What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-26 compared with 2024-03-13 · 101 added, 59 removed, 204 unchanged (44% of the section changed)

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Overview of the Company

We are a multi-state cannabis operator with licenses to operate in Nevada, California, and Florida, and a conditional dispensing license in Illinois.

We are headquartered in Las Vegas, Nevada, at our superstore dispensary located adjacent to the Las Vegas Strip.

We are a multi-state cannabis operator with licenses to operate in Nevada, California, Florida and Illinois.

We are headquartered in Las Vegas, Nevada.

A detailed description of our corporate history and our business can be found above in Item 1.

As of December 31, 2023, we employed approximately 625 people and remain focused on providing our customers with the best products, best services, and an experiential shopping experience at our superstore-themed dispensaries, while expanding our products and sales through neighborhood stores.

As of December 31, 2024, we employed approximately 1,000 people and remain focused on providing our customers with the best products, best services, and an experiential shopping experience at our superstore-themed dispensary while expanding our products and sales through neighborhood stores.

Each of our state operations is held in state-focused subsidiaries:

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for California-licensed cannabis dispensing and distribution activities, (b) Next Green Wave, LLC for California-licensed cannabis cultivation and production activities, (c) MM Development Company, Inc.

for all licensed Nevada cannabis cultivation, production, distribution, and dispensing, (d) Planet 13 Florida, Inc.

(“ Planet 13 Florida ”) which holds our Florida Medical Marijuana Treatment Center (“ MMTC ”) license, and (e) Planet 13 Illinois, LLC (“ Planet 13 Illinois ”) which holds an Illinois social-equity justice impaired dispensing license.

for all licensed Nevada cannabis cultivation, production, distribution, and dispensing, (d) VidaCann LLC.

(“ VidaCann ”) which holds our Florida Medical Marijuana Treatment Center (“ MMTC ”) license, and (e) Planet 13 Illinois, LLC (“ Planet 13 Illinois ”) which holds an Illinois social-equity justice impaired dispensing license.

We have focused on our large-store dispensing stores as superstores which offer an experiential approach to our customers, including drones, robotics, 3-D mapping projection, cannabis-culture inspired social-media backdrops for customer interaction, customer-facing production, one-on-one sales staffing and customer education, and other interactive marketing elements to differentiate from more traditional dispensing locations, which we refer to herein as “neighborhood stores”.

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As of December 31, 2024, we held the following licensed operations in Nevada:

(a) one dual-licensed dispensary superstore adjacent to the Las Vegas Strip with 24,000 square feet of licensed dispensary (the “ Planet 13 Las Vegas Superstore ”), (b) one adult-use “neighborhood store” at 2,300 square feet of licensed dispensary (the “ Medizin dispensary ”), (c) three dual-licensed production facilities, one of which is co-located and customer-facing at the superstore in Las Vegas with 18,500 square feet of licensed production, (d) three dual-licensed cultivation facilities, one with approximately 16,100 square foot indoor cultivation facility under perpetual harvest cycle, a second with 45,000 square feet co-located with our production license at that facility, and a small-indoor rural site in Beatty, Nevada that is expandable up to 2,300,000 square feet of greenhouse located on 80-acres owned by us, also co-located with our production license at that facility, and (e) one cannabis distribution license.

At the Planet 13 Las Vegas Superstore, we also offer ancillary services to our customers, including a restaurant with a liquor license, a retail store, and our online cannabidiol (“ CBD ”) store which also sells products in our facility.

(a) one dual-licensed dispensary superstore adjacent to the Las Vegas Strip with 24,000 square feet of licensed dispensary (the “ Planet 13 Las Vegas Superstore ”), (b) one adult-use “neighborhood store” at 2,300 square feet of licensed dispensary (the “ Medizin dispensary ”), (c) three dual-licensed production facilities, one of which is co-located and customer-facing at the Las Vegas SuoperStore Entertainment complex with 18,500 square feet of licensed production, (d) three dual-licensed cultivation facilities, one with approximately 16,100 square foot indoor cultivation facility under perpetual harvest cycle, a second with 45,000 square feet co-located with our production license at that facility, and a small-indoor rural site in Beatty, Nevada that is expandable up to 2,300,000 square feet of greenhouse located on 80-acres owned by us, also co-located with our production license at that facility, and (e) one cannabis distribution license and (f) one cannabis consumption licence operating as DAZED!

Compsumption lounge, a 3,000 square foot location inside the Planet 13 Las Vegas Superstore Entertainment complex.

At the Planet 13 Las Vegas Superstore Entertainment complex , we also offer ancillary services to our customers, including a restaurant (currently closed and awaiting a new tenant operator) with a liquor license, a retail store, and our online cannabidiol (“ CBD ”) store which also sells products in our facility.

As of December 31, 2024, we held the following licensed operations in California:

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Further, on July 12, 2022, the DCC granted to NGW a cultivation processing license to trim, cure, dry, grade, package, and label the cannabis grown at NGW facilities.

As of December 31, 2023, we are continuing capital outlays to utilize our Florida MMTC license issued by the Florida Department of Health that was acquired by our wholly owned subsidiary, Planet 13 Florida Inc., on October 1, 2021 for $55 million in cash.

As of December 31, 2024, we are continuing capital outlays to utilize our Florida MMTC license issued by the Florida Department of Health that was acquired through our acquisition of VidaCann.

Licensed MMTCs are vertically integrated and the only businesses in Florida authorized to dispense medical marijuana cannabis to qualified patients and caregivers.

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License holders are not subject to restrictions on the number of dispensaries that may be opened or on the number or size of cultivation and processing facilities they may operate.

On September 15, 2023, we recorded an impairment charge of $32,750,466 against our Florida MMTC License to reflect the value of the Florida MMTC License as of the date we domesticated to Nevada.

We recognized an additional impairment of $7,197,418 bringing the carrying value of our Florida MMTC License to $9,000,000, equal to the sale price negotiated with a third party who will acquire the license on the closing of our Pending Transaction with VidaCann LLC.

On September 15, 2023, we recorded an impairment charge of $32,750,466 against our previously acquired Florida MMTC License to reflect the value of the Florida MMTC License as of the date we domesticated to Nevada.

We recognized an additional impairment of $7,197,418, that brought the carrying value of our Florida MMTC License to $9,000,000, as of December 31, 2023.

The amount was equal to the sale price negotiated with a third party who acquired the license from us on May 6, 2024, prior to us closing the acquisition of VidaCann on May 10, 2024.

The VidCann acquisition added a cultivation and processing facility, a production facility and a twenty-six (26) retail store network, to which we have added four (4) additional locations, bringing the total number of medical dispensaries we operate in Florida to thirty (30)

On July 1, 2022, we, through our subsidiary Planet 13 Florida, Inc., closed on a $3,300,000 USD purchase of a 23-acre parcel of real property, inclusive of a 10,500 square foot building, near Ocala, Florida.

The property was previously leased by Planet 13 Florida, Inc., and has received Florida OMMU approvals for cultivation, processing, and dispensing activities.

The lease was terminated in conjunction with the purchase on July 1, 2022.

As part of our Florida expansion, as of the date of this report, we have entered into four leases for dispensing locations in Florida, which remain subject to completion of tenant improvements and regulatory inspection prior to sales to customers.

See Recent Developments for further information related to the Company’s Florida operations and its planned acquisition of VidaCann, LLC.

On August 5, 2021, Planet 13 Illinois, in which entity we hold a minority interest, won a Conditional Adult Use Dispensing Organization License in the Chicago-Naperville-Elgin region from the Illinois Department of Financial and Professional Regulation.

The property was previously received Florida OMMU approvals for cultivation, processing, and dispensing activities.

The location was leased to another MMTC licensed operator as part of the sale.

of the MMTC license described above, for a nominal amount.

The lease was terminated on March 1, 2025 and the property is currently listed for sale.

As part of our Florida expansion, as of the date of this report, we have entered into four leases for additional dispensing locations in Florida, which remain subject to completion of tenant improvements and regulatory inspection prior to sales to customers.

See Recent Developments for further information related to the Company’s Florida operations and our acquisition of VidaCann.

On August 5, 2021, Planet 13 Illinois won a Conditional Adult Use Dispensing Organization License in the Chicago-Naperville-Elgin region from the Illinois Department of Financial and Professional Regulation.

The conditional license was issued to Planet 13 Illinois on July 22, 2022.

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On February 3, 2023, we closed on the purchase of a dispensary location in the town of Waukegan, a suburb of the greater Chicago area, and on December 4, 2023, opened the Planet 13 Illinois dispensary to the public.

COVID-19 Pandemic

COVID-19 Update

Starting on February 10, 2022, COVID-19 protocols in Nevada no longer include mask mandates in Clark and Nye County, where we have operations, for all individuals within public indoor settings.

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On May 3, 2021, Governor DeSantis signed an executive order stating, “all local COVID-19 restrictions and mandates on individuals and businesses are hereby ending all mask mandates in Florida from that time forward.”

These policies have continued through the date of this report.

On May 5 2023, the World Health Organization and former US president Joe Biden declared an end to the pandemic.

The disease continued to circulate during the year ended December 31, 2024 and into 2025.

We caution that current global uncertainty with respect to the spread of COVID-19 or its variants and its effect on the broader global economy may have a significant negative effect on us.

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Long-term economic impacts relating to COVID-19 and state and national fiscal policy related to combatting the economic impacts of COVID-19 may have a long-term detrimental impact on customer spending, costs of customer acquisition, and may be a driver for rapid inflation which could negatively affect our customers’ discretionary spending capability or increase our materials and labor costs in future periods.

On March 2, 2022 (the “ Closing Date ”), we completed our acquisition of NGW.

We entered into an arrangement agreement (the “ Arrangement Agreement ”) with NGW on December 20, 2021, pursuant to which we agreed to acquire (the “ Arrangement ”) all of the issued and outstanding common shares of NGW (the “ NGW Shares ”) pursuant to a plan of arrangement (the “ Plan of Arrangement ”) under the Business Corporations Act (British Columbia).

The Arrangement was approved by the holders of NGW Shares (the “ NGW Shareholders ”) at a special meeting of NGW Shareholders held on February 25, 2022, and approved by the Supreme Court of British Columbia on March 1, 2022.

Pursuant to the Plan of Arrangement, at 12:01 a.m.

(Vancouver time) (the “ Effective Time ”) on the Closing Date, we acquired all of the NGW Shares for a total consideration of approximately C$71,345,747 (based on the closing price of our Common Shares (the “ Planet 13 Shares ”) on the Canadian Securities Exchange on March 2, 2022), and NGW then amalgamated with us.

The NGW Shareholders received 0.1145 of one Planet 13 Share (the “ Exchange Ratio ”) and a nominal cash payment of C$0.0001 for each NGW Share held immediately prior to the Effective Time.

As a result, 21,361,002 Planet 13 Shares and $14,788 in cash were issued in exchange for the NGW Shares.

In addition, the number of Planet 13 Shares issued to any person pursuant to the Arrangement was rounded down to the nearest whole Planet 13 Share, with a cash consideration paid in lieu of the issuance of such fractional Planet 13 Share of C$3.379 per share.

Based upon the Exchange Ratio, all NGW options to acquire NGW Shares that were outstanding immediately prior to the Effective Time were also exchanged for our options that will entitle the holders to receive, upon exercise thereof, Planet 13 Shares.

As a result, we issued 1,106,925 options in exchange for the NGW options.

On August 28, 2023, the Company entered into a Membership Interest Purchase Agreement (“ Purchase Agreement ”) with VidaCann, LLC (“ VidaCann ”), Loop’s Dispensaries, LLC (“ Dispensaries ”), Ray of Hope 4 Florida, LLC (“ Ray of Hope ”) and Loops Nursery & Greenhouses, Inc.

(“ Nursery ” and together with Dispensaries and Ray of Hope, the (“ Sellers ”), David Loop (“ Loop ”) and Mark Ascik (together with Loop, the “ Indemnifying Members ”) and Loop, solely in his capacity as Seller Representative, pursuant to which, upon the terms and subject to the conditions set forth therein, the Company would acquire from the Sellers all of the membership interests in VidaCann (the “ Transaction ”).

On May 9, 2024, the Company acquired 100% ownership interest of VidaCann, LLC.

(“ VidaCann ”) and accounted for the transaction as a business combination acquisition pursuant to ASC 805.

VidaCann was established in 2003 and was formed for the purpose of cultivating and selling cannabis products in the state of Florida, where it owns and operates a cultivation and manufacturing facility.

The Company executed the VidaCann transaction in order to expedite its entrance into the attractive Florida cannabis market with an existing customer base and operational cultivation and manufacturing facilities.

Pursuant to the Purchase Agreement, the Company acquired VidaCann from the Sellers for agreed consideration at closing of the Transaction (the “ Closing ”) equal to the sum of:

(i) 81,872,252 shares of common stock of the Company (the “ Base Share Consideration ”), of which 1,307,698 shares were issued to VidaCann’s industry advisor (the “ VC Advisor ”);

(ii) a cash payment of US$4,000,000 (the “Closing Cash Payment”);

and (iii) promissory notes issued by the Company to the Sellers in the aggregate principal amount of US$5,000,000, with each of the above components subject to adjustments as set out in the Purchase Agreement.

Based on the closing price of the Company’s common shares of (CAD$0.9100) US$0.6647 on May 9, 2024 on the Canadian Securities Exchange (the “ CSE ”) (based on the Bank of Canada CAD to USD exchange rate on May 9, 2024 of CAD$1.00=US$0.7304), the total consideration was valued at US$50,755,443 million.

As contemplated by the definitive agreement, VidaCann continued to have US$3 million of bank indebtedness and US$1.5 million of related party notes to former VidaCann managers at the time of closing, which were assumed by the Company.

The Seller of the majority interest in VidaCann also has the right to nominate a director to the Company’s board of directors effective the next business day following the Company’s 2024 annual meeting of stockholders in June.

The Seller has selected David Loop, the former Chief Executive Officer of VidaCann, as its board nominee.

The VidaCann acquisition was deemed to be a business combination under ASC 805.

The following table summarizes the allocation of consideration exchanged to the estimated fair value of the tangible and intangible assets acquired:

Consideration paid:

Issuance of 81,872,252 Common Shares

Note Payable to Former VidaCann Shareholders

Fair value of net assets acquired:

Prepaids and other assets

Property, plant and equipment

Intangible assets

ROU Liabilities

Notes Payable

Accounts Payable and Accrued Liabilities

The purchase price allocations for the VidaCann transaction reflect various fair value estimates and analyses relating to the determination of fair value of certain tangible and intangible assets acquired and residual goodwill.

The Company determined the estimated fair value of the acquired working capital, and identifiable intangible assets and goodwill after review and consideration of relevant information including market data and management’s estimates.

The estimated fair value of acquired working capital was determined to approximate carrying value.

The goodwill arising from the VidaCann transaction consists of expected synergies from combining operations of the Company and VidaCann, and intangible assets not qualifying for separate recognition such as formulations, proprietary technologies and acquired know-how.

None of the goodwill is deductible for tax purposes.

VidaCann’s state cannabis license represented an identifiable intangible asset acquired in the amount of $9,000,000.

The VidaCann cannabis license acquired has an indefinite life and as such will not be subject to amortization.

In connection with the VidaCann transaction, the Company expensed $1,020,563 of acquisition-related costs, which have been included in general and administrative expenses on the Company’s consolidated statement of operations and comprehensive loss for the period ended December 31, 2024, and $909,363 for the period ended December 31, 2023.

VidaCann contributed revenue, net of discounts, gross profit and net loss of $26,890,356, $14,668,773 and ($1,878,533) included in the Company's Consolidated Comprehensive Net Income in the period ended December 31, 2024.

Results of Operations

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Change in fair value of warrants

Gain on sale-leaseback

Provision for stolen funds

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Basic and diluted

We experienced a $6,069,207 decrease in net revenue during the year ended December 31, 2023, when compared to the year ended December 31, 2022.

The decrease is attributable to a reduction in the number of customers at our Planet 13 Las Vegas Superstore location compared to the prior year, partially offset by an increase of revenue from the Planet 13 OC Superstore and the addition of wholesale revenue from the NGW cultivation operations in California, and an increase in net wholesale revenue in Nevada as well as one month of activity from Planet 13 Illinois.

Overall, net revenue decreased by 5.8% during the year ended December 31, 2023, when compared to the year ended December 31, 2022.

We believe that the potential economic downturn and increase in inflation, including the increase in the price of gasoline and the increase in interest rates, combined to reduce the disposable income of our customers during the year ended December 31, 2023, and also had an impact on the number of customers and tourists visiting the Planet 13 Las Vegas Superstore and our other retail locations.

We experienced a $17,903,796 increase in net revenue during the year ended December 31, 2024, when compared to the year ended December 31, 2023.

The increase is attributable to the inclusion of the VidaCann acquisition that closed on May 9, 2024.

We experienced a reduction in the number of customers at our Planet 13 Las Vegas Superstore location compared to the prior year, a decrease in revenue from the Planet 13 OC store, relatively flat wholesale revenue from the NGW cultivation operations in California, the full year addition of revenue from the Company’s Planet 13 Illinois dispensary in Waukegan that opened in December 2023 and a decrease in net wholesale revenue in Nevada.

Overall, net revenue increased by 18.2% during the year ended December 31, 2024, when compared to the year ended December 31, 2023.

We believe that the potential economic downturn and increase in inflation,combined to reduce the disposable income of our customers during the year ended December 31, 2024, and also had an impact on the number of customers and tourists visiting the Planet 13 Las Vegas Superstore and our other retail locations.

Details of net revenue by product category are as follows:

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Gross profit margin for the year ended December 31, 2024, was 48.2% compared to 45.5% for the year ended December 31, 2023.

The decrease in gross profit margin for the year ended December 31, 2023 was a result of increased sales incentives during the year coupled with the increase in wholesale revenue, both from our Nevada wholesale business and from the recently acquired NGW cultivation assets in California, which has an inherently lower gross margin than retail sales revenue.

The increase in gross profit margin for the year ended December 31, 2024 was a result of an increase in the percentage of sales coming from retail dispensary operations (with the addition of the VidaCann store network) when compared to the year ended December 31, 2023.

Retail operations have an inherently higher gross margin than wholesale operations.

The costs of internal cultivation have continued to trend down as we continue to improve our yields and cultivation efficiency across all of our cultivation facilities.

In addition, margin enhancement through the creation of internally generated brands, such as TRENDI, Leaf & Vine, HaHa Gummies, Dreamland Chocolate, HaHa Beverages and Medizin, continued to have a positive impact on gross margins during the year ended December 31, 2024, helping offset the lower margins received on the sale of wholesale product and sales to local customers in the State of Nevada.

We anticipate that margins will trend upward as tourist customers return to Las Vegas and the Planet 13 Las Vegas Superstore in greater numbers and through our ability to produce our award-winning brands in California and introduce those brands into our Planet 13 OC Superstore along with the recent introduction of NGW premium flower to the Planet 13 OC Superstore.

The cost of internal cultivation at our VidaCann operations also improved during the year as upgrades and efficiency measures implemented have had a positive impact on yields and lower operational costs.

We anticipate that margins will trend upward as tourist customers return to Las Vegas and the Planet 13 Las Vegas Superstore in greater numbers and through our ability to grow our Florida retail operations.

Our premium cultivation facilities were operating near capacity during the years ended December 31, 2024, and December 31, 2023, respectively.

The amount of cannabis grown during the year was in line with the prior year.

Wholesale flower prices began to stabilize in both California and Nevada towards the latter half of the year ended December 31, 2023.

The price declines that were experienced during the first half of 2023 led to an overall decline in flower revenue during the year when compared to the year ended December 31, 2022.

Overall gross profit was $44,823,144 and $47,974,754 for the years ended December 31, 2023 and 2022 respectively, a decrease of 6.6%.

General and Administrative (“ G&A ”) expenses (which includes non-cash share-based compensation expenses), decreased by 14.1% during the year ended December 31, 2023, when compared to the year ended December 31, 2022.

The decrease in G&A expenses incurred during the year ended December 31, 2023, was a result of focused cost cutting initiatives undertaken by the Company and a reduction in share-based compensation expense recorded during the year, partially offset by the addition of G&A expenses from the recently acquired NGW cultivation assets in California, a full year of operations at our Planet 13 OC Superstore compared with only six months in the prior year, as well as increased expenditures related to corporate initiatives (registration of the class of our Common Shares through filing a Form 10 registration statement with the SEC and merger and acquisition related fees incurred on the closing of the NGW acquisition) that were expensed during the year ended December 31, 2023when compared to the year ended December 31, 2022.

Wholesale flower prices continued to be soft in both California and Nevada towards the latter half of the year ended December 31, 2024.

The price declines that were experienced during 2024 led to an overall decline in flower revenue during the year when compared to the year ended December 31, 2023.

Overall gross profit was $56,110,446 and $44,823,144 for the years ended December 31, 2024 and 2023 respectively, an increase of 25.2%.

The increase can be directly attributed.

to the inclusion of the VidaCann operations during the year ended December 31, 2024.

General and Administrative (“ G&A ”) expenses (which includes non-cash share-based compensation expenses), increased by 20.6% during the year ended December 31, 2024, when compared to the year ended December 31, 2023.

The increase in G&A expenses incurred during the year ended December 31, 2024, was a result of the addition of the VidaCann operations and an inclusion of a full year of results from our Illinois operations.

These increases were partially mitigated by focused cost cutting initiatives undertaken by the Company, coupled with a reduction in share-based compensation expense recorded during the year ended December 31, 2024when compared to the year ended December 31, 2023.

Overall, excluding non-cash share-based compensation expenses, G&A expenses as a percentage of revenue equaled 44.0% for the year ended December 31, 2024, compared to 43.1% for the year ended December 31, 2023.

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Sales and marketing expenses increased by 8.1% during the year ended December 31, 2024, when compared to the year ended December 31, 2023.

The increase was a result of us continuing to refine our marketing efforts to optimize marketing spend on initiatives that drive increased customer traffic to the Planet 13 Las Vegas Superstore and the Planet 13 OC Superstore and our Medizin dispensary in Nevada as well as to support the launch of our Planet 13 Illinois retail dispensary in Waukegan.

Lease expense increased by 13.2% during the year ended December 31, 2023, when compared to the year ended December 31, 2022, due to increases in contracted lease rates on the Company’s leased properties during the year as well as a financial incentive from the landlord of the Planet 13 OC Superstore received during the period which offset increases in contractual lease rates.

We are amortizing the financial incentive benefit received over the remaining life of the lease.

Depreciation and Amortization decreased 1.9% during the year ended December 31, 2023, when compared to the prior year because of the recording of depreciation on the NGW cultivation facility during the year as well as depreciation from the Planet 13 OC Superstore location, both of which were not owned/open during the prior year.

As of December 31, 2023, the Company evaluated whether intangible assets and goodwill showed any indicators of impairment, and it was determined that such indicators existed.

The increase was a result of us continuing to refine our marketing efforts to optimize marketing spend on initiatives that drive increased customer traffic to the Planet 13 Las Vegas Superstore and the Planet 13 OC store and our Medizin dispensary in Nevada as well as to support the launch of our Planet 13 Illinois retail dispensary in Waukegan and marketing expenses incurred in Florida promoting our expanded store network.

Lease expense increased by 45.3% during the year ended December 31, 2024, when compared to the year ended December 31, 2023, due to increases in contracted lease rates on the Company’s leased properties during the year as well as the addition of 26 dispensaries, a cultivation and processing facility and a production facility in Florida.

Depreciation and Amortization increased 8.3% during the year ended December 31, 2024, when compared to the prior year because of the recording of depreciation on the Company’s recently acquired VidaCann assets as well as a full year of depreciation recorded on the Company’s assets in Illinois,

both of which were not owned/open during the prior year.

During the year ended December 31, 2024 the Company recorded a full impairment charge of $17,118,954 associated with property, plant and equipment, ROU assets and the retail license for its Orange County, California dispensary.

The Company also recorded a full impairment charge of $1,763,901 associated with property, plant and equipment and ROU assets related to its cultivation facility in Beatty Nevada, as well as an impairment charge of $2,393,087 associated with property plant and equipment related to an abandoned cultivation project in Florida.

During the year ended December 31, 2023 the Company evaluated whether intangible assets and goodwill showed any indicators of impairment, and it was determined that such indicators existed.

As a result of the Company’s analysis, it was determined that certain of the Company’s intangibles were impaired, resulting in the Company recording an impairment charge of $46,846,866.

This charge is comprised of an impairment of the carrying value of our Florida MMTC License as a result of the definitive agreement entered into to sell the license to a third party on the closing of the acquisition of VidaCann LLC.

This compares to an impairment of $6,947,778 on the carrying value of our cultivation license in Coalinga California and an impairment charge of $25,802,688 reducing the carrying value of goodwill associated with our acquisition of Next Green Wave to $0.

This charge was comprised of an impairment of the carrying value of our Florida MMTC License as a result of the definitive agreement entered into to sell the license to a third party on the closing of the acquisition of VidaCann LLC.

See Note 7 of our Audited Annual Consolidated Financial Statements for the year ended December 31, 2024.

Interest income was $195,722 during the year ended December 31, 2023, compared to interest income of $189,473 during the year ended December 31, 2022.

The interest income relates to interest earned on cash deposits offset by accrued interest on our note payable that is due and payable on demand offset by interest income earned on cash deposits.

Interest expense was ($333,082) during the year ended December 31, 2024, compared to interest income of $195,722 during the year ended December 31, 2023.

The interest income relates to interest earned on cash deposits offset by accrued interest on our note payable that is due and payable on demand.

The balance of notes payable as of December 31, 2024, was $8,681,684 compared to $884,000 as of December 31, 2023.

We conduct our operations in both United States dollars and Canadian dollars, holding financial assets and incurring expenses in both currencies.

On December 31, 2022, the value of the USD was USD$1.00=CAD$1.3544 compared to the value of the USD of USD$1.00=CAD$1.3226 at December 31, 2023 and averaged USD$1.00=CAD$1.3497 during the year ended December 31, 2023, resulting in our realizing a foreign exchange loss of $3,653 during the year ended December 31, 2023 compared to a foreign exchange (loss) of ($25,528) during the prior year.

On December 31, 2023, the value of the USD was USD$1.00=CAD$1.3356 compared to the value of the USD of USD$1.00=CAD$1.4389 at December 31, 2024 and averaged USD$1.00=CAD$1.3698 during the year ended December 31, 2024, resulting in our realizing a foreign exchange loss of ($14,492) during the year ended December 31, 2024 compared to a foreign exchange gain of 3,653 during the prior year.

It is our policy not to hedge our CAD exposure.

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During the year ended December 31, 2024, the change in fair value of the warrants resulted in a gain of $- compared to a gain of $18,127 during the year ended December 31, 2023.

We did not enter into any sale leaseback transaction during the year ended December 31, 2023.

During the year ended December 31, 2022, we recognized a gain of $509,392 on the sale-leaseback of one of our buildings in Coalinga, California.

Provision for misappropriated funds consists of funds that were misappropriated by the Company’s external investment advisor over the period from November 2021 through to September 30, 2023.

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Any future recovery of misappropriated funds will be recognized in the period in which the recovery occurs.

Other income (expense), consisting of Automated Teller Machine (“ ATM ”) fees, interest and other miscellaneous income/expense was income of $807,023 for the year ended December 31, 2023, compared to other income of $413,029 for the year ended December 31, 2022.

On March 3, 2025, the Company announced significant recovery of funds related to the El Capitan matter.

This includes a settlement and recovery of US$2.1 million of funds which were held at BridgeBank, a division of Western Alliance Bank (collectively "WAB"), bringing the total recovery of funds held at WAB to US$5.5 million.

Additionally, the Company, through a wholly-owned subsidiary, will also obtain real estate (the "Real Property") valued at approximately US$5.0 million based on recent comparable sales, which it intends to sell.

In total, the Company has recovered approximately $10.5 million, including the expected value from the sale of the Real Property.

This settlement does not conclude the Company’s lawsuit against El Capitan Advisors, Inc.

("El Capitan") and its founder and Chief Executive Officer, Andrew Nash, in which it is seeking approximately US$10.3 million, which is based on $15.3 million less the expected net proceeds Planet 13 receives from the sale of the Real Property, in additional compensatory damages and other relief.

Other income (expense), consisting of Automated Teller Machine (“ ATM ”) fees, interest and other miscellaneous income was income of $257,438 for the year ended December 31, 2024, compared to other income of $807,023 for the year ended December 31, 2023.

The income tax expense for the year ended December 31, 2024, was $12,190,243 compared to $11,533,455 for the prior year.

The tax expense increased in 2023 due to the inclusion of California state income tax on California operations.

The tax expense increased in 2024 due to the inclusion of Florida operations that increased table profitability during the year ended December 31, 2024.

We are subject to Section 280E of the Internal Revenue Code (the “ Code ”), which prohibits businesses from taking deductions or credits in carrying on any trade or business consisting of trafficking in certain controlled substances that are prohibited by federal law.

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The Company determined that each of its locations represents an operating segment.

These operating segments have been aggregated into a single reportable segment as the Company operates as a vertically integrated cannabis company with dispensary, cultivation, production and distribution operations in the State of Nevada and dispensary, cultivation and distribution operations in the State of California.

These operating segments have been aggregated into a single reportable segment as the Company operates as a vertically integrated cannabis company with dispensary, cultivation, production and distribution operations in the States of Nevada and Florida, dispensary, cultivation and distribution operations in the State of California and dispensary operations in the State of Illinois.

Liquidity and Capital Resources

10 unchanged sentences

Net cash provided by (used in) operating activities was $5,210,899 for the year ended December 31, 2024, compared to cash used in operating activities of ($12,045,516) for the year ended December 31, 2023.

The increase in case used is primarily due to the change in non-cash working capital during the year ended December 31, 2023, when compared to the year ended December 31, 2022.

The increase in cash provided by operations is primarily due to the inclusion of VidaCann operations during.

the year ended December 31, 2024, when compared to the year ended December 31, 2023.

Cash Flows from Investing Activities

2 unchanged sentences

Cash Flows from Financing Activities

Net cash provided by (used in) financing activities was ($267,529) $1,142,238 during the year ended December 31, 2023, compared to net cash provided by financing activities of $1,142,238 for the year ended December 31, 2022.

The decrease was primarily related to no warrants being exercised during the year ended December 31, 2023, as well as the payment of $267,529 in taxes in lieu of issuing shares on the settlement of RSUs during the year as compared to the year ended December 31, 2022 where no taxes were paid and warrants and options were exercised for cash.

Net cash provided by (used in) financing activities was $6,728,089 during the year ended December 31, 2024, compared to net cash (used in) financing activities of ($267,529) for the year ended December 31, 2023.

The increase was due to the equity financing that was completed in March 2024 compared to no equity financing occurring during the year ended December 31, 2023, as well as the payment of $267,529 in taxes in lieu of issuing shares on the settlement of RSUs during 2023 as compared to the year ended December 31, 2024 where no taxes were paid.

Capital Resources

3 unchanged sentences

There can be no assurance that it will be able to obtain adequate financing in the future or that the terms of such financing may be favorable.

Should financing not be available, the Company has adequate liquidity in the form of cash on hand to fund all of its planned capital expenditures and expansion plans as well as to continue to fund its operation over the next 12 months, including the planned build-out of its operations in Florida, the further expansion of operations in Nevada, California, and, Illinois.

Should financing not be available, the Company has adequate liquidity in the form of cash on hand to fund all of its planned capital expenditures and expansion plans as well as to continue to fund its operation over the next 12 months, including the continued build-out of its operations in Florida and the further expansion of operations in Nevada, California, and, Illinois.

Capital Management

49 unchanged sentences

Deferred tax asset valuation allowances and liabilities for unrecognized tax benefits require significant judgment regarding applicable statutes and their related interpretation, the status of various income tax audits and the Company’s particular facts and circumstances.

Although the Company believes that the judgments and estimates discussed herein are reasonable, actual results, including forecasted COVID-19 business recovery, could differ, and the Company may be exposed to losses or gains that could be material.

Although the Company believes that the judgments and estimates discussed herein are reasonable, actual results could differ, and the Company may be exposed to losses or gains that could be material.

To the extent the Company prevails in matters for which a liability has been established or is required to pay amounts in excess of the established liability, the effective income tax rate in a given financial statement period could be materially affected.

15 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-K

Item 7. Management’s Discussion and Analysis