What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-05-14 compared with 2025-11-06 · 93 added, 120 removed, 188 unchanged (53% of the section changed)

16 unchanged sentences

increased competition, including from the Company’s business partners;

and enforcement of U.S.

federal cannabis-related laws.

and enforcement of United States federal cannabis-related laws.

The following discussion should be read in conjunction with the financial statements and related notes which are included in this Quarterly Report on Form 10-Q.

3 unchanged sentences

We have created and continue to develop our own brands of premium cannabis flower, concentrates, edibles and other precision-dosed products utilizing our proprietary strains and formulations.

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

We also license our proprietary brands, along with other top cannabis products, in select domestic markets, although licensing revenues are not material to our overall results of operations.

Cannabis remains illegal under United States federal law.

Our operations are conducted in compliance with applicable state and local laws and regulations in the jurisdictions in which we operate.

We completed the acquisition of First State Compassion Center ("FSC"), the leading cannabis operator in Delaware, effective March 1, 2025 (the "FSC Acquisition Date").

Prior to its acquisition by us (the "FSC Acquisition"), FSC had been our managed services client.

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

We completed two acquisitions in the year ended December 31, 2024, which we accounted for as asset purchases.

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.

On April 5, 2024, we acquired 100% of the membership interests of Our Community Wellness & Compassionate Care Center, Inc.

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

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.

Prior to our acquisition of FSC (the "FSC Acquisition"), FSC had been our managed services client.

The financial results of FSC are included in our consolidated financial statements for the periods subsequent to the FSC Acquisition Date.

On February 24, 2026, we and the holders of our Series B Convertible Preferred Stock (the "Series B Holders") entered into a Restructuring and Exchange Agreement (the "Series B Restructuring Agreement") to restructure our existing obligation under the Series B Convertible Preferred Stock (the "Series B Obligation").

Pursuant to the Series B Restructuring Agreement, all outstanding shares of Series B Convertible Preferred Stock were cancelled, and the Series B Obligation was extinguished.

In exchange, we issued to the Series B Holders (i) two new promissory notes in the aggregate principal amount of $8.0 million, one in the principal amount of $2.0 million, due March 1, 2028, accruing

interest at a rate of 8.0% per annum (“Note #1”) and the other in the principal amount of $6.0 million, due March 1, 2031, accruing interest at a rate of 10.0% per annum (subject to reduction to 8.0% if Note #1 is paid in full within six (6) months of February 24, 2026) (“Note #2” collectively with Note #1, the “New Notes”), and (ii) 26,900,000 shares of an amended and restated class of our Series B Convertible Preferred Stock (the “New Series B Preferred Stock”), having an aggregate liquidation preference of $6.725 million ($0.25 per share), and the rights, preferences and privileges set forth in the Second Amended and Restated Certificate of Designation filed with the Secretary of State of the State of Delaware on February 26, 2026.

The New Notes are guaranteed by certain of our subsidiaries pursuant to a Subsidiary Guaranty, dated as of February 24, 2026.

We recognized a gain on the extinguishment of $0.7 million.

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

8 unchanged sentences

◦ expanding our dispensary footprint in current markets where regulations allow and into new markets through new license applications and/or acquisitions of existing cannabis businesses.

On July 30, 2025, we entered into a Management Services Agreement ("MSA") with Standard Farms, LLC ("Standard Farms"), a wholly-owned subsidiary of TILT Holdings Inc.

Under the terms of the MSA, which became effective on September 1, 2025, we assumed the day-to-day management of TILT's Standard Farms cultivation and processing facility in White Haven, Pennsylvania.

These management services include oversight of Standard Farms' budgeting, financial planning, compliance with applicable laws and quality management.

In addition, pursuant to a licensing arrangement with us, upon regulatory approval, Standard Farms intends to produce and distribute our brands in Pennsylvania.

Critical Accounting Policies and Estimates

16 unchanged sentences

Accordingly, the actual amounts collected could differ from expected amounts and require that we record additional reserves.

Our inventory is valued at the lower of cost or market, including consideration of factors such as shrinkage, the aging of and future demand for inventory, expected future selling price, what we expect to realize by selling the inventory and the

contractual arrangements with customers.

Reserves for excess and obsolete inventory are based upon quantities on hand, projected volumes from demand forecasts, and net realizable value.

22 unchanged sentences

We reserve for legal contingencies and legal fees when the amounts are probable and estimable.

Customer Loyalty Program

We have a customer loyalty program (the “Loyalty Program”) under which customers who participate in the Loyalty Program earn points based on qualifying purchases that can be redeemed for discounts on future purchases.

A portion of the transaction price is allocated to the loyalty points based on their relative standalone selling price, and revenue is deferred until the points are redeemed or expire.

Stock-Based Compensation

Our stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized over the requisite service period, which is generally the vesting period.

We use the Black-Scholes valuation model for estimating the fair value of stock options as of the date of grant.

We use the Black-Scholes valuation model for

estimating the fair value of stock options as of the date of grant.

Determining the fair value of stock option awards at the grant date requires judgment regarding certain valuation assumptions, including the volatility of our stock price, expected term of the stock option, risk-free interest rate and expected dividends.

2 unchanged sentences

We use the asset and liability method to account for income taxes.

Under this method, deferred income tax assets and liabilities are recorded for the future tax consequences of differences between the tax basis and financial reporting basis of assets and liabilities, measured using enacted tax rates and laws that will be in effect when the differences are expected to

Deferred tax assets are reduced by a valuation allowance to the extent our management concludes that it is more likely than not that the assets will not be realized.

2 unchanged sentences

These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage our businesses.

Customer Loyalty Program – Adjustments to Correct Error in Prior Periods

We have a customer loyalty program (the “Loyalty Program”) under which customers earn points based on qualifying purchases that can be redeemed for discounts on future purchases.

Applying Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”), a portion of the transaction price is allocated to the loyalty points based on their relative standalone selling price, and revenue is deferred until the points are redeemed or expire.

During the third quarter of 2025, we determined that we were not accounting for the Loyalty Program in accordance with ASC 606 and, accordingly, calculated the amounts that should have been recorded in prior periods.

These amounts were deemed immaterial to our condensed consolidated financial statements.

We have adjusted our financial statements to reflect the impact of adjustments to prior periods, which adjustments are reflected in the condensed consolidated financial statements included herein.

We recorded decreases to revenue of approximately $83,000 and $237,000 in the three and nine months ended September 30, 2025, respectively, an increase to revenue of approximately $4,000 in the three months ended September 30, 2024 and a decrease to revenue of approximately $202,000 in the nine months ended September 30, 2024.

We recorded additional marketing and promotion expense of approximately $16,000 and $46,000 in the three and nine months ended September 30, 2025, respectively, a nominal credit to marketing and promotion expense in the three months ended September 30, 2024 and additional marketing and promotion expense of approximately $38,000 in the nine months ended September 30, 2024.

OTCQX Listing

On June 10, 2025, the OTC Markets Group notified us of our non-compliance with the minimum bid price requirement, thereby triggering a discretionary cure period.

To regain compliance, we must have maintained a bid price of at least $0.10 per share for a minimum of 10 consecutive trading days by September 8, 2025, which occurred effective September 5, 2025.

Results of Operations

Three and nine months ended September 30, 2025 and 2024

Three months ended March 31, 2026 and 2025

Our main sources of revenue are comprised of the following:

17 unchanged sentences

If deemed an agent, we do not recognize revenue for the performance obligations we do not satisfy.

Revenue for the three and nine months ended September 30, 2025 and 2024 was comprised of the following (in thousands):

Increase (decrease) from prior year

Three months ended September 30,

Revenue for the three months ended March 31, 2026 and 2025 was comprised of the following (in thousands, except percentages):

Three months ended Increase (decrease)

March 31, from prior year

2026 2025 $ %

Product sales - retail

6 unchanged sentences

$ 39,481 $ 37,906 $ 1,575 4.2 %

Nine months ended September 30,

Product sales - retail $ 65,637 $ 69,151 $ (3,514) (5.1) %

Product sales - wholesale 51,948 46,683 5,265 11.3 %

Total other revenue 591 2,926 (2,335) (79.8) %

Total revenue $ 118,176 $ 118,760 $ (584) (0.5) %

Our product sales increased by $0.9 million and $1.8 million, respectively, in the three and nine months ended September 30, 2025, compared to the three and nine months ended September 30, 2024.

Decreases in retail sales were more than offset by increases in wholesale sales in each of the three and nine month ended September 30, 2025, compared to the same prior year periods.

The decreases in retail sales in both current periods were primarily attributable to lower sales in our Metropolis, Illinois dispensary and, to a lesser extent, certain of our dispensaries in Massachusetts, Maryland and our other Illinois dispensaries.

These decreases were partially offset by higher sales in our other dispensaries in Delaware, Maryland, Ohio and Massachusetts, as well as the inclusion of retail revenue from FSC for the period since the FSC Acquisition Date.

The increases in our wholesale revenue were primarily attributable to higher wholesale revenue in Delaware, Illinois and Massachusetts.

These increases were partially offset by a decline in wholesale revenue in Maryland.

The decreases in total other revenue in the three and nine months ended September 30, 2025 compared to the same prior year periods were primarily attributable to the cessation of revenue recognition from management fees, rental income and other components of other income, effective as of the FSC Acquisition Date.

Our product sales increased by $1.7 million in the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

The increase in retail sales was primarily attributable to our dispensaries in Delaware and Maryland, partially offset by lower sales in certain of our other dispensaries in Illinois and, to a lesser extent, our Massachusetts dispensaries.

The increase in our wholesale revenue was primarily attributable to higher wholesale revenue in Delaware and Illinois, partially offset by lower wholesale revenue in Maryland.

The decrease in total other revenue in the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily attributable to the cessation of revenue recognition from management fees, rental income and other components of other income from FSC prior to its acquisition by us in March 2025.

Cost of Revenue, Gross Profit and Gross Margin

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 nine months ended September 30, 2025 and 2024 were as follows (in thousands, except percentages):

Increase (decrease) from prior year

Three months ended September 30,

Cost of revenue $ 24,401 $ 23,813 $ 588 2.5 %

Gross profit $ 16,363 $ 16,782 $ (419) (2.5) %

Gross margin 40.1 % 41.3 %

Nine months ended September 30,

Our cost of revenue, gross profit and gross margin for the three months ended March 31, 2026 and 2025 were as follows (in thousands, except percentages):

Three months ended Increase

March 31, from prior year

2026 2025 $ %

Cost of revenue $ 24,205 $ 22,817 $ 1,388 6.1 %

1 unchanged sentence

Gross margin 38.7 % 39.8 %

The increases in our cost of revenue in both the three and nine months ended September 30, 2025 compared to the same prior year periods were primarily due to higher employee-related, facilities and related expenses, partially offset by lower inventory-related expenses.

The increases in employee-related, facilities and related expenses were primarily due to our increased headcount in connection with our recent acquisitions and expanded footprint.

The increase in our cost of revenue in the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to higher employee- and facilities-related expenses.

This increase primarily resulted from the inclusion of FSC expenses for the full quarter in 2026 and the expansion of our production footprint in Maryland.

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 nine months ended September 30, 2025 and 2024 were as follows (in thousands, except percentages):

Increase (decrease) from prior year

2025 2024 $ %

Three months ended September 30,

Personnel $ 7,028 $ 7,255 $ (227) (3.1) %

Marketing and promotion 1,121 1,827 (706) (38.6) %

General and administrative 6,592 6,100 492 8.1 %

Acquisition-related and other 145 371 (226) (60.9) %

Bad debt (122) (116) (6) 5.2 %

Our operating expenses for the three months ended March 31, 2026 and 2025 were as follows (in thousands, except percentages):

Three months ended Increase (decrease)

March 31, from prior year

2026 2025 $ %

Nine months ended September 30,

Personnel $ 7,254 $ 7,341 $ (87) (1.2) %

4 unchanged sentences

$ 15,151 $ 15,999 $ (848) (5.3) %

The decrease in our personnel expenses in the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was primarily related to the strategic elimination and consolidation of certain positions, coupled with lower expense in connection with certain employee benefits.

These decreases were partially offset by increased headcount in connection with our acquisitions and expanded presence.

The increase in our personnel expenses in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily attributable to increased headcount in connection with our acquisitions and expanded presence, partially offset by lower expense in connection with certain employee benefits.

Personnel costs decreased to approximately 17% of revenue in the three months ended September 30, 2025, from approximately 18% in the three months ended September 30, 2024.

Personnel costs increased to approximately 18% of revenue in the nine months ended September 30, 2025, compared to approximately 17% in the same prior year period.

The decreases in our marketing and promotion expenses in each of the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 were primarily attributable to our planned reductions to these expenditures;

Our personnel expenses were relatively unchanged in the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

The slight decrease in the three months ended March 31, 2026 compared to the same prior year period was primarily attributable to the elimination of employee expenses in connection with our pre-acquisition operations in Missouri, which we exited in the fourth quarter of 2025, coupled with lower employee cash incentive payments.

Personnel costs decreased to approximately 18% of revenue in the three months ended March 31, 2026, from approximately 19% in the three months ended March 31, 2025.

The decrease in our marketing and promotion expenses in the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily attributable to our planned reductions to these expenditures;

however, we continue to focus on judicious marketing initiatives that expand the branding and distribution of our licensed products.

The increases in our general and administrative expenses in each of the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 were primarily attributable to higher facilities, stock-based compensation and insurance expenses.

These increases were largely offset by decreases in certain other general and administrative expenses, such as professional fees, travel and entertainment.

The increase in our general and administrative expenses in the three months ended March 31, 2026 compared to the three months ended March 31, 2025 were primarily attributable to higher facility-related, employee travel and entertainment, and depreciation expenses.

These increases were largely offset by decreases in certain other general and administrative expenses, such as stock-based compensation, amortization of acquired intangible assets, and insurance.

Acquisition-related and other expenses include those expenses related to acquisitive activities 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 each of the three and nine months ended September 30, 2025 primarily related to the FSC Acquisition and other acquisitive activities.

Our acquisition-related and other expense in 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.

We recorded $0.1 million of credits to bad debt expense and $1.5 million of bad debt expense in the three and nine months ended September 30, 2025, respectively.

The nine-month amount included $1.5 million of expense to fully reserve amounts due from two credit card service providers (the "Service Provider Receivables").

Of the $1.5 million of Service Provider Receivables, $1.3 million and the related reserve were included as components of Other assets and $0.2 million and the related reserve were included as components of Accounts Receivable in the condensed consolidated balance sheet at September 30, 2025.

At December 31, 2024, the Service Provider Receivables were included as components of Cash.

We recorded $0.1 million of credits to bad debt expense in each of the three and nine months ended September 30, 2024.

Our acquisition-related and other expenses in the three months ended March 31, 2026 primarily related to multiple pre-acquisitive and similar activities.

Our acquisition-related and other expenses in the three months ended March 31, 2025 primarily related to the FSC Acquisition.

We recorded $0.1 million of bad debt expense in the three months ended March 31, 2026 to reserve for certain trade receivable accounts.

We recorded $1.4 million of bad debt expense in the three months ended March 31, 2025, comprised of $1.3 million of expense to fully reserve an amount due from a credit card service provider (the "Service Provider Receivable") and $0.1 million of expense to reserve for certain trade accounts receivable accounts.

The reserve was reported as a component of Other assets in our condensed consolidated balance sheets at each of March 31, 2026 and December 31, 2025.

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

Interest income primarily relates to our notes receivable.

Our net interest expense increased by $0.1 million in the three months ended September 30, 2025 compared to the three months ended September 30, 2024, and increased by $0.3 million in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

These increases were primarily due to the interest on additional finance leases and the refinancing of one of our mortgages.

Other Income (Expense), Net

We recorded net other income of approximately $19,000 and $36,000 in the three and nine months ended September 30, 2025, respectively.

We recorded net other expense of approximately $50,000 in the nine months ended September 30, 2024, primarily related to changes in the fair value of investments.

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

Our net interest expense increased by $0.2 million in the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

This increase was primarily due to the inclusion in the three months of March 31, 2026 of interest on finance leases entered into in the third quarter of 2025.

Gain on Extinguishment of Debt

We recognized a gain on the extinguishment of debt of $0.7 million in connection with the Series B Restructuring Agreement described in the “Overview” section above.

Income Tax Provision

We recorded income tax provisions of $2.8 million and $6.3 million in the three and nine months ended September 30, 2025, respectively, and $0.7 million and $3.2 million in the three and nine months ended September 30, 2024, respectively.

We recorded income tax provisions of $2.7 million and $2.8 million in the three months ended March 31, 2026 and 2025, respectively.

We are subject to income taxes in the jurisdictions in which we operate, and consequently, income tax expense is a function of the allocation of taxable income by jurisdiction and the various activities that impact the timing of taxable events.

As we operate in the federally illegal cannabis industry, we are subject to the limitations of the U.S.

Internal Revenue Code of 1986, as amended (“IRC”) Section 280E, under which taxpayers are only allowed to deduct expenses directly related to cost of goods sold of cannabis products.

Internal Revenue Code of 1986, as amended (the “IRC”), Section 280E, under which taxpayers are only allowed to deduct expenses directly related to cost of goods sold of cannabis products.

This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E and a higher effective tax rate than most industries.

As a result, our effective tax rate can be highly variable and may not necessarily correlate to pre-tax income or loss.

On April 23, 2026, the U.S.

Department of Justice (the “DOJ”) issued a final order that placed both FDA-approved drugs containing cannabis and cannabis subject to a qualifying state medical list in Schedule III of the Controlled Substances Act.

As a result, business conducted within these categories is no longer subject to IRC Section 280E, allowing for full deduction of ordinary and necessary business expenses.

Due to the timing of when the final order was issued, we did not record the impact in our income tax provision for the three months ended March 31, 2026.

We continue to monitor guidance from the DOJ and the U.S.

Internal Revenue Service (the "IRS") to properly record and disclose any impact in our future financial statements.

In February 2026, the IRS filed a lien against FSC in connection with an approximate $1 million tax liability for the years 2023 and 2024, which periods were prior to the FSC Acquisition Date.

We recorded this liability as part of the allocation of the purchase consideration for FSC.

In June 2025, the IRS filed a lien against us in connection with an approximate $6 million 2023 tax liability.

We are disputing the assessment through a Collection Due Process (“CDP”) Hearing and pursuing a resolution, including potential reduction or collection alternatives.

While the matter is pending, IRS enforcement is generally stayed.

Although the liability is fully accrued in the accompanying condensed consolidated financial statements, an unfavorable outcome could materially impact our operations and financial position.

We are disputing these assessments through Collection Due Process Hearings and pursuing resolutions, including potential reductions or collection alternatives.

While the matters are pending, IRS enforcement is generally stayed.

Although the liabilities are fully accrued in the accompanying condensed consolidated financial statements, unfavorable outcomes could materially impact our operations and financial position.

Liquidity and Capital Resources

We had cash and cash equivalents of $6.6 million and $7.3 million at September 30, 2025 and December 31, 2024, respectively.

We had cash, cash equivalents and restricted cash aggregating $7.9 million and $8.9 million at March 31, 2026 and December 31, 2025, 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.

10 unchanged sentences

in Quincy, Massachusetts.

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 the CREM Lender, which mortgage matures in 2033 and which outstanding amount is included as a component of the CREM Loan amount in our consolidated balance sheets at September 30, 2025 and December 31, 2024.

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

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

The CREM Loan Agreement also includes customary negative covenants limiting the CREM Borrowers' (but not the Company's) ability to incur additional

indebtedness and grant liens that are otherwise not permitted, among others.

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

Effective December 31, 2025, we and the CREM Borrowers entered into a First Amendment to the CREM Loan Agreement (the "Amendment") in connection with a federal tax lien filed against us relating to our 2023 income taxes (the "Tax Lien"), which we are disputing (the "Disputed Taxes").

Pursuant to the Amendment, beginning in January 2026, the CREM Borrowers are required to deposit $100,000 per month into a non-interest-bearing cash collateral reserve account to be held by the CREM Lender until the full amount of the Disputed Taxes is on deposit.

The account is pledged as additional collateral under the CREM Loan Agreement and the amounts on deposit are available for payment of the Disputed Taxes.

The Amendment also modified the CREM Borrowers' reporting obligations under the CREM Loan Agreement.

All other material terms of the CREM Loan Agreement remain in effect.

Cash Flows from Operating Activities

1 unchanged sentence

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 $4.3 million and $7.2 million of cash in the nine months ended September 30, 2025 and 2024, respectively.

The change in cash from operating activities in the current year period compared to the prior year was primarily attributable to higher personnel costs and operating expenses arising from expanding our geographic presence.

These higher costs primarily relate to personnel, cultivation/manufacturing and facility expenses.

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 $0.9 million and $1.3 million of cash in the three months ended March 31, 2026 and 2025, respectively.

The change in cash from operating activities in the current year period compared to the prior year was primarily attributable to expenses arising from expanding our geographic presence.

These higher costs primarily relate to cultivation/manufacturing, personnel and facility-related expenses.

Cash Flows from Investing Activities

Our investing activities used $1.2 million and $15.9 million of cash in the nine months ended September 30, 2025 and 2024, respectively.

During the nine months ended September 30, 2025, we used $1.1 million of cash for capital expenditures and an aggregate of $0.4 million for advances toward future business acquisitions and purchases and renewals of cannabis licenses.

These amounts were partially offset by $0.2 million of cash acquired in connection with the FSC Acquisition, approximately $45,000 of cash proceeds from the disposal of assets and approximately $26,000 of proceeds from notes receivable.

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

Our investing activities used $0.8 million and $0.1 million of cash in the three months ended March 31, 2026 and 2025, respectively.

During the three months ended March 31, 2026, we used $0.4 million for each of purchases of cannabis licenses and for capital expenditures.

During the three months ended March 31, 2025, we used $0.3 million of cash for capital expenditures and $0.1 million in the aggregate for advances toward future business acquisitions and purchases of cannabis licenses.

These amounts were partially offset by $0.2 million of cash acquired in connection with the FSC Acquisition and approximately $26,000 of proceeds from notes receivable.

Cash Flows from Financing Activities

Our financing activities used $3.8 million of cash in the nine months ended September 30, 2025 and provided $3.9 million of cash in the nine months ended September 30, 2024.

During the nine months ended September 30, 2025, we made $5.6 million of aggregate principal payments on our outstanding mortgages, promissory notes and finance leases and made approximately $115,000 of distribution payments.

We received $2.0 million from the refinancing of the mortgage on one of our facilities in Illinois, of which we used $0.7 million of proceeds to retire the previous mortgage on this facility, which amount is included in the aggregate principal payments discussed above.

During the nine months ended September 30, 2024, we received $5.1 million of additional proceeds from the CREM Loan (described above) 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.

Our financing activities used $1.1 million and $1.3 million of cash in the three months ended March 31, 2026 and 2025, respectively.

During the three months ended March 31, 2026, we made $1.1 million of aggregate principal payments on our outstanding mortgages, promissory notes and finance leases, and approximately $49,000 of distribution payments.

During the three months ended March 31, 2025, we made $1.2 million of aggregate principal payments on our outstanding mortgages, promissory notes and finance leases, and approximately $58,000 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 September 30, 2025, and our ability to raise additional cash through financing activities.

Our contractual obligations at September 30, 2025 were primarily comprised of our outstanding CREM Loan, mortgages, promissory notes, and operating and finance leases.

Our CREM Loan, mortgage and promissory note obligations totaled approximately $73 million at September 30, 2025.

The rate at which we consume cash is dependent on the cash needs of our future operations, including our contractual obligations at March 31, 2026, and our ability to raise additional cash through financing activities.

Our contractual obligations at March 31, 2026 were primarily comprised of our outstanding CREM Loan, mortgages, promissory notes, and operating and finance leases.

Our CREM Loan, mortgage and promissory note obligations totaled approximately $79 million at March 31, 2026.

Non-GAAP Measurement

In addition to the financial information reflected in this report, which is prepared in accordance with GAAP, we are providing a non-GAAP financial measurement of profitability – Adjusted EBITDA – as a supplement to the preceding discussion of our financial results.

Our management defines Adjusted EBITDA as income from operations, determined in accordance with GAAP, excluding the following:

Our management defines Adjusted EBITDA as income (loss) from operations, determined in accordance with GAAP, excluding the following:

• depreciation and amortization of property and equipment;

12 unchanged sentences

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 nine months ended September 30, 2025 and 2024 (in thousands):

Three months ended Nine months ended

September 30,

2025 September 30,

2024 September 30,

2025 September 30,

GAAP Income from operations $ 1,599 $ 1,345 $ 1,705 $ 4,077

The table below reconciles income (loss) from operations to Adjusted EBITDA for the three months ended March 31, 2026 and 2025 (in thousands):

Three months ended

2026 March 31,

GAAP Income (loss) from operations $ 125 $ (910)

Depreciation and amortization of property and equipment 2,153 1,807

1 unchanged sentence

Stock-based compensation 325 547

Severance 224 — 224 —

Acquisition-related and other 169 112

10 unchanged sentences

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