What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-08 · 83 added, 67 removed, 242 unchanged (38% of the section changed)

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The following discussion of the financial condition and results of operations of MariMed Inc.

should be read in conjunction with the condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the U.S.

Securities and Exchange Commission (“SEC”) on March 7, 2024.

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We also license our proprietary brands of cannabis products, along with other top brands, in several domestic markets.

We completed two acquisitions during the three months ended June 30, 2024 that we accounted for as asset purchases.

We completed two acquisitions during the nine months ended September 30, 2024, which we accounted for as asset purchase.

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

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

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

We will commence retail sales upon receiving regulatory approvals, which we expect will occur later in 2024.

The MedLeaf dispensary had ceased operations since July 1, 2023, but we reopened it on August 19, 2024, upon receiving regulatory approval to commence adult use retail sales.

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

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The financial results of Ermont are included in our condensed consolidated financial statements for the period subsequent to the Ermont Acquisition Date.

During 2024, we are continuing to focus on executing our strategic growth plan, with priority on activities that include the following:

During 2024, we continue to focus on executing our strategic growth plan, with priority on activities that include the following:

• Completing the acquisition and consolidation of the client cannabis businesses we developed, managed and advised prior to becoming a seed to sale multi-state operator.

There is one remaining business that we continue to

manage and intend to acquire - Delaware operator First State Compassion Center ("FSCC").

There is one remaining business that we continue to manage and intend to acquire - Delaware operator First State Compassion Center ("FSCC").

Delaware's current cannabis regulations prevent such an acquisition.

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• Increasing product brand revenue by introducing new, innovative products that consumers want, expanding our award-winning brands to include new effects or to fill additional customer needs, and by identifying qualified licensing partners that will expand our distribution into new markets.

In November 2023, we announced the closing of a $58.7 million secured credit facility with a United States chartered bank at a lower rate relative to both our previous outstanding debt with Chicago Atlantic Admin, LLC (“Chicago Atlantic”) and recent transactions announced by other cannabis companies.

In November 2023, we announced the closing of a $58.7 million secured credit facility with a Needham Bank at a lower rate relative to both our previous outstanding debt with Chicago Atlantic Admin, LLC (“Chicago Atlantic”) and recent transactions announced by other cannabis companies.

This debt refinancing enabled us to pay off our term loan with Chicago Atlantic, pay off the mortgage on our New Bedford and Middleborough, Massachusetts facilities with Bank of New England, and reduce the principal outstanding on the note we issued to the sellers in connection with our acquisition of the operating assets of Ermont, Inc.

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The assessment of any impairment of these assets is dependent upon estimates of recoverable amounts that take into account factors such as economic and market conditions and the useful lives of assets.

Business Acquisitions

Business Combinations and Asset Purchases

Classification of a business acquisition as a business combination or an asset acquisition depends on whether the assets acquired constitute a business, which can be a complex judgment.

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Results of Operations

Three and six months ended June 30, 2024 and 2023

Three and nine months ended September 30, 2024 and 2023

Our main sources of revenue are comprised of the following:

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We recognize this revenue when products are delivered or at retail points-of-sale.

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

We recognize this revenue after the delivery and acceptance of goods by a purchaser.

• Real estate rentals - rental income generated from leasing of our state-of-the-art, regulatory-compliant cannabis facilities to our cannabis-licensed clients.

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

• Supply procurement - resale of cultivation and production resources, supplies and equipment that we have acquired from top national vendors at discounted prices to our clients and third parties within the cannabis industry.

We recognize this revenue after the delivery and acceptance of goods by the purchaser.

• Management fees - fees for providing our cannabis clients with comprehensive oversight of their cannabis cultivation, production and dispensary operations.

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We recognize this revenue when the products are delivered.

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

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

Increase (decrease) from prior year

Three months ended June 30,

Three months ended September 30,

Product revenue:

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Total revenue $ 40,591 $ 38,800 $ 1,791 4.6 %

Six months ended June 30,

Nine months ended September 30,

Product revenue:

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Total revenue $ 118,962 $ 109,699 $ 9,263 8.4 %

Our total revenue increased $3.9 million in the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Our total product revenue increased $4.1 million, or 11.7%, in the three months ended June 30, 2024 compared to the same prior year period.

This increase was primarily attributable to higher revenue in each of our wholesale locations, particularly in Maryland.

Our retail operations in Maryland, Massachusetts and Ohio all reported higher retail revenue in the three months ended June 30, 2024 compared to the same prior year period;

however, these increases were partially offset by lower retail revenue in most of our Illinois dispensaries.

The decrease in other revenue in the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily attributable to lower real estate rentals and licensing fees, partially offset by management fees from Allgreens.

Our total revenue increased $7.5 million in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

The $7.4 million, or 10.8%, increase in our total product revenue was primarily attributable to higher revenue in each of our wholesale locations, particularly in Maryland.

Our total revenue increased $1.8 million, or 4.6%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Our total product revenue increased $1.9 million, or 5.1%, in the three months ended September 30, 2024, compared to the same prior year period.

The $2.7 million increase in revenue from our wholesale operations was partially offset by a $0.7 million decrease in retail sales.

The increase in wholesale revenue was attributable to the inclusion of wholesale revenue in Illinois in the current year, coupled with higher revenue in our other wholesale locations.

Our retail operations in Massachusetts reported higher retail revenue in the three months ended September 30, 2024, partially offset by lower retail revenue in our other locations, primarily certain of our Illinois dispensaries.

The decrease in other revenue in the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily attributable to lower real estate rentals, partially offset by management fees.

Our total revenue increased $9.3 million, or 8.4%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily attributable to wholesale revenue, partially offset by lower retail sales and other revenue.

The increase in wholesale revenue was attributable to the inclusion of wholesale revenue in Illinois in the current year, coupled with higher revenue in our other wholesale locations, particularly in Maryland.

Our retail operations in Illinois reported lower revenue in the aggregate;

however, this decrease was partially offset by higher net sales in our Massachusetts dispensaries and in Maryland.

Our other revenue was relatively unchanged in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Our other revenue was relatively unchanged in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

The increase in management fees principally related to Allgreens prior to the Allgreens Acquisition Date.

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Our cost of revenue represents the direct costs associated with the generation of our revenue, including licensing, packaging, supply procurement, manufacturing, supplies, depreciation, amortization of acquired intangible assets, and other product-related costs.

Our cost of revenue, gross profit and gross margin for the three and six months ended June 30, 2024 and 2023 were as follows (in thousands, except percentages):

Increase from prior year

Our cost of revenue, gross profit and gross margin for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands, except percentages):

Increase (decrease) from prior year

2024 2023 $ %

Three months ended June 30,

Three months ended September 30,

Cost of revenue $ 23,813 $ 21,962 $ 1,851 8.4 %

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Gross margin 41.3 % 43.4 %

Six months ended June 30,

Nine months ended September 30,

Cost of revenue $ 68,803 $ 61,097 $ 7,706 12.6 %

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Gross margin 42.2 % 44.3 %

Our cost of revenue increased in both the three- and six-month periods ended June 30, 2024 compared to the same periods in the prior year.

These increases were primarily attributable to increases in materials and employee-related expenses aggregating approximately $6 million and $11 million, respectively, in the three and six months ended June 30, 2024.

Our cost of revenue increased in both the three- and nine-month periods ended September 30, 2024 compared to the same periods in the prior year.

These increases were primarily attributable to increases in employee-related expenses and materials costs aggregating approximately $2 million and $6 million in the three and nine months ended September 30, 2024, respectively.

Our higher personnel costs were primarily due to our increased headcount in connection with our recent acquisitions and expanded footprint.

These increases were partially offset primarily by decreases in certain inventory-related expenses.

These increases were partially offset by decreases in certain inventory-related expenses.

Operating Expenses

Our operating expenses are comprised of personnel, marketing and promotion, general and administrative, acquisition-related and other, and bad debt expenses.

Our operating expenses for the three and six months ended June 30, 2024 and 2023 were as follows (in thousands, except percentages):

Our operating expenses for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands, except percentages):

Increase (decrease) from prior year

2024 2023 $ %

Three months ended June 30,

Three months ended September 30,

Personnel $ 7,255 $ 5,916 $ 1,339 22.6 %

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$ 15,438 $ 13,546 $ 1,892 14.0 %

Six months ended June 30,

Nine months ended September 30,

Personnel $ 20,678 $ 16,191 $ 4,487 27.7 %

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$ 45,842 $ 36,628 $ 9,214 25.2 %

The increase in our personnel expenses in both the three- and six-month periods ended June 30, 2024 compared to the three- and six-month periods ended June 30, 2023 was primarily due to the hiring of additional staff to support higher levels of projected revenue from existing operations and our recent acquisitions.

Personnel costs increased to approximately 17% of revenue in both the three- and six-month periods ended June 30, 2024, compared to approximately 15% of revenue in both the three- and six-month periods ended June 30, 2023.

The increase in our marketing and promotion expenses in both the three- and six-month periods ended June 30, 2024, compared to the three- and six-month periods ended June 30, 2023 was primarily attributable to our continued focus on upgrading our marketing initiatives in order to expand branding and distribution of our licensed products.

The increase in our general and administrative expenses in the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily attributable to higher facility and related expenses, depreciation and amortization of fixed assets, and professional fees (i.e., legal, accounting and consulting).

The increase in our general and administrative expenses in the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily attributable to higher facility and related expenses, depreciation and amortization of fixed assets, and professional fees.

The increase in our personnel expenses in both the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 was primarily due to the hiring of additional staff to support higher levels of projected revenue from existing operations and our recent acquisitions.

Personnel costs increased to approximately 18%

and 17% of revenue in the three and nine months ended September 30, 2024, respectively, compared to approximately 15% of revenue in both the three and nine months ended September 30, 2023.

The increase in our marketing and promotion expenses in both the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023 was primarily attributable to our continued focus on upgrading our marketing initiatives in order to expand branding and distribution of our licensed products.

Our general and administrative expenses in the three months ended September 30, 2024 were essentially flat compared to the three months ended September 30, 2023.

The moderate increases in our deal costs and facility and related expenses were virtually offset by lower professional fees (i.e., legal, accounting and consulting), depreciation and amortization, and other general and administrative expenses.

The increase in our general and administrative expenses in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily attributable to higher facility and related expenses, depreciation and amortization of fixed assets, and professional fees.

These increases were primarily attributable to the addition of new facilities and related fixed assets, coupled with higher professional fees, primarily legal fees in connection with our acquisitive and financing activities.

Acquisition-related and other expenses include those expenses related to acquisitions and other significant transactions that we would otherwise not have incurred, and include professional and services fees, such as legal, audit, consulting, paying agent and other fees.

Our acquisition-related and other expense in both the three and six months ended June 30, 2024 primarily related to the acquisitions of MedLeaf and Allgreens, which were both consummated in April 2024, and non-cash expense for warrants to purchase our common stock issued to an entity in consideration for introductory and other services rendered in connection with certain funding and acquisitive transactions.

Our acquisition-related and other expense in the three and six months ended June 30, 2023 primarily related to our acquisitions and professional fees incurred to obtain the CA Credit Agreement (described below).

Our acquisition-related and other expense in both the three and nine months ended September 30, 2024 primarily related to the acquisitions of MedLeaf and Allgreens, which were both consummated in April 2024, and non-cash expense for warrants to purchase our common stock issued to an entity in consideration for introductory and other services rendered in connection with certain funding and acquisitive transactions.

Our acquisition-related and other expense in the three and nine months ended September 30, 2023 primarily related to our acquisitions and professional fees incurred to obtain the CA Credit Agreement (described below).

Interest expense primarily relates to interest on mortgages and notes payable, as well as the CREM Loan (described below) in 2024 and the CA Term Loan (described below) in 2023.

Interest income primarily relates to our notes receivable.

Our net interest expense decreased $0.8 million in the three months ended June 30, 2024 compared to the three months ended June 30, 2023, and $1.6 million in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Our net interest expense decreased $0.8 million in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, and $2.4 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

These decreases were primarily due to lower non-cash interest expense in the current year periods, coupled with lower interest rates on our CREM Loan compared to our previous financing facility.

Other Expense, Net

We reported net other expense of approximately $30,000 and $50,000 in the three and six months ended June 30, 2024, respectively, and approximately $10,000 and $910,000 in the three and six months ended June 30, 2023, respectively.

The expense in the six months ended June 30, 2023 was primarily due to the write-off of assets in connection with our decision to cancel our plans to expand into Nevada.

We reported net other expense of approximately $50,000 in the nine months ended September 30, 2024.

We did not record other income or expense in the three months ended September 30, 2024.

We reported net other expense of $0.6 million and $1.6 million in the three and nine months ended September 30, 2023.

The expense for the three months ended September 30, 2023 primarily relates to a $0.7 million term loan payment that we initiated in error to an account provided in a fraudulent email we received.

We were initially advised by JPM Chase, the recipient's bank ("Chase") that we had identified the problem before the payment was delivered to the account identified by the email, and that the funds were being held by Chase pending its completion of an internal investigation.

Chase has subsequently advised us that the funds were delivered to the fraudulent recipient's account.

We continue to pursue all channels through our bank to recover these funds.

In addition, we initiated, and are pursuing, a claim under our insurance coverage to recover this amount.

There is no assurance that we will successfully recover all or any portion of this amount, including under our insurance claim.

We reduced our cash balance and included this amount as a component of Other expense, net, in our condensed consolidated statement of operations for the three and nine months ended September 30, 2023.

If these funds, or any portion of these funds, are recovered, we will reverse the expense accordingly.

We have implemented additional safeguards to protect ourselves from future fraudulent activity;

please see Part I, Item 1A.

Risk Factors and Item 1C.

Cybersecurity of our 2023 10-K.

In addition to the aforementioned payment, the amount for the nine months ended September 30, 2023 also includes the write-off of assets in the first quarter of 2023 in connection with our decision to abandon a project to expand into Nevada.

Income Tax Provision

We recorded income tax provisions of $2.6 million and $4.4 million in the six months ended June 30, 2024 and 2023, respectively.

We recorded income tax provisions of $3.2 million and $8.9 million in the nine months ended September 30, 2024 and 2023, respectively.

Our income tax provisions are impacted by Section 280E of the Internal Revenue Code, which prohibits the deduction of certain ordinary business expenses.

Liquidity and Capital Resources

We had cash and cash equivalents of $10.2 million and $14.6 million at June 30, 2024 and December 31, 2023, respectively.

We had cash and cash equivalents of $9.8 million and $14.6 million at September 30, 2024 and December 31, 2023, respectively.

In addition to the discussions below of our cash flows from operating, investing, and financing activities, please also see our discussion of non-GAAP Adjusted EBITDA in the section “Non-GAAP Measurement” below, which discusses an additional financial measure not defined by GAAP which our management also uses to measure our liquidity.

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On January 24, 2023, we 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

Therapeutics seller notes incurred in connection with the Kind Acquisition, which repayment occurred on January 24, 2023.

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

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

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

Additionally, the CA Credit Agreement required us to meet

certain financial tests.

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

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At the initial closing, upon funding of the initial $30.0 million under the facility, we issued to the CA Lenders warrants to purchase an aggregate of 19,148,936 shares of our common stock at $0.47 per share, exercisable for a five-year period following issuance.

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

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.

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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 in escrow to complete the expansion of our Hagerstown, Maryland cultivation facility (the "Hagerstown Facility").

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

Any unused proceeds would be released to us after completion of the Hagerstown Facility expansion.

We used $46.8 million of the Initial CREM Distribution to fully repay certain of our outstanding debt obligations.

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Concurrent with the repayment of the BNE Mortgage, we refinanced these 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 amount in our consolidated balance sheet at December 31, 2023.

During the six months ended June 30, 2024, we received $2.9 million of the amount previously held back by the CREM Lender.

During the nine months ended September 30, 2024, $5.1 million of the escrowed portion of the loan proceeds was released to us,

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.

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We expect cash flows from operating activities to be affected by increases and decreases in sales volumes and timing of collections, and by purchases of inventory and shipment of our products.

Our primary uses of cash for operating activities are for personnel costs, purchases of packaging and other materials required for the production and sale of our products, and income taxes.

Our operating activities provided $6.4 million and used $3.2 million of cash in the six months ended June 30, 2024 and 2023, respectively.

Our primary uses of cash for operating

activities are for personnel costs, purchases of packaging and other materials required for the production and sale of our products, and income taxes.

Our operating activities provided $7.2 million and $4.7 million of cash in the nine months ended September 30, 2024 and 2023, respectively.

The change in cash from operating activities in the current year period compared to the prior year was primarily attributable to higher costs and operating expenses arising from expanding our sales activities, facilities and geographic footprint, both in the states where we currently operate and to expand into other states.

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Cash Flows from Investing Activities

Our investing activities used $13.8 million and $13.4 million of cash in the six months ended June 30, 2024 and 2023, respectively.

During the six months ended June 30, 2024, we used $8.3 million of cash for capital expenditures, $4.3 million for purchase consideration in connection with the MedLeaf Acquisition and Allgreens Acquisition, $0.6 million for purchases of cannabis licenses and $0.5 million for advances toward future business acquisitions.

During the six months ended June 30, 2023 we used $8.8 million of cash for capital expenditures, $3.0 million as part of the purchase consideration for the Ermont Acquisition, $0.6 million for cannabis licenses and $0.3 million for advances toward future business acquisitions.

Our investing activities used $15.9 million and $19.6 million of cash in the nine months ended September 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2024, we used $10.9 million of cash for capital expenditures, $4.3 million for purchase consideration in connection with the MedLeaf Acquisition and Allgreens Acquisition, and $0.7 million for purchases of cannabis licenses.

During the nine months ended September 30, 2023, we used $14.7 million of cash for capital expenditures, $3.0 million as part of the purchase consideration for the Ermont Acquisition, $0.6 million for cannabis licenses, $0.3 million for advances toward future acquisitions and $0.2 million for the purchase of certain investments.

We also issued $0.9 million of notes receivable to a cannabis-licensed client.

Cash Flows from Financing Activities

Our financing activities provided $3.0 million of cash in the six months ended June 30, 2024 and $21.5 million of cash in the six months ended June 30, 2023.

During the six months ended June 30, 2024, we received $2.9 million of additional proceeds from the CREM Loan and $1.2 million of proceeds from the refinancing of our retail facility in Mt.

Our financing activities provided $3.9 million of cash in the nine months ended September 30, 2024 and $18.5 million of cash in the nine months ended September 30, 2023.

During the nine months ended September 30, 2024, we received $5.1 million of additional proceeds from the CREM Loan and $1.2 million of proceeds from the refinancing of our retail facility in Mt.

Vernon, Illinois.

We made $2.2 million of aggregate principal payments on our outstanding mortgages, promissory notes and finance leases, and approximately $120,000 of distribution payments.

During the six months ended June 30, 2023, we received proceeds of $29.1 million from the CA Credit Agreement, of which we used $5.5 million to repay in full the notes issued in connection with our 2022 acquisition of Kind Therapeutics USA (the "Kind Acquisition") and made approximately $81,000 of distribution payments.

During the nine months ended September 30, 2023, we received proceeds of $29.1 million from the CA Credit Agreement, of which we used $5.5 million to repay in full the notes issued in connection with our 2022 acquisition of Kind Therapeutics USA (the "Kind Acquisition").

Excluding the aforementioned repayment of the notes in connection with the Kind Acquisition, we made $1.3 million of aggregate principal payments on our outstanding mortgages and promissory notes, including the repayment in full in May 2023 of our mortgage with South Porte Bank.

We also made $0.6 million of payments toward the outstanding balance of the CA Credit Agreement and $0.2 million of principal payments of finance leases.

We also paid $1.8 million for third-party debt issuance costs in connection with the CA Credit Agreement, and made $1.5 million of payments toward the outstanding balance of the CA Credit Agreement, $0.5 million of principal payments of finance leases, and $0.1 million of distribution payments.

Based on our current expectations, we believe our current cash and future funding opportunities will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next twelve months.

The rate at which we consume cash is dependent on the cash needs of our future operations, including our contractual obligations at June 30, 2024, and our ability to raise additional cash through financing activities.

The rate at which we consume cash is dependent on the cash needs of our future operations, including our contractual obligations at September 30, 2024, and our ability to raise additional cash through financing activities.

We anticipate devoting substantial capital resources to continue our efforts to execute our strategic growth plan as described above.

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Reconciliation of Income from Operations to Adjusted EBITDA (a Non-GAAP Measurement)

The table below reconciles income from operations to Adjusted EBITDA for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three months ended Six months ended

2024 June 30,

2023 June 30,

2024 June 30,

The table below reconciles income from operations to Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Three months ended Nine months ended

September 30,

2024 September 30,

2023 September 30,

2024 September 30,

GAAP Income from operations $ 1,340 $ 3,292 $ 4,317 $ 11,974

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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 2. Management’s Discussion and Analysis