What changed in this filing

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Item 1. Financial Statements

2026-08-13 compared with 2026-05-14 · 184 added, 141 removed, 612 unchanged (35% of the section changed)

5 unchanged sentences

Cash, cash equivalents and restricted cash $ 8,437 $ 8,884

Accounts receivable, net of allowances of $ 364 and $ 287 at March 31, 2026 and December 31, 2025, respectively

Accounts receivable, net of allowances of $ 819 and $ 287 at June 30, 2026 and December 31, 2025, respectively

Inventory 36,675 36,601

5 unchanged sentences

Goodwill 24,002 24,002

Notes receivable, net of current portion 866 —

Operating lease right-of-use assets 7,662 7,723

22 unchanged sentences

Series B convertible preferred stock, $ 0.001 par value;

zero and 4,908,333 shares authorized, issued and outstanding at March 31, 2026 and December 31, 2025

zero and 4,908,333 shares authorized, issued and outstanding at June 30, 2026 and December 31, 2025, respectively

New Series B convertible preferred stock, $ 0.001 par value;

26,900,000 and zero shares authorized, issued and outstanding at March 31, 2026 and December 31, 2025, respectively

26,900,000 and zero shares authorized, issued and outstanding at June 30, 2026 and December 31, 2025, respectively

Total mezzanine equity 6,933 14,725

2 unchanged sentences

32,659,235 shares authorized;

zero shares issued and outstanding at March 31, 2026 and December 31, 2025

zero shares issued and outstanding at June 30, 2026 and December 31, 2025

Common stock, $ 0.001 par value;

700,000,000 shares authorized;

398,906,622 and 396,911,368 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively

401,167,467 and 396,911,368 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively

Additional paid-in capital 180,054 179,405

6 unchanged sentences

(in thousands, except per share amounts)

Three months ended

Three months ended Six months ended

June 30, June 30,

2026 2025 2026 2025

Revenue $ 41,925 $ 39,506 $ 81,406 $ 77,412

8 unchanged sentences

Total operating expenses 15,807 14,911 30,958 30,910

Income (loss) from operations 125 ( 910 )

Income from operations 418 1,016 543 106

Interest and other (expense) income:

2 unchanged sentences

Gain on extinguishment of debt — — 699 —

Other income, net — 17 — 17

Total interest and other expense, net ( 1,971 ) ( 1,720 ) ( 3,212 ) ( 3,458 )

2 unchanged sentences

Net loss ( 3,571 ) ( 1,395 ) ( 7,338 ) ( 6,874 )

Net income attributable to noncontrolling interests 18 32

Net income (loss) attributable to noncontrolling interests 18 ( 1 ) 36 31

Net loss attributable to common stockholders $ ( 3,589 ) $ ( 1,394 ) $ ( 7,374 ) $ ( 6,905 )

8 unchanged sentences

(in thousands, except share amounts)

Three months ended March 31, 2026

Six months ended June 30, 2026

Common stock Additional

10 unchanged sentences

Balances at March 31, 2026 398,906,622 399 179,723 ( 131,717 ) ( 1,892 ) 46,513

Three months ended March 31, 2025

Release of shares under stock grants 2,442,935 2 ( 2 ) — — —

Shares of newly vested common stock surrendered to the Company to satisfy tax withholding obligations ( 182,090 ) — ( 17 ) — — ( 17 )

Distributions to non-controlling interests — — — — ( 31 ) ( 31 )

Stock-based compensation — — 350 — — 350

Net loss (income) — — — ( 3,589 ) 18 ( 3,571 )

Balances at June 30, 2026 401,167,467 $ 401 $ 180,054 $ ( 135,306 ) $ ( 1,905 ) $ 43,244

Six months ended June 30, 2025

Common stock Additional

12 unchanged sentences

Balances at March 31, 2025 388,679,070 389 178,172 ( 118,959 ) ( 1,778 ) 57,824

Release of shares under stock grants 3,568,940 3 ( 3 ) — — —

Shares of newly vested stock surrendered to the Company to satisfy tax withholding obligations ( 251,631 ) — ( 21 ) — — ( 21 )

Common stock issued under licensing agreement 10,686 — 1 — — 1

Distributions to non-controlling interests — — — — ( 23 ) ( 23 )

Stock-based compensation — — 549 — — 549

Net loss — — — ( 1,394 ) ( 1 ) ( 1,395 )

Balances at June 30, 2025 392,007,065 $ 392 $ 178,698 $ ( 120,353 ) $ ( 1,802 ) $ 56,935

See accompanying notes to the unaudited condensed consolidated financial statements.

1 unchanged sentence

(in thousands)

Three months ended

Six months ended

Cash flows from operating activities:

29 unchanged sentences

Proceeds from notes receivable — 26

Interest receivable on notes receivable ( 9 ) —

Net cash used in investing activities ( 1,260 ) ( 669 )

1 unchanged sentence

(in thousands)

Three months ended

Six months ended

Cash flows from financing activities:

Proceeds from mortgages — 2,000

Payment of third-party debt issuance costs in connection with debt — ( 9 )

Principal payments of mortgages ( 805 ) ( 741 )

Repayment and retirement of mortgages — ( 689 )

Principal payments of promissory notes ( 591 ) ( 1,919 )

9 unchanged sentences

Non-cash activities:

Notes payable issued to purchase property and equipment $ 27 $ 393

Renewal of existing operating leases $ 94 $ —

21 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 three-month period ended March 31, 2026.

There were no material changes to the Company's significant accounting policies during the six-month period ended June 30, 2026.

Principles of Consolidation

15 unchanged sentences

The Company classifies as restricted cash all cash pledged as collateral to secure long-term obligations and all cash whose use is otherwise limited by contractual provisions.

The Company had $ 1.8 million and $ 1.5 million of restricted cash at March 31, 2026 and December 31, 2025, respectively, which is held as collateral for the Company's Construction to Permanent Commercial Real Estate Mortgage Loan (the "CREM Loan") with Needham Bank, a Massachusetts co-operative bank (the "CREM Lender") (the "CREM Loan Collateral") (see Note 9).

The Company had $ 1.9 million and $ 1.5 million of restricted cash at June 30, 2026 and December 31, 2025, respectively, which is held as collateral for the Company's Construction to Permanent Commercial Real Estate Mortgage Loan (the "CREM Loan") with Needham Bank, a Massachusetts co-operative bank (the "CREM Lender") (the "CREM Loan Collateral") (see Note 9).

Fair Value of Financial Instruments

9 unchanged sentences

Bad Debt Expense

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

The Company 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 for an amount due from a credit card service provider (the "Service Provider Receivable") and $ 0.1 million of expense to reserve for certain trade receivable accounts.

The Service Provider Receivable is included as a component of Other assets at both March 31, 2026 and December 31, 2025 in the condensed consolidated balance sheets.

The Company recorded $ 0.5 million and $ 0.6 million of bad debt expense in the three and six months ended June 30, 2026, respectively, to reserve for certain trade receivable accounts.

The Company recorded $ 0.2 million and $ 1.6 million of bad debt expense in the three and six months ended June 30, 2025, respectively.

The six-month amount included $ 1.5 million of expense to fully reserve amounts due from two credit card service providers (the "Service Provider Receivables") and $ 0.1 million of expense to reserve for certain trade receivable accounts.

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 sheets at each of June 30, 2026 and December 31, 2025.

Recent Accounting Pronouncements

2 unchanged sentences

First State Compassion Center

On July 1, 2023 (the "Omnibus Agreement Date"), the Company entered into an Omnibus Agreement (the "Omnibus Agreement") with First State Compassion Center ("FSC"):

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

(b) providing for the automatic conversion of all

amounts owed by FSC to the Company, upon the approval of adult cannabis use in Delaware, into 100 % ownership of FSC's licenses and business;

On July 1, 2023 (the "Omnibus Agreement Date"), the Company entered into an Omnibus Agreement (the "Omnibus

Agreement") with First State Compassion Center ("FSC"):

(a) consolidating all amounts owed by FSC to the Company and its affiliated entities, aggregating $ 11.0 million;

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

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

6 unchanged sentences

The Company also wrote off deferred rents receivable aggregating $ 0.5 million related to the facilities FSC had subleased from the Company through the FSC Acquisition Date.

The Company's condensed consolidated statement of operations for the three months ended March 31, 2025 included $ 0.8 million of revenue and $ 0.2 million of net loss attributable to FSC for the period subsequent to the FSC Acquisition Date.

The Company's condensed consolidated statement of operations for the three and six months ended June 30, 2025 included revenue of $ 2.3 million and $ 3.1 million, respectively, and net losses of $ 1.4 million and $ 1.6 million, respectively, attributable to FSC for the period subsequent to the FSC Acquisition Date.

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

17 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 FSC for the three months ended March 31, 2025 as if the FSC Acquisition had been completed on January 1, 2024, with adjustments to give effect to pro forma events that are directly attributable to the FSC Acquisition.

The following unaudited pro forma information presents the condensed combined results of MariMed and FSC for the three and six months ended June 30, 2025, as if the FSC Acquisition had been completed on January 1, 2024, with adjustments to give effect to pro forma events that are directly attributable to the FSC Acquisition.

These pro forma adjustments include amortization of acquired intangibles arising from the FSC Acquisition, the reversal of income recognized by MariMed attributable to FSC as its managed client, and the reversal of expense recorded by FSC in connection with its management agreement with MariMed.

2 unchanged sentences

results of operations.

These unaudited pro forma results for the three months ended March 31, 2025 are as follows (in thousands):

These unaudited pro forma results for the three and six months ended June 30, 2025 are as follows (in thousands):

Three months Six months

June 30, June 30,

Revenue $ 39,296 $ 78,580

10 unchanged sentences

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

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

The Company was conducting business under a managed service agreement pending the final approval of the License Transfer.

Pursuant to the Robust Agreement, the Company made an initial advance payment of $ 350,000 (the "Advance Payment"), with the balance due at closing, which was to occur upon the State of Missouri's approval of the License Transfer.

On October 28, 2025, the Company announced that it had completed a strategic review of its Missouri business operations and had decided to exit that market, effective immediately (the "Missouri Exit").

In furtherance thereof, the Company entered into an agreement to sell and assign its rights, interests and duties as outlined in the Robust Agreement, and to transfer its ownership of all Company-held assets purchased in connection with the Robust Agreement to the buyer, including inventory and fixed assets, and wrote off the Advance Payment.

In furtherance thereof, the Company entered into an agreement with an arms-length buyer to sell and assign its rights, interests and obligations as reflected in the Robust Agreement, and to transfer its ownership of all Company-held assets purchased in connection with the Robust Agreement, including inventory and fixed assets.

Further, the Company wrote off the Advance Payment.

The Company also negotiated the forgiveness of an outstanding payable for purchases it had made under the Robust Agreement.

4 unchanged sentences

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

Three months ended

2026 March 31,

Three months ended Six months ended

2026 June 30,

2025 June 30,

2026 June 30,

Weighted average shares outstanding - basic 399,597 389,903 398,529 386,250

2 unchanged sentences

(4) INVENTORY

Inventory at March 31, 2026 and December 31, 2025 consisted of the following (in thousands):

Inventory at June 30, 2026 and December 31, 2025 consisted of the following (in thousands):

2026 December 31,

13 unchanged sentences

The Company is not the lessor under any finance leases.

The Company received rental payments and recognized rental income of $ 0.2 million in the three months ended March 31, 2025.

The Company received rental payments and recognized rental income of $ 0.2 million in both the three and six months ended June 30, 2025.

These payments were recognized as revenue on a straight-line basis.

1 unchanged sentence

Note Receivable

At each of March 31, 2026 and December 31, 2025, 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 .

At each of June 30, 2026 and December 31, 2025, the Company had a note receivable from Healer LLC, an entity that provides cannabis education and dosage programs ("Healer"), of approximately $ 866,000 .

The note bore interest at a rate of 6 % per annum and required quarterly payments of interest through the original April 2026 maturity date.

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

As of March 31, 2026, all interest payments were current.

As of June 30, 2026, there was outstanding interest receivable of approximately $ 8,825 ;

which amount is reported as Notes receivable, current portion, in the condensed consolidated balance sheet.

On May 6, 2026, the Company and Healer entered into an Amended and Restated Promissory Note (the "Amended Healer Note"), which extended the maturity date of the original note to April 1, 2033, effective April 1, 2026.

The Amended Healer Note bears interest at a rate of 6 % per annum and requires quarterly interest-only payments through March 1, 2028.

Effective April 1, 2028, the Amended Healer Note requires quarterly payments of both principal and interest for the remaining five years of the note through the maturity date, with such principal payments based on a five-year amortization schedule.

Beginning April 1, 2028, the Amended Healer Note requires quarterly payments of both principal and interest for the remaining five years of the note term, with such principal payments based on a five-year amortization schedule.

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

2 unchanged sentences

(7) PROPERTY AND EQUIPMENT, NET

The Company’s property and equipment, net, at March 31, 2026 and December 31, 2025 was comprised of the following (in thousands):

The Company’s property and equipment, net, at June 30, 2026 and December 31, 2025 was comprised of the following (in thousands):

2026 December 31,

8 unchanged sentences

Property and equipment, net $ 86,411 $ 89,385

The Company recorded depreciation expense related to property and equipment of $ 2.2 million and $ 1.8 million in the three months ended March 31, 2026 and 2025, respectively.

The Company did not dispose of any property and equipment during the three months ended March 31, 2026.

The Company recorded depreciation expense related to property and equipment of $ 2.3 million and $ 2.1 million in the three months ended June 30, 2026 and 2025, respectively, and $ 4.5 million and $ 3.9 million in the six months ended June 30, 2026 and 2025, respectively.

(8) INTANGIBLE ASSETS AND GOODWILL

The Company’s acquired intangible assets at March 31, 2026 and December 31, 2025 consisted of the following (in thousands):

March 31, 2026 Weighted

The Company’s acquired intangible assets at June 30, 2026 and December 31, 2025 consisted of the following (in thousands):

June 30, 2026 Weighted

period (years) Cost Accumulated

11 unchanged sentences

8.23 $ 27,726 $ 10,516 $ 17,210

Estimated future amortization expense for the Company’s intangible assets at March 31, 2026 was as follows:

Estimated future amortization expense for the Company’s intangible assets at June 30, 2026 was as follows:

Year ending December 31,

2 unchanged sentences

Total $ 15,683

The changes in the carrying value of the Company’s goodwill in the three months ended March 31, 2026 and 2025 were as follows (in thousands):

The changes in the carrying value of the Company’s goodwill in the six months ended June 30, 2026 and 2025 were as follows (in thousands):

Balance at January 1, $ 24,002 $ 15,812

FSC Acquisition — 4,239

Balance at March 31, $ 24,002 $ 19,482

Balance at June 30, $ 24,002 $ 20,051

Mortgages and Notes Payable

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 March 31, 2026 and December 31, 2025 were comprised of the following (in thousands):

The Company’s mortgage and notes payable balances at June 30, 2026 and December 31, 2025 were comprised of the following (in thousands):

2026 December 31,

CREM Loan, net of debt discount of $ 1,369 and $ 1,387 at March 31, 2026 and December 31, 2025, respectively

CREM Loan, net of debt discount of $ 1,350 and $ 1,387 at June 30, 2026 and December 31, 2025, respectively

$ 55,443 $ 56,037

6 unchanged sentences

Vernon, IL property (grow and production) 2,782 2,814

Promissory note issued to the holders of the Series B Convertible Preferred Stock under the Restructuring and Exchange Agreement (see Note 10), net of debt discount of $ 176 at March 31, 2026

Promissory note issued to the holders of the Series B Convertible Preferred Stock under the Restructuring and Exchange Agreement (see Note 10), net of debt discount of $ 732 at March 31, 2026

Promissory note issued as purchase consideration - Ermont Acquisition, net of debt discount of $ 1,266 and $ 1,327 at March 31, 2026 and December 31, 2025, respectively

Promissory note issued as purchase consideration - Greenhouse Naturals Acquisition, net of debt discount of $ 501 and $ 513 at March 31, 2026 and December 31, 2025, respectively

Promissory note issued to the holders of the Series B Convertible Preferred Stock under the Restructuring and Exchange Agreement (see Note 10), net of debt discount of $ 144 at June 30, 2026

Promissory note issued to the holders of the Series B Convertible Preferred Stock under the Restructuring and Exchange Agreement (see Note 10), net of debt discount of $ 686 at June 30, 2026

Promissory note issued as purchase consideration - Ermont Acquisition, net of debt discount of $ 1,189 and $ 1,327 at June 30, 2026 and December 31, 2025, respectively

Promissory note issued as purchase consideration - Greenhouse Naturals Acquisition, net of debt discount of $ 488 and $ 513 at June 30, 2026 and December 31, 2025, respectively

Promissory note issued to purchase land 352 352

4 unchanged sentences

Mortgages and notes payable, net of current portion $ 75,399 $ 70,192

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

CREM Lender loaned to the CREM Borrowers an aggregate principal amount of $ 58.7 million (the "CREM Loan Transaction").

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

5 unchanged sentences

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 its previous term loan administered by Chicago Atlantic Admin, LLC, $ 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 (described below).

These payments were comprised of $ 32.7 million to pay off its previous term

loan administered by Chicago Atlantic Admin, LLC, $ 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 (described below).

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 of interest amortization in each of the three months ended March 31, 2026 and 2025 related to the CREM Closing Costs Discount.

The Company recorded interest amortization related to the CREM Loan Closing Costs of approximately $ 19,000 and $ 18,000 in the three months ended June 30, 2026 and 2025, respectively, and $ 37,000 and $ 36,000 in the six months ended June 30, 2026 and 2025, respectively.

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 three months ended March 31, 2026, the Company made payments aggregating $ 1.5 million, comprised of $ 0.3 million of principal and $ 1.2 million of interest.

During the three months ended March 31, 2025, the Company made payments aggregating $ 1.5 million, comprised of $ 0.3 million of principal and $ 1.2 million of interest.

The current portion of the outstanding principal balance of the CREM Loan was $ 1.3 million at each of March 31, 2026 and December 31, 2025.

During the six months ended June 30, 2026, the Company made payments aggregating $ 3.1 million, comprised of $ 0.6 million of principal and $ 2.5 million of interest.

During the six months ended June 30, 2025, the Company made payments aggregating $ 3.1 million, comprised of $ 0.6 million of principal and $ 2.5 million of interest.

The current portion of the outstanding principal balance of the CREM Loan was $ 1.3 million at each of June 30, 2026 and December 31, 2025.

Effective December 31, 2025, the Company 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 the Company relating to its 2023 income taxes (the "Tax Lien"), which the Company is disputing (the "Disputed Taxes").

7 unchanged sentences

The next interest rate adjustment will occur in September 2026.

The current portion of the outstanding principal balance under this mortgage at was approximately $ 150,000 and $ 148,000 at March 31, 2026 and December 31, 2025, respectively.

The current portion of the outstanding principal balance under this mortgage was approximately $ 152,000 and $ 148,000 at June 30, 2026 and December 31, 2025, respectively.

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

3 unchanged sentences

The Company used $ 0.7 million of the proceeds from the DSB Mortgage to retire the DSB Original Mortgage.

The current portion of the outstanding principal balance under the DSB Refinance Mortgage was approximately $ 38,000 at each of March 31, 2026 and December 31, 2025.

The current portion of the outstanding principal balance under the DSB Refinance Mortgage was approximately $ 42,000 and $ 38,000 at June 30, 2026 and December 31, 2025, respectively.

DuQuoin State Bank (Metropolis, Illinois)

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

In connection with this purchase, the Company entered into a loan and mortgage agreement with DSB in the amount of $ 2.7 million that matures in July 2041, and which currently bears interest at a rate of 11.25 % per annum, which rate is adjusted each year based on a certain interest rate index plus a margin.

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

The current portion of the outstanding principal balance of this mortgage was approximately $ 61,000 and $ 55,000 at March 31, 2026 and December 31, 2025 respectively.

In connection with this purchase, the Company entered into a loan and mortgage agreement with DSB in the amount of $ 2.7 million that matures in July 2041, and currently bears interest at a rate of 11.25 % per annum, which rate is adjusted each year based on a certain interest rate index plus a margin.

As part of this transaction, the seller was provided with a 30.0 % ownership interest in Mari Holdings Metropolis LLC (“Metro”), the Company’s subsidiary that owns the

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

The current portion of the outstanding principal balance of this mortgage was approximately $ 68,000 and $ 55,000 at June 30, 2026 and December 31, 2025 respectively.

DuQuoin State Bank (Mt.

5 unchanged sentences

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

The current portion of the outstanding principal balance of this mortgage was approximately $ 62,000 and $ 61,000 at March 31, 2026 and December 31, 2025, respectively.

The current portion of the outstanding principal balance of this mortgage was approximately $ 69,000 and $ 61,000 at June 30, 2026 and December 31, 2025, respectively.

DuQuoin State Bank (Mt.

2 unchanged sentences

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

The current portion of the outstanding principal balance of this mortgage was approximately $ 22,000 and $ 30,000 at March 31, 2026 and December 31, 2025, respectively.

The current portion of the outstanding principal balance of this mortgage was approximately $ 27,000 and $ 30,000 at June 30, 2026 and December 31, 2025, respectively.

Promissory Notes

2 unchanged sentences

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

In exchange, the Company 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 the Company’s 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 “Amended Certificate of

Designation”).

The New Notes are guaranteed by certain subsidiaries of the Company pursuant to a Subsidiary Guaranty dated as of February 24, 2026 (the “Subsidiary Guaranty”).

The transaction was accounted for as an extinguishment of the Series B Obligation in accordance with Accounting Standards Codification 470, Debt ("ASC 470"), and a gain on the extinguishment of $ 0.7 million was recognized.

This amount is included in the Company's condensed consolidated statement of operations for the three months ended March 31, 2026.

This amount is included in the Company's condensed consolidated statement of operations for the six months ended June 30, 2026.

The New Notes were initially recorded at fair value.

2 unchanged sentences

This amount is net of the $ 0.2 million recorded as a debt discount, which is being accreted through the term of Note #1 to interest expense.

The fair value of Note #1 was $ 1.8 million at March 31, 2026.

The current portion of the outstanding principal balance of Note #1 was $ 0.4 million at March 31, 2026.

The fair value of Note #1 was $ 1.7

million at June 30, 2026.

The current portion of the outstanding principal balance of Note #1 was $ 0.3 million at June 30, 2026.

Note #2 was initially recorded at a fair value of $ 5.3 million.

This amount is net of the $ 0.7 million recorded as a debt discount, which is being accreted through the term of Note #2 to interest expense.

The fair value of Note #2 was $ 5.2 million at March 31, 2026.

The current portion of the outstanding principal balance of Note #2 was $ 0.4 million at March 31, 2026.

The fair value of Note #2 was $ 5.2 million at June 30, 2026.

The current portion of the outstanding principal balance of Note #2 was $ 0.4 million at June 30, 2026.

Promissory Notes Issued as Purchase Consideration

7 unchanged sentences

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 $ 3.3 million and $ 3.2 million at March 31, 2026 and December 31, 2025, respectively.

The current portion of the outstanding principal balance of the Ermont Note was $ 0.1 million at each of March 31, 2026 and December 31, 2025, respectively.

The fair value of the Ermont Note was $ 3.4 million and $ 3.2 million at June 30, 2026 and December 31, 2025, respectively.

The current portion of the outstanding principal balance of the Ermont Note was $ 0.1 million at each of June 30, 2026 and December 31, 2025.

Greenhouse Naturals LLC

1 unchanged sentence

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.

The fair value of the Greenhouse Naturals Note was $ 3.3 million and $ 3.4 million at March 31, 2026 and December 31, 2025, respectively.

The Company estimated that the current portion of the Greenhouse Naturals Note was $ 0.5 million and $ 0.6 million at March 31, 2026 and December 31, 2025, respectively.

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

The Company's monthly payments on the Greenhouse Naturals Note are calculated based on the Beverly Dispensary's monthly sales.

The fair value of the Greenhouse Naturals Note was $ 3.3 million and $ 3.4 million at June 30, 2026 and December 31, 2025, respectively.

The Company estimated that the current portion of the Greenhouse Naturals Note was $ 0.6 million at each of June 30, 2026 and December 31, 2025.

In connection with the acquisition of Our Community Wellness & Compassionate Care Center, Inc.

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Promissory Notes Issued to Purchase Property and Equipment

The Company had six outstanding promissory notes in connection with the purchase of commercial motor vehicles at each of March 31, 2026 and December 31, 2025.

At March 31, 2026, the outstanding notes had an aggregate outstanding balance of approximately $ 173,000 , of which approximately $ 43,000 was current.

The Company had seven and six outstanding promissory notes in connection with the purchase of commercial motor vehicles at June 30, 2026 and December 31, 2025, respectively.

At June 30, 2026, the outstanding notes had an aggregate outstanding balance of approximately $ 188,000 , of which approximately $ 51,000 was current.

At December 31, 2025, the outstanding notes had an aggregate outstanding balance of approximately $ 185,000 , of which approximately $ 45,000 was current.

The weighted average interest rates of the outstanding balances were 11.15 % and 11.11 % at March 31, 2026 and December 31, 2025, respectively.

The weighted average remaining terms of these notes were 3.87 years and 4.06 years at March 31, 2026 and December 31, 2025, respectively.

The Company had an outstanding note totaling $ 352,000 at each of March 31, 2026 and December 31, 2025 in connection with the purchase, in the second quarter of 2024, of a parking lot adjacent to its Middleborough, Massachusetts dispensary (the "Middleborough Note") at both March 31, 2026 and December 31, 2025.

The weighted average interest rates of the outstanding balances were 11.27 % and 11.11 % at June 30, 2026 and December 31, 2025, respectively.

The weighted average remaining terms of these notes were 3.94 years and 4.06 years at June 30, 2026 and December 31, 2025, respectively.

The Company had an outstanding note totaling $ 352,000 at each of June 30, 2026 and December 31, 2025 in connection with the purchase, in the second quarter of 2024, of a parking lot adjacent to its Middleborough, Massachusetts dispensary (the "Middleborough Note").

The Middleborough Note bears interest at a rate of 4.0 % per annum, with monthly interest-only payments and a balloon payment for the entire principal amount due on February 1, 2029.

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The M&E Note bears interest at an imputed rate of 15.7 % per annum, and matures in May 2027.

The current portion of the M&E Note was approximately $ 175,000 and $ 169,000 at March 31, 2026 and December 31, 2025, respectively.

The entire outstanding balance of the M&E Note, approximating $ 212,000 , was current at June 30, 2026.

The current portion of the M&E Note balance was approximately $ 169,000 at December 31, 2025.

Future Payments

The future principal amounts due under the Company's outstanding mortgages and notes payable at March 31, 2026 were as follows (in thousands):

The future principal amounts due under the Company's outstanding mortgages and notes payable at June 30, 2026 were as follows (in thousands):

Year ending December 31,

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Accordingly, the Company determined that the New Series B Preferred Stock should be classified as mezzanine equity.

The New Notes, net of debt discount, are included as components of liabilities and the New Series B Preferred Stock is reported as mezzanine equity in the condensed consolidated balance sheets at March 31, 2026.

The Company recorded the New Notes and the New Series B Preferred Stock at their respective fair values at the transaction date and allocated the total consideration transferred based on their relative fair values.

The Company recognized a non-cash gain on the extinguishment of $ 0.7 million in the three months ended March 31, 2026, representing the excess of the carrying value of the Series B Obligation over the aggregate fair value of the New Notes and New Series B Preferred Stock.

The New Notes, net of debt discount, are included as components of liabilities (see Note 9) and the New Series B Preferred Stock is reported as mezzanine equity in the condensed consolidated balance sheets at March 31, 2026.

In the condensed consolidated balance sheet at June 30, 2026, the New Notes, net of debt discount, are included as components of liabilities (see Note 9) and the New Series B Preferred Stock is reported as mezzanine equity..

Series C Convertible Preferred Stock

In 2021, the Company issued to Hadron Healthcare Master Fund ("Hadron") 6,216,216 shares of Series C Convertible Preferred Stock (the "Series C Stock") and warrants to purchase up to an aggregate of 15,540,540 shares of its common stock in connection with a financing facility between the Company and Hadron.

Each share of Series C Stock was

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.

Each share of Series C Stock was convertible, at Hadron’s option, into five shares of the Company's common stock, and each warrant was exercisable at an exercise price of $ 1.087 per share.

The warrants were subject to early termination if certain milestones were achieved and the market value of the Company’s common stock reached certain predetermined levels.

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

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The Company did not recognize either a gain or loss on the Conversion as it was effected in accordance with the Series C Stock certificate of designation.

As a result of the Conversion, no shares of Series C Stock were outstanding at either March 31, 2026 or December 31, 2025.

As a result of the Conversion, no shares of Series C Stock were outstanding at either June 30, 2026 or December 31, 2025.

(11) STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

Amended and Restated 2018 Stock Award and Incentive Plan

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

rights (“SARs”), restricted stock, deferred stock, dividend equivalents, performance shares or other stock-based performance awards and other stock- or cash-based awards.

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.

Stock Options

A summary of stock option activity during the three months ended March 31, 2026 is below:

A summary of stock option activity during the six months ended June 30, 2026 is below:

Shares Weighted average exercise price

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Expired ( 2,090,000 ) $ 0.70

Outstanding at March 31, 2026 18,040,921 $ 0.84

Outstanding at June 30, 2026 17,065,921 $ 0.84

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

At March 31, 2026, the stock options outstanding had a weighted average remaining life of approximately six months .

The Company did not grant any stock options during the three months ended March 31, 2026.

At June 30, 2026, the stock options outstanding had a weighted average remaining life of approximately four months .

The Company did not grant any stock options during the six months ended June 30, 2026.

Restricted Stock Units

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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.

A summary of RSU activity for the three months ended March 31, 2026 was as follows:

A summary of RSU activity for the six months ended June 30, 2026 was as follows:

RSUs Weighted average grant date fair value

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Forfeited ( 300,405 ) $ 0.11

Outstanding at March 31, 2026 8,801,920 $ 0.12

Outstanding at June 30, 2026 10,692,415 $ 0.10

Of the 4,256,099 RSUs reported as vested in the table above, 243,958 shares, with an aggregate fair value of approximately $ 22,000 , were surrendered to the Company to satisfy the tax withholding obligations that arose in connection with the vesting of such RSUs.

At March 31, 2026, warrants to purchase up to 21,548,936 shares of the Company's common stock were outstanding, with a weighted average exercise price of $ 0.46 per share.

At June 30, 2026, warrants to purchase up to 21,148,936 shares of the Company's common stock were outstanding, with a weighted average exercise price of $ 0.46 per share.

Stock-Based Compensation

The Company recorded stock-based compensation of $ 0.3 million and $ 0.5 million in the three months ended March 31, 2026 and 2025, respectively.

The Company recorded stock-based compensation of $ 0.4 million and $ 0.6 million in the three months ended June 30, 2026 and 2025, respectively, and $ 0.7 million and $ 1.1 million in the six months ended June 30, 2026 and 2025, respectively.

(12) SEGMENT INFORMATION

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Investment decisions, including capital expenditures for new cultivation facilities and retail expansion, are made based on expected return on investment and regulatory considerations in each state in which the Company operates.

The table below provides the Company's Net loss, Income (loss) from operations, and a reconciliation of 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,

Three months ended Six months ended

2026 June 30,

2025 June 30,

2026 June 30,

$ ( 3,571 ) $ ( 1,395 ) $ ( 7,338 ) $ ( 6,874 )

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

GAAP Income from operations $ 418 $ 1,016 $ 543 $ 106

Depreciation and amortization of property and equipment 2,331 2,114 4,484 3,921

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Stock-based compensation 350 549 675 1,096

Severance 16 — 16 —

Acquisition-related and other 116 139 285 251

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supply procurement fees from facilitating purchases of resources, supplies and equipment for cannabis-licensed clients and third parties;

management fees for providing cannabis-licensed clients with comprehensive oversight of their operations;

management fees for providing cannabis-licensed clients with comprehensive oversight

of their operations;

and licensing fees from the licensing of its branded products to wholesalers and regulated dispensaries.

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

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

Three months ended

2026 March 31,

Revenue for the three and six months ended June 30, 2026 and 2025 was comprised of the following (in thousands):

Three months ended Six months ended

2026 June 30,

2025 June 30,

2026 June 30,

Product sales - retail $ 23,218 $ 22,334 $ 44,945 $ 43,064

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(14) MAJOR CUSTOMERS

The Company did not have any customers that contributed 10% or more of total revenue in either of the three-month periods ended March 31, 2026 or 2025.

The Company did not have any customers that accounted for 10% or more of the Company’s accounts receivable balance at either March 31, 2026 or December 31, 2025.

The Company did not have any customers that contributed 10% or more of total revenue in either of the six-month periods ended June 30, 2026 or 2025.

The Company did not have any customers that accounted for 10% or more of the Company’s accounts receivable balance at either June 30, 2026 or December 31, 2025.

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

The Company maintains an allowance for doubtful accounts and historical losses have been within management’s expectations.

Arrangements that are determined to be leases with a term greater than one year are accounted for by the recognition of right-of-use assets that represent the Company’s right to use an underlying asset for the lease term, and lease liabilities that represent the Company’s obligation to make lease payments arising from the lease.

represent the Company’s obligation to make lease payments arising from the lease.

Non-lease components within lease agreements are accounted for separately.

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

At March 31, 2026, the Company was the lessee under nine operating leases and thirty-three finance leases.

At June 30, 2026, the Company was the lessee under eight operating leases and thirty-two finance leases.

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

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

The Company leases machinery and office equipment under finance leases that expire from January 2026 through August 2031, with such terms being a major part of the economic useful life of the leased property.

The components of lease expense for the three months ended March 31, 2026 and 2025 were as follows (in thousands):

Three months ended

2026 March 31,

The Company leases machinery and office equipment under finance leases that expire from July 2026 through August 2031, with such terms being a major part of the economic useful life of the leased property.

The components of lease expense for the three months ended June 30, 2026 and 2025 were as follows (in thousands):

Three months ended Six months ended

2026 June 30,

2025 June 30,

2026 June 30,

Operating lease expense $ 524 $ 534 $ 1,046 $ 1,067

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Total finance lease expense $ 614 $ 370 $ 1,167 $ 783

The weighted average remaining lease terms and weighted average discount rates for the Company's operating leases and finance leases at March 31, 2026 and December 31, 2025 were as follows:

The weighted average remaining lease terms and weighted average discount rates for the Company's operating leases and finance leases at June 30, 2026 and December 31, 2025 were as follows:

2026 December 31,

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Finance leases 11.5 % 10.9 %

Future minimum lease payments as of March 31, 2026 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 June 30, 2026 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 $ 70,000 and $ 77,000 for the three months ended March 31, 2026 and 2025, respectively.

Expenses incurred under this lease were approximately $ 66,000 and $ 68,000 for the three months ended June 30, 2026 and 2025, respectively and approximately $ 136,000 and $ 145,000 for the six months ended June 30, 2026 and 2025, 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 $ 1.4 million in each of the three months ended March 31, 2026 and 2025.

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

Purchases from this entity totaled $ 0.7 million and $ 1.6 million in the three months ended June 30, 2026 and 2025, respectively, and $ 2.1 million and $ 2.9 million in the six months ended June 30, 2026 and 2025, respectively.

The Company pays royalties on the revenue generated from its Betty’s Eddies product line to an entity owned by the COO and the Company's Chief Commercial Officer 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.

Future developed products 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 $ 174,000 and $ 163,000 for the three months ended March 31, 2026 and 2025, respectively .

During the three months ended March 31, 2026 and 2025, one of the Company’s majority-owned subsidiaries paid or accrued distributions of $ 1,995 and $ 1,785 , respectively, to the CEO, who owns a minority equity interest in such subsidiary.

The aggregate royalties earned by the entity under this agreement were approximately $ 179,000 and $ 156,000 for the three months ended June 30, 2026 and 2025, respectively, and approximately $ 353,000 and $ 319,000 for the six months ended June 30, 2026 and 2025, respectively.

During the three months ended June 30, 2026 and 2025, one of the Company’s majority-owned subsidiaries paid or accrued distributions of $ 1,050 and $ 1,260 , respectively, to the CEO, who owns a minority equity interest in such subsidiary.

These distributions totaled $ 3,045 in each of the six months ended June 30, 2026 and 2025.

The CEO and COO own 5 % and 15 %, respectively, of the membership units of Mari Holdings Metropolis, LLC, one of the Company's majority-owned subsidiaries.

During the three months ended March 31, 2026, this majority-owned subsidiary recorded distributions of $ 5,000 and $ 15,000 to the CEO and COO, respectively.

During the three months ended March 31, 2025, this majority-owned subsidiary accrued distribution payments of $ 3,000 and $ 9,000 to the CEO and COO, respectively.

At March 31, 2026 and December 31, 2025, the Company had an outstanding accounts payable balance of approximately $ 224,000 and $ 448,000 , respectively, primarily in connection with fixed assets purchased from a third-party company in which the CEO has a controlling interest.

During the three months ended June 30, 2026, this majority-owned subsidiary recorded distributions of $ 3,500 and $ 10,500 to the CEO and COO, respectively.

During the six months ended June 30, 2026, this subsidiary recorded distributions of $ 8,500 and $ 25,500 to the CEO and COO, respectively.

During the three months ended June 30, 2025, this subsidiary recorded distributions of $ 2,000 and $ 6,000 to the CEO and COO, respectively.

The distributions recorded by this subsidiary to the CEO and COO for the six months ended June 30, 2025 were $ 5,000 and $ 15,000 , respectively.

At June 30, 2026 and December 31, 2025, the Company had an outstanding accounts payable balance of approximately $ 95,000 and $ 448,000 , respectively, primarily in connection with fixed assets purchased from a third-party company in which the CEO has a controlling interest.

The Company assumed approximately $ 35,000 of accounts payable to that company as part of the FSC Acquisition, which is included in the previously described balances.

The Company also assumed an accounts payable amount of $ 21,000 from FSC to a second company in which the CEO has a controlling interest, which amount was outstanding at each of March 31, 2026 and December 31, 2025.

The Company also assumed an accounts payable amount of $ 21,000 from FSC to a second company in which the CEO has a controlling interest, which amount was outstanding at each of June 30, 2026 and December 31, 2025.

These assumed liabilities related to cash advances to FSC in periods prior to the FSC Acquisition Date.

In addition, the Company had outstanding payables to the CEO aggregating approximately $ 259,000 and $ 50,000 at March 31, 2026 and December 31, 2025, respectively, for amounts that the CEO had advanced to the Company for certain operating activities.

At March 31, 2026, the Company’s mortgages with Bank of New England and DSB were personally guaranteed by the CEO.

In addition, the Company had outstanding payables

to the CEO aggregating approximately $ 314,000 and $ 50,000 at June 30, 2026 and December 31, 2025, respectively, for amounts that the CEO had advanced to the Company for certain operating activities.

At June 30, 2026, the Company’s mortgages with Bank of New England and DSB were personally guaranteed by the CEO.

(17) INCOME TAXES

The following table summarizes the Company's income tax provision and effective tax rates for the three months ended March 31, 2026 and 2025 (in thousands, except percentages):

Three months ended

The following table summarizes the Company's income tax provision and effective tax rates for the three and six months ended June 30, 2026 and 2025 (in thousands, except percentages):

Three months ended Six months ended

June 30, June 30,

2026 2025 2026 2025

Loss before income taxes $ ( 1,553 ) $ ( 704 ) $ ( 2,669 ) $ ( 3,352 )

1 unchanged sentence

Effective tax rate ( 130 ) % ( 98 ) % ( 175 ) % ( 105 ) %

The effective tax rates for the three months ended March 31, 2026 and 2025 were calculated using the discrete method based on the Company's period-to-date results adjusted for permanent and temporary differences.

The effective tax rates for the three and six months ended June 30, 2026 and 2025 were calculated using the discrete method based on the Company's period-to-date results adjusted for permanent and temporary differences.

Due to its cannabis operations, the Company is subject to the limitations of the U.S.

Internal Revenue Code of 1986, as amended (the "IRC"), Section 280E under which the Company is 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 the Company is only allowed to deduct expenses directly related to cost of goods sold of non-medical cannabis products.

This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E.

3 unchanged sentences

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, the Company did not record the impact in its income tax provision for the three months ended March 31, 2026.

Due to the timing of when the final order was issued, the Company recorded the impact in its income tax provision for the three months ended June 30, 2026.

The impact of this change in 280E applicability was a reduction in income tax expense of approximately $ 786,000 in each of the three and six months ended June 30, 2026.

The Company continues to monitor guidance from the DOJ and the U.S.

Internal Revenue Service (the "IRS") to properly record and disclose any impact in its 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.

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

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

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Litigation Risk

From time to time, the Company may become involved in litigation or regulatory proceedings in the ordinary course of it business.

The cannabis industry is highly regulated, and many aspects o the Company's business involve substantial risk of liability.

Further, as an employer of a significant number of full- and part-time employees, from time to time in the ordinary course of business, the Company aces claims and threatened claims from former employees alleging wrongful termination and other similar alleged wrongdoing, which the Company disputes and which are not material.

From time to time, the Company may become involved in litigation or regulatory proceedings in the ordinary course of it

The cannabis industry is highly regulated, and many aspects of the Company's business involve substantial risk of liability.

Further, as an employer of a significant number of full- and part-time employees, from time to time in the ordinary course of business, the Company faces claims and threatened claims from former employees alleging wrongful termination and other similar alleged wrongdoing, which the Company disputes and which are not material.

Bankruptcy Claim

1 unchanged sentence

("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 early 2020, GenCanna entered a Chapter 11 bankruptcy, which led to a final liquidating plan.

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.

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

The electrical work was primarily paid for by an entity that is indirectly controlled by that individual and another non-officer/director Company 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).

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.

The electrical work was primarily paid for by an entity that was 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.

Discussions to reach agreement with the entity that paid for the electrical work and all other interested parties to address this liability, which was $ 1.9 million at June 30, 2026, and related payment terms, are ongoing.

(19) SUBSEQUENT EVENTS

Equity Transactions

Subsequent to March 31, 2026, the Company issued an aggregate of 359,469 net shares of common stock upon the settlement of RSUs that vested prior to the filing of this report.

Subsequent to June 30, 2026, the Company issued an aggregate of 1,873,207 net shares of common stock upon the settlement of RSUs that vested prior to the filing date 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