What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-08-08 · 213 added, 168 removed, 617 unchanged (38% of the section changed)

2 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

2024 December 31,

1 unchanged sentence

Cash and cash equivalents $ 9,788 $ 14,645

Accounts receivable, net of allowances of $ 764 at both June 30, 2024 and December 31, 2023

Accounts receivable, net of allowances of $ 460 and $ 764 at September 30, 2024 and December 31, 2023, respectively

Inventory 34,975 25,306

28 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

2024 December 31,

4 unchanged sentences

Series B convertible preferred stock, $ 0.001 par value;

4,908,333 shares authorized, issued and outstanding at June 30, 2024 and December 31, 2023

4,908,333 shares authorized, issued and outstanding at September 30, 2024 and December 31, 2023

14,725 14,725

1 unchanged sentence

12,432,432 shares authorized;

1,155,274 shares issued and outstanding at both June 30, 2024 and December 31, 2023

1,155,274 shares issued and outstanding at both September 30, 2024 and December 31, 2023

Total mezzanine equity 19,000 19,000

2 unchanged sentences

32,659,235 shares authorized;

zero shares issued and outstanding at June 30, 2024 and December 31, 2023

zero shares issued and outstanding at September 30, 2024 and December 31, 2023

Common stock, $ 0.001 par value;

700,000,000 shares authorized;

380,338,790 and 375,126,352 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

380,992,386 and 375,126,352 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 173,111 171,144

6 unchanged sentences

(in thousands, except per share amounts)

Three months ended Six months ended

June 30, June 30,

Three months ended Nine months ended

September 30, September 30,

2024 2023 2024 2023

18 unchanged sentences

Net loss ( 995 ) ( 4,269 ) ( 3,926 ) ( 5,868 )

Net income attributable to noncontrolling interests 12 23 18 4

Net income (loss) attributable to noncontrolling interests 16 ( 10 ) 34 ( 6 )

Net loss attributable to common stockholders $ ( 1,011 ) $ ( 4,259 ) $ ( 3,960 ) $ ( 5,862 )

8 unchanged sentences

(in thousands, except share amounts)

Six months ended June 30, 2024

Nine months ended September 30, 2024

Common stock Common stock

20 unchanged sentences

Balances at June 30, 2024 380,338,790 380 — — 172,842 ( 102,904 ) ( 1,715 ) 68,603

Release of shares under stock grants 719,462 1 — — ( 1 ) — — —

Shares of newly vested common stock surrendered to the Company to satisfy tax withholding obligations ( 85,071 ) — — — ( 15 ) — — ( 15 )

Common stock issued under licensing agreement 19,205 — — — 5 — — 5

Distributions to non-controlling interests — — — — — — ( 37 ) ( 37 )

Stock-based compensation — — — — 280 — — 280

Net (loss) income — — — — — ( 1,011 ) 16 ( 995 )

Balances at September 30, 2024 380,992,386 $ 381 — $ — $ 173,111 $ ( 103,915 ) $ ( 1,736 ) $ 67,841

Condensed Consolidated Statements of Stockholders’ Equity (continued)

(in thousands, except share amounts)

Six months ended June 30, 2023

Nine months ended September 30, 2023

Common stock Common stock

28 unchanged sentences

Balances at June 30, 2023 371,614,758 372 — $ — 167,652 ( 85,527 ) ( 1,593 ) 80,904

Exercise of stock options 330,000 — — — 74 — — 74

Conversion of preferred stock to common stock 3,921,670 4 — — 2,898 — — 2,902

Common stock issued under licensing agreement 5,530 — — — 2 — — 2

Distributions to non-controlling interests — — — — — — ( 47 ) ( 47 )

Stock-based compensation — — — — 296 — — 296

Net loss — — — — — ( 4,259 ) ( 10 ) ( 4,269 )

Balances at September 30, 2023 375,871,958 $ 376 — $ — $ 170,922 $ ( 89,786 ) $ ( 1,650 ) $ 79,862

See accompanying notes to the unaudited condensed consolidated financial statements.

1 unchanged sentence

(in thousands)

Six months ended

Nine months ended

September 30,

Cash flows from operating activities:

Net loss attributable to common stockholders $ ( 3,960 ) $ ( 5,862 )

Net income attributable to noncontrolling interests 18 4

Net income (loss) attributable to noncontrolling interests 34 ( 6 )

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

2 unchanged sentences

Stock-based compensation 772 801

Amortization of warrants issued to as payment for services received 218 —

Amortization of warrants issued as payment for services received 218 —

Amortization of original debt issuance discount — 206

4 unchanged sentences

Obligations settled with common stock 7 463

Write-off of disposed assets 36 906

(Gain) loss on disposal of assets ( 20 ) 906

Gain on finance lease adjustment — ( 31 )

Loss on changes in fair value of investments 144 30

Write-down of prepaid purchase consideration — 200

Loss (gain) on changes in fair value of investments 145 ( 16 )

Changes in operating assets and liabilities:

7 unchanged sentences

Income taxes payable 2,609 2,525

Net cash provided by (used in) operating activities 6,395 ( 3,224 )

Net cash provided by operating activities 7,198 4,676

Cash flows from investing activities:

Purchases of property and equipment ( 10,902 ) ( 14,749 )

Business acquisitions, net of cash acquired ( 4,250 ) ( 2,987 )

Advances toward future business acquisitions ( 485 ) ( 250 )

Purchases of cannabis licenses ( 623 ) ( 601 )

Business combinations, net of cash acquired, and asset purchases ( 4,250 ) ( 2,987 )

Advances toward future business combinations and asset purchases — ( 250 )

Purchases of investments — ( 187 )

Purchases and renewals of cannabis licenses ( 663 ) ( 626 )

Issuance of notes receivable — ( 879 )

2 unchanged sentences

(in thousands)

Six months ended

Nine months ended

September 30,

Return on investment 44 —

Proceeds from disposal of assets 22 —

Due from related party ( 197 ) ( 58 )

4 unchanged sentences

Proceeds from mortgages 1,163 —

Payment of third-party debt issuance costs in connection with debt — ( 1,798 )

Principal payments of term loan — ( 1,500 )

7 unchanged sentences

Net cash provided by financing activities 3,878 18,483

Net increase in cash and cash equivalents ( 4,453 ) 4,898

Net (decrease) increase in cash and cash equivalents ( 4,857 ) 3,522

Cash and equivalents, beginning of year 14,645 9,737

5 unchanged sentences

Common stock issued as purchase consideration $ 991 $ 2,994

Common stock issued to purchase minority interests in certain of the Company's subsidiaries $ — $ 5

Present value of promissory notes issued as purchase consideration $ 3,000 $ 4,569

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

Notes payable issued to purchase motor vehicles $ — $ 109

Liability recorded for building improvements $ — $ 1,997

Notes payable issued to purchase property and equipment $ 396 $ 158

Entry into new operating leases $ — $ 5,366

Entry into new finance leases $ 2,816 $ 2,309

Write-off of finance leases $ 1,112 $ —

Return of stock to the Company $ 15 $ —

Issuance of common stock associated with subscriptions $ — $ 41

Condensed Consolidated Statements of Cash Flows (continued)

(in thousands)

Nine months ended

September 30,

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

8 unchanged sentences

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The Company completed two acquisitions during the three months ended June 30, 2024 that it accounted for as asset purchases.

The Company completed two acquisitions during the nine months ended September 30, 2024 that it accounted for as asset purchases (see Note 2).

On April 9, 2024 (the "Allgreens Acquisition Date"), the Company acquired 100 % of the membership interests of Allgreens Dispensary, LLC ("Allgreens"), which held a conditional adult-use cannabis dispensary license in Illinois.

1 unchanged sentence

("MedLeaf"), which held a retail dispensary license in Maryland.

The MedLeaf dispensary has been closed since July 1, 2023.

The MedLeaf dispensary had been closed since July 1, 2023, but was reopened by the Company on August 19, 2024, upon receiving regulatory approval to commence adult use retail sales.

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 condensed consolidated financial statements since the Ermont Acquisition Date.

The financial results of Ermont are included in the Company's condensed consolidated financial statements since the Ermont Acquisition Date (see Note 2).

Interim results are not necessarily indicative of results for the full fiscal year or any future interim period.

4 unchanged sentences

The Company’s significant accounting policies are disclosed in Note 2 to the Consolidated Financial Statements in the Annual Report.

There were no material changes to the Company's significant accounting policies during the six-month period ended June 30, 2024.

There were no material changes to the Company's significant accounting policies during the nine-month period ended September 30, 2024.

Principles of Consolidation

10 unchanged sentences

The fair values of these investments approximate their carrying values.

The Company had $ 0.2 million and $ 0.1 million of cash held in escrow at June 30, 2024 and December 31, 2023, respectively.

The Company had $ 0.2 million and $ 0.1 million of cash held in escrow at September 30, 2024 and December 31, 2023, respectively.

Fair Value of Financial Instruments

10 unchanged sentences

The Company has reviewed all recently issued, but not yet effective, Accounting Standards Updates (“ASUs”) and does not believe that the future adoption of any such ASUs will have a material impact on its financial condition or results of operations.

(2) BUSINESS ACQUISITIONS

(2) BUSINESS COMBINATIONS AND ASSET PURCHASES

Business Combination

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.

9 unchanged sentences

The Company expanded the existing medical dispensary to accommodate expected increased traffic associated with adult-use sales and repurposed Ermont's existing cultivation facility.

The Company's condensed consolidated statement of operations for the three months ended June 30, 2023 included $ 1.1 million of revenue and $ 1.1 million of net loss attributable to Ermont.

The Company's condensed consolidated statement of operations for the six months ended June 30, 2023 included $ 1.4 million of revenue and $ 1.2 million of net loss attributable to Ermont for the period since the Ermont Acquisition Date.

The Company's condensed consolidated statement of operations for the three months ended September 30, 2023 included $ 1.2 million of revenue and $ 0.7 million of net loss attributable to Ermont.

The Company's condensed consolidated statement of operations for the nine months ended September 30, 2023 included $ 2.6 million of revenue and $ 1.9 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.

20 unchanged sentences

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 three and nine months ended September 30, 2023 as if the Ermont Acquisition had been completed on January 1, 2023, with adjustments to give effect to pro forma events that are directly attributable to the Ermont Acquisition.

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

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, 2023, nor are they intended to represent or be indicative of future results of operations.

These unaudited pro forma results for the three and nine months ended September 30, 2023 are as follows (in thousands):

Three months ended September 30, 2023 Nine months ended September 30, 2023

Revenue $ 39,150 $ 110,049

Net loss $ ( 4,937 ) $ ( 6,536 )

Valuation of Acquired Intangible Assets

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

The Company uses an income approach to value acquired tradenames and trademarks, licenses and customer bases, and non-

compete intangible assets.

The Company uses an income approach to value acquired tradenames and trademarks, licenses and customer bases, and non-compete intangible assets.

The valuation for each of these intangible assets is 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.

Asset Purchases

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 $ 3.25 million, comprised of $ 2.25 million of cash and a promissory note for $ 1.0 million, which note was issued to the Allgreens members on the Allgreens Acquisition Date.

2 unchanged sentences

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

Under this management agreement, the Company funded the build-out of the dispensary, including purchasing and retaining ownership of the related fixed assets it intended to use upon the transfer ownership to the Company, hired and trained employees, and implemented the processes necessary to run the dispensary, all of which was completed prior to the state's approval of the license transfer to the Company.

In connection with this agreement, the Company recorded expenses related to Allgreens aggregating approximately $ 250,000 for the period from January 1, 2024 through the Allgreens Acquisition Date as a component of Investments, net of current portion (the "Allgreens Expenses").

5 unchanged sentences

On February 1, 2024 (the "P&S Date"), the Company entered into an agreement to acquire 100 % of the membership interests of MedLeaf (the "MedLeaf Agreement"), which held a retail dispensary license in Maryland.

The MedLeaf dispensary has been closed since July 1, 2023.

The Company plans to reopen the dispensary and begin adult-use retail sales upon receiving regulatory approval.

The MedLeaf dispensary had ceased its operations since July 1, 2023.

Upon receiving regulatory approval, the Company reopened the

dispensary and commenced adult-use retail sales on August 19, 2024.

The acquisition of MedLeaf provides the Company with a second dispensary in the state of Maryland.

Pursuant to the MedLeaf Agreement, total purchase consideration was $ 5.25 million, comprised of $ 2.0 million of cash with adjustments to reflect amounts owed to the Company by the sellers of MedLeaf (the "MedLeaf Sellers"), a $ 2.0 million promissory note, and shares of the Company's common stock, valued at $ 1.25 million, with such number of shares calculated using the volume weighted average price based on the ten trading day period ending on the P&S Date.

Pursuant to the MedLeaf Agreement, total purchase consideration was $ 5.25 million, comprised of $ 2.0 million of cash with adjustments to reflect amounts owed to the Company by the sellers of MedLeaf (the "MedLeaf Sellers"), a $ 2.0 million promissory note (the "MedLeaf Note"), and shares of the Company's common stock, valued at $ 1.25 million, with such number of shares calculated using the volume weighted average price based on the ten trading day period ending on the P&S Date.

The Company made cash payments aggregating $ 0.5 million through the P&S Date, which funds were deposited into escrow.

2 unchanged sentences

The Company has allocated the purchase price to its licenses intangible asset, with an estimated useful life of 10 years (see Note 8).

Pending Transaction at June 30, 2024

Pending Transaction at September 30, 2024

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

1 unchanged sentence

Completion of the acquisition is dependent upon obtaining all requisite approvals from the Missouri Department of Health and Senior Services.

The state of Missouri has approved the location for the new facility but has not yet approved the application to transfer the license from Robust to the Company (the "License Transfer").

Once the new facility is licensed to conduct business, the Company will do so under a managed service agreement until the final approval

of the License Transfer.

Pursuant to the Robust Agreement, the Company has made an initial advance payment of $ 350,000 , with the balance due at closing, which will occur upon the state of Missouri's approval of the License Transfer.

In August 2024, the state of Missouri approved a facility license to conduct business, but has not yet approved the application to transfer the license from Robust to the Company (the "License Transfer").

The Company is currently conducting business under a managed service agreement until the final approval of the License Transfer.

Pursuant to the Robust Agreement, the Company made an initial advance payment of $ 350,000 , with the balance due at closing, which will occur upon the state of Missouri's approval of the License Transfer.

(3) EARNINGS (LOSS) PER SHARE

2 unchanged sentences

The shares used to compute loss per share were as follows (in thousands):

Three months ended Six months ended

2024 June 30,

2023 June 30,

2024 June 30,

Three months ended Nine months ended

September 30,

2024 September 30,

2023 September 30,

2024 September 30,

Weighted average shares outstanding - basic 380,599 373,081 378,449 359,156

8 unchanged sentences

The Company had previously leased a portion of an 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 expanded its cultivation footprint into this space and accordingly, it is currently utilizing this space for its operations.

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.

1 unchanged sentence

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

The Company received rental payments aggregating $ 0.3 million and $ 0.4 million in the three months ended June 30, 2024 and 2023, respectively, and $ 0.6 million and $ 0.8 million in the six months ended June 30, 2024 and 2023, respectively.

Revenue from these payments was recognized on a straight-line basis and aggregated $ 0.3 million and $ 0.4 million in the three months ended June 30, 2024 and 2023, respectively, and $ 0.6 million and $ 0.8 million in the six months ended June 30, 2024 and 2023, respectively.

Future minimum rental receipts for non-cancellable leases and subleases as of June 30, 2024 were as follows (in thousands):

The Company received rental payments aggregating $ 0.3 million and $ 0.5 million in the three months ended September 30, 2024 and 2023, respectively, and $ 0.9 million and $ 1.3 million in the nine months ended September 30, 2024 and 2023, respectively.

Revenue from these payments was recognized on a straight-line basis and aggregated $ 0.3 million and $ 0.4 million in the three months ended September 30, 2024 and 2023, respectively, and $ 0.9 million and $ 1.2 million in the nine months ended September 30, 2024 and 2023, respectively.

Future minimum rental receipts for non-cancellable leases and subleases as of September 30, 2024 were as follows (in thousands):

Year ending December 31,

3 unchanged sentences

Note Receivable

At both June 30, 2024 and December 31, 2023, the Company had a note receivable from Healer LLC, an entity that provides cannabis education, dosage programs and products developed by Dr.

At both September 30, 2024 and December 31, 2023, the Company had a note receivable from Healer LLC, an entity that provides cannabis education, dosage programs and products developed by Dr.

Dustin Sulak ("Healer"), of approximately $ 866,000 .

6 unchanged sentences

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

The Omnibus 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, 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.

The Omnibus 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.

1 unchanged sentence

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

The Omnibus was included as a component of Other assets in the condensed consolidated balance sheets at June 30, 2024 and December 31, 2023.

The Omnibus is included as a component of Other assets in the condensed consolidated balance sheets at both September 30, 2024 and December 31, 2023.

(6) INVENTORY

Inventory at June 30, 2024 and December 31, 2023 consisted of the following (in thousands):

Inventory at September 30, 2024 and December 31, 2023 consisted of the following (in thousands):

September 30,

2024 December 31,

5 unchanged sentences

(7) PROPERTY AND EQUIPMENT, NET

The Company’s property and equipment, net, at June 30, 2024 and December 31, 2023 was comprised of the following (in thousands):

The Company’s property and equipment, net, at September 30, 2024 and December 31, 2023 was comprised of the following (in thousands):

September 30,

2024 December 31,

8 unchanged sentences

Property and equipment, net $ 95,496 $ 89,103

The Company recorded depreciation expense related to property and equipment of $ 2.0 million and $ 1.2 million in the three months ended June 30, 2024 and 2023, respectively, and $ 3.9 million and $ 2.2 million in the six months ended June 30, 2024 and 2023, respectively.

The Company recorded depreciation expense related to property and equipment of $ 1.8 million and $ 1.6 million in the three months ended September 30, 2024 and 2023, respectively, and $ 5.7 million and $ 3.8 million in the nine months ended September 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2024, the Company disposed of equipment and recorded a gain on the disposal of such assets aggregating approximately $ 20,000 , net of insurance proceeds for such disposal of approximately $ 22,000 .

In the first quarter of 2023, the Company disposed of equipment it had previously purchased in connection with its planned acquisition of The Harvest Foundation LLC ("Harvest") in Nevada as a result of the Company's withdrawal from the agreement to purchase Harvest.

The Company recorded a loss on the disposal of assets aggregating $ 0.9 million, which is included as a component of Other expense, net, in the condensed consolidated statement of operations for the six months ended June 30, 2023.

(8) INTANGIBLE ASSETS AND GOODWILL

The Company’s acquired intangible assets at June 30, 2024 and December 31, 2023 consisted of the following (in thousands):

June 30, 2024 Weighted

The Company’s acquired intangible assets at September 30, 2024 and December 31, 2023 consisted of the following (in thousands):

September 30, 2024 Weighted

period (years) Cost Accumulated

11 unchanged sentences

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

Estimated future amortization expense for the Company’s intangible assets at June 30, 2024 was as follows:

Estimated future amortization expense for the Company’s intangible assets at September 30, 2024 was as follows:

Year ending December 31,

2 unchanged sentences

Total $ 19,522

The changes in the carrying value of the Company’s goodwill in the six months ended June 30, 2024 and 2023 were as follows (in thousands):

The changes in the carrying value of the Company’s goodwill in the nine months ended September 30, 2024 and 2023 were as follows (in thousands):

Balance at January 1, $ 11,993 $ 8,079

Ermont Acquisition 3,819 3,914

Balance at June 30, $ 15,812 $ 12,004

Balance at September 30, $ 15,812 $ 11,993

In connection with the finalization of the purchase price allocation for the Ermont Acquisition in the first quarter of 2024, the Company recorded reclassifications between its Tradename and trademarks intangible asset, Licenses and customer base intangible asset, and Goodwill (see Note 2).

1 unchanged sentence

On January 24, 2023, 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 notes payable issued in 2022 in connection with the acquisition of Kind Therapeutics USA, which repayment occurred on January 24, 2023.

expenditures, and repay in full the notes payable issued in 2022 in connection with the acquisition of Kind Therapeutics USA, which repayment occurred on January 24, 2023.

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

6 unchanged sentences

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.

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.

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.

8 unchanged sentences

The Company recorded $ 0.3 million of aggregate interest amortization for the three months ended March 31, 2023 related to the CA Original Issuance Discount, CA Warrant Discount and CA Third-Party Costs Discount.

On November 16, 2023, the Company repaid and retired the CA Term Loan (the "CA Term Loan Payoff") using proceeds from a new $ 58.7 million loan entered into on the same date (described below).

On November 16, 2023, the Company repaid and retired the CA Term Loan (the "CA Term Loan Payoff") using proceeds from a new $ 58.7 million loan entered into on the same date (see "CREM Loan" below).

The CA 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.

2 unchanged sentences

The Company’s mortgages and notes payable are reported in the aggregate on the condensed consolidated balance sheets under the captions Mortgages and notes payable, current portion, and Mortgages and notes payable, net of current portion.

The Company’s mortgage and notes payable balances at June 30, 2024 and December 31, 2023 were comprised of the following (in thousands):

The Company’s mortgage and notes payable balances at September 30, 2024 and December 31, 2023 were comprised of the following (in thousands):

September 30,

2024 December 31,

11 unchanged sentences

Promissory note issued as purchase consideration - Allgreens Acquisition 1,036 —

Promissory note issued to purchase land 352 —

Promissory notes issued to purchase motor vehicles 177 178

8 unchanged sentences

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"), with the remaining proceeds of $ 5.9 million placed into 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 obligations.

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 approximately $ 19,000 and $ 37,000 of interest amortization in the three and six months ended June 30, 2024, respectively, related to the CREM Closing Costs Discount.

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 were 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 approximately $ 18,000 and $ 55,000 of interest amortization in the three and nine months ended September 30, 2024, respectively, 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.

1 unchanged sentence

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

During the six months ended June 30, 2024, the Company received $ 2.9 million of the amount previously held back by the CREM Lender and made interest-only payments to the CREM Lender aggregating $ 2.3 million.

The current portion of the outstanding principal balance of the CREM Loan was $ 0.7 million at June 30, 2024.

During the nine months ended September 30, 2024, $ 5.1 million of the escrowed portion of the loan proceeds was released to the Company, and the Company made interest-only payments to the CREM Lender aggregating $ 4.0 million.

The current portion of the outstanding principal balance of the CREM Loan was $ 1.0 million at September 30, 2024.

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

7 unchanged sentences

The next interest rate adjustment will occur in September 2026.

The current portions of the outstanding principal balance under this mortgage at June 30, 2024 and December 31, 2023 were approximately $ 137,000 and $ 133,000 , respectively.

The current portions of the outstanding principal balance under this mortgage at September 30, 2024 and December 31, 2023 were approximately $ 138,000 and $ 133,000 , respectively.

DuQuoin State Bank (Anna, IL and Harrisburg IL)

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The mortgage was renewed in May 2024 at a rate of 9.5 % per annum.

The current portions of the outstanding principal balance under this mortgage at June 30, 2024 and December 31, 2023 were approximately $ 23,000 and $ 27,000 , respectively.

The current portions of the outstanding principal balance under this mortgage at September 30, 2024 and December 31, 2023 were approximately $ 26,000 and $ 27,000 , respectively.

DuQuoin State Bank (Metropolis, IL)

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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 holds the related mortgage obligation, reducing the Company’s ownership interest in Metro to 70.0 %.

The current portions of the outstanding principal balance of this mortgage at June 30, 2024 and December 31, 2023 were approximately $ 50,000 and $ 46,000 , respectively.

The current portions of the outstanding principal balance of this mortgage at September 30, 2024 and December 31, 2023 were approximately $ 55,000 and $ 46,000 , respectively.

DuQuoin State Bank (Mt.

In July 2022, Mari Holdings Mt Vernon LLC, a wholly owned subsidiary of the Company, entered into a $ 3.0 million loan agreement and mortgage with DSB secured by property owned in Mt.

Vernon, Illinois, which the Company is developing into a grow and production facility.

In July 2022, Mari Holdings Mt Vernon LLC, a wholly owned subsidiary of the Company, entered into a $ 3.0 million loan agreement and mortgage with DSB secured by property owned by the Company in Mt.

Vernon, Illinois, which it is developing into a grow and production facility.

The mortgage has a 20 -year term and currently bears interest at the rate of 11.25 % per annum, subject to upward adjustment on each annual anniversary date to the Wall Street Journal U.S.

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

The current portions of the outstanding principal balance of this mortgage were approximately $ 51,000 and $ 48,000 at June 30, 2024 and December 31, 2023, respectively.

The current portions of the outstanding principal balance of this mortgage were approximately $ 59,000 and $ 48,000 at September 30, 2024 and December 31, 2023, respectively.

DuQuoin State Bank (Mt.

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The mortgage with DSB has a 17-year term and bears interest of 9.50 % per annum.

The current portion of the outstanding principal balance of this mortgage was approximately $ 30,000 at June 30, 2024.

The current portion of the outstanding principal balance of this mortgage was approximately $ 31,000 at September 30, 2024.

Promissory Notes

Promissory Notes Issued as Purchase Consideration

Ermont Acquisition

In connection with the Ermont Acquisition, the Company issued the Ermont Note (see Note 2), totaling $ 7.0 million.

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The difference between the face value of the Ermont Note and the present value recorded at the time of the Ermont Acquisition is being amortized to interest expense over the term of the Ermont Note.

The fair value of the Ermont Note was $ 2.8 million and $ 2.6 million at June 30, 2024 and December 31, 2023, respectively.

The current portion of the outstanding principal balance of this mortgage was approximately $ 151,000 at June 30, 2024.

This mortgage did no t have a current portion recorded at December 31, 2023, as the first 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 2) 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 fair value of the Ermont Note was $ 2.9 million and $ 2.6 million at September 30, 2024 and December 31, 2023, respectively.

The current portion of the outstanding principal balance of the Ermont Note was $ 0.3 million at September 30, 2024.

The Ermont Note did no t have a current portion recorded at December 31, 2023.

Greenhouse Naturals LLC

In December 2022, the Company completed the acquisition from Greenhouse Naturals LLC of the assets associated with a cannabis dispensary in Beverly, Massachusetts (the "Beverly Dispensary").

In connection with this transaction, the Company issued a $ 5.0 million promissory note to the sellers, payable on a monthly basis as a percentage of the monthly gross sales of the Beverly Dispensary (the "Greenhouse Naturals Note").

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, 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 $ 4.0 million and $ 4.2 million at June 30, 2024 and December 31, 2023, respectively.

The Company estimated that the current portion of the Greenhouse Naturals Note was $ 0.4 million and $ 0.3 million at June 30, 2024 and December 31, 2023, respectively.

MedLeaf Acquisition

In connection with the MedLeaf Acquisition, the Company issued a $ 2.0 million promissory note to the MedLeaf Sellers (the "MedLeaf Note") (See Note 2).

The fair value of the Greenhouse Naturals Note was $ 3.9 million and $ 4.2 million at September 30, 2024 and December 31, 2023, respectively.

The Company estimated that the current portion of the Greenhouse Naturals Note was $ 0.4 million and $ 0.3 million at September 30, 2024 and December 31, 2023, respectively.

In connection with the MedLeaf Acquisition, the Company issued the MedLeaf Note, totaling $ 2.0 million (See Note 2).

The MedLeaf Note bears interest at a rate of 8.0 % per annum and matures on October 5, 2025.

The MedLeaf Note calls for six equal principal payments, paid quarterly;

which payments began on July 5, 2024.

At June 30, 2024, the current portion of the MedLeaf Note was $ 1.3 million.

Allgreens Acquisition

In connection with the Allgreens Acquisition, the Company issued promissory notes aggregating $ 1.0 million to the Allgreens members.

The MedLeaf Note calls for

six equal principal payments, paid quarterly, which payments began on July 5, 2024.

At September 30, 2024, the current portion of the MedLeaf Note was $ 1.3 million.

In connection with the Allgreens Acquisition, the Company issued promissory notes aggregating $ 1.0 million (See Note 2).

The Allgreens Notes bear interest at a rate of 7.5 % per annum and will mature one year from the date that the dispensary is permitted to commence operations.

The $ 1.0 million outstanding balance of the Allgreens Notes was recorded as current at June 30, 2024.

The Allgreens Notes had an aggregate outstanding balance of $ 1.0 million at September 30, 2024, all of which was recorded as current.

Kind Acquisition

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

Promissory Notes Issued to Purchase Commercial Vehicles

The Company had four outstanding promissory notes to purchase commercial motor vehicles at June 30, 2024 and five such notes outstanding at December 31, 2023.

At June 30, 2024, the outstanding notes had an aggregate outstanding

balance of approximately $ 141,000 , of which approximately $ 29,000 was current.

Promissory Notes Issued to Purchase Property and Equipment

The Company had five outstanding promissory notes in connection with the purchase of commercial motor vehicles at both September 30, 2024 and December 31, 2023.

At September 30, 2024, the outstanding notes had an aggregate outstanding balance of approximately $ 177,000 , of which approximately $ 35,000 was current.

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

The weighted average interest rates of the outstanding balances were 11.33 % and 11.07 % at June 30, 2024 and December 31, 2023, respectively.

The weighted average remaining terms of these notes were 4.32 years and 4.61 years at June 30, 2024 and December 31, 2023, respectively.

The weighted average interest rates of the outstanding balances were 11.33 % and 11.07 % at September 30, 2024 and December 31, 2023, respectively.

The weighted average remaining terms of these notes were 4.50 years and 4.61 years at September 30, 2024 and December 31, 2023, respectively.

The Company had an outstanding note in connection with the purchase, in the second quarter of 2024, of a parking lot adjacent to its Middleborough, MA dispensary totaling $ 352,000 (the "Middleborough Note").

The note bears interest at 4.0 %, with monthly interest-only payments and a balloon payment for the entire principal amount due on February 1, 2029.

Future Payments

The future principal amounts due under the Company outstanding mortgages and notes payable at June 30, 2024 were as follows (in thousands):

The future principal amounts due under the Company outstanding mortgages and notes payable at September 30, 2024 were as follows (in thousands):

Year ending December 31,

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Thereafter 65,398

Total future principal payments 79,411

discount ( 3,920 )

Total future principal payments, net of discount $ 75,491

(10) MEZZANINE EQUITY

Series B Convertible Preferred Stock

The Company had 4,908,333 shares of Series B Convertible Preferred Stock (the "Series B Stock") outstanding at both June 30, 2024 and December 31, 2023, which shares are held by three institutional shareholders.

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

The Company had 4,908,333 shares of Series B Convertible Preferred Stock (the "Series B Stock") outstanding at both September 30, 2024 and December 31, 2023, which shares are held by three institutional shareholders.

Company's 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 an 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 defined in the certificate of designation.

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Each share of Series C Stock is convertible, at Hadron’s option, into five shares of the Company's 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 achieved and the market value of the Company’s common stock reaches certain predetermined levels.

The warrants are subject to early termination if

certain milestones are achieved and the market value of the Company’s common stock reaches certain predetermined levels.

The Series C Stock is zero coupon, non-voting, and has a liquidation preference equal to its original issuance price plus declared but unpaid dividends.

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During the year ended December 31, 2023, 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), comprised of 784,334 shares of Series C Stock converted into 3,921,670 shares of the Company's common stock in the third quarter of 2023 and 4,276,608 shares of Series C Stock converted into 21,383,040 shares of the Company's common stock in the second quarter of 2023.

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

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 both June 30, 2024 and December 31, 2023, 1,155,274 shares of Series C Stock remained outstanding.

At both September 30, 2024 and December 31, 2023, 1,155,274 shares of Series C Stock remained outstanding.

(11) STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

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Awards can be granted under the Plan to the Company’s employees, officers and non-employee directors, as well as consultants and advisors of the Company and its subsidiaries.

On June 8, 2023, the Company's Board of Directors approved an amendment to the Plan (the "2018 Plan") to modify the one-year minimum vesting requirements.

On June 8, 2023, the Company's Board of Directors approved an amendment to the Plan to modify the one-year minimum vesting requirements.

Stock Options

A summary of the Company's stock option activity during the six months ended June 30, 2024 is below:

A summary of the Company's stock option activity during the nine months ended September 30, 2024 is below:

Shares Weighted average exercise price

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Expired ( 406,250 ) $ 0.93

Outstanding at June 30, 2024 35,574,421 $ 0.78

Outstanding at September 30, 2024 35,249,421 $ 0.78

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

At June 30, 2024, the stock options outstanding had a weighted average remaining life of approximately two years .

The grant date fair value of the stock options granted in the six months ended June 30, 2024 was estimated using the Black-Scholes valuation model with the following assumptions:

At September 30, 2024, the stock options outstanding had a weighted average remaining life of approximately two years .

The grant date fair value of the stock options granted in the nine months ended September 30, 2024 was estimated using the Black-Scholes valuation model with the following assumptions:

Estimated life (in years) 1.18

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

The activity related to the Company's RSUs for the six months ended June 30, 2024 was as follows:

The activity related to the Company's RSUs for the nine months ended September 30, 2024 was as follows:

RSUs Weighted average grant date fair value

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Forfeited ( 273,075 ) $ 0.38

Outstanding at June 30, 2024 5,033,100 $ 0.39

Outstanding at September 30, 2024 6,736,422 $ 0.31

Of the 2,005,469 RSUs reported as vested in the table above, 85,071 shares, with an aggregate fair value of approximately $ 15,000 , were surrendered to the Company to satisfy the tax withholding obligations that arose in connection with the vesting of such RSUs.

On May 2, 2024, the Company issued warrants to purchase 1,000,000 shares of the Company's common stock to an entity in consideration for introductory and other services rendered in connection with certain funding and acquisition transactions.

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The Company calculated that the grant date fair value of the warrants was approximately $ 218,000 in the aggregate using the Black-Scholes valuation model.

This expense is included as a component of Acquisition-related and other in the Company's condensed consolidated statements of operations for both the three and six months ended June 30, 2024.

At June 30, 2024, warrants to purchase up to 43,089,476 shares of the Company's common stock were outstanding, with a

weighted average exercise price of $ 0.67 .

This expense is included as a component of Acquisition-related and other in the Company's condensed consolidated statements of operations for the nine months ended September 30, 2024.

At September 30, 2024, warrants to purchase up to 43,089,476 shares of the Company's common stock were outstanding, with a weighted average exercise price of $ 0.67 .

Other Common Stock Issuances

In addition to the activity related to stock options and RSUs, described above, during the six months ended June 30, 2024, the Company also issued 3,917,267 shares of restricted common stock as purchase consideration (see Note 2) with a grant date fair value of approximately $ 1 million, and 5,550 shares of restricted common stock with an aggregate fair value of approximately $ 1,200 , under a royalty agreement.

In addition to the activity related to stock options and RSUs, described above, during the nine months ended September 30, 2024, the Company also issued 3,917,267 shares of restricted common stock as purchase consideration (see Note 2) with a grant date fair value of approximately $ 1 million, and 28,369 shares of restricted common stock with an aggregate fair value of approximately $ 7,000 , under a royalty agreement.

Stock-Based Compensation

The Company recorded stock-based compensation of $ 0.2 million and $ 0.3 million in the three months ended June 30, 2024 and 2023, respectively, and $ 0.5 million in each of the six months ended June 30, 2024 and 2023.

The Company recorded stock-based compensation of $ 0.3 million in each of the three months ended September 30, 2024 and 2023, and $ 0.8 million in each of the nine months ended September 30, 2024 and 2023.

The Company’s main sources of revenue are comprised of the following:

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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;

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

• Supply procurement – resale of cultivation and production resources, supplies and equipment that the Company has acquired from top national vendors at discounted prices to its client and third parties within the cannabis industry.

• Supply procurement fees – fees from facilitating purchases of cultivation and production resources, supplies and equipment for the Company's cannabis-licensed clients and third parties.

The Company recognizes this revenue after the delivery and acceptance of goods by a purchaser.

• 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 were based on a percentage of such client's revenue and were recognized after services were performed;

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

• Licensing fees – revenue from the licensing of the Company's branded products, including Betty's Eddies , Bubby's Baked , Vibations and Kalm Fusion , to wholesalers and to regulated dispensaries throughout the United States and Puerto Rico.

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Additionally, when another party is involved in providing goods or services to the Company’s clients, a determination is made as to who - the Company or the other party - is acting in the capacity as the principal in the sale transaction, and who is the agent arranging for goods or services to be provided by the other party.

The Company is typically considered the principal if it controls the specified good or service before such good or service is transferred to its client.

The Company may also be deemed to be the principal even if it engages another party (an agent) to satisfy some of the performance obligations on its behalf, provided the Company (i) takes on certain responsibilities, obligations, and risks, (ii) possesses certain abilities and discretion, or (iii) other relevant indicators of the sale.

If deemed an agent, the Company would not recognize revenue for the performance obligations it does not satisfy.

Revenue for the three and six months ended June 30, 2024 and 2023 was comprised of the following (in thousands):

Three months ended Six months ended

2024 June 30,

2023 June 30,

2024 June 30,

The Company is typically considered the principal if it controls the specified good or service before such good or service is transferred to its client, and typically considered the agent if it does not exert such control.

The Company may also be deemed to be the principal even if it engages another party (an agent) to satisfy some of the performance obligations on its behalf, provided the Company (i) takes on certain responsibilities, obligations and risks, (ii) possesses certain abilities and discretion, or (iii) fulfills other relevant indicators of the sale.

If deemed an agent, the Company does not recognize revenue for the performance obligations it does not satisfy.

Revenue for the three and nine months ended September 30, 2024 and 2023 was comprised of the following (in thousands):

Three months ended Nine months ended

September 30,

2024 September 30,

2023 September 30,

2024 September 30,

Product revenue:

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(13) MAJOR CUSTOMERS

The Company did not have any customers that contributed 10% or more of total revenue in any of the three- or six-month periods ended June 30, 2024 or 2023.

The Company did not have any customers that accounted for 10% or more of the Company’s accounts receivable balance at either June 30, 2024 or December 31, 2023.

The Company did not have any customers that contributed 10% or more of total revenue in any of the three- or nine-month periods ended September 30, 2024 or 2023.

The Company did not have any customers that accounted for 10% or more of the Company’s accounts receivable balance at either September 30, 2024 or December 31, 2023.

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

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Lease expense for lease payments is recognized on a straight-line basis over the lease term.

At June 30, 2024, the Company was the lessee under eight operating leases and twenty-nine finance leases.

At September 30, 2024, the Company was the lessee under eight operating leases and thirty finance leases.

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

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The Company leases machinery and office equipment under finance leases that expire from January 2026 through April 2030, with such terms being a major part of the economic useful life of the leased property.

The components of lease expense for the three and six months ended June 30, 2024 and 2023 were as follows (in thousands):

Three months ended Six months ended

2024 June 30,

2023 June 30,

2024 June 30,

The components of lease expense for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):

Three months ended Nine months ended

September 30,

2024 September 30,

2023 September 30,

2024 September 30,

Operating lease expense $ 515 $ 507 $ 1,552 $ 1,321

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Total finance lease expense $ 266 $ 267 $ 817 $ 566

The weighted average remaining lease terms and weighted average discount rates for the Company's operating leases and finance leases at June 30, 2024 and December 31, 2023 were as follows:

The weighted average remaining lease terms and weighted average discount rates for the Company's operating leases and finance leases at September 30, 2024 and December 31, 2023 were as follows:

September 30,

2024 December 31,

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Finance leases 9.7 % 11.0 %

Future minimum lease payments as of June 30, 2024 under all non-cancelable leases having an initial or remaining term of more than one year were (in thousands):

Future minimum lease payments as of September 30, 2024 under all non-cancelable leases having an initial or remaining term of more than one year were (in thousands):

leases Finance

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

Expenses incurred under this lease were approximately $ 63,000 and $ 64,000 for the three months ended June 30, 2024 and 2023, respectively, and approximately $ 104,000 and $ 129,000 for the six months ended June 30, 2024 and 2023, respectively.

Expenses incurred under this lease were approximately $ 64,000 and $ 61,000 for the three months ended September 30, 2024 and 2023, respectively, and approximately $ 168,000 and $ 190,000 for the nine months ended September 30, 2024 and 2023, 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”).

Purchases from this entity totaled $ 1.2 million and $ 1.4 million in the three months ended June 30, 2024 and 2023, respectively, and $ 2.2 million and $ 2.7 million in the six months ended June 30, 2024 and 2023, respectively.

Purchases from this entity totaled $ 1.3 million and $ 1.4 million in the three months ended September 30, 2024 and 2023, respectively, and $ 3.5 million and $ 4.2 million in the nine months ended September 30, 2024 and 2023, respectively.

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

Under this agreement, the royalty percentage on all

sales of Betty’s Eddies products is 3.0 % if sold directly by the Company and between 1.35 % and 2.5 % if licensed by the Company for sale by third parties.

Under this agreement, the royalty percentage on all sales of Betty’s Eddies products is 3.0 % if sold directly by the Company and between 1.35 % 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 earned by the entity under this agreement were approximately $ 131,000 and $ 346,000 for the three months ended June 30, 2024 and 2023, respectively, and approximately $ 249,000 and $ 465,000 for the six months ended June 30, 2024 and 2023, respectively.

During the three months ended June 30, 2024 and 2023, one of the Company’s majority-owned subsidiaries paid distributions of approximately $ 1,900 and $ 2,100 , respectively, to the CEO, who owns a minority equity interest in such subsidiary.

During the six months ended June 30, 2024 and 2023, this majority-owned subsidiary made distribution payments of approximately $ 3,100 and $ 12,600 , respectively, to the CEO.

The aggregate royalties earned by the entity under this agreement were approximately $ 178,000 and $ 149,000 for the three months ended September 30, 2024 and 2023, respectively, and approximately $ 427,000 and $ 614,000 for the nine months ended September 30, 2024 and 2023, respectively.

During the three months ended September 30, 2024 and 2023, one of the Company’s majority-owned subsidiaries paid distributions of approximately $ 1,900 and $ 3,000 , respectively, to the CEO, who owns a minority equity interest in such subsidiary.

During the nine months ended September 30, 2024 and 2023, this majority-owned subsidiary made distribution payments of approximately $ 5,000 and $ 6,400 , respectively, to the CEO.

On June 10, 2024 (the "Membership Unit Purchase Date"), the CEO and COO purchased 5 % and 15 %, respectively, of the membership units of Mari Holdings Metropolis, LLC, one of the Company's majority-owned subsidiaries.

These membership units were purchased from the previous minority interest-holder, and accordingly, the percentage of this majority-owned subsidiary held by noncontrolling interests remains unchanged.

During both the three- and six-month periods ended June 30, 2024, this majority-owned subsidiary accrued distribution payments of $ 3,250 and $ 9,750 to the CEO and COO, respectively.

During the three months ended September 30, 2024, this majority-owned subsidiary accrued distribution payments of approximately $ 3,250 and $ 9,750 to the CEO and COO, respectively.

During the nine months ended September 30, 2024, this majority-owned subsidiary accrued distribution payments of approximately $ 6,500 and $ 19,500 to the CEO and COO, respectively.

The Company holds a 49 % interest in a delivery company that delivers products purchased at certain of the Company's dispensaries (the "Delivery Company").

The remaining interest is held by a non-executive officer employee of the Company who was a founder of the Delivery Company.

The Company has provided funding to the Delivery Company;

during the nine months ended September 30, 2024 and 2023, the Company provided funding of approximately $ 197,000 and $ 58,000 , respectively.

As of September 30, 2024, these amounts remained outstanding.

Prior to December 31, 2023, 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 $ 48,000 and $ 96,000 , respectively, for the three and six months ended June 30, 2023.

The aggregate fees paid by FSCC were $ 48,000 and $ 144,000 , respectively, for the three and nine months ended September 30, 2023.

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

At June 30, 2024, the Company’s mortgages with Bank of New England and DuQuoin State Bank were personally guaranteed by the CEO.

At September 30, 2024, the Company’s mortgages with Bank of New England and DuQuoin State Bank were personally guaranteed by the CEO.

Additionally, the CEO provided a limited guaranty to the Lenders under the Company's Credit Agreement with Chicago Atlantic through its repayment in November 2023.

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Bankruptcy Claim

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 held 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 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.) (the "OGGUSA Debtors") in the U.S.

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

In February 2020, the proceeding was converted into a voluntary Chapter 11 proceeding.

In May 2020, the Bankruptcy Court entered an order authorizing the sale of all or substantially all of the assets of the OGGUSA Debtors to MGG Investment Group LP ("MGG"), a creditor of the OGGUSA Debtors.

Following such sale, a liquidating plan of reorganization was confirmed by the Bankruptcy Court on November 12, 2020 (the "Liquidating Plan").

The liquidation is currently ongoing.

In April 2022, a Complaint was filed by the Liquidating Plan administrator 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 proceedings (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.

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 filing, 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.

In 2019, MariMed Hemp, Inc.

("MMH"), a subsidiary of the Company, sold hemp seed inventory to GenCanna Global Inc., (“GenCanna”), recording a related party receivable of approximately $ 29 million, which was fully reserved at December 31, 2019.

In early 2020, GenCanna entered a Chapter 11 bankruptcy, leading to a liquidating plan that remains ongoing.

In 2022, the Plan Administrator filed a complaint against MMH for alleged preferential transfers, which was settled in 2023 by reducing MMH's general unsecured claim to $ 15.5 million.

In the three months ended September 30, 2024, MMH received a liquidation distribution of $ 116,250 .

As of the date of this filing, there is insufficient information to determine the amount of further liquidation distributions, if any, that MMH may receive on account of its general unsecured claim.

New Bedford, MA and Middleborough, MA Buildouts

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The electrical work was primarily paid for by an entity that is indirectly controlled by that individual and another non-officer/director Company stockholder who also beneficially owned more than 5 % of the Company's 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 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 terminated.

Discussions to reach agreement with the entity that paid for the electrical work and all other interested parties to address this liability and related payment terms are ongoing.

1 unchanged sentence

Equity Transactions

Subsequent to June 30, 2024, the Company issued 270,732 shares of common stock in the aggregate underlying RSUs that vested on various dates prior to the filing of this report.

Subsequent to September 30, 2024, the Company issued 314,001 shares of common stock in the aggregate underlying RSUs that vested on various dates prior to the filing of this report.

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-Q

Item 1. Financial Statements