between the face value of the Greenhouse Naturals Note and the value recorded at the time of the Greenhouse Naturals Acquisition is being amortized to interest expense over the term of such note, which matures in July 2026.

In the third quarter of 2023, the Company updated its forecast of revenue attributable to the Beverly Dispensary and accordingly, adjusted the schedule of estimated future payments on the Greenhouse Naturals Note.

The fair value of the Greenhouse Naturals Note was $ 4.2 million and $ 4.3 million at December 31, 2023 and 2022, respectively.

The Company estimated that the current portion of the Greenhouse Naturals Note was $ 0.3 million and $ 0.9 million at December 31, 2023 and 2022, respectively, which amounts are included in Mortgages and notes payable, current portion, in the Company's consolidated balance sheets.

Kind Acquisition

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The Kind Notes had an aggregate outstanding balance of $ 5.5 million at December 31, 2022, of which $ 1.6 million was current.

On January 24, 2023, in connection with the Company's new $ 35.0 million credit facility (see Note 22), the Company repaid the Kind Notes in full, aggregating $ 5.4 million, including approximately $ 20,000 of accrued interest.

On January 24, 2023, in connection with the CA Credit Agreement (see Note 12), the Company repaid the Kind Notes in full, aggregating $ 5.4 million, including approximately $ 420,000 of accrued interest.

There was no penalty in connection with the early repayment of the Kind Notes.

Promissory Notes Issued to Purchase Commercial Vehicles

In August 2020, the Company entered into a note agreement with First Citizens’ Federal Credit Union for the purchase of a commercial vehicle.

The note bears interest of 5.74 % per annum and matures in July 2026.

At December 31, 2022 and 2021, the balance of this note approximated $ 20,000 and $ 26,000 , respectively, of which approximately $ 5,000 was current at each date.

In June 2021, the Company entered into a note agreement with Ally Financial for the purchase of a second commercial vehicle.

The note bears interest of 10.0 % per annum and matures in May 2027.

At December 31, 2022 and 2021, the balance of this note approximated $ 28,000 and $ 33,000 , respectively, of which approximately $ 7,000 and $ 5,000 , respectively, was current.

Promissory Note Issued by MMH

MMH issued a $ 1.0 million promissory note (the “$1.0M Note”) in 2020 to an unaffiliated party and paid $ 0.5 million of principal amount thereof.

In March 2021, the Company paid interest on the $1.0M Note of $ 0.2 million and paid off the remaining principal balance of $ 0.5 million utilizing a portion of the proceeds from the Hadron transaction (see Note 13).

Other Promissory Note Issuances

In addition to the above transactions, in March 2021, the Company repaid in full promissory notes entered into in prior years.

The payments aggregated $ 2.3 million, comprised of $ 2.0 million of principal and $ 0.3 million of accrued interest .

(12) DEBENTURES PAYABLE

In a series of transactions between October 2018 and February 2020, the Company sold an aggregate of $ 21.0 million of convertible debentures (the “$21M Debentures”) to an unaffiliated investor pursuant to an amended securities purchase agreement.

As of December 31, 2020, $ 1.0 million of the $21M Debentures had not been previously converted into the Company's common stock (the "Remaining Debenture Balance").

During the first quarter of 2021, the holder of the $21M Debentures (the “Holder”) converted the Remaining Debenture Balance into the Company’s common stock at conversion prices equal to 80.0 % of a calculated average of the daily volume-weighted price preceding the date of conversion, and an aggregate of $ 1.3 million of principal and approximately $ 56,000 of accrued interest was converted into 4,610,645 shares of the Company's common stock at a conversion price of $ 0.29 per share.

These conversions were effected in accordance with the terms of the debenture agreements, and therefore the Company was not required to record a gain or loss on such conversions.

The conversions were limited in any given month to certain agreed-upon amounts based on the conversion price, and the Holder was also limited from beneficially owning more than 4.99 % of the Company’s outstanding common stock.

The Company entered into three note agreements to purchase commercial vehicles in the year ended December 31, 2023;

in August 2023 with Ally Financial, in April 2023 with Ford Credit, and in January 2023 with Ally Financial.

The Company had previously entered into note agreements to purchase commercial vehicles in August 2020 with First Citizens' Federal Credit Union and in June 2021 with Ally Financial.

At December 31, 2023, the five outstanding notes had an aggregate outstanding balance of approximately $ 178,000 , of which approximately $ 33,000 was current.

At December 31, 2022, there were two outstanding notes with an aggregate outstanding balance of approximately $ 48,000 , of which approximately $ 12,000 was current.

The weighted average interest rates of the outstanding balances were 11.07 % and 8.19 % at December 31, 2023 and 2022, respectively.

The weighted average remaining terms of these notes were 4.61 years and 4.07 years at December 31, 2023 and 2022, respectively.

(14) MEZZANINE EQUITY

Series B Convertible Preferred Stock

In February 2020, the Company entered into an exchange agreement with two institutional shareholders (the “TIS Exchange Agreement”) whereby the Company (i) exchanged 4,908,333 shares of the Company’s common stock previously acquired by the two institutional shareholders for an equal number of shares of the Company's newly designated Series B convertible preferred stock, and (ii) issued the $4.4M Notes (see Note 11).

In connection with the TIS Exchange Agreement, the Company filed (i) a certificate of designation with respect to the rights and preferences of the Series B convertible preferred stock, and (ii) a certificate of elimination to return all shares of the Series A convertible preferred stock, of which no shares were issued or outstanding, to the status of authorized and unissued shares of undesignated preferred stock.

The holders of Series B convertible preferred stock (the “Series B Holders”) are entitled to cast the number of votes equal to the number of shares of common stock into which the shares of Series B convertible preferred stock are convertible, together with the holders of common stock as a single class, on most matters.

However, the affirmative vote or consent of the Series B Holders voting separately as a class is required for certain acts taken by the Company, including the amendment or repeal of certain charter provisions, liquidation or winding up of the Company, creation of stock senior to the Series B convertible preferred stock, and/or other acts defined in the certificate of designation.

The Series B convertible preferred stock shall, with respect to dividend rights and rights on liquidation, winding up and dissolution, rank senior to the Company’s common stock.

The Company shall not declare, pay, or set aside any dividends on shares of any other class or series of capital stock of the Company unless the Series B Holders then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series B convertible preferred stock in an amount calculated pursuant to the certificate of designation.

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the Series B Holders then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders before any payment shall be made to the holders of common stock by reason of their ownership thereof, an amount per share equal to $ 3.00 , plus any dividends declared but unpaid thereon, with any remaining assets distributed pro-rata among the holders of the shares of Series B convertible preferred stock and common stock, based on the number of shares held by each such holder, treating for this purpose all such securities as if they had been converted to common stock.

At any time on or prior to the six-year anniversary of the issuance date of the Series B convertible preferred stock, (i) the Series B Holders have the option to convert their shares of Series B convertible preferred stock into common stock at a conversion price of $ 3.00 per share, without the payment of additional consideration, and (ii) the Company has the option to convert all, but not less than all, of the shares of Series B convertible preferred stock into the Company's common stock at a conversion price of $ 3.00 if the daily volume weighted average price of common stock (the “VWAP”) exceeds $ 4.00 per share for at least twenty consecutive trading days prior to the date on which the Company gives notice of such conversion to the Series B Holders.

On the day following the six-year anniversary of the issuance of the Series B convertible preferred stock, all outstanding shares of Series B convertible preferred stock shall automatically convert into common stock as follows:

• If the sixty-day VWAP is less than or equal to $ 0.50 per share, the Company shall have the option to (i) convert all shares of Series B convertible preferred stock into common stock at a conversion price of $ 1.00 per share, and pay cash to the Series B Holders equal to the difference between the 60 -day VWAP and $ 3.00 per share, or (ii) pay cash to the Series B Holders equal to $ 3.00 per share.

• If the sixty-day VWAP is greater than $ 0.50 per share, the Company shall have the option to (i) convert all shares of Series B convertible preferred stock into common stock at a conversion price per share equal to the quotient of $ 3.00 per share divided by the sixty-day VWAP, or (ii) pay cash to the Series B Holders equal to $ 3.00 per share, or (iii) convert all shares of Series B convertible preferred stock into common stock at a conversion price per share equal to the sixty-day VWAP per share and pay cash to the Series B Holders at the difference between $ 3.00 per share and the sixty-day VWAP per share.

The Company shall at all times when the Series B convertible preferred stock is outstanding, reserve and keep available enough of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Series B convertible preferred stock, such number of its duly authorized shares of common stock as shall from time to time be sufficient to effect the conversion of all outstanding Series B convertible preferred stock.

The Company's outstanding Series B convertible preferred stock (the "Series B Stock") is held by three institutional shareholders (the “Series B Holders”).

The Series B Holders are entitled to cast the number of votes equal to the number of shares of common stock into which the shares of Series B Stock are convertible, together with the holders of common stock as a single class, on most matters.

However, the affirmative vote or consent of the Series B Holders voting separately as a class is required for certain acts taken by the Company, including the amendment or repeal of certain charter provisions, liquidation or winding up of the Company, creation of stock senior to the Series B Stock, and/or other acts as defined in the Series B Stock certificate of designation.

The Series B Stock shall, with respect to dividend rights and rights on liquidation, winding up and dissolution, rank senior to the Company’s common stock.

The Company shall not declare, pay, or set aside any dividends on shares of any other class or series of capital stock of the Company unless the Series B Holders then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series B Stock in an amount calculated pursuant to the Series B Stock certificate of designation.

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the Series B Holders then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders before any payment shall be made to the holders of common stock by reason of their ownership thereof, an amount per share equal to $ 3.00 , plus any dividends declared but unpaid thereon, with any remaining assets distributed on a prorated basis among the holders of the shares of Series B Stock and common stock, based on the number of shares held by each such holder, treating for this purpose all such securities as if they had been converted to common stock.

At any time on or prior to the six-year anniversary of the issuance date of the Series B Stock, (i) the Series B Holders have the option to convert their shares of Series B Stock into common stock at a conversion price of $ 3.00 per share, without the payment of additional consideration, and (ii) the Company has the option to convert all, but not less than all, of the shares of Series B Stock into the Company's common stock at a conversion price of $ 3.00 if the daily volume weighted average price of common stock (the “VWAP”) exceeds $ 4.00 per share for at least twenty consecutive trading days prior to the date on which the Company gives notice of such conversion to the Series B Holders.

On the day following the six-year anniversary of the 2020 issuance of the Series B Stock, all outstanding shares of Series B Stock shall automatically convert into common stock as follows:

If the sixty-day VWAP is less than or equal to $ 0.50 per share, the Company shall have the option to:

• convert all shares of Series B Stock into shares of the Company's common stock at a conversion ratio of 1 :1 ( 4,908,333 shares), subject to adjustment upon the occurrence of certain events and pay cash to the Series B Holders equal to the difference between the sixty-day VWAP and $ 3.00 per share;

• pay cash to the Series B Holders equal to $ 3.00 per share ($ 14,725,000 ).

If the sixty-day VWAP is greater than $ 0.50 per share, the Company shall have the option to

• convert all shares of Series B Stock into shares of common stock at a conversion price per share equal to $ 3.00 per share divided by the sixty-day VWAP;

• pay cash to the Series B Holders equal to $ 3.00 per share ($ 14,725,000 );

• convert a number of shares of Series B Stock, such number at the Company's sole discretion into shares of the Company's common stock valued at the sixty-day VWAP (the "Conversion Value") and pay cash to the Series B Holders equal to the difference between $ 14,725,000 and the Conversion Value (shares issued multiplied by the sixty-day VWAP).

The Company shall at all times when the Series B Stock is outstanding, reserve and keep available such number of its duly authorized shares of common stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Series B Stock.

Series C Convertible Preferred Stock

In March 2021, the Company entered into a securities purchase agreement with Hadron Healthcare Master Fund (“Hadron”) with respect to a financing facility of up to $ 46.0 million in exchange for newly-designated Series C convertible preferred stock of the Company and warrants to purchase the Company’s common stock (the "Hadron Facility").

At the closing of the transaction in March 2021, Hadron purchased $ 23.0 million of Units (as defined below) at a price of $ 3.70 per Unit.

At that time, Hadron purchased $ 23.0 million of Units at a price of $ 3.70 per Unit.

Each Unit is comprised of one share of Series C preferred stock and a four-year warrant to purchase two and one-half shares of common stock.

Accordingly, the Company issued to Hadron 6,216,216 shares of Series C preferred stock and warrants to purchase up to an aggregate of 15,540,540 shares of common stock.

Each share of Series C preferred stock is convertible, at Hadron’s option, into five shares of MariMed common stock, and each warrant is exercisable at an exercise price of $ 1.087 per share.

The warrants shall be subject to early termination if certain milestones are attained, and the market value of the Company’s common stock reaches certain predetermined levels.

The fair value of the warrants of approximately $ 9.5 million on the issuance date was allocated to the proceeds and recorded as additional paid-in capital.

The Company incurred costs of approximately $ 387,000 related to the issuance of the aforementioned shares to Hadron, which was recorded as a reduction to additional paid-in capital in March 2021.

In connection with the closing of the transaction, the Company filed a certificate of designation with respect to the rights and preferences of the Series C convertible preferred stock.

Such stock is zero coupon, non-voting, and has a liquidation preference equal to its investment amount plus declared but unpaid dividends.

Holders of Series C convertible preferred stock are entitled to receive dividends on an as-converted basis.

Of the $ 23.0 million of proceeds received by the Company in March 2021, $ 7.8 million was designated to fund construction and upgrades of certain of the Company’s owned and managed facilities during 2021 and $ 15.2 million was used to pay down debt and obligations, comprised of principal and interest on various notes outstanding (see Note 11) and payments of certain amounts due to related parties (see Note 19).

Provided that at least 50.0 % of the shares of Series C convertible preferred stock remained outstanding, the holders had the right to appoint one observer to the Company’s board and to each of its board committees, and appoint a member to the Company’s board if and when a seat became available, at which time the observer roles would terminate.

The Company issued to Hadron 6,216,216 shares of Series C preferred stock and warrants to purchase up to an aggregate of 15,540,540 shares of common stock.

Each share of Series C preferred stock is convertible, at the holder’s option, into five shares of MariMed common stock, and each warrant is exercisable at an exercise price of $ 1.087 per share.

The warrants are subject to early termination if certain milestones are attained and the market value of the Company’s common stock reaches certain predetermined levels.

Provided that at least 50.0 % of the shares of Series C convertible preferred stock remained outstanding, the holders had the right to appoint one observer to the Company’s board of directors (the "Board") and to each of its Board committees, and appoint a member to the Company’s B if and when a seat became available, at which time the observer roles would terminate.

The transaction also imposed certain covenants on the Company with respect to the incurrence of new indebtedness, the issuance of additional shares of any designation of preferred stock, and the payment of distributions.

No further funding has occurred under the Hadron Facility and, on August 4, 2022, the Company and Hadron entered into a second amendment to the purchase agreement pursuant to which, inter alia, (i) Hadron's obligation to provide any further funding to the Company and the Company's obligation to sell any further securities to Hadron was terminated, (ii) Hadron's right to appoint a designee to the Company's board of directors was eliminated, and (iii) certain covenants restricting the Company's incurrence of new indebtedness were eliminated.

For the years ended December 31, 2022 and 2021, the Company’s revenue was comprised of the following major categories (in thousands):

Year ended December 31,

Product sales - retail $ 92,836 $ 82,127

Product sales - wholesale 32,865 26,119

Total product revenue 125,701 108,246

Other revenue:

Real estate rentals 3,526 6,548

Supply procurement 3,353 2,108

Management fees 848 3,079

Licensing fees 582 1,483

Total other revenue 8,309 13,218

Total revenue $ 134,010 $ 121,464

On August 4, 2022, the Company and Hadron entered into a second amendment to the Hadron Agreement pursuant to which, inter alia, (i) Hadron's obligation to provide any further funding to the Company and the Company's obligation to sell any further securities to Hadron was terminated, (ii) Hadron's right to appoint a designee to the Board was eliminated, and (iii) certain covenants restricting the Company's incurrence of new indebtedness were eliminated.

During the year ended December 31, 2023, in three separate transactions, the Company converted, at Hadron's request in accordance with the terms and conditions of the Series C stock certificate of designation, a total of 5,060,942 shares of Series C Stock into 25,304,710 shares of the Company's common stock (the "Conversions").

The Conversions were effected at a conversion rate of five shares of the Company's common stock for each share of Series C Stock converted.

The Company did not recognize a gain or loss on the Conversions, as they were effected in accordance with the Series C Stock certificate of designation.

At December 31, 2023, 1,155,274 shares of Series C Stock remained outstanding.

(15) STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

Stockholder Resolutions

At the Company’s 2021 annual meeting of stockholders in September 2021 (the “2021 Annual Meeting”), stockholders approved an amendment to the Company’s certificate of incorporation, increasing the number of authorized shares of common stock from 500 million to 700 million.

Also at the 2021 Annual Meeting, stockholders approved an amendment to the Company’s Amended and Restated 2018 Stock Award and Incentive Plan (the “2018 Plan”), increasing the aggregate number of shares available for issuance under the Plan from 40 million to 70 million.

Amended and Restated 2018 Stock Award and Incentive Plan

The 2018 Plan provides for the award of options to purchase the Company's common stock ("stock options"), restricted stock units ("RSUs"), stock appreciation rights, restricted stock, deferred stock, dividend equivalents, performance shares or other stock-based performance awards, as well as other stock- or cash-based awards.

The Amended and Restated Stock Award and Incentive Plan (the "2018 Plan") provides for the award of options to purchase the Company's common stock ("stock options"), restricted stock units ("RSUs"), stock appreciation rights, restricted stock, deferred stock, dividend equivalents, performance shares or other stock-based performance awards, as well

as other stock- or cash-based awards.

At December 31, 2023, there were 26,034,185 total shares of common stock available for future issuance under the 2018 Plan.

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Outstanding at December 31, 2023 35,599,421 $ 0.78

The amount reported as stock options exercised was comprised of 55,000 options exercised in cash transactions, from which the Company received approximately $ 10,000 , and a cashless exercise of 312,248 stock options, under which 200,000 shares were released and 112,248 shares were returned to the Company in lieu of cash.

Stock options granted under the 2018 Plan generally expire five years from the date of grant.

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The grant date fair values of stock options granted in the year ended December 31, 2023 were estimated using the Black-Scholes valuation model with the following assumptions:

Estimated life (in years) 5.0

Estimated life (in years) 3.00 to 3.26

Weighted average volatility 99.22 %

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The fair value of RSUs is determined based on the market value of the Company's shares on the date of grant.

The Company granted 2,433,332 RSUs in the year ended December 31, 2022, 833,333 RSUs were granted to each of the Company's then-Chief Executive Officer and its President, 666,667 RSUs were granted to the Company's Chief Operating Officer, and 33,333 RSUs were granted to each of the three independent members of its Board of Directors.

Each of these RSUs had a grant date fair value of $ 0.53 .

At December 31, 2022, there were 1,599,999 unvested RSUs outstanding.

In April 2022, 750,000 warrants were exercised in a cashless transaction under which the Company withheld 515,039 shares underlying such warrants and issued 234,961 shares of common stock.

In October 2022, 896,031 warrants were exercised in a cashless transaction under which the Company withheld 813,694 shares underlying such warrants and issued 82,337 shares of common stock.

The activity related to the Company's RSUs for the year ended December 31, 2023 was as follows:

RSUs Weighted average grant date fair value

Unvested at January 1, 2023 1,599,999 $ 0.53

Granted 4,962,538 $ 0.40

Vested ( 599,999 ) $ 0.53

Forfeited ( 137,000 ) $ 0.44

Outstanding at December 31, 2023 5,825,538 $ 0.42

In connection with the CA Credit Agreement (see Note 12), the Company issued to the Lenders an aggregate of 19,148,936 warrants to purchase shares of the Company's common stock at $ 0.47 per share, exercisable for a five-year period following issuance.

In addition to the 450,000 shares of restricted common stock issued to purchase the outstanding minority interest in Mari Holdings MD LLC ("Mari MD") noted below, the Company also issued 400,000 warrants to purchase the Company's common stock at an exercise price of $ 0.40 per share (the "Mari MD Warrants").

The Mari MD Warrants expire on April 13, 2026.

At December 31, 2023, warrants to purchase up to 42,189,476 shares of common stock were outstanding, with a weighted average exercise price of $ 0.68 .

Other Common Stock Issuances

During 2021 and 2022, the Company issued an aggregate of 12,542,126 shares of common stock in a series of conversions of a promissory note in the original principal amount of $ 8.8 million, of which 1,142,858 shares were issued in the first quarter of 2022, resulting in the promissory note being fully paid and retired (see Note 11).

In addition to the activity described previously, the Company also issued during the year ended December 31, 2022:

• 4,343,750 shares of restricted common stock in the aggregate as purchase consideration for two business acquisitions with an aggregate fair value of $ 2.2 million (see Note 3);

In addition to the activity related to stock options and RSUs described above and the Conversions (see Note 14), the Company also issued during the year ended December 31, 2023:

• 6,580,390 shares of restricted common stock with a fair value of $ 3.0 million in connection with the Ermont Acquisition (see Note 3);

• 740,741 shares of restricted common stock with a fair value of approximately $ 300,000 to purchase property and equipment;

• 375,000 shares of restricted common stock with a fair value of approximately $ 275,000 in exchange for consulting services;

• 350,000 shares of restricted common stock with a grant date fair value of approximately $ 217,000 to the Company’s Chief Financial Officer in connection with her appointment;

• 218,345 shares of restricted common stock under a royalty agreement with an aggregate fair value of approximately $ 121,000 ;

• 34,976 shares of common stock issued in connection with the vesting of restricted stock units with a grant date fair value of approximately $ 19,000 (see "Extension of Exercise Period and Accelerated Vesting of RSUs" below);

• 17,227 shares of restricted common stock to an employee with an aggregate grant date fair value of approximately $ 9,000 .

Extension of Exercise Period and Accelerated Vesting of RSUs

In connection with the death of the Company's former Chief Executive Officer Robert Fireman ("Mr.

Fireman") on December 11, 2022, the Company, in accordance with the 2018 Plan, extended the exercise period for Mr.

Fireman's outstanding stock options, which were fully vested, to the earlier of three years from the date of death or the contractual expiration date of the respective stock options.

Accordingly, Mr.

Fireman's stock options will remain exercisable until December 11, 2025.

Additionally, the Compensation Committee of the Company's Board of Directors, as prescribed in the 2018 Plan, accelerated the vesting, on a prorated basis, of Mr.

Fireman's RSUs, which had been granted to him on October 27, 2022, such that 34,976 RSUs were accelerated and the underlying shares were released in trust to Mr.

Fireman's estate on December 30, 2022.

The remaining 798,357 unvested RSUs that had been granted to Mr.

Fireman on October 27, 2022 were forfeited and returned to the 2018 Plan.

These amounts are included in the information related to RSUs above.

• 400,000 shares of restricted common stock to settle certain obligations to one of the Company's service providers with a fair value of approximately $ 160,000 ;

• 450,000 shares of restricted common stock to purchase a 0.33 % minority interest in Mari Holdings MD LLC, one Company's majority-owned subsidiaries;

• 13,007 shares of restricted common stock with an aggregate fair value of approximately $ 5,000 issued under a royalty agreement;

• 75,025 shares of restricted common stock in the aggregate granted to three employees, including the 70,000 shares discussed below under "Common Stock Issuance Obligations" below, with a total fair value of approximately $ 41,000 .

Stock-Based Compensation

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Common Stock Issuance Obligations

At December 31, 2022, the Company was obligated to issue 70,000 shares of common stock in the aggregate, with an aggregate grant date fair value of approximately $ 39,000 , to two employees.

At December 31, 2022, the Company was obligated to issue 70,000 shares of common stock in the aggregate, with an aggregate grant date fair value of approximately $ 39,000 , to two employees, which shares were issued in the first quarter of 2023.

The Company had no such obligation at December 31, 2023.

For the years ended December 31, 2023 and 2022, the Company’s revenue was comprised of the following major categories (in thousands):

Year ended December 31,

Product sales - retail $ 95,517 $ 92,836

Product sales - wholesale 48,788 32,865

Total product revenue 144,305 125,701

Other revenue:

Real estate rentals 1,787 3,526

Supply procurement 1,534 3,353

Management fees 711 848

Licensing fees 261 582

Total other revenue 4,293 8,309

Total revenue $ 148,598 $ 134,010

(17) MAJOR CUSTOMERS

The Company did not have any customers that contributed 10% or more of total revenue in the years ended December 31, 2023 or 2022.

At December 31, 2022, there were no customers that accounted for 10% or more of the Company' accounts receivable balance.

At December 31, 2021, one customer accounted for 10% or more of the Company's accounts receivable balance, representing approximately 28 % of total accounts receivable.

At each of December 31, 2023 and 2022, there were no customers that accounted for 10% or more of the Company's accounts receivable balance.

The Company performs ongoing credit evaluations of its customers and generally does not require collateral on accounts receivable.

(17) BAD DEBT

The Company maintains an allowance against trade accounts receivable (the “AR Allowance”) and previously also reserved against cash advanced by the Company to a cannabis-licensed client for working capital purposes (the "WC Reserve”).

During the year ended December 31, 2022, the Company recorded $ 3.8 million of expense to increase its AR Allowance.

During the year ended December 31, 2021, the Company increased the AR Allowance and the WC Reserve by $ 1.4 million and $ 0.5 million, respectively.

The increase to the WC Reserve in the year ended December 31, 2021 was related to Harvest's working capital balance (see Note 3).

These amounts are reported as Bad debt in the consolidated statements of operations for the respective years.

Lease Commitments

The Company is the lessee under six operating leases and seven finance leases.

The Company was the lessee under eight operating leases and twenty-three finance leases at December 31, 2023.

These leases contain rent holidays and customary escalations of lease payments for the type of facilities being leased.

The Company's operating lease agreements include its corporate headquarters, dispensaries and cannabis production and processing facilities.

The Company subleases three of these leased facilities to a cannabis-licensed client.

The Company recognizes rent expense on a straight-line basis over the expected lease term, including cancelable option periods which the Company fully expects to exercise.

Certain leases require the payment of property taxes, insurance and/or maintenance costs in addition to the rent payments.

The details of the Company’s operating lease agreements are as follows:

• Delaware – 4,000 square feet of retail space in a multi-use building under a five-year lease that expires in April 2027 that the Company has developed into a cannabis dispensary, which is subleased to a cannabis-licensed client.

• Delaware – a 100,000 square foot warehouse, of which the Company developed 60,000 square feet into a cultivation facility, and is developing the remaining space into a processing facility, subleased to a cannabis-licensed client.

The lease expires in March 2030, with an option to extend the term for three additional five-year periods.

• Delaware – a 12,000 square foot premises which the Company developed into a cannabis production facility with offices, and is subleased to a cannabis-licensed client.

The lease expires in January 2026 and contains an option to negotiate an extension at the end of the lease term.

• Massachusetts – 10,000 square feet of office space which the Company utilizes as its corporate offices under a lease with a related party expiring in 2028, with an option to extend the term for an additional five-year period.

• Massachusetts – a 2,700 square foot dispensary, which lease the Company assumed under a lease that expires in 2026, with options to extend the term for three additional five-year periods through 2041.

• Maryland – a 2,700 square foot two-unit apartment under a lease that expires in July 2023.

The Company leases machinery and office equipment under finance leases that expire in July 2023 through January 2028 with such terms being a major part of the economic useful life of the leased property.

The components of lease expense for the year ended December 31, 2022 were as follows (in thousands):

The Company leases machinery and office equipment under finance leases that expire in January 2026 through October 2038 with such terms comprising major part of the economic useful life of the leased property.

The components of lease expense for the years ended December 31, 2023 and 2022 were as follows (in thousands):

Year ended December 31,

Operating lease expense $ 1,838 $ 1,160

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Total finance lease expense $ 850 $ 216

The weighted average remaining lease term for operating leases and finance leases is 6.3 years and 3.7 years, respectively.

The weighted average discount rate used to determine the right-of-use assets and lease liabilities was between 7.50 % to 12.75 % for all leases.

The weighted average remaining lease terms and weighted average discount rates for the Company's operating leases and finance leases at December 31, 2023 and 2022 were as follows:

Year ended December 31,

Weighted average remaining lease term (years):

Operating leases 9.83 6.30

Finance leases 3.29 3.70

Weighted average discount rate:

Operating leases 11.0 % 8.1 %

Finance leases 11.0 % 8.7 %

Future minimum lease payments as of December 31, 2023 under all non-cancelable leases having an initial or remaining term of more than one year were as follows (in thousands):

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Present value of lease liabilities $ 10,400 $ 3,350

In November 2021, the Company entered into lease agreements for six retail properties, each with square footage between 4,000 and 6,000 square feet, in the State of Ohio (each an “Ohio Lease” and collectively the “Ohio Leases”).

Each Ohio Lease had an initial lease period of eleven months , with a minimum rent of $ 31.00 per square foot, which increased 3.0 % annually.

Should the Company be awarded one or more cannabis licenses by the state of Ohio prior to the end of the initial lease period, it could extend the term of one or more of the Ohio Leases to ten years (with two additional five-year options to extend) upon the payment of $ 50,000 for the extended Ohio Lease, which the Company is building out into a medical use dispensary.

In February 2022, the Company was notified that it was awarded a cannabis dispensary license from the State of Ohio.

The Company is awaiting the final verification process to be completed by the state.

In April 2022 the Company extended the term of one of the Ohio Leases to February 2023 (the "Extended Ohio Lease"), and the remaining five Ohio Leases were terminated.

The Company intends to enter into a ten-year lease on the Extended Ohio Lease property, which will become effective upon the completion of the final verification process by the state, which is expected to occur in the first half of 2023.

As of December 31, 2022, the lease term of the Extended Ohio Lease was less than one year, and the Company was not required to record a right-of-use asset and corresponding lease liability on its balance sheet.

Accordingly, the future lease payments of the Extended Ohio Lease are excluded from the table of future minimum lease payments shown above.

(19) RELATED PARTY TRANSACTIONS

The Company’s corporate offices are leased from an entity in which the Company’s President and Chief Executive Officer ("Mr.

Levine") has an investment interest.

The Company’s corporate offices are leased from an entity in which the Company’s President and Chief Executive Officer (the "CEO") has an investment interest.

This lease expires in October 2028 and contains a five-year extension option.

Expenses under this lease in both of the years ended December 31, 2022 and 2021 approximated $ 156,000 .

Expenses under this lease in the years ended December 31, 2023 and 2022 were approximately $ 272,000 and $ 156,000 , respectively.

The Company procures nutrients, lab equipment, cultivation supplies, furniture, and tools from an entity owned by the family of the Company’s Chief Operating Officer (the "COO").

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The Company pays royalties on the revenue generated from its Betty’s Eddies product line to an entity owned by the COO and the Company's Chief Revenue Officer (the "CRO") under a royalty agreement.

This agreement was amended effective January 1, 2021 whereby, among other modifications, the royalty percentage changed from 2.5 % on all sales of Betty’s Eddies products to 3.0 % if sold directly by the Company and between 1.3 % and 2.5 % if licensed by the Company for sale by third parties.

Under this agreement, the royalty on all sales of Betty’s Eddies products is 3.0 % if sold directly by the Company and between 1.3 % and 2.5 % if licensed by the Company for sale by third parties.

Future developed products (i.e., ice cream) have a royalty rate of 0.5 % if sold directly by the Company and between 0.125 % and 0.135 % if licensed by the Company for sale by third parties.

The aggregate royalties due to this entity for the years ended December 31, 2023 and 2022 approximated $ 722,000 and $ 219,000 , respectively.

During the years ended December 31, 2022 and 2021, one of the Company’s majority-owned subsidiaries paid distributions aggregating approximately $ 27,300 and $ 44,000 , respectively, to Mr.

Fireman and Mr.

Levine, who own

minority equity interests in such subsidiary.

In addition, the Company accrued $ 1,800 in the aggregate at December 31, 2022 for payments relate to the fourth quarter of 2022.

During the years ended December 31, 2022 and 2021, another of the Company’s majority-owned subsidiaries paid distributions of approximately $ 17,500 and $ 7,000 to a current employee who owns a minority equity interest in such subsidiary, and accrued $ 9,000 at December 31, 2022 for a payment related to the fourth quarter of 2022.

During the years ended December 31, 2022 and 2021, the Company purchased fixed assets and consulting services aggregating $ 1.2 million and $ 0.9 million, respectively, from two entities owned by two of the Company’s general managers.

During the years ended December 31, 2022 and 2021, the Company purchased fixed assets aggregating approximately $ 600,000 and $ 642,000 from an entity owned by an employee.

In the first quarter of 2021, the Company made payments aggregating $ 1.2 million that had been accrued at December 31, 2020, comprised of approximately $ 460,000 paid to Mr.

Fireman, $ 653,000 paid to entities owned by Mr.

Fireman and Mr.

Levine, and $ 45,000 paid to a stockholder of the Company.

At December 31, 2022, the Company’s mortgages with Bank of New England, DuQuoin State Bank, and South Porte Bank were personally guaranteed by Mr.

During the year ended December 31, 2023, one of the Company’s majority-owned subsidiaries paid distributions of approximately $ 11,000 to the CEO, who owns a minority equity interest in such subsidiary.

During the year ended December 31, 2022, this subsidiary paid distributions aggregating approximately $ 27,300 to the CEO and Robert Fireman, the Company's former President and Chief Executive Officer.

In addition, the Company accrued $ 1,800 in the aggregate at December 31, 2022 for payments related to the fourth quarter of 2022.

FSCC, the cannabis-licensed client in Delaware that the Company manages, paid fees to BKR Management Inc., a company partially owned by the CEO, related to the initial formation, licensing and establishment of FSCC's cannabis operations.

The aggregate fees paid by FSCC were $ 192,000 related to each of the years ended December 31, 2023 and 2022.

Payment of these fees terminated effective as of December 31, 2023.

At December 31, 2023, the Company’s mortgages with Bank of New England and DuQuoin State Bank were personally guaranteed by the CEO under a limited guaranty.

Additionally, the CEO provided a limited guaranty to the CA Lenders under the CA Credit Agreement through its repayment in November 2023.

The CEO had also guaranteed the South Porte Bank Mortgage prior to its repayment in May 2023.

(20) INCOME TAXES

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At December 31, 2023 and 2022, the Company’s cumulative federal net operating losses were $ 71.2 million and $ 39.2 million, respectively.

The provision recorded in the year ended December 31, 2023 was due in part to the impact of Section 280E of the Internal Revenue Code ("Section 280E"), which prohibits the deduction of

certain ordinary business expenses, true-ups from changes that occurred between when the provision for the year ended December 31, 2022 as determined and when the related tax returns were filed, and reserves recorded against uncertain tax positions taken on the tax returns as filed.

The provision recorded in the year ended December 31, 2022 was due in part to the impact of Section 280E of the Internal Revenue Code, which prohibits the deduction certain ordinary business expenses, and true-ups from changes that occurred between when the provision for the year ended December 31, 2021 was determined and when the related tax return was filed.

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Stock-based compensation ( 0.7 ) % 2.2 %

Non-cash interest ( 9.4 ) % — %

FIN 48 reserve ( 28.1 ) % 19.5 %

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The Company does not expect its unrecognized tax benefits to change significantly over the next twelve months.

During the year ended December 31, 2023, the Company's unrecognized tax benefits increased by $ 1.6 million as a result of uncertain tax positions relating to net operating losses deducted by subsidiaries that are subject to the provisions of Section 280E.

During the year ended December 31, 2022, the Company's unrecognized tax benefits increased by $ 4.0 million as a result of uncertain tax positions relating to net operating losses deducted by subsidiaries that are subject to the provision of Section 280E of the Internal Revenue Code.

The Company believes that its reserves for uncertain tax positions are appropriate, and that it has meritorious defenses for its tax filings and will vigorously defend them during any audit process, appellate process and through litigation in courts, as necessary.

The Company files income tax returns in the U.S.

federal tax jurisdiction and various state jurisdictions.

The Company is currently open to examination under the statute of limitations by the Internal Revenue Service and state jurisdictions for the tax years ended 2018 through 2022.

The Company classified interest and penalties related to unrecognized tax benefits as income tax expense.

The total amount of interest and penalties related to uncertain tax positions and recognized in the balance sheet at December 31, 2023 was $ 0.4 million.

The Company files income tax returns in the United States federal tax jurisdiction and various state jurisdictions.

The Company is currently open to examination under the statute of limitations by the Internal Revenue Service and state jurisdictions for the tax years ended December 31, 2018 through December 31, 2033.

At December 31, 2023, the Company recorded a receivable for income taxes of $ 1.0 million, comprised of refunds requested from the Internal Revenue Service and state taxing authorities.

This receivable is reported as a component of Other current assets in the Company's consolidated balance sheet at December 31, 2023.

At December 31, 2022, the Company recorded a receivable for income taxes of $ 3.1 million, comprised of $ 1.3 million of overpayments that will be applied to future periods and $ 1.8 million that was requested for refund from the Internal Revenue Service.

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Bankruptcy Claim

During 2019, the Company’s MMH subsidiary sold and delivered hemp seed inventory to OGG, Inc.

(f/k/a GenCanna Global Inc.), a Kentucky-based cultivator, producer, and distributor of hemp (“GenCanna”).

During 2019, the Company’s subsidiary, MariMed Hemp, Inc.

("MMH") sold and delivered hemp seed inventory to GenCanna Global Inc., a Kentucky-based cultivator, producer, and distributor of hemp (“GenCanna”).

At the time of sale, the Company owned a 33.5 % ownership interest in GenCanna.

The Company recorded a related party receivable of approximately $ 29 million from the sale, which was fully reserved on December 31, 2019.

The Company recorded a related party receivable of approximately $ 29 million from the sale, which was fully reserved at December 31, 2019.

On January 24, 2020, an involuntary bankruptcy proceeding under Chapter 11 was filed against GenCanna and its wholly-owned subsidiary, OGGUSA Inc.

(f/k/a GenCanna Global US, Inc.) ("OGGUSA" and together with GenCanna, the "OGGUSA Debtors") in the U.S.

(f/k/a GenCanna Global US, Inc.) ("OGGUSA" and together with GenCanna, the "OGGUSA Debtors") in the United States.

Bankruptcy Court in the Eastern District of Kentucky (the "Bankruptcy Court").

In February 2020, the OGGUSA Debtors, under pressure from certain of its creditors including its senior lender MGG Investment Group LP (MGG"), agreed to convert the involuntary bankruptcy proceeding into a voluntary Chapter 11 proceeding.

In February 2020, the OGGUSA Debtors, agreed to convert the involuntary bankruptcy proceeding into a voluntary Chapter 11 proceeding.

The OGGUSA Debtors' subsidiary, Hemp Kentucky LLC, also filed voluntary petitions under Chapter 11 in the Bankruptcy Court.

In May 2020, after an abbreviated solicitation/bid/sale process, the Bankruptcy Court, over numerous objections by creditors and shareholders of the OGGUSA Debtors, which included the Company, entered an order authorizing the sale of all or substantially all of the assets of the OGGUSA Debtors to MGG.

After the consummation of the sale of all or substantially all of their assets and business, the OGGUSA Debtors filed their liquidating plan of reorganization (the “Liquidating Plan”) to collect various prepetition payments and commercial claims against third parties, liquidate the remaining assets of the OGGUSA Debtors, and make payments to creditors.

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Since the approval of the Liquidating Plan, the OGGUSA Debtors have been in the process of liquidating the remaining assets, negotiating and prosecuting objections to other creditors’ claims, and pursuing the collection of accounts receivable and Chapter 5 bankruptcy avoidance claims.

In January 2022, the Company, at the request of Oxford Restructuring Advisors LLC, the administrator of the Liquidating Plan for the OGGUSA Debtors (the "Plan Administrator"), executed a written release of claims, if any, of the Company against Huron Consulting Group (“Huron”), a financial consulting and management company retained by the senior lender of the OGGUSA Debtors to perform loan management services for the lender and OGGUSA Debtors prior to and during

their Chapter 11 bankruptcy cases.

Such release was executed in connection with a comprehensive settlement agreement between the OGGUSA Debtors and Huron.

In consideration for the Company’s execution of the release, Huron paid an additional $ 40,000 to the bankruptcy estates of the OGGUSA Debtors to be included in the funds to be distributed to creditors, including the Company.

In connection with the discussions of the Company with the OGGUSA Debtors relating to the Huron settlement, the Plan Administrator raised issues relating to a potential claim against MariMed Hemp, Inc.

("MHI") for certain preferential transfers of assets, which were valued at $ 250,000 by the Plan Administrator, of the OGGUSA Debtors alleged to have been made to MHI in payment of a $ 600,000 loan made by the Company prior to the Chapter 11 bankruptcy of the OGGUSA Debtors (the "Preferential Claim").

On April 20, 2022, the Plan Administrator filed its Complaint to Avoid and Recover Transfers Pursuant to 11 U.S.C.

§§547 and 550 and to Disallow Claims Pursuant to 11 U.S.C.

§502 (the "Complaint"), asserting the Preferential Claim seeking the recovery of an amount no less than $ 200,000 and to disallow the MHI claim until such time as such preferential transfer has been repaid to the OGGUSA Debtors.

On August 1, 2022, an answer to the Complaint was filed, asserting counterclaims and third-party claims against OGGUSA, the Plan Administrator, and Huron for declaratory judgment (the "Related Claims") in relation to terms of the Plan of Reorganization (the "Plan") and the allowance of the MHI claim under the Plan.

The Company has and continues to vigorously deny that any of the Preferential Claim exists in that such claims were waived and released in connection with the Company's settlement agreement and stipulations for its support of and voting for the Plan.

As such, the Company believes that such claims are meritless and have no basis in fact or law.

As of the date of this filing, there is insufficient information as to how much of the Company's allowed general unsecured claim, if any, will be paid upon the completion of the liquidation of the remaining assets of the OGGUSA Debtors.

In April 2022, the Plan Administrator filed a Complaint against MMH (the "Complaint") alleging certain preferential transfers of assets, which were valued by the Plan Administrator at $ 250,000 , relating to payments on a $ 600,000 loan made to MMH by the Company prior to the filing of the OGGUSA Debtors Chapter 11 proceeding (the "Preferential Claim").

The Complaint sought to recover an amount no less than $ 200,000 and to disallow MMH’s unsecured general claim in the bankruptcy proceeding until such time as such preferential transfer had been repaid to the OGGUSA Debtors.

In July 2023, MMH entered into a Settlement and Release Agreement with the Plan Administrator pursuant to which it agreed to reduce its Bankruptcy Court approved unsecured general claim to $ 15.5 million, or by 50 %, in consideration for the settlement of the Preferential Claim and a general release of MMH and the Company.

As of the date of this report, there is insufficient information to determine how much MMH may receive upon the completion of the liquidation of the remaining assets of the OGGUSA Debtors on account of its general unsecured claim, if anything.

New Bedford, MA and Middleborough, MA Buildouts

In the third quarter of 2023, the Company recorded an increase of $ 2.0 million in building and building improvements and a corresponding accrued liability in the same amount for electrical work performed at the Company's New Bedford and Middleborough properties between December 2017 and June 2023.

The electrical work was performed by an electrical contractor that is owned and/or controlled by the family of a non-officer/director Company stockholder who beneficially owned more than 5 % of the Company's common stock when the electrical work began.

The electrical work was primarily paid for by an entity that is indirectly controlled by that individual and another non-officer/director Company shareholder who also beneficially owned more than 5 % of the common stock when the electrical work began.

The Company repaid the two shareholders $ 300,000 each as salary between 2021 and 2023 (at the rate of $ 100,000 each per year), which payments have since been terminated.

The Company intends to negotiate an agreement with the entity that paid for the electrical work and all other interested parties to reflect the liability and agreed-upon payment terms.

(22) SUBSEQUENT EVENTS

Planned Acquisition of Dispensary

On February 21, 2023, the Company announced its intention to acquire the operating assets of Ermont, Inc.

("Ermont"), a medical licensed vertical cannabis operator, located in Quincy, Massachusetts.

This acquisition, which is subject to approval by the Massachusetts Cannabis Control Commission (the "CCC"), will provide the Company with its third dispensary in Massachusetts, substantially completing its buildout to the maximum allowable by state regulations.

The Company anticipates rebranding the dispensary as Panacea Wellness and intends to commence medical sales upon receipt of final approvals and closing conditions.

The acquisition includes a Host Community Agreement with the city of Quincy to conduct adult-use cannabis sales.

The Company expects to commence adult-use sales upon approval by the CCC.

The Company also plans to expand the existing medical dispensary to accommodate the expected increased traffic associated with adult-use sales.

Additionally, the Company plans to repurpose Ermont's existing cultivation facility to use for its pheno-hunting activities.

The Company expects this will allow it to move pheno-hunting out of its New Bedford facility and to use the freed space in New Bedford for much-needed additional capacity to cultivate its Nature's Heritage flower.

Credit Agreement

On January 24, 2023, the Company entered into a Loan and Security Agreement (the “Credit Agreement”), by and among the Company, subsidiaries of the Company from time-to-time party thereto (together with the Company, collectively, the “Borrowers”), lenders from time-to-time party thereto (the “Lenders”), and Chicago Atlantic Admin, LLC (“Chicago Atlantic”), as administrative agent for the Lenders.

Proceeds from the Credit Agreement are designated to complete the build-out of a new cultivation and processing facility in Illinois, complete the buildout of a new processing kitchen in Missouri, expand existing cultivation and processing facilities in Massachusetts and Maryland, fund certain capital expenditures, and to repay in full the Kind Therapeutics seller notes incurred in connection with the Kind acquisition in April 2022.

The remaining balance, if any, will be used to fund acquisitions.

Principal, Security, Interest and Prepayments

The Credit Agreement provides for $ 35.0 million in principal borrowings at the Borrowers’ option in the aggregate and further provides the Borrowers with the right, subject to customary conditions, to request an additional incremental term

loan in the aggregate principal amount of up to $ 30.0 million;

provided that the Lenders elect to fund such incremental term loan.

$ 30 million of loan principal was funded at the initial closing and the Company has the option, during a six-month period following the initial closing, to draw down an additional $ 5.0 million.

The loans require scheduled amortization payments of 1.0 % of the principal amount outstanding under the Credit Agreement per month commencing in May 2023, and the remaining principal balance is due in full on January 24, 2026, subject to extension to January 24, 2028 under certain circumstances.

The Credit Agreement provides the Borrowers with the right, subject to specified limitations, to (a) incur seller provided debt in connection with future acquisitions, (b) incur additional mortgage financing from third-party lenders secured by real estate currently owned and acquired after the closing date, and (c) to incur additional debt in connection with equipment leasing transactions.

The obligations under the Credit Agreement are secured by substantially all of the assets of the Borrowers, excluding specified parcels of real estate and other customary exclusions.

The Credit Agreement provides for a floating annual interest rate equal to the prime rate then in effect plus 5.75 %, which rate may be increased by 3.00 % upon an event of default or 7.50 % upon a material event of default as provided in the Credit Agreement.

At any time, the Company may voluntarily prepay amounts due under the facility in $ 5.0 million increments, subject to a three -percent prepayment premium and, during the first 20-months of the term, a “make-whole” payment.

Representations, Warranties, Events of Default and Certain Covenants

The Credit Agreement includes customary representations and warranties and customary events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to material indebtedness, and events of bankruptcy and insolvency.

The Credit Agreement also includes customary negative covenants limiting the Borrowers’ ability to incur additional indebtedness and grant liens that are otherwise not permitted, among others.

Additionally, the Credit Agreement requires the Borrowers to meet certain financial tests.

Warrant Issuance

The Credit Agreement provides for 30 % warrant coverage against amounts funded under the facility, priced at a 20 % premium to the trailing 20-day average price on the closing date of each such funding.

At the initial closing, upon funding of the initial $ 30.0 million under the facility, the Company issued to the Lenders an aggregate of 19,148,936 warrants to purchase shares of the Company’s common stock at $ 0.47 per share, exercisable for a five-year period following issuance.

Incremental warrants are issuable upon further draw-downs under the facility.

Repayment of Kind Notes

On January 24, 2023, in connection with the Company's Credit Agreement described above, the Company repaid in full the Kind Notes (see Note 11).

Equity Transactions

Subsequent to December 31, 2022, the following equity transaction occurred:

• 1,793 shares of restricted common stock issued as payment under a royalty agreement with an aggregate fair market value of approximately $ 700 .

Planned Business Acquisition

On February 1, 2024, the Company entered into an agreement to acquire the medical cannabis retail license and certain assets of Our Community Wellness & Compassionate Care Center, Inc.

("Medleaf") in Prince George's County, Maryland in exchange for $ 5.25 million, adjusted for certain items.

The purchase consideration is comprised of $ 2.0 million of cash in the aggregate, a $ 2.0 million note to be issued to the sellers of Medleaf (the "Medleaf Sellers") at the time of closing, and shares of the Company's common stock with a fair value of $ 1.25 million based on a formulaic calculation, to be issued at the time of closing.

As of the date of this report, the Company has made advance payments to the Medleaf Sellers totaling $ 0.5 million.

Completion of the acquisition is dependent upon certain conditions, including regulatory approval of the acquisition.

The Company expects this acquisition to be completed in 2024;

however, there is no assurance that the required regulatory approvals will be obtained.

Receipt of Certificate of Occupancy - Casey, Illinois

On February 26, 2024, MariMed received its Certificate of Occupancy from the Illinois Cannabis Control Commission to commence operations in the Company's permanent brick-and-mortar facility for its Casey, Illinois adult-use dispensary.

The Company anticipates that it will transition from its temporary facility at the same location and commence operations in the new facility during the first quarter of 2024.

Equity Transaction

Subsequent to December 31, 2023, the Company issued 3,614 shares of restricted common stock with an aggregate fair market value of approximately $ 2,000 as payment under a royalty agreement.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data