RYTHM, Inc. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures Management, with the participation of our Interim Chief Executive Officer evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2025. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our Interim Chief Executive Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2025. Management’s Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including our Interim Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on criteria established in the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the results of this evaluation, management has concluded that our internal control over financial reporting was effective at the reasonable assurance level as of December 31, 2025. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm because we are an “emerging growth company,” and may take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. Remediation of Prior Year Material Weaknesses As previously reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and filed with the SEC on March 21, 2025, as amended on March 28, 2025, management identified a material weakness in internal control over financial reporting. The material weaknesses that were previously identified related to the following: lack of technical expertise, segregation of duties and accounting for complex financial transactions. 32 Under the oversight of senior management and the Audit Committee of the Board of Directors, we have implemented a previously disclosed remediation plan designed to address the underlying causes of these material weaknesses. Key measures include: ● Expanding our accounting and financial reporting personnel with additional U.S. GAAP and SEC reporting experience; ● Establishing enhanced monitoring and review controls for non-recurring and complex transactions to ensure the accuracy and completeness of our financial statements and related disclosures; ● Formalizing and maintaining documentation of critical controls and accounting policies to strengthen consistency and accountability across the Company; ● Engaging nationally recognized third-party advisors on specific technical accounting and valuation matters; and ● Implementing and reinforcing segregation of duties within key financial reporting and operational processes. Management, including the Interim Chief Executive Officer and Chief Financial Officer, has reaffirmed the importance of strong control environment an d an organization-wide focus on internal control and accountability. Management has concluded that the actions taken to strengthen our internal control over financial reporting, as well as the results of our testing over the design and operating effectiveness of these controls fully remediated the previously identified material weakness as of December 31, 2025. However, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with applicable policies, processes and documentation requirements may deteriorate. Changes in Internal Control Over Financial Reporting Except for the material weaknesses remediation actions noted above, there were no significant changes in our internal control over financial reporting(as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the quarter ended December 31, 2025. Item 9B. Other Information. During the quarter ended December 31, 2025, none of our directors or officers informed us of the adoption , modification or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 33 PART III Item 10. Directors, Executive Officers, and Corporate Governance The information required by this Item 10 will be included in our Definitive Proxy Statement to be filed with the SEC with respect to our 2026 Annual Meeting of Stockholders and is incorporated herein by reference. Item 11. Executive Compensation. The information required by this Item 11 will be included in our Definitive Proxy Statement to be filed with the SEC with respect to our 2026 Annual Meeting of Stockholders and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners, Management and Related Stockholder Matters. The information required by this Item 12 will be included in our Definitive Proxy Statement to be filed with the SEC with respect to our 2026 Annual Meeting of Stockholders and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this Item 13 will be included in our Definitive Proxy Statement to be filed with the SEC with respect to our 2026 Annual Meeting of Stockholders and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services. The information required by this Item 14 will be included in our Definitive Proxy Statement to be filed with the SEC with respect to our 2026 Annual Meeting of Stockholders and is incorporated herein by reference. 34 PART IV Item 15. Exhibits, Financial Statements and Schedules. (a) Financial Statements: (1) The consolidated financial statements required to be included in this report appear after the signature page to this report as a separate section beginning on page F-1. (2) All supplemental schedules have been omitted since the information is either included in the consolidated financial statements or the notes thereto or they are not required or are not applicable. (3) The Exhibit Index of this report appears below. (b) Exhibits: Exhibit No. Description 2.1 Asset Purchase Agreement, dated as of December 12, 2024, among the registrant, Double or Nothing, LLC, Joel Gott, and Charles Bieler (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 16, 2024) 3.1 Articles of Incorporation of the Registrant, as amended (incorporated by reference to Exhibit 3.1 to the Registrant’s Amendment No. 1 to Registration Statement on Form S-1 filed with the Securities and Exchange Commission on January 13, 2021) 3.2 Certificate of Amendment to the Articles of Incorporation of the Registrant, filed July 11, 2022 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 14, 2022). 3.3 Certificate of Amendment to the Articles of Incorporation of the Registrant, filed October 17, 2022 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 17, 2022). 3.4 Certificate of Amendment to the Articles of Incorporation of the Registrant, filed March 1, 2023 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report filed with the Securities and Exchange Commission on March 3, 2023). 3.5 Certificate of Change to Articles of Incorporation of Agrify Corporation, filed June 30, 2023 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 3, 2023). 3.6 Certificate of Amendment to the Articles of Incorporation of the Registrant, filed January 22, 2024 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 25, 2024). 3.7 Articles of Amendment to Articles of Incorporation of Agrify Corporation, filed October 3, 2024 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 4, 2024). 3.8 Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.3 to the Registrant’s Amendment No. 2 to Registration Statement on Form S-1 filed with the Securities and Exchange Commission on January 26, 2021) 3.9 Second Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 9, 2024). 3.10 Third Amended and Restated Certificate of Designations of the Series A Convertible Preferred Stock of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s Amendment No. 1 to Registration Statement on Form S-1 filed with the Securities and Exchange Commission on January 13, 2021). 3.11 Certificate of Amendment to Articles of Incorporation dated August 27, 2025 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 27, 2025). 3.12 Third Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 27, 2025). 4.1 Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Amendment No. 2 to Registration Statement on Form S-1 filed with the Securities and Exchange Commission on January 26, 2021) 35 4.2 Form of Representative’s Warrant dated February 19, 2021 (incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 11, 2021) 4.3 Form of Representative’s Warrant dated January 27, 2021 (incorporated by reference to Exhibit 4.2 to the Registrant’s Amendment No. 2 to Registration Statement on Form S-1 filed with the Securities and Exchange Commission on January 26, 2021) 4.4 Form of Warrant issued to Noteholders (incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on December 22, 2020) 4.5 Description of Registrant’s Securities (incorporated by reference to Exhibit 4.5 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 2, 2021) 4.6 Form of Common Stock Purchase Warrant dated January 28, 2022 (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 26, 2022) 4.7 Form of Warrant Exchange Warrant (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 19, 2022). 4.8 Form of Note Exchange Warrant (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 19, 2022). 4.9 Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 16, 2022) 4.10 Form of Common Warrant (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 16, 2022) 4.11 Common Stock Purchase Warrant, dated October 27, 2023 (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 30, 2023) 4.12 Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 28, 2024). 4.13 Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.2 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 22, 2024). 4.14 Amendment to Pre-Funded Common Stock Purchase Warrant between Agrify Corporation and CP Acquisitions, LLC dated as of June 30, 2024 (incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 3, 2024). 4.15 Amendment to Pre-Funded Common Stock Purchase Warrant between Agrify Corporation and GIC Acquisitions, LLC dated as of June 30, 2024 (incorporated by reference to Exhibit 4.2 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 3, 2024). 36 4.16 Amendment to Pre-Funded Common Stock Purchase Warrant, dated as of August 28, 2024, by and between Agrify Corporation and CP Acquisitions, LLC (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 29, 2024) . 4.17 Amendment to Pre-Funded Common Stock Purchase Warrant, dated as of August 28, 2024, by and between Agrify Corporation and GIC Acquisition LLC (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 29, 2024) . 4.18 Amendment to Pre-Funded Common Stock Purchase Warrant, dated as of September 27, 2024, by and between Agrify Corporation and CP Acquisitions, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 1, 2024) . 4.19 Amendment to Pre-Funded Common Stock Purchase Warrant, dated as of September 27, 2024, by and between Agrify Corporation and GIC Acquisition LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 1, 2024) . 4.20 Secured Amended, Restated and Consolidated Convertible Note (incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 5, 2024). 4.21 Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 21, 2024). 4.22 Pre-Funded Warrant dated December 12, 2024 (incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 16, 2024). 4.23 Form of Pre-Funded Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 22, 2025). 4.24± Form of Secured Convertible Note dated May 22, 2025 (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 22, 2025). 4.25± Second Amendment, dated May 22, 2025, to Secured Convertible Note issued on November 5, 2024 (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 22, 2025). 4.26± Form of Secured Convertible Note dated August 25, 2025 (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 27, 2025). 4.27 Form of Pre-Funded Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 27, 2025). 4.28 Third Amendment, dated August 25, 2025, to Secured Convertible Note issued on November 5, 2024 (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 27, 2025). 4.29 First Amendment, dated August 25, 2025, to Secured Convertible Notes issued on May 22, 2025 (incorporated by reference to Exhibit 4.4 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 27, 2025). 10.1† 2020 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.13 to the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on December 22, 2020) 10.2 Form of Indemnification Agreement with directors and executive officers (incorporated by reference to Exhibit 10.18 to the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 11, 2021) 10.3† Agrify Corporation 2022 Omnibus Equity Incentive Plan, as amended (incorporated by reference to Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 30, 2025) 10.4† Agrify Corporation 2022 Employee Stock Purchase Plan (incorporated by reference to Appendix B to the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 29, 2022) 10.5± Purchase Agreement, dated as of August 28, 2024, by and between Agrify Corporation and Ionic Ventures, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 29, 2024) 37 10.6 Registration Rights Agreement, dated as of August 28, 2024, by and between Agrify Corporation and Ionic Ventures, LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 29, 2024) 10.7† Severance Agreement, dated November 5, 2024, between Agrify Corporation and Raymond Chang (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 5, 2024) 10.8 Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 21, 2024) 10.9 Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 21, 2024) 10.10# Asset Purchase Agreement, dated as of December 31, 2024, among the registrant and CP Acquisitions, LLC (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 6, 2025). 10.11† Shared Services Agreement, dated March 21, 2025 with Vision Management Services, LLC for Chief Financial Officer Services (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 21, 2025). 10.12†± Amended and Restated Shared Services Agreement, dated May 20, 2025, by and between Vision Management Services, LLC and Agrify Corporation (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 22, 2025). 10.13± Purchase Agreement, dated May 20, 2025, by and between VCP IP Holdings, LLC and Agrify Corporation (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 22, 2025). 10.14± Trademark and Recipe License Agreement, dated May 20, 2025, by and between MC Brands LLC and GTI Core, LLC (incorporated by referenced to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 22, 2025). 10.15± Trademark and Recipe License Agreement, dated May 20, 2025, by and between For Success Holding Company and Core Growth, LLC (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 22, 2025). 10.16± Trademark and Recipe License Agreement, dated May 20, 2025, by and between VCP IP Holdings, LLC and Core Growth, LLC (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 22, 2025). 10.17± Amended and Restated Purchase Agreement, dated June 30, 2025, by and between Agrify Corporation VCP IP Holdings, LLC (incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 8, 2025). 10.18± Purchase Agreement, dated August 27, 2025, by and between VCP23, LLC and Agrify Corporation (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 27, 2025). 10.19± Trademark and Recipe License Agreement, dated August 27, 2025, by and between VCP IP Holdings, LLC and GTI Core, LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 27, 2025). 38 10.20± Amended and Restated Trademark and Recipe License Agreement, dated August 27, 2025, by and between MC Brands LLC and GTI Core, LLC (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 27, 2025). 14.1 Code of Ethics Applicable To Directors, Officers And Employees (incorporated by reference to Exhibit 14.1 to the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on December 22, 2020) 19.1* Insider Trading Policy 21.1* Subsidiaries of the Registrant 23.1* Consent of Independent Registered Public Accounting Firm 31.1* Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a- 14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of Principal Financial and Accounting Officer Pursuant to Securities Exchange Act Rules 13a- 14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1** Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2** Certification of Principal Financial and Accounting Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 97.1 RYTHM, Inc. Clawback policy (incorporated by reference to Exhibit 97.1 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 4, 2024, as amended on April 29, 2024) 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). ± Certain information has been omitted from this exhibit in reliance upon Item 601(a)(5) of Regulation S-K. † Indicates a management contract, compensatory plan, or arrangement. # Certain confidential portions of this exhibit were omitted pursuant to Item 601(b)(2)(ii) of Regulation S-K because the identified confidential portions (i) are not material and (ii) are customarily and actually treated as private or confidential by the Company. * Filed herewith. ** Furnished herewith. Item 16. Form 10-K Summary. None. 39 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. RYTHM, INC. Date: March 3, 2026 By: /s/ Benjamin Kovler Benjamin Kovler Chairman and Interim Chief Executive Officer (Principal Executive Officer) 40 Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following person on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Benjamin Kovler Chairman and Interim Chief Executive Officer March 3, 2026 Benjamin Kovler (Principal Executive Officer) /s/ Brad Asher Chief Financial Officer March 3, 2026 Brad Asher (Principal Financial and Accounting Officer) /s/ Krishnan Varier Director March 3, 2026 Krishnan Varier /s/ Timothy Mahoney Director March 3, 2026 Timothy Mahoney /s/ Max Holtzman Director March 3, 2026 Max Holtzman /s/ Armon Vakili Director March 3, 2026 Armon Vakili /s/ Peter Shapiro Director March 3, 2026 Peter Shapiro /s/ Sanjay Tolia Director March 3, 2026 Sanjay Tolia Date: March 3, 2026 41 RYTHM, INC. Index to Consolidated Financial Statements Fiscal Years Ended December 31, 2025 and 2024: Report of Independent Registered Public Accounting Firm (PCAOB ID # 7143 ) F-2 Consolidated Financial Statements F-3 Consolidated Balance Sheets F-3 Consolidated Statements of Operations F-4 Consolidated Statements of Stockholders’ Equity (Deficit) F-5 Consolidated Statements of Cash Flows F-7 Notes to Consolidated Financial Statements F-9 - F-35 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of RYTHM, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of RYTHM, Inc. (formerly known as Agrify Corporation) (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Emphasis of Matter – Related Parties As described in Note 3, Note 8, Note 10, Note 18, Note 21, and Note 23, the accompanying financial statements include significant transactions with a related party, and a significant portion of the Company’s operating, investing, and financing activities are conducted with this related party. /s/ GuzmanGray We have served as the Company’s auditor since 2024. Costa Mesa, California March 3, 2026 F- 2 Item 1. Financial Statements RYTHM, INC. (Formerly known as Agrify Corporation) CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) As of December 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 32,218 $ 31,170 Accounts receivable, net (1) 9,317 30 Inventory, net (2) 4,045 500 Prepaid expenses and other current assets 1,970 398 Current assets associated with discontinued operations — 2,596 Total current assets 47,550 34,694 Goodwill 9,713 9,713 Intangible assets, net — 8,900 Related party prepaid license rights 49,400 — Non-current assets associated with discontinued operations 14 715 Total assets $ 106,677 $ 54,022 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable (3) $ 2,340 $ 825 Accrued expenses and other current liabilities (4) 7,917 4,090 Long-term debt, current 3,621 522 Related party debt, current 27,000 10,000 Current liabilities associated with discontinued operations 2,082 9,242 Total current liabilities 42,960 24,679 Warrant liabilities (5) 697 996 Long-term debt, net of current 5,000 1 Related party debt, net of current 45,000 — Non-current liabilities associated with discontinued operations — 257 Total liabilities 93,657 25,933 Commitments and contingencies (Note 23) Stockholders’ equity: Common Stock, $ 0.001 par value per share, 35,000,000 shares authorized; 2,149,128 and 1,952,032 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively 2 2 Preferred Stock, $ 0.001 par value per share, 2,895,000 shares authorized, no shares issued or outstanding — — Preferred A Stock, $ 0.001 par value per share, 105,000 shares authorized, no shares issued or outstanding — — Additional paid-in capital 353,818 335,400 Accumulated deficit ( 340,800 ) ( 307,313 ) Total stockholders’ equity 13,020 28,089 Total liabilities and stockholders’ equity $ 106,677 $ 54,022 (1) Include $ 7.0 million and none from related parties as of December 31, 2025 and December 31, 2024, respectively. (2) Included $ 392 thousand and none from related parties as of December 31, 2025 and December 31, 2024, respectively. (3) Include $ 152 thousand and none due to a related party as of December 31, 2025 and December 31, 2024, respectively. (4) Include $ 4.7 million and $ 487 thousand due to related parties as of December 31, 2025 and December 31, 2024, respectively. (5) As of December 31, 2025 and December 31, 2024, the number of outstanding warrants subject to liability classification was 40,017 , of which 15,394 are held by RSLGH, a related party. The accompanying notes are an integral part of these consolidated financial statements. F- 3 RYTHM, INC. (Formerly known as Agrify Corporation) CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) Year Ended December 31, 2025 2024 Revenue (1) $ 17,283 $ 18 Cost of goods sold 7,093 89 Gross profit (loss) 10,190 ( 71 ) Selling, general and administrative (2) 34,055 7,182 Impairment of long-lived assets 8,471 — Change in contingent consideration — ( 2,180 ) Total operating expenses 42,526 5,002 Operating loss from continuing operations ( 32,336 ) ( 5,073 ) Interest expense, net (3) ( 3,203 ) ( 256 ) Change in fair value of warrant liabilities 299 ( 17,902 ) Other income, net 500 — Total other expense, net ( 2,404 ) ( 18,158 ) Loss from continuing operations before income taxes ( 34,740 ) ( 23,231 ) Income tax provision — 2 Loss from continuing operations, net of income taxes ( 34,740 ) ( 23,229 ) Loss from discontinued operations ( 2,054 ) ( 6,624 ) Gain (loss) on disposal of Extraction and Cultivation business 3,537 ( 11,893 ) Income (loss) from discontinued operations, net of income taxes 1,483 ( 18,517 ) Net loss ( 33,257 ) ( 41,746 ) Net loss per share: Basic and diluted Continuing operations $ ( 17.42 ) $ ( 22.77 ) Discontinued operations 0.74 ( 18.15 ) Net loss per share – basic and diluted (4) ( 16.68 ) ( 40.92 ) Weighted average common shares outstanding - basic and diluted (4) 1,993,947 1,020,185 (1) Include $ 8.2 million and none for the year ended December 31, 2025 and December 31, 2024, respectively, in each case from related parties. (2) Include $ 10.6 million and $ 331 thousand for the year ended December 31, 2025 and December 31, 2024, respectively, in each case from related parties. (3) Include $ 4.1 million and $ 156 thousand for the year ended December 31, 2025 and December 31, 2024, respectively, in each case from related parties. (4) Amounts for the year ended December 31, 2024 have been adjusted to retroactively reflect the 1-for-15 reverse stock split on October 8, 2024. Additional information regarding the reverse stock split may be found in Note 1 – Overview, included in the notes to the consolidated financial statements. In addition to the transactions described above, the Company engaged in other routine transactions with related parties in the ordinary course of business. Such transactions were not material, individually or in aggregate, to the consolidated financial statements for the periods presented. The accompanying notes are an integral part of these consolidated financial statements. F- 4 RYTHM, INC. (Formerly known as Agrify Corporation) CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (In thousands, except share and per share data) Common Stock Additional Paid-In- Accumulated Total Stockholders’ Equity Shares Amount Capital Deficit (Deficit) Balance at January 1, 2024 113,416 $ — $ 250,857 $ ( 265,567 ) $ ( 14,710 ) Issuance of Common Stock in connection with private placement, net 203,988 1 25,792 — 25,793 Senorita Acquisition 97,300 — 18,836 — 18,836 Conversion of related party debt into Pre-Funded Warrants — — 13,980 — 13,980 Excess of related party debt and Pre-Funded Warrants conversion — — 10,044 — 10,044 Issuance of equity classified Pre-Funded Warrants — — 6,791 — 6,791 Issuance of Common Stock and Pre-Funded Warrants through public offering 184,000 — 2,123 — 2,123 Conversion of Convertible Note 178,109 — 1,731 — 1,731 Exercise of liability classified warrants, net of forfeitures 52,681 — 1,680 — 1,680 Exercise of Pre-Funded Warrants 647,373 — 1,355 — 1,355 Stock-based compensation — — 1,165 — 1,165 Contribution from troubled debt restructuring with related party — — 676 — 676 Issuance of common shares (IONIC Stock Subscription Payable) 189,645 — 345 — 345 Exercise of Placement Agent Warrants 4,482 — 26 — 26 Stock split share adjustment ( 283 ) 1 ( 1 ) — — Cashless exercise of High Trail Warrants 208,814 — — — — Issuance of vested RSUs 72,397 — — — — Issuance of vested RSUs, net of shares held back to offset tax 71 — — — — Issuance of held-back shares from Sinclair acquisition 39 — — — — Net loss — — — ( 41,746 ) ( 41,746 ) Balance at December 31, 2024 1,952,032 $ 2 $ 335,400 $ ( 307,313 ) $ 28,089 The accompanying notes are an integral part of these consolidated financial statements. F- 5 Common Stock Additional Paid-in- Accumulated Total Stockholders’ Shares Amount Capital Deficit Equity Balance at January 1, 2025 1,952,032 $ 2 $ 335,400 $ ( 307,313 ) $ 28,089 Conversion of related party convertible note to pre-funded warrants — — 10,000 — 10,000 Issuance of pre-funded warrants in lieu of cash payments on related party shared services agreement — — 3,771 — 3,771 Issuance or accrual of pre-funded warrants in lieu of cash interest payments on related party debt — — 2,644 — 2,644 Stock-based compensation — — 2,157 — 2,157 Issuance or accrual of pre-funded warrants in lieu of cash interest payments — — 183 — 183 Issuance of vested RSUs, net of shares held back to offset tax 83,028 — ( 337 ) — ( 337 ) Exercise of Pre-Funded Warrants 114,086 — — — — Cancellation of common shares ( 18 ) — — — — Impairment of non-controlling interests — — — ( 230 ) ( 230 ) Net loss — — — ( 33,257 ) ( 33,257 ) Balance at December 31, 2025 2,149,128 $ 2 $ 353,818 $ ( 340,800 ) $ 13,020 The accompanying notes are an integral part of these consolidated financial statements. F- 6 RYTHM, INC. (Formerly known as Agrify Corporation) CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, except share and per share data) Year Ended December 31, 2025 2024 Cash flows from operating activities: Net loss $ ( 33,257 ) $ ( 41,746 ) Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities: Depreciation and amortization 6,156 1,421 Amortization of debt discount — ( 47 ) Non-cash interest expense 2,829 — Lease expense 156 — Impairment of right-of-use assets 24 — Impairment of long-lived assets 8,471 — Stock-based compensation expense 2,157 1,165 Change in fair value of warrant liabilities ( 299 ) 17,902 Change in provision for credit losses, net 268 ( 336 ) Change in inventory reserve 552 ( 747 ) Loss on abandonment of CIP projects — 31 Loss on inventory write-down — — Gain on disposal of property and equipment ( 2 ) 14 Gain on exit of Extraction business ( 3,534 ) — Gain on early termination of lease — ( 50 ) Gain on settlement of contingent liability — ( 5,935 ) Loss on disposal of Cultivation business — 11,893 Change in contingent consideration — ( 2,180 ) Changes in operating assets and liabilities, net of acquisitions: — — Accounts receivable ( 1,788 ) 646 Accounts receivable - related party ( 6,978 ) — Inventory ( 2,886 ) 8,341 Prepaid expenses and other current assets ( 1,245 ) 1,872 Operating lease right-of-use assets — 528 Other non-current assets 12 46 Accounts payable 151 ( 4,562 ) Accounts payable - related party 152 — Accrued expenses and other current liabilities ( 3,825 ) 1,258 Accrued expenses and other current liabilities - related party 10,677 — Operating lease liabilities ( 161 ) ( 519 ) Contract liabilities ( 1,167 ) ( 578 ) Net cash and cash equivalents used in operating activities ( 23,537 ) ( 11,583 ) Cash flows from investing activities: Related party transaction with MC Brands ( 5,075 ) — Related party transaction with VCP ( 50,000 ) — Purchases of property and equipment — ( 4 ) Proceeds from disposal of property and equipment — 20 Issuance of loans receivable — ( 400 ) Proceeds from repayment of loan receivable — 330 Net cash and cash equivalents used in investing activities ( 55,075 ) ( 54 ) Cash flows from financing activities: Proceeds from related party notes payable 72,000 14,453 Proceeds from third-party notes payable 8,000 — Repayments of third-party notes payable ( 3 ) — Payments for taxes related to net share settlement of equity awards ( 337 ) — Proceeds from issuance of Common Stock through an S-1 and Pre-Funded Warrants offering — 2,123 Proceeds from issuance of Common Stock through IONIC Stock Subscription — 345 Proceeds from issuance of Common Stock in connection with private placement, net — 25,793 Proceeds from exercise of Pre-Funded Warrants — 36 Payments on insurance financing loans — ( 377 ) Net cash and cash equivalents provided by financing activities continuing operations 79,660 42,373 Net increase in cash and cash equivalents 1,048 30,736 Cash and cash equivalents at the beginning of period $ 31,170 $ 434 Cash and cash equivalents of discontinued operations, beginning of period — — Cash and cash equivalents of discontinued operations, end of period — — Cash and cash equivalents at the end of period $ 32,218 $ 31,170 The accompanying notes are an integral part of these consolidated financial statements. F- 7 Year Ended December 31, 2025 2024 Supplemental disclosures Cash paid for interest $ 9 $ — Supplemental disclosure of non-cash investing and financing activities Conversion of related party debt to common stock $ 10,000 $ 10,044 Issuance of pre-funded warrants in lieu of related party shared services agreement $ 3,771 $ — Issuance of pre-funded warrants in lieu of related party cash interest $ 2,644 $ — Issuance of pre-funded warrants in lieu of cash interest $ 183 $ — Reclassification of accounts payable and accrued interests to notes payable $ 99 $ — Conversion of liability classified pre-funded warrants to equity $ — $ 20,771 Stock and warrants issued in connection with business combination $ — $ 18,836 Fair value of warrants in connection with reclassification and issuance $ — $ 6,791 Conversion of convertible notes into equity $ — $ 1,731 Cashless exercise of liability classified warrants $ — $ 1,680 Deemed contribution from troubled debt restructuring with related party $ — $ 676 Financing of prepaid insurance $ — $ 14 The accompanying notes are an integral part of these consolidated financial statements. F- 8 Note 1 — Overview Description of Business RYTHM, Inc. (formerly Agrify Corporation) (together with its subsidiaries, the “Company” or “RYTHM”) delivers well-being to consumers through its portfolio of hemp-derived THC products and iconic licensed brands. The Company’s portfolio of consumer-packaged goods brands includes RYTHM, incredibles, Dogwalkers, Beboe, &Shine, Doctor Solomon’s, Good Green and Señorita. The Señorita brand offers consumers hemp-derived tetrahydrocannabinol (“THC”) beverages that mirror well-known cocktails like a margarita – in four flavors – classic Lime Jalapeño Margarita, Mango Margarita, Paloma and Ranch Water. Known for its clean, fresh taste and commitment to high-quality, natural ingredients, Señorita offers a low-sugar, low-calorie alternative to alcoholic beverages and is available at top retailers including Total Wine, ABC Fine Wine & Spirits, and Binny’s in eleven U.S. states and Canada, with plans for expansion and future availability in premier on-premises destinations. Other hemp-derived products including RYTHM beverages and incredibles and Beboe edible products are primarily sold online and through direct-to-retail partnerships. In addition to the sale of hemp-derived products (“Non-licensing Revenue”), the Company licenses its brands to be manufactured and distributed in exchange for a licensing fee (“Licensing Revenue”). Throughout the Form 10-K, the terms “intellectual property”, “intellectual property rights”, “brands”, “trademarks”, “tradenames”, “brand rights” and “Prepaid License Rights” are used interchangeably. RYTHM has also historically been a leading provider of innovative cultivation and extraction solutions for the cannabis industry. Prior to the exit of the extraction business on March 30, 2025, the Company’s comprehensive extraction product line (“the Extraction Business”), which included hydrocarbon, alcohol, solventless, post-processing, and lab equipment, empowered cannabis producers to maximize the quantity and quality of extract required for premium concentrates. Additionally, prior to its sale on December 31, 2024, the Company’s proprietary micro-environment-controlled Agrify Vertical Farming Units (“VFUs”) enabled cultivators to produce high quality products for the cannabis. The Company was formed in the State of Nevada on June 6, 2016 as Agrinamics, Inc., and subsequently changed its name to Agrify Corporation. On August 27, 2025, the Company filed a Certificate of Amendment to the Articles of Incorporation of the Company with the Secretary of State of Nevada, to effect a change in the Company’s name from Agrify Corporation to RYTHM, Inc., effective as of September 2, 2025. In connection with the name change, the Company’s trading symbol on the Nasdaq Capital Market changed from “AGFY” to “RYM” effective as of the open of trading on September 2, 2025. The Company is sometimes referred to herein by the words “we,” “us,” “our,” and similar terminology. The Company has thirteen wholly-owned consolidated subsidiaries, which are collectively referred to as the “Subsidiaries” and seven out of thirteen subsidiaries are related to discontinued operations. On December 12, 2024, the Company acquired certain assets from Double or Nothing, LLC (“Double or Nothing”), the owner and creator of the Señorita brand of hemp-derived drinks as part of the Company’s strategic plan to reposition itself as a distributor of hemp-derived THC beverages and similar products. On December 31, 2024, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with CP Acquisitions, LLC (“CP”), an entity affiliated with Raymond Chang, the Company’s former Chairman and Chief Executive Officer. Under the Purchase Agreement, CP acquired assets from the Company relating to the Company’s VFUs, including the related Agrify total-turnkey (“TTK”) solution assets and Agrify Insights TM software solutions (collectively the “Cultivation Business”). The sale of the Cultivation Business occurred following signing on December 31, 2024. The results of the Cultivation Business are presented as discontinued operations in the consolidated statements of operations and, as such, have been excluded from continuing operations. Further, the Company reclassified the assets and liabilities of the Cultivation Business associated with discontinued operations in the consolidated balance sheets as of December 31, 2025 and December 31, 2024. For further discussion on the discontinued operations, refer to Note 17 included elsewhere in the notes to the consolidated financial statements. On March 30, 2025, the Company approved the winding down of the Extraction Business by March 31, 2025, including but not limited to, the sale or other disposal of all remaining assets constituting the Extraction Business, the cessation of all business operations related to the Extraction Business, the termination of any outstanding contracts related to the Extraction Business, and termination of any employees primarily involved in the Extraction Business. The results of the Extraction Business are presented as discontinued operations in the consolidated statements of operations and, as such, have been excluded from continuing operations. Further, the Company reclassified the assets and liabilities of the Extraction Business associated with discontinued operations in the consolidated balance sheets as of December 31, 2025 and December 31, 2024. The balances as of December 31, 2024 reflect historical carrying values, without remeasurement. For further discussion on the discontinued operations, refer to Note 17 included elsewhere in the notes to the consolidated financial statements. F- 9 On May 20, 2025, we acquired from VCP IP Holdings, LLC (“VCP”) an indirect wholly-owned subsidiary of Green Thumb, a related party, 100 % of the equity interests of MC Brands, LLC pursuant to which we obtained rights relating to MC Brands, LLC and its wholly-owned subsidiary Core Growth LLC (together referred to as “MC Brands”). The assets of MC Brands consist primarily of intellectual property rights associated with the Incredibles brand. Concurrent with the transaction, we entered into a license agreement with GTI Core, LLC, (“GTI Core”), an indirect subsidiary of Green Thumb, pursuant to which GTI Core was granted the right to use the incredibles brand in connection with its existing businesses. Consideration payable by GTI Core under the license agreement consists of a monthly license fee payable in cash. We began recognizing licensing revenue under this agreement in May 2025. On August 27, 2025, we acquired from VCP23, LLC an indirect wholly-owned subsidiary of Green Thumb, 100 % of the equity interests of VCP IP Holdings, LLC pursuant to which we obtained rights relating to VCP IP Holdings, LLC. The assets of VCP IP Holdings, consist primarily of intellectual property rights to the RYTHM, Beboe, Dogwalkers, Doctor Solomon’s,& Shine, and Good Green brands (these rights, together with the incredibles brand rights, referred to as “Brand Rights”). Concurrent with the transaction, we entered into a license agreement with GTI Core pursuant to which GTI Core was granted the right to use the Brand Rights in connection with its existing businesses. Consideration payable by GTI Core under the license agreement consists of a monthly license fee payable in cash. We began recognizing licensing revenue under this agreement in November 2025. Reverse Stock Splits On October 8, 2024, the Company effected a 1-for-15 reverse stock split of its Common Stock. All share and per share information has been retroactively adjusted to give effect to the reverse stock splits for the year ended December 31, 2024, unless otherwise indicated. No fractional shares of Common Stock were issued as a result of this reverse stock split. Any fractional shares in connection with this reverse stock splits were rounded up to the nearest whole share and no stockholders received cash in lieu of fractional shares. The reverse stock split had no impact on the number of shares of Common Stock that the Company is authorized to issue pursuant to its articles of incorporation or on the par value per share of the Common Stock. Proportional adjustments were made to the number of shares of Common Stock issuable upon exercise or conversion of the Company’s outstanding stock options and warrants, the exercise price or conversion price (as applicable) of the Company’s outstanding stock options and warrants, and the number of shares reserved for issuance under the Company’s equity incentive plan. All share and per share information included in this Annual Report on Form 10-K has been retroactively adjusted to reflect the impact of this reverse stock split. Note 2 — Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States (“GAAP”) and include the accounts of RYTHM and its wholly-owned subsidiaries, as described above, in accordance with the provisions required by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) the Consolidation Topic 810 (“ASC 810”). The Company includes results of operations of acquired companies from the date of acquisition. All significant intercompany transactions and balances are eliminated. Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of expenses during the reporting period. On an ongoing basis, the Company evaluates estimates, which include estimates related to accruals, stock-based compensation expense, reported amounts of revenues during the reported period, fair value of warrant liabilities, sales tax liabilities, valuation of deferred tax assets, net realizable value of inventory and collectability of trade accounts, intangible assets, other assets (Prepaid License Rights), goodwill, and litigation. The Company bases their estimates on historical experience and other market-specific or other relevant assumptions that they believe to be reasonable under the circumstances. Actual results may differ materially from those estimates or assumptions. The Company regularly evaluates its assets, including asset groups or reporting units, for impairment in accordance with GAAP. The Company is aware of the impact that prolonged net losses can have on the fair value of underlying assets and the overall company. The Company is committed to ensuring that the carrying amounts of its assets are appropriately assessed and adjusted for any impairment, reflecting a true and fair view of its financial position. F- 10 Discontinued Operations On December 31, 2024, the Company entered into and closed a Purchase Agreement with CP. Under the Purchase Agreement, CP acquired assets from the Company relating to the Cultivation Business. On March 30, 2025, the Company discontinued the Extraction Business (together with the Cultivation Business, the “Discontinued Operations”). As the sale of the Cultivation Business and the exit of the Extraction Business represented a strategic shift that will have a major effect on the Company’s operations and financial results, they have been presented in discontinued operations in accordance with ASC 205, Presentation of Financial Statements , separate from continuing operations for the years ended December 31, 2025 and 2024, as applicable. For further discussion, refer to Note 17 included elsewhere in the notes to the consolidated financial statements. Cash and Cash Equivalents Cash and cash equivalents consist principally of cash and deposits with original maturities of three months or less as of December 31, 2025 and December 31, 2024. All cash equivalents are carried at cost, which approximates fair value. Accounts Receivable, Net Accounts receivable, net, primarily consists of amounts for goods and services that are billed and currently due from customers. In accordance with the current expect credited loss (“CECL”) impairment model under ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) , accounts receivable balances are presented net of an allowance for credit losses, which are an estimate of billed or borrowed amounts that may not be collectible. In determining the amount of the allowance at each reporting date, management makes judgments about general economic conditions, historical write-off experience, and any specific risks identified in customer or borrower collection matters, including the aging of unpaid accounts receivable and changes in customer or borrower financial conditions. Accounts receivable balances are written off after all means of collection are exhausted and the potential for non-recovery is determined to be probable. Adjustments to the allowance for credit losses are recorded as general and administrative expenses in the consolidated statements of operations. For the year ended December 31, 2025, the Company recorded approximately $ 382 thousand in allowance for doubtful accounts. There was no comparable allowance in the prior year. Concentration of Credit Risk and Significant Customer Financial instruments that potentially subject the Company to a concentration of credit risk primarily consist of cash, cash equivalents, marketable securities, and accounts receivable. Cash equivalents primarily consist of money market funds with original maturities of three months or less, which are invested primarily with U.S. financial institutions. Cash deposits with financial institutions generally exceed federally insured limits. Management believes minimal credit risk exists with respect to these financial institutions and the Company has not experienced any losses on such amounts. For the year ended December 31, 2025, a related party customer and a third-party customer accounted for approximately 45 % and 12 % of the Company’s revenue, respectively. For the year ended December 31, 2025, a related party accounted for 75 % of the Company’s total accounts receivable. For the year ended December 31, 2024, one customer accounted for 100 % of revenue and accounts receivable. Inventories The Company values all its inventories, which consist primarily of finished goods and raw materials, at the lower of cost or net realizable value, with cost principally determined by the weighted-average cost method on a first-in, first-out basis. Write-offs of potentially slow-moving, damaged, or expiring inventory are recorded through specific identification of expired or damaged material. The Company takes a physical inventory count at least annually at all significant inventory locations. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expenses are recognized using the straight-line method over the estimated useful life of each asset. The estimated useful lives of the Company’s property and equipment are periodically assessed to determine if changes are appropriate. The Company charges maintenance and repairs to expense as incurred. When the Company retires or disposes of assets, the carrying cost of these assets and related accumulated depreciation or amortization are eliminated from the consolidated balance sheets and any resulting gain or loss is included in the consolidated statements of operations in the period of retirement or disposal. F- 11 Goodwill Goodwill is defined as the excess of cost over the fair value of assets acquired and liabilities assumed in a business combination. Goodwill is tested for impairment annually, and more frequently if events and circumstances indicate that the asset might be impaired. A goodwill impairment charge is recorded if the amount by which the Company’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Factors that could lead to a future impairment include material uncertainties such as a significant reduction in projected revenues, a deterioration of projected financial performance, future acquisitions and/or mergers, and/or a decline in the Company’s market value as a result of a significant sustained decline in the Company’s stock price. Goodwill is not subject to amortization and is tested annually for impairment, or more frequently if events or changes in circumstances indicate there might be an impairment. An impaired asset is written down to its estimated fair value based upon the most recent information. During the years ended December 31, 2025 and 2024, the Company performed a qualitative analysis for its goodwill impairment test. The Company applies the guidance in ASU 2011-08 Intangibles-Goodwill and Other-Testing Goodwill for Impairment , which provides entities with an option to perform a qualitative assessment (commonly referred to as “Step Zero”) to determine whether further quantitative analysis for impairment of goodwill is necessary. A goodwill impairment charge is recorded if the amount by which our carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Factors that could lead to a future impairment include material uncertainties such as a significant reduction in projected revenues, a deterioration of projected financial performance, future acquisitions and/or mergers, and a decline in our market value as a result of a significant sustained decline in our stock price. As a result of the Company’s Step Zero analysis, no further quantitative impairment test was deemed necessary. Impairment of Long-Lived Assets Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. Examples include a significant adverse change in the extent or manner in which we use the asset, or an unexpected change in financial performance. When evaluating long-lived assets for impairment, we compare the carrying value of the asset to the asset’s estimated undiscounted future cash flows. An impairment is indicated if the estimated future cash flows are less than the carrying value of the asset. The impairment is the excess of the carrying value over the fair value of the asset. We recorded impairment charges related to intangible assets and other assets (Prepaid License Rights) of $ 7.9 million and $ 0.6 million, respectively, for the year ended December 31, 2025 due to changes in legislation around hemp-derived products in November 2025, which is expected to become effective in November 2026. There was no comparable impairment in the prior year. Warrant Liabilities The Company evaluates all its financial instruments, including issued private placement stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC Topic 815, Derivatives and Hedging (“ASC 815”). The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815. Management’s assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether they meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own Common Stock among other conditions for equity classification. For issued or modified warrants that meet all of the criteria for equity classification, they are recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that are precluded from equity classification, they are recorded as a liability at their initial fair value on the date of issuance and subject to remeasurement on each balance sheet date with changes in the estimated fair value of the warrants to be recognized as an unrealized gain or loss in the consolidated statements of operations. F- 12 Convertible Notes Payable The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with ASC 815. The accounting treatment of derivative financial instruments requires that the Company identify and record certain embedded conversion options (“ECOs”), certain variable-share settlement features, and any related freestanding instruments at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as an unrealized non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. Bifurcated embedded conversion options, variable-share settlement features, and any related freestanding instruments are recorded as a discount to the host instrument which is amortized to interest expense over the life of the respective note using the effective interest method. Leases The Company determines at the inception of an asset contract if such arrangement is or contains a lease. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company classifies leases at the lease commencement date as operating or finance leases and records a right-of-use asset and a lease liability on its consolidated balance sheet for all leases with an initial lease term of greater than 12 months. A lease with an initial term of 12 months or less is not recorded on the balance sheet, but related payments are recognized as an expense on a straight-line basis over the lease term. The Company’s asset contracts may contain both lease and non-lease components. Non-lease components may include maintenance, utilities, and other operating costs. The Company combines the lease and non-lease components of fixed costs in its lease arrangements as a single lease component. Variable costs, such as utilities or maintenance costs, are not included in the measurement of right-of-use assets and lease liabilities, but rather are expensed when the event determining the amount of variable consideration to be paid occurs. Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of future lease payments over the expected lease term. The Company determines the present value of future lease payments by using its estimated secured incremental borrowing rate for that lease term as the interest rate implicit in the lease is not readily determinable. The Company estimates its secured incremental borrowing rate for each lease based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. Certain of the Company’s leases include options to extend or terminate the lease. The amounts determined for the Company’s right-of-use assets and lease liabilities generally do not assume that renewal options or early-termination provisions, if any, are exercised unless it is reasonably certain that the Company will exercise such options. The Company did not have any leases as part of continuing operations as of years ended December 31, 2025 and 2024. Contract Liabilities Contract Liabilities includes amounts collected, billed in excess of revenue or customer deposits that the Company can recognize. The Company recognizes contract liabilities and non-current contract liabilities as revenue as the related performance obligation is satisfied. The Company records contract liabilities that will be recognized during the succeeding twelve-month period as a current liability on the consolidated balance sheets. The Company did not have any contract liabilities in continuing operations as of years ended December 31, 2025 and December 31, 2024. F- 13 Fair Value of Financial Instruments The Company’s financial instruments consist of cash and cash equivalents, marketable securities, accounts receivable, contingent considerations, long-term debt, related party debt, and warrant liabilities. Refer to Note 12 - Fair Value Measures, included elsewhere in the notes to the consolidated financial statements for details of the Company’s financial instruments. Stock-Based Compensation The Company measures restricted stock units and stock options awards granted to employees, directors and consultants based on the fair value on the date of the grant and recognizes compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award. Forfeitures are recognized as incurred. Historically, the Company has issued stock options to employees, directors and consultants with only service-based vesting conditions and records the expense for these awards using the straight-line method. The Company classifies stock-based compensation expense in its consolidated statements of operations in the same manner in which the award recipient’s payroll costs are classified. The Company estimates the fair value of each stock option grant on the date of the grant using the Black-Scholes option-pricing model. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. Business Combinations and Asset Acquisitions The Company follows the guidance in ASC 805, Business Combinations , for determining the appropriate accounting treatment for asset acquisitions. ASU 2017-01, Clarifying the Definition of a Business , provides an initial fair value screen to determine if substantially all of the fair value of the assets acquired is concentrated in a single asset or group of similar assets. If the initial screening test is not met, the set is considered a business based on whether there are inputs and substantive processes in place. Based on the results of this analysis and conclusion on an acquisition’s classification of a business combination or an asset acquisition, the accounting treatment is derived. If the acquisition is deemed to be a business, the purchase method of accounting is applied. The estimated fair value of net assets acquired, including the allocation of the fair value to identifiable assets and liabilities, is determined using established valuation techniques. A fair value measurement is determined as the price received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. In the context of purchase accounting, the determination of fair value often involves significant judgments and estimates by management, including the selection of valuation methodologies, estimates of future revenues, costs and cash flows, discount rates, and selection of comparable companies. The estimated fair values reflected in the purchase accounting rely on management’s judgment and the expertise of a third-party valuation firm engaged to assist in concluding on the fair value measurements. In determining the fair value of all identifiable assets and liabilities acquired, the most significant estimates relate to intangible assets. For the intangible assets identified, depending on the type of intangible asset and the complexity of determining its fair value, the fair value is developed using appropriate valuation techniques, taking into account assumptions such as the expected future revenue, expected use of the asset, market conditions, uncertainty factors, the estimated useful life, and discount rate, among other factors. These assumptions may vary based on future events, perceptions of different market participants and other factors outside the control of management, and such variations may be significant to estimated values. If the transaction is deemed to be an asset acquisition, the cost accumulation and allocation model is used whereby the assets and liabilities are recorded based on the purchase price and allocated to the individual assets and liabilities based on relative fair values. For the allocation of intangible assets identified, depending on the type of intangible asset and the complexity of determining its relative fair value, an independent valuation expert or management may allocate the relative fair value, using appropriate valuation techniques, which are generally based on a forecast of the total expected future net cash flows and takes into consideration other significant assumptions such as the expected use, market uncertainty, marketing or sales support requirements and the intangible asset useful lives. F- 14 Prepaid License Rights If a sale arrangement includes terms—such as repurchase features or other provisions—that prevent the buyer from obtaining control of the business or assets, the Company concludes that control has not transferred. In those circumstances, the arrangement is accounted for based on its substance under other applicable U.S. GAAP. In connection with such arrangements, amounts paid for licensing rights are deferred and recorded as prepaid licensing rights on the Company’s consolidated balance sheets. These amounts are recognized in expense over the period in which the related rights are utilized or otherwise as the underlying economic benefit is consumed. Revenue Recognition Overview The Company generates revenue from continuing operations through the sale of hemp-derived THC products (non-licensing) and Licensing Revenue. The Company licenses intellectual property to a related party under arrangements that provide for sales-based license fees. The Company recognizes licensing income derived from licensing agreements in accordance with ASC Topic 606, Revenue Recognition (“ASC 606”), specifically, the sales-based royalty exception. In accordance with ASC 606, revenue for hemp-derived THC products (non-licensing) is recognized through a five-step model, as outlined below:   ● Identify the customer contract : A customer contract is identified when there is mutual approval and commitment between the Company and its customer, the rights and obligations are clear, payment terms are set, the contract has commercial substance, and collectability is probable. Written or electronic signatures on contracts and purchase orders are obtained if such orders are issued in the normal course of business by the customer.   ● Identify performance obligations that are distinct : The Company identifies distinct performance obligations in each contract. A performance obligation is considered distinct if the customer can benefit from the good or service on its own or with readily available resources, and if it is separately identifiable from other promises in the contract. The Company’s revenue-generating activities typically have a single performance obligation.   ● Determine the transaction price : The transaction price is the amount of consideration the Company expects to receive in exchange for the sale of the product. This amount is determined excluding sales taxes collected on behalf of government agencies and net of any sales discounts, incentives, and returns.   ● Allocate the transaction price to distinct performance obligations : The transaction price is allocated to each distinct performance obligation based on the relative standalone selling prices (“SSP”) of the goods or services provided. If a contract involves multiple performance obligations, each is accounted for separately if distinct, and the SSP reflects the price the Company would charge if the good or service were sold separately in similar circumstances and to similar customers.   ● Recognize revenue as the performance obligations are satisfied :   - Revenue from the sale of hemp-derived THC products (non-licensing) is recognized when control of the product transfers to the customer, typically upon delivery or shipment, as the customer assumes the risks and rewards of ownership. Payment terms vary by customer, but the time between revenue recognition and payment due is generally not significant. For products sold under consignment arrangements, revenue is recognized only when control is transferred to the end customer.  The Company does not maintain a specific reserve for returns due to the limited circumstances under which returns are permitted in customer agreements. Payments for slotting, listing fees, or other marketing or promotional activities, where legally permitted, are recorded as a reduction in revenue unless a distinct good or service is received in exchange.   - In accordance with ASC 606-10-55-65 through 55-65B, Licensing Revenue is recognized only when the underlying sale by the licensee occurs, and the performance obligation has otherwise been satisfied. This approach ensures that revenue is recognized in the period in which it is earned and determinable, consistent with the transfer of control of the intellectual property to the licensee. F- 15 Income Taxes The Company accounts for income taxes pursuant to the provisions of ASC Topic 740, Income Taxes (“ASC 740”), which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred tax asset will not be realized. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740, the benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. The Company recognizes the benefit of a tax position when it is effectively settled. ASC 740, provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. ASC 740 clarifies that a tax position can be effectively settled upon the completion of an examination by a taxing authority. For tax positions considered effectively settled, the Company recognizes the full amount of the tax benefit. The Company’s provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items within the period presented. To determine the annual effective tax rate, the Company estimates both the total income (loss) before income taxes for the full year and the jurisdictions in which that income (loss) is subject to tax. The actual effective tax rate for the full year may differ from these estimates if income (loss) before income taxes is greater than or less than what was estimated or if the allocation of income (loss) to jurisdictions in which it is taxed is different from the estimated allocations. The provision for income taxes represents Federal, state and local income taxes. The effective rate differs from statutory rates due to the Company’s loss position and the valuation allowance offsetting deferred tax assets. Our effective tax rate may change from quarter to quarter based on recurring and non-recurring factors including, but not limited to, the geographical mix of earnings, enacted tax legislation, and state and local income taxes. In addition, changes in judgment from the evaluation of new information resulting in the recognition, derecognition or re-measurement of a tax position taken in a prior annual period is recognized separately in the quarter of the change. Tax contingencies are recorded, if needed, to address potential exposure involving tax positions the Company has taken that could be challenged by tax authorities. These potential exposures could result from applications of various statutes, rules, regulations and interpretations. Any estimates of tax contingencies contain assumptions and judgments about potential actions by taxing jurisdictions. Any interest and penalties related to uncertain tax positions would be included as part of the income tax provision. The Company’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analysis of or changes in tax laws, regulations and interpretations thereof as well as other factors. F- 16 Net Loss Per Share The Company presents basic and diluted net loss per share in conformity with the one-class method. The Company computes basic loss per share by dividing net loss by the weighted-average number of Common Stock outstanding. Diluted loss per share adjusts basic loss per share for the potentially dilutive impact of convertible notes, stock options, restricted stock units and warrants. As the Company has reported losses for the years ended December 31, 2025 and 2024, all potentially dilutive securities including convertible notes, stock options, restricted stock units and warrants, are anti-dilutive, and accordingly, basic net loss per share equals diluted net loss per share for those periods. Net loss per share calculations for the year ended December 31, 2024 have been adjusted to reflect the reverse stock splits effected on October 8, 2024. Recently Adopted Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures, to provide enhanced segment disclosures. The standard requires disclosures about significant segment expense categories and amounts for each reportable segment, for all periods presented. Additionally, the standard requires public entities to disclose the title and position of the Chief Operating Decision Maker (“CODM”) in the consolidated financial statements. These enhanced disclosures are required for all entities on an interim and annual basis, effective for fiscal years beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures , a final standard on improvements to income tax disclosures. The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard applies to all entities subject to income taxes and is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. For public business entities (PBEs), the new requirements will be effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. The Company adopted this new standard on January 1, 2025 and the effect of this guidance is reflected in the consolidated financial statements. In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (“ASU 2025-05”), to introduce a practical expedient for all entities, which simplifies the calculation required for estimating credit losses and assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods; however, early adoption is permitted. ASU 2025-25 allows for adoption using a prospective method. The Company early adopted this standard as of December 31, 2025. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. Recently Announced Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Topic 220): Disaggregation of Income Statement Expenses . This guidance requires additional disclosure of certain amounts included in the expense captions presented on the Statement of Operations as well as disclosures about selling expenses. The ASU is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted for annual financial statements that have not yet been issued. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures. In November 2024, the FASB issued ASU 2024-04, Debt with Conversion and Other Options (“ASU 2024-04”), which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. ASU 2024-04 is effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in Update 2020-06. Adoption can be on a prospective or retrospective basis. The Company is currently evaluating the disclosure impact that ASU 2024-04 may have on its financial statement presentation and disclosures. F- 17 In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270), Narrow-Scope Improvements, to provide clarity about the current requirements, rather than evaluate whether to expand or reduce interim disclosure requirements. The amendments in ASU 2025-11 result in a comprehensive list of interim disclosures that are required by GAAP. The amendments in ASU 2025-11 also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The amendments in ASU 2025-11 are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 and early adoption is permitted. The amendments in ASU 2025-11 can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the disclosure impact that ASU 2025-11 may have on its financial statement presentation and disclosures. In December 2025, FASB issued ASU 2025-12 Codification Improvements (“ASU 2025-12”), which includes various amendments to the FASB Accounting Standards Codification intended to clarify, correct, and improve existing guidance. ASU 2025-12 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact that ASU 2025-12 may have on its financial statement presentation and disclosures. Other recent accounting pronouncements did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. Liquidity and Capital Resources The Company is required to evaluate whether there are conditions or events, considered in aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. Substantial doubt exists when conditions and events, considered in aggregate, indicate that it is probable that a company will be unable to meet its obligations as they become due within one year after the date that the consolidated financial statements are issued. We have a history of recurring net losses and negative cash flow in operating activities. However, we believe our positive working capital as of December 31, 2025 inclusive of $ 32.2 million of cash and cash equivalents, anticipated contractual Licensing Revenue and ability to address our Convertible Notes will be sufficient to meet our cash requirements through at least the 12-month period following the date that these consolidated financial statements were issued. Contractual debt maturities of $ 80 million exist through February 2027, with $ 72 million of the Convertible Notes held by Green Thumb, a related party. The election of these notes to be payable in cash upon maturity could raise substantial doubt about the Company’s ability to continue as a going concern. However, while these contractual maturities require management attention, management believes it is probable that the obligations will be addressed through extension or conversion consistent with historical practice. As such, our financial statements have been prepared on a going concern basis. F- 18 Note 3 — Acquisitions Prepaid License Rights VCP Transaction On August 27, 2025, the Company entered into a purchase agreement with VCP23, an indirect wholly-owned subsidiary of Green Thumb, a related party, pursuant to which the Company acquired all of the equity interests in VCP. The assets of VCP consist primarily of intellectual property rights RYTHM, Beboe, Dogwalkers, Doctor Solomon’s, &Shine, and Good Green brands. The consideration exchanged for the equity interest was cash consideration of $ 50.0 million. An affiliate of Green Thumb holds a call option to repurchase some or all of the VCP intellectual property rights for up to five years from the transaction date upon the occurrence of certain specified eligibility conditions, which are outside of the control of both parties but with likelihood of eligibility greater than remote. Due to changes in legislation around hemp-derived products enacted in November 2025, which are currently expected to become effective in November 2026, one of the eligibility conditions that would permit the repurchase right to become exercisable is likely to be satisfied within the next twelve months. However, satisfaction of such conditions does not obligate Green Thumb or its affiliates to exercise the repurchase option, which remains within their discretion. Because this call option represents a substantive repurchase right, the arrangement includes terms that preclude the transfer of control and therefore does not meet the criteria for a completed sale. As such, the transaction is not accounted for as an asset acquisition under ASC 805, as previously reported. Instead, the Company accounts for the arrangement under other applicable U.S. GAAP, including ASC 340. The Company determined that the consideration transferred represents a prepaid executory contract for access to and use of intellectual property, which is recorded as Prepaid License Rights (defined below) and recognized in expense as the related benefits are consumed. The Prepaid License Rights represent the right to use intellectual property in circumstances where control of the underlying intellectual property rights did not transfer. The resulting revision in accounting conclusion was not considered material to the current period or any prior period, including the Company’s quarterly unaudited interim condensed consolidated financial statements. The Company evaluated the nature of the transaction whereby in exchange for the $ 50.0 million consideration the Company received access to and use of intellectual property (“Prepaid License Rights”) . The Prepaid License Rights relate to the RYTHM, Beboe, Dogwalkers, Doctor Solomon’s, &Shine, and Good Green brands and are measured based on the cost of consideration exchanged and amortized on a straight-line basis over the expected useful life of the asset, estimated based on the expected economic benefits of the asset. The useful lives of the Prepaid License Rights range from 2.4 to 4.4 years with a weighted average useful life of 3.9 years. MC Brands Transaction On May 20, 2025, the Company entered into a purchase agreement with VCP, an indirect wholly-owned subsidiary of Green Thumb, a related party, pursuant to which the Company acquired all of the equity interests in MC Brands LLC. The assets of MC Brands consist primarily of intellectual property rights to the incredibles brand. The consideration exchanged for the equity interest was cash consideration of $ 5.1 million. An affiliate of Green Thumb holds a call option to repurchase some or all of the MC Brands intellectual property rights for up to five years from the transaction date upon the occurrence of certain specified eligibility conditions, which are outside of the control of both parties but with likelihood of eligibility greater than remote. Due to changes in legislation around hemp-derived products enacted in November 2025, which are currently expected to become effective in November 2026, one of the eligibility conditions that would permit the repurchase right to become exercisable is likely to be satisfied within the next twelve months. However, satisfaction of such conditions does not obligate Green Thumb or its affiliates to exercise the repurchase option, which remains within their discretion. Because this call option represents a substantive repurchase right, the arrangement includes terms that preclude the transfer of control and therefore does not meet the criteria for a completed sale. As such, the transaction is not accounted for as an asset acquisition under ASC 805, as previously reported. Instead, the Company accounts for the arrangement under other applicable U.S. GAAP, including ASC 340. The Company determined that the consideration transferred represents a prepaid executory contract for access to and use of intellectual property, which is recorded as Prepaid License Rights and recognized in expense as the related benefits are consumed. The Prepaid License Rights represent the right to use intellectual property in circumstances where control of the underlying intellectual property rights did not transfer. The resulting revision in accounting conclusion was not considered material to the current period or any prior period, including the Company’s quarterly unaudited interim condensed consolidated financial statements. The Company evaluated the nature of the transaction whereby in exchange for the $ 5.1 million consideration the Company received access to and use of Prepaid License Rights and other assets related to hemp-derived THC, amounting to $ 4.5 million and $ 0.6 million respectively. The Prepaid License Rights and hemp-derived THC assets are measured based on the cost of consideration exchanged and amortized on a straight-line basis over the expected useful life of the asset, estimated based on the expected economic benefits of the asset. The estimated useful lives of the assets range from five years to seven years with a weighted average useful life of 5.11 years. During the year ended December 31, 2025, the Company recognized impairment of the hemp-derived THC assets due to the November 2025 change in legislation around hemp-derived THC products. Refer to Note 8 included elsewhere in the notes to the consolidated financial statements. The remaining $ 4.5 million of Prepaid License Rights relates to the incredibles brand with a useful life of five years . Business Combinations Acquisition of Assets of Señorita On December 12, 2024, the Company acquired certain assets from Double or Nothing, the owner and creator of the Señorita brand of hemp-derived THC drinks. As of June 30, 2025, the Company has completed its purchase price allocation for the Double or Nothing business combination. The final allocation remains unchanged from the preliminary amounts disclosed in the Company’s financial statements for the fiscal year ended December 31, 2024. Based on the information available to management, no further adjustments are expected. Accordingly, the measurement period has ended and the purchase accounting is now considered final in accordance with ASC 805. F- 19 The following table summarizes the final allocation of purchase price for Double or Nothing: Allocation of Purchase Price (in thousands) Inventory $ 500 Deposits 123 Tradenames 6,100 Customer Relationships 2,800 Goodwill 9,713 Total purchase price $ 19,236 During the year ended December 31, 2025, the Company recognized impairments of tradenames and customer relationships due to the November 2025 change in legislation around hemp-derived THC products. Refer to Note 7 included elsewhere in the notes to the consolidated financial statements. Note 4 — Inventory, Net Inventories are stated at the lower of cost or net realizable value, with cost principally determined by the weighted-average cost method on a first-in, first-out basis. Such costs include the acquisition cost for raw materials and operating supplies. Inventory consisted of the following as of December 31, 2025 and December 31, 2024: Year Ended December 31, (In thousands) 2025 2024 Finished goods $ 3,108 $ 500 Raw materials 947 — Packaging materials 542 — Inventory, gross 4,597 500 Inventory reserves ( 552 ) — Total inventory, net $ 4,045 $ 500 Note 5 - Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following as of December 31, 2025 and December 31, 2024: Year Ended December 31, (In thousands) 2025 2024 Prepaid marketing $ 1,259 $ — Prepaid insurance 122 86 Other receivables — 170 Prepaid expenses, other 589 142 Total prepaid expenses and other current assets $ 1,970 $ 398 Note 6 — Goodwill As of December 31, 2025 and 2024, the Company’s goodwill is as follows: Year Ended December 31, (In thousands) 2025 2024 Goodwill - beginning of period $ 9,713 $ — Goodwill acquired during period (Note 3) — 9,713 Goodwill - end of period $ 9,713 $ 9,713 F- 20 Note 7 — Intangible Assets As of December 31, 2025, intangible assets were comprised of the following: December 31, 2025 Estimated Gross Net Useful Life Carrying Accumulated Carrying (In thousands) in Years Amount Amortization Amount Tradenames - - - - Customer Relationships - - - - As of December 31, 2025, the Company recognized impairments of $ 2.5 million of customer relationships and $ 5.4 million of tradenames relating to the Señorita acquisition. The impairment was due to the November 2025 change in legislation around hemp-derived THC products. During the year ended December 31, 2025, the Company amortized $ 1.0 million of intangible assets which is included in Selling, general and administrative. As of December 31, 2024, intangible assets were comprised of the following: December 31, 2024 Estimated Gross Net Useful Life Carrying Accumulated Carrying (In thousands) in Years Amount Amortization Amount Tradenames 7 6,100 — 6,100 Customer relationships 10 2,800 — 2,800 $ 8,900 $ — $ 8,900 Note 8 — Prepaid License Rights As of December 31, 2025, prepaid license rights were comprised of the following: December 31, 2025 Estimated Gross Net Useful Life Carrying Accumulated Carrying (In thousands) in Years Amount Amortization Amount Prepaid License Rights, related party 2 - 5 $ 54,500 $ ( 5,100 ) $ 49,400 As of December 31, 2025, the Company recognized impairment of $ 0.6 million of other hemp-derived THC assets associated with the MC Brands acquisition. The impairment was due to the November 2025 change in legislation around hemp-derived THC products. There were no prepaid license rights as of December 31, 2024. During the year ended December 31, 2025, the Company amortized $ 5.1 million of prepaid license rights which is included in Selling, general and administrative. The estimated future amortization expense for the next five years and thereafter is as follows: Years ending December 31 (In thousands) Future Amortization Expense 2026 $ 13,961 2027 13,964 2028 12,346 2029 8,784 2030 346 Total $ 49,400 Note 9 — Accrued Expenses Accrued expenses and other current liabilities consisted of the following as of December 31, 2025 and December 31, 2024: Year Ended December 31, (In thousands) 2025 2024 Related party accrued consulting fees $ 3,097 $ 332 Third-party accrued consulting fees 21 51 Related party accrued interest expense 1,563 — Third-party accrued interest expense 173 6 Third-party accrued marketing fee 933 — Related party accrued marketing fee 88 155 Litigation reserve 570 1,628 Compensation related fees 522 1,112 Accrued fulfillment and manufacturing related costs 342 — Other current liabilities 360 4 Accrued professional fees 248 802 Total accrued expenses and other current liabilities $ 7,917 $ 4,090 F- 21 Note 10 — Debt The Company’s debt consisted of: December 31, (In thousands) 2025 2024 Related party debt: Convertible Notes $ 72,000 $ 10,000 Total related party debt 72,000 10,000 Less: current portion ( 27,000 ) ( 10,000 ) Related party debt, net of current $ 45,000 $ — Short-term debt: PPP Loan 620 518 Other Notes Payable - Current 1 4 Total short-term debt $ 621 $ 522 Long-term debt: Convertible Note $ 8,000 $ — Other notes payable — 1 Total long-term debt 8,000 1 Less: current portion ( 3,000 ) — Long-term debt, net of current $ 5,000 $ 1 Convertible Notes On November 5, 2024, the Company issued a secured convertible note (the “November 2024 Note”) to RSLGH, LLC (“RSLGH”), a subsidiary of Green Thumb, a related party. The November 2024 Note is a secured obligation of the Company and ranks senior to all indebtedness of the Company except for the May 2025 Notes and the August 2025 Notes (both as defined below), which rank on parity with the November 2024 Note. The November 2024 Note will matured on November 5, 2025 and accrued interest at a 10.0 % annualized rate. The principal amount of the November 2024 Note was paid on the maturity date. The November 2024 Note provided for advances of up to $ 20 million in the aggregate, of which $ 10 million was advanced upon issuance. The November 2024 Note was amended on May 8, 2025 to issue pre-funded warrants in lieu of cash interest, with 18,614 pre-funded warrants issued on May 8, 2025 and an additional 11,373 pre-funded warrants issued on September 1, 2025, which were issued in lieu of the cash interest that would otherwise be payable under the November 2024 Note. The number of pre-funded warrants is equal to the cash interest amount otherwise payable on the November 2024 Note divided by the closing share price on May 8, 2025, the effective date of the amendment. No changes were made to the conversion price of the principal amount of the November 2024 Note. On May 22, 2025, the Company and RSLGH entered into a second amendment to the November 2024 Note, which amended the terms to, among other things, permit RSLGH to elect, subject to any required approvals under Nasdaq listing rules, to receive pre-funded warrants in lieu of shares of Common Stock upon conversion of the November 2024 Note at a conversion price equal to the existing conversion price of $ 3.158 less the $ 0.001 exercise price of each pre-funded warrant. On November 3, 2025, the holder of the November 2024 Note elected to convert the outstanding principal and interest, into pre-funded warrants. The outstanding principal and accrued interest amounts of $ 10 million and $ 175 thousand respectively, resulted in the issuance of 3,167,564 and 55,433 pre-funded warrants, respectively. On May 22, 2025, the Company issued secured convertible notes with an aggregate original principal amount of $ 30.0 million (collectively the “May 2025 Notes”) to RSLGH and to certain other third-party accredited investors. The May 2025 Notes are secured obligations of the Company and rank senior to all indebtedness of the Company except for the August 2025 Notes, which ranks on parity with the May 2025 Notes. The May 2025 Notes will mature on November 22, 2026 and accrue interest at a 10.0 % annualized rate, with interest to be paid on the first calendar day of each September and March while the May 2025 Notes are outstanding, in pre-funded warrants, beginning September 1, 2025. The principal amount of the May 2025 Notes will be payable on the maturity date. The May 2025 Notes may be converted into Common Stock or, at the election of the holder, into pre-funded warrants, with a beneficial ownership limitation for RSLGH of 49.99 % and a beneficial ownership limitation for other holders of 4.99 %, in each case subject to applicable Nasdaq listing rules. If a holder elects to convert the May 2025 Notes into Common Stock, the conversion price per share will be $ 23.53 , equal to the most recent closing price of the Common Stock on the Nasdaq Capital Market at the time the May 2025 Notes were issued, subject to customary adjustments for certain corporate events. If a holder elects to convert the May 2025 Notes into pre-funded warrants, and for interest payments payable in the form of pre-funded warrants, the conversion price per pre-funded warrant will be equal to the $ 23.53 conversion price less than $ 0.001 exercise price of the warrant. The conversion of the May 2025 Notes into Common Stock and/or pre-funded warrants is subject to certain customary conditions and, to the extent necessary, the receipt of stockholder approval under Nasdaq listing rules. F- 22 On August 25, 2025, the Company issued secured convertible notes with an aggregate original principal amount of $ 50.0 million (collectively the “August 2025 Notes”) to RSLGH and to certain other third-party accredited investors. The August 2025 Notes are secured obligations of the Company and rank senior to all indebtedness of the Company except for the May 2025 and November 2024 Notes, which rank on parity with the August 2025 Notes. The August 2025 Notes will mature on February 25, 2027 and accrue interest at a 10.0 % annualized rate, with interest to be paid on the first calendar day of each September and March, while the August 2025 Notes are outstanding beginning March 1, 2026. The principal amount of the August 2025 Notes will be payable on the maturity date. The August 2025 Notes may be converted into Common Stock or, at the election of the holder, into pre-funded warrants, with a beneficial ownership limitation for RSLGH of 49.99 % and a beneficial ownership limitation for other holders of 4.99 %, in each case subject to applicable Nasdaq listing rules. If a holder elects to convert the August 2025 Notes into Common Stock, the conversion price per share will be $ 29.475 , equal to the Minimum Price as such term is defined under Nasdaq Listing Rule 5635 at the time the August 2025 Notes were issued, subject to customary adjustments for certain corporate events. If a holder elects to convert the August 2025 Notes into pre-funded warrants, and for interest payments elected to be paid in the form of pre-funded warrants, the conversion price per pre-funded warrant will be equal to the $ 29.475 conversion price less than $ 0.001 exercise price of the warrant. The conversion of the August 2025 Notes into Common Stock and/or pre-funded warrants is subject to certain customary conditions and, to the extent necessary, the receipt of stockholder approval under Nasdaq listing rules. The May 2025 Notes and August 2025 Notes (together referred to as “the Notes”) impose certain customary affirmative and negative covenants upon the Company, including covenants relating to ranking and reservation of shares. If an event of default under one or more of the Notes occurs and is not waived, the holder can elect to accelerate all or a portion of the then-outstanding principal amount of the applicable Note, plus accrued and unpaid interest, including default interest, which accrues at a rate per annum equal to 14 % from the date of a default or event of default. The Company was in compliance with these covenants as of December 31, 2025. The Company determined the Notes do not contain features that qualify as embedded derivatives in accordance with ASC 815. Borrowings under the Notes as of December 31, 2025 totaled $ 72.0 million, $ 27.0 million of which are recorded on the Company’s consolidated balance sheets in related party debt, current, $ 45.0 million of which are recorded in related party debt, net of current, and the remaining are reported in long-term debt, net of current. Related party interest expense incurred on the Notes amounted to $ 4.1 million and $ 156 thousand for the year ended December 31, 2025 and 2024, respectively. Interest expense incurred on the Notes related to unaffiliated third parties amounted to approximately $ 362 thousand and $ 256 thousand for the year ended December 31, 2025 and 2024, respectively. As of December 31, 2025, future minimum principal payments on all debt positions, excluding accrued interest amounts, were as follows: Years ending December 31 (In thousands) 2026 $ 30,621 2027 50,000 Total future payments $ 80,621 Note 11 — Leases The determination as to whether any arrangement contained a lease at its inception was performed based on whether or not the Company has the right to control the asset during the contract period. The lease term was determined by assuming the exercise of options that were reasonably certain to occur. Leases with an original lease term of 12 months or less at inception are not reflected in the Company’s consolidated balance sheets and those lease costs are expensed on a straight-line basis over the respective term. Leases with a term greater than 12 months are reflected as non-current right-of-use assets and current and non-current lease liabilities in the Company’s consolidated balance sheets. As of December 31, 2025 and 2024, the Company had no active finance leases. Also during the year ended December 31, 2025, in connection with the discontinuation of Extraction Business, the Company subleased the assets under one of its leases, with the sublease commencement date on April 1, 2025, for $ 9 thousand per month. The Company recognized a sublease income of $ 27 thousand, within loss from discontinued operations in the consolidated statements of operations. The Company recognized an impairment of right-of-use assets of $ 24 thousand, within loss from discontinued operations in the consolidated statements of operations. During year ended December 31, 2025, in connection with the discontinuation of Extraction Business, the Company terminated a lease early and recognized a loss on lease termination of $ 161 thousand, within gain on disposal of Extraction Business in the consolidated statements of operations. As of December 31, 2025 and December 31, 2024, the Company did not have any operating leases related to continuing operations. As such, no operating lease cost, weighted average remaining lease term, or weighted average discount rate, and cash paid for operating leases are presented for continuing operations for the year ended December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, there was no future lease payments related to continuing operations. F- 23 Note 12 — Fair Value Measures Fair Values of Assets and Liabilities In accordance with ASC Topic 820, Fair Value Measurement , the Company measures fair value at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the assumptions that market participants would use in pricing an asset or liability (the inputs) are based on a tiered fair value hierarchy consisting of three levels, as follows: Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets. Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar instruments in active markets or for similar markets that are not active. Level 3: Unobservable inputs for which there is little or no market data which require the Company to develop its own assumptions about how market participants would price the asset or liability. The Company has certain financial instruments which consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, contingent consideration, operating lease liabilities, long-term debt, related party debt, and warrant liabilities. Fair value information for each of these instruments as well as other balances of the Company are as follows: ● Cash and cash equivalents, accounts payable, and accrued expenses approximate their fair value based on the short-term nature of these instruments. ● Accounts receivable are presented net of an allowance for estimated credit losses, which approximates fair value. ● The carrying value of lease liabilities approximates fair value due to the implicit discount rates used in the determination of the lease liabilities being consistent with the Company’s incremental borrowing rates at the time of lease inception and accounting for the duration of the leases. ● Long-term debt and related party debt, including the debt that has undergone troubled debt restructuring, is carried at amortized cost, dictated by the prevailing market interest rates at the time of each transaction in accordance with ASC Topic 470, Debt (“ASC 470”). ● The Company’s warrant liabilities are marked-to-market for each reporting period with the changes in fair value of warrant liabilities recorded in other income (expense), net in the accompanying consolidated statements of operations until the warrants are exercised. The fair value of the warrant liabilities are estimated using a Black-Scholes option-pricing model. ● As detailed in Note 14 - Stockholders’ Equity, during the year ended December 31, 2024, the Company amended Pre-Funded Warrants that had been issued to a related party such that they again became liability classified. These warrants were marked to fair value upon the execution of this amendment in August 2024. Through an additional amendment executed as of December 31, 2024, the warrants again met the requirements for equity classification and were marked to fair value at the moment of the amendment and then reclassified from liability to equity. The warrants will not be marked to fair value on a recurring basis and there were no additional amendments during the year ended December 31, 2025. As of December 31, 2025 and December 31, 2024, the Company’s assets and liabilities measured at fair value on a recurring basis were as follows: December 31, 2025 December 31, 2024 Fair Value Measurements Using Input Types Fair Value Measurements Using Input Types (In thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Warrant liabilities $ — $ — $ 697 $ 697 $ — $ — $ 996 $ 996 Total liabilities $ — $ — $ 697 $ 697 $ — $ — $ 996 $ 996 Note 13 — Warrant Liabilities The estimated fair value of the warrant liabilities as of December 31, 2025 and 2024 is determined using Level 3 inputs. Inherent in a Black-Scholes option-pricing model are assumptions used in calculating the estimated fair values that represent the Company’s best estimate. The volatility rate is determined utilizing the Company’s own share price and the share price of competitors over time. However, inherent uncertainties are involved. If factors or assumptions change, the estimated fair values could be materially different. The following table summarizes the Company’s assumptions used in the valuations as of December 31, 2025 and 2024: December 31, 2025 December 31, 2024 Stock price $ 21.34 $ 28.99 Exercise price $ 0.14 - $ 22,440 $ 0.14 - $ 22,440 Expected term (in Years) 1.08 - 2.14 2.08 - 3.14 Volatility 163.0 % 171.0 % Discount rate - treasury yield 3.47 - 3.48 % 4.27 % F- 24 The following table sets forth a summary of the changes in the fair value of the Level 3 warrant liabilities for the years ended December 31, 2025 and 2024: (In thousands, except number of outstanding warrant liabilities) December 31, 2025 December 31, 2024 Warrant liabilities - beginning of period $ 996 $ 1,290 Initial fair value of warrant liabilities — 5,601 Exercise of warrants — ( 3,026 ) Reclassification of warrant liabilities to equity — ( 20,771 ) Change in estimated fair value ( 299 ) 17,902 Warrant liabilities end of period $ 697 $ 996 As of December 31, 2025 and December 31, 2024, the number of outstanding warrants subject to liability classification was 40,017 , of which 15,394 are held by RSLGH, a related party. Note 14 — Stockholders’ Equity Public Offerings On February 27, 2024, the Company entered into a placement agency agreement (the “Agency Agreement”) with Alexander Capital, LP (“Alexander Capital”) as placement agent (the “Placement Agent”), pursuant to which the Company agreed to issue and sell an aggregate of 184,000 shares of its Common Stock, and, in lieu of Common Stock to certain investors that so chose, Pre-Funded Warrants to purchase 264,246 shares of its Common Stock (the “S-1 Offering”). The public offering price for each share of Common Stock was $ 5.70 , and the offering price for each Pre-Funded Warrant is $ 5.685 , which equals the public offering price per share of the Common Stock, less the $ 0.015 per share exercise price of each Pre-Funded Warrant. The Company issued 4,482 warrants to purchase Common Stock to Alexander Capital (the “Placement Agents Warrants”). The Placement Agents Warrants were classified as equity warrants and recorded under additional paid-in capital in the consolidated balance sheets. The Placement Agents Warrants had a five-year term and exercise price of 100 % of the offering price, and were subject to adjustment for stock splits, reverse stock splits, stock dividends, and similar transactions. The Placement Agents Warrants were exercisable on a cash basis, unless there was not an effective registration statement covering the issuance of the shares issuable upon exercise of the Placement Agents Warrants or if shareholder approval for the full exercise of the Placement Agents Warrants was not received, in which case the Placement Agents Warrants would also be exercisable on a cashless exercise basis at Alexander Capital’s election. The Placement Agent Warrants were exercised in full during November 2024. The measurement of fair value of the Placement Agents Warrants was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 7.80 , exercise price of $ 5.70 , term of five years, volatility of 128 %, risk-free rate of 4.32 %, and expected dividend rate of 0 %). The grant date fair value of these Placement Agents Warrants was estimated to be $ 31 thousand on February 27, 2024, and was originally recorded within additional paid-in capital. As the Placement Agents Warrants were exercised during the year ended December 31, 2024, the related amounts remain within equity as part of the total proceeds from the issuance of Common Stock. Related Party Warrant Issuance On May 21, 2024, in connection with the amendment of previously outstanding notes, the Company issued 492,204 and 525,114 Pre-Funded Warrants to GIC Acquisitions and CP (the “Related Party Pre-Funded Warrants”), respectively, in exchange of notes payable amounting approximately to $ 2.29 million and $ 11.5 million, respectively. The Related Party Pre-Funded Warrants can be used to purchase Company’s Common Stock with par value of $ 0.001 at an exercise price of $ 0.015 . The Related Party Pre-Funded Warrants have been identified as freestanding financial instruments and were determined not to be indexed to the Company’s own stock. Accordingly, the Related Party Pre-Funded Warrants are precluded from being classified within equity and classified as a liability with subsequent changes in fair value recognized each reporting period in earnings. The fair value of the Related Party Pre-Funded Warrants on the issuance date was $ 5,600,334 determined as the intrinsic value. On June 30, 2024, the Company executed an amendment to the Related Party Pre-Funded Warrants, pursuant to which the Company revised certain provisions of the Related Party Pre-Funded Warrants to (i) remove the adjustment to the exercise price of the Related Party Pre-Funded Warrants when there is a bona fide equity financing with the primary purpose of raising capital (the “Adjustment Provisions”) and (ii) increase the threshold for a change of control from 50 % to greater than 50 %. The classification of the Related Party Pre-Funded Warrants was reassessed upon the modification and the Related Party Pre-Funded Warrants were determined to meet all of the additional requirements for equity classification. Accordingly, as of June 30, 2024, the Company remeasured the Related Party Pre-Funded Warrants to its fair value immediately prior to the modification and recognized the change in fair value of approximately $ 1.2 million in earnings. The Company then reclassified the Pre-Funded Warrant liability to stockholders’ equity at its post-modification fair value of $ 6.8 million. F- 25 On August 12, 2024, the stockholders of the Company approved a proposal to amend the Related Party Pre-Funded Warrants to add the Adjustment Provisions at a future date. Pursuant to that approval, on August 28, 2024, the Company entered into amendments to the Related Party Pre-Funded Warrants to insert the Adjustment Provisions. This resulted in a reassessment of the Related Party Pre-Funded Warrants such that they no longer met the requirements for equity classification and became classified as liabilities. They were remeasured to their fair value upon modification, resulting in a reduction in value of approximately $ 3.1 million. The fair value, as of August 28, 2024, of $ 3,723,383 was reclassified to a warrant liability. As a result of the warrant amendments and the subsequent issuance of 189,645 shares of Common Stock to Ionic at an effective purchase price of $ 2.109 per share of Common Stock, the number of shares of Common Stock underlying the Related Party Pre-Funded Warrant held by CP Acquisitions was adjusted to 5,452,288 and the number of shares of Common Stock underlying the Related Party Pre-Funded Warrant held by GIC Acquisition was adjusted to 1,085,122 . On August 30, 2024, CP Acquisitions partially exercised its Pre-Funded Warrant and entities affiliated with Raymond Chang and I-Tseng Jenny Chan received an aggregate of 383,127 shares of Common Stock upon the exercise. On September 27, 2024, the Company executed an amendment to the Related Party Pre-Funded Warrants to remove the Adjustment Provisions. Accordingly, the Related Party Pre-Funded Warrants met the requirements for equity classification. The amendment also included a provision preventing the holders from any additional exercise of either of the Related Party Pre-Funded Warrants at any time between September 27, 2024 and October 9, 2024. They were remeasured to their fair value upon modification resulting in an increase to the fair value of $ 18,392,143 . The fair value as of September 27, 2024 of $ 20,770,707 was reclassified to equity. During the year ended December 31, 2025, 120,723 warrants were issued in lieu of cash interest payments of $ 1.8 million. Note 15 — Stock-Based Compensation 2022 Omnibus Equity Incentive Plan On April 29, 2022, the Company’s Board of Directors, and on June 8, 2022, the Company’s stockholders, adopted and approved the 2022 Omnibus Equity Incentive Plan (the “2022 Plan”), which provides for the grant of stock options, stock appreciation right awards, performance share awards, restricted stock awards, restricted stock unit awards, other stock-based awards and cash-based awards. The aggregate number of shares of Common Stock that may be reserved and available for grant and issuance under the 2022 Plan is 1,765 shares and 16,667 additional shares issued upon approval by the Board of Directors on January 8, 2024. On August 12, 2024, the Company’s stockholders approved an amendment to the 2022 Plan to increase the number of shares issuable thereunder by 166,667 . Shares will be deemed to have been issued under the 2022 Plan solely to the extent actually issued and delivered pursuant to an award. The 2022 Plan shall continue in effect, unless sooner terminated, until the tenth anniversary of the date on which it was adopted by the Board of Directors. On June 11, 2025, the Company’s stockholders approved an amendment to the 2022 Plan to increase the number of shares issuable thereunder by 250,000 shares. As of September 30, 2025, there were 135,065 shares of Common Stock available to be granted under the Company’s 2022 Plan. The Company’s stock compensation expense from continuing operations was $ 2.2 million and $ 892 thousand for the years ended December 31, 2025 and 2024, respectively. The Company’s stock compensation expense from discontinued operations was a forfeiture of $ 20 thousand and $ 273 thousand for the years ended December 31, 2025 and 2024, respectively. Stock Options As of December 31, 2025, there was no unrecognized compensation expense related to unvested options. Stock options granted under the Company’s 2022 Plan are generally non-qualified and are granted with an exercise price equal to the market price of the Company’s Common Stock on the date of grant. The fair value of each option grant was estimated on the date of the grant using the Black-Scholes option-pricing model. This model incorporates certain assumptions for inputs including a risk-free market interest rate, expected dividend yield of the underlying Common Stock, expected option life, and expected volatility in the market value of the underlying Common Stock. No stock options were granted during the years ended December 31, 2025 and 2024. The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. The risk-free interest rate is based upon quoted market yields for United States Treasury debt securities with a term similar to the expected term. The expected dividend yield is based upon the Company’s history of having never issued a dividend and management’s current expectation of future action surrounding dividends. The Company calculates the expected volatility of the stock price based on the corresponding volatility of the Company’s peer group stock price for a period consistent with the underlying instrument’s expected term. The expected lives for such grants were based on the simplified method for employees and directors. Forfeitures are accounted for when they occur. F- 26 The following table presents option activity under the Company’s stock option plans for the years ended December 31, 2025 and 2024: Number of Options Weighted- Average Exercise Price Aggregate Intrinsic Value Options vested and exercisable as of December 31, 2024 210 18,726 Options vested and expected to vest as of December 31, 2024 216 18,611 Options outstanding at December 31, 2024 216 18,611 $ — Granted — — Exercised — — Forfeited Expired ( 141 ) 11,171 Options outstanding at December 31, 2025 75 26,991 $ — Options vested and exercisable as of December 31, 2025 75 26,991 Options vested and expected to vest as of December 31, 2025 75 26,991 The following table summarizes information about options vested and exercisable as of December 31, 2025: Options Vested and Exercisable Number of Options Weighted- Average Remaining Contractual Life (Years) Weighted- Average Exercise Price 38 5.13 $ 40,234 34 4.84 $ 14,208 3 4.57 $ 4,104 Restricted Stock Units Under the 2022 Plan, the Company may grant restricted stock units to employees, directors officers, and other service providers. The restricted stock units granted generally vest equally over periods ranging from one to three years . The fair value of restricted stock units is determined based on the closing market price of the Company’s Common Stock on the date of grant. Compensation expense related to the restricted stock units is recognized using a straight-line attribution method over the vesting period. The following table presents restricted stock unit activity under the 2022 Plan for the year ended December 31, 2025: Number of Shares Weighted- Average Grant Date Fair Value Unvested at January 1, 2024 143 $ 3,461.25 Granted 238,874 9.60 Vested ( 85,921 ) 9.15 Forfeited ( 50,229 ) 7.05 Unvested at December 31, 2024 102,867 $ 17.42 Granted 129,250 37.80 Vested ( 91,258 ) 19.66 Forfeited ( 14,109 ) 4.57 Unvested at December 31, 2025 126,750 $ 38.08 As of December 31, 2025, total unrecognized compensation expense related to unvested restricted stock units was $ 4.1 million, which is expected to be recognized over a weighted average period of 1.5 years. F- 27 Note 16 — Stock Warrants The following tables present all warrant activity of the Company for the year ended December 31, 2025 and December 31, 2024: Number of Warrants Weighted- Average Exercise Price Warrants outstanding at December 31, 2024 7,576,573 $ 7.30 Issued 3,429,630 0.00 Exercised ( 114,091 ) 0.00 Canceled — — Warrants outstanding at December 31, 2025 10,892,112 $ 5.08 Note 17 — Discontinued Operations Cultivation Business Discontinued Operations On December 31, 2024, the Company executed and closed the Purchase Agreement with CP for the sale of assets relating to the Company’s Cultivation Business. The consideration for the sale of the Cultivation Business consisted of the assumption by CP of all the Company’s secured indebtedness currently held by CP with an aggregate amount of principal and accrued interest of approximately $ 7 million, as well as certain other liabilities related to the Cultivation Business. The sale represents efforts to strategically shift the Company’s direction to focus on its hemp-related business operations. As a result, the Cultivation Business has been presented as discontinued operations in the consolidated financial statements for all periods presented. The disposition resulted in a loss on sale of $ 11.9 million along with a loss from discontinued operations of $ 1.5 million for a total loss of $ 13.4 million, which was recorded in net loss from discontinued operations in the consolidated statement of operations for the period ended December 31, 2024. The operating results of the Cultivation Business were reported as a net loss from discontinued operations in the consolidated statements of operations through December 31, 2025, the date of disposition, and were considered material. The net loss from discontinued operations for the period ended December 31, 2024 represents the Cultivation Business’ operating results from the prior year. The assets and liabilities related to the Cultivation Business have been separately classified in the accompanying consolidated balance sheet as of December 31, 2024. Extraction Business Discontinued Operations On March 30, 2025, the Company approved the discontinuation and wind down of its legacy Extraction Business. As a result, all operations associated with the Extraction Business have ceased as of March 31, 2025, and the Company has initiated the sale or disposal of all remaining assets related to the Extraction Business. In addition, all outstanding contracts associated with the Extraction Business have been terminated in accordance with their respective terms. In connection with the discontinuation of the Extraction Business, the Company reduced its workforce by nine employees on April 1, 2025. The discontinuation of the legacy Extraction Business represents efforts to strategically shift the Company’s direction to support the continued expansion of its hemp-derived products business operations. As a result, the Extraction Business has been presented as discontinued operations in the consolidated financial statements for all periods presented. As a result of the decision to wind down the Extraction Business, a gain of approximately $ 3.5 million, was recorded in income from discontinued operations in the consolidated statement of operations for the year ended December 31, 2025. The operating results of the Extraction Business were reported as a net loss from discontinued operations in the consolidated statements of operations for the year ended December 31, 2025, and were considered material. The assets and liabilities related to the Extraction Business have been separately classified in the accompanying consolidated balance sheets as of December 31, 2025 and December 31, 2024. F- 28 The assets and liabilities associated with discontinued operations consisted of the following as of December 31, 2025 and 2024, respectively: Carrying amounts of assets and liabilities included as part of discontinued operations: (In thousands) December 31, 2025 December 31, 2024 Assets Current assets: Accounts receivable, net $ — $ 318 Inventory, net — 1,079 Prepaid expenses and other current assets — 1,199 Current assets of discontinued operations — 2,596 Loan receivable, net — Property and equipment, net — 186 Operating lease right-of-use assets 14 504 Other non-current assets — 25 Non-current assets of discontinued operations 14 715 Total assets of discontinued operations $ 14 $ 3,311 Current liabilities: Accounts payable $ 563 $ 1,249 Accrued expenses and other current liabilities 1,481 5,207 Operating lease liabilities, current 38 261 Related party debt, current — — Customer deposits 2,525 Current liabilities of discontinued operations 2,082 9,242 Operating lease liabilities, net of current — 257 Long-term debt, net of current — — Non-current liabilities of discontinued operations — 257 Total liabilities $ 2,082 $ 9,499 The following table summarizes the Company’s loss from discontinued operations for the years ended December 31, 2025 and 2024, respectively: For the year ended December 31, (In thousands) 2025 2024 Revenue $ 1,188 $ 10,212 Cost of goods sold 1,835 13,487 Gross loss ( 647 ) ( 3,275 ) Selling, general and administrative 1,407 8,748 Research and development — 743 Gain on settlement of contingent liabilities — ( 5,935 ) Gain on disposal on property and equipment — ( 38 ) Total operating expenses 1,407 3,518 Operating loss from discontinued operations ( 2,054 ) ( 6,793 ) Other Income (Expense) Interest expense, net — — Loss on disposal of Cultivation business — ( 11,893 ) Other income, net — 169 Total other expense — ( 11,724 ) Net loss from discontinued operations ( 2,054 ) ( 18,517 ) Income tax effect on discontinued operations — — Loss from discontinued operations, net of income taxes ( 2,054 ) ( 18,517 ) F- 29 The consolidated statements of cash flows includes continuing operations and Discontinued Operations. The following table summarizes the depreciation of long-lived assets, amortization of long-lived assets, provisions for credit losses and adjustments to net realizable value of inventories, and capital expenditures and disposals of discontinued operations for the years ended December 31: 2025 2024 Depreciation and amortization $ — $ 1,421 Proceeds from disposal of property and equipment — 20 Purchases of property and equipment — ( 4 ) Recovery of credit losses — ( 336 ) Recovery of slow-moving inventory — ( 747 ) Note 18 — Revenue The Company generates revenue from continuing operations from Non-licensing Revenue and Licensing Revenue. For the year ended December 31, 2025, the Company generated revenue from continuing operations from non-hemp-derived product sales and sales-based Licensing Revenue. Non-licensing Revenue from hemp-derived product sales is recognized at a point-in-time when control transfers to the customer. Licensing Revenue is recognized over time as the underlying sales occur in accordance with the terms of the related party license agreements. The following table provides the Company’s revenue from continuing operations disaggregated by revenue type: As of December 31, (In thousands) 2025 2024 Non-licensing Revenue $ 9,504 $ 18 Licensing Revenue 7,779 — Total revenue $ 17,283 $ 18 In accordance with ASC 606-10-50-13, the Company is required to include disclosure on its remaining performance obligations as of the end of the current reporting period. Due to the nature of the Company’s contracts, these reporting requirements are not applicable because the majority of the Company’s remaining contracts meet certain exemptions as defined in ASC 606-10-50-14 through 606-10-50-14A, including (i) performance obligation is part of a contract that has an original expected duration of one year or less and (ii) the right to invoice practical expedient. Note 19 — Income Taxes For financial reporting purposes, the net pre-tax book income and/or loss for the U.S. and foreign entities, in the aggregate, was: (In thousands) December 31, 2025 December 31, 2024 United States ( 33,257 ) ( 41,746 ) Foreign — — Total ( 33,257 ) ( 41,746 ) Income tax expense consisted of the following for the years ended December 31, 2025 and December 31, 2024: (In thousands) December 31, 2025 December 31, 2024 Current: Federal $ — $ — State — ( 2 ) Foreign — — Subtotal — ( 2 ) Deferred: Federal $ — — State — — Foreign — — Subtotal — — Total $ — $ ( 2 ) F- 30 The reconciliation between the Company’s effective tax rate on income from continuing operations and the statutory tax rate for the years ended December 31, 2025 and December 31, 2024 is as follows: December 31, 2025 December 31, 2024 (In thousands) $ % $ % Current tax at U.S. statutory rate ( 6,986 ) 21.01 % ( 8,767 ) 21.00 % Non-deductible loss on fair value of warrants — 0.00 % 3,759 - 9.00 % Other nondeductible/nontaxable items ( 54 ) 0.16 % ( 423 ) 1.01 % Illinois taxes ( 997 ) 3.00 % — 0.00 % Other state taxes ( 749 ) 2.25 % ( 872 ) 2.09 % Rate change ( 597 ) 1.80 % ( 717 ) 1.72 % True-up and other (federal) 39,104 - 117.58 % 1,383 - 3.31 % True-up and other (state) 5,666 - 17.04 % — 0.00 % Valuation allowance (federal) ( 31,209 ) 93.84 % 2,067 Valuation allowance (state) ( 4,178 ) 12.56 % 3,568 Income tax (expense) benefit $ — $ ( 2 ) Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of net deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. The following items comprise the Company’s net deferred tax assets and liabilities as of December 31, 2025 and December 31, 2024: (In thousands) December 31, 2025 December 31, 2024 Deferred tax assets: Net operating loss carryforward $ 12,659 $ 48,662 Accruals, reserves, and other 2,725 4,422 Stock-based compensation 1,265 442 Lease liability 10 126 Fixed assets — 116 Intangible assets 5,589 3,475 Capitalized sec. 174 R&E 1,221 1,731 Credits 1,100 1,221 Uncertain tax positions ( 1,100 ) ( 1,221 ) Total Deferred Tax Asset 23,469 58,974 Valuation allowance ( 23,465 ) ( 58,852 ) Deferred income tax assets, net of Valuation Allowance 4 122 Deferred tax liabilities: Right-of-Use Asset ( 4 ) ( 122 ) Amortization Total Deferred Tax Liability ( 4 ) ( 122 ) Net Deferred Tax Asset/(Liability) $ — $ — The Company continually evaluates the likelihood of the realization of deferred tax assets and adjusts the carrying amount of the deferred tax assets by the valuation allowance to the extent the future realization of the deferred tax assets is more likely than not. The Company considers many factors when assessing the likelihood of future realization of its deferred tax assets, including its recent cumulative pre-tax income or loss in recent history, expectation of future taxable income or loss, the carryforward periods available to the Company for tax reporting purposes, and other relevant factors. Therefore, a full valuation allowance has been applied to deferred tax assets. F- 31 The utilization of the Company’s net operating losses may be subject to a U.S. federal limitation due to the “change in ownership provisions” under Section 382 of the Internal Revenue Code of 1986, as amended (“IRC” or the “Code”) and other similar limitations in various state jurisdictions. Such limitations may result in a reduction of the amount of net operating loss carryforwards in future years and possibly the expiration of certain net operating loss carryforwards before their utilization. During the quarter ended June 30, 2025, the Company completed an analysis of Ownership Changes, which had not previously been performed. The analysis identified multiple historical ownership changes that significantly limit the utilization of federal NOLs through the date of the most recent change on November 5, 2024, subjecting them to a minimal annual limitation. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, introducing significant and wide-ranging changes to the U.S. federal tax system. These changes are impactful to many areas of the tax law including but not limited to timing of the deductibility of interest expense, recovery of capital expenditures, ability to expense research and experimental expenditures, limitations on deductions for charitable contributions and a host of changes to the U.S. taxation of companies with international operations. The Company has evaluated the impacts and determined that there is no material impact on its consolidated financial statements due to its cumulative loss position and the existence of a full valuation allowance. As of the year ended December 31, 2025, the Company has federal, and state net operating loss carryforwards of approximately $ 45.5 million, and $ 47.9 million respectively. Federal net operating loss carryforwards in the amount of $ 48.5 million have an indefinite life. Federal NOL carryforwards generated after tax year 2021 are subject to an 80 % limitation on taxable income, do not expire and will carryforward indefinitely. State net operating loss carryforwards in the amount of $ 44.8 million begin expiring in 2039 and approximately $ 3.1 million have an indefinite life. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examinations by federal, foreign, and state and local jurisdictions, where applicable. There are currently no pending tax examinations. The Company’s tax years are still open under statute from 2022 to the present in the U.S. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service and state and local tax authorities to the extent utilized in a future period. The Company is also subject to certain non-income taxes such as value added taxes, sales taxes, and property taxes. The Company has taken certain positions that management feels, although not free from doubt, should not result in a successful challenge by certain tax authorities. As required by the uncertain tax position guidance in ASC 740, Income Tax the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company applied the uncertain tax position guidance in ASC 740, Accounting for Income to all tax positions for which the statute of limitations remained open. Any estimates of tax contingencies contain assumptions and judgments about potential actions by taxing jurisdictions. Any interest and penalties related to uncertain tax positions would be included as part of the income tax provision. Our unrecognized tax benefits at December 31, 2025 relate entirely to research and development tax credits. The total amount of unrecognized tax benefits at December 31, 2025 is $ 1,100 . If recognized, none of the unrecognized tax benefits would impact our effective tax rate. The following table summarizes the activity related to our unrecognized tax benefits (in thousands): Year ended December 31, 2025 Unrecognized benefit – beginning of period $ 1,191 Prior period tax position increases (decreases) $ - Current period tax position increases (decreases) $ ( 91 ) Unrecognized benefit – end of period $ 1,100 Our policy is to recognize interest and penalties related to income taxes as components of interest expense and other expense, respectively. We incurred no interest or penalties related to unrecognized tax benefits for the years ended December 31, 2025 or 2024. We do not anticipate any significant changes in our uncertain tax positions within twelve months of this reporting date. Note 20 — Net Loss Per Share Net loss per share calculations for the year ended December 31, 2024 have been adjusted to reflect the Company’s reverse stock split. Net loss per share was calculated based on the weighted-average number of the Company’s Common Stock outstanding. Basic net loss per share is calculated using the weighted-average number of shares of Common Stock outstanding during the periods. Diluted net loss per share is computed by giving effect to all potential shares of Common Stock, including convertible notes, outstanding stock options, stock related to unvested restricted stock units, and outstanding warrants to the extent dilutive. Net loss per share, assuming dilution, is equal to basic net loss per share for the years ended December 31, 2025 and 2024 because the effect of dilutive securities outstanding during the periods, including convertible notes, options, restricted stock units and warrants computed using the treasury stock method, is anti-dilutive. F- 32 The components of basic and diluted net loss per share were as follows: Year Ended December 31, (In thousands, except share and per share data) 2025 2024 Numerator: Net loss from continuing operations before taxes $ ( 34,740 ) $ ( 23,229 ) Net (loss) income from discontinued operations, net of income taxes 1,483 ( 18,517 ) Numerator for basic EPS - Net Loss $ ( 33,257 ) $ ( 41,746 ) Denominator: Denominator for basic EPS - Weighted-average common shares outstanding 1,993,947 1,020,185 Net loss per share – basic and diluted $ ( 16.68 ) $ ( 40.92 ) The Company’s potential dilutive securities, which include stock options, restricted stock units, and warrants, and convertible notes, have been excluded from the computation of basic and diluted net (loss) income per share. The Convertible Notes outstanding during the year ended December 31, 2025 and December 31, 2024, were also excluded from the computation of diluted net (loss) per share as they do not represent common stock equivalents unless and until conversion conditions are met. The weighted-average number of shares of Common Stock outstanding used to calculate both basic and diluted net loss per share attributable to Common Stockholders is the same. The Company excluded the following potential Common Stock equivalents presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect: Year Ended December 31, 2025 2024 Shares subject to outstanding warrants 10,892,112 7,576,573 Shares subject to unvested restricted stock units 126,750 102,867 Shares subject to outstanding stock options 75 210 Total shares subject to potential common stock equivalents. 11,018,937 7,679,650 Note 21 — Related Parties Some of the current and former officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities that become available. Benjamin Kovler, the Company’s Chairman and Interim Chief Executive Officer also serves as Green Thumb’s Chairman and Chief Executive Officer. The Company’s Chief Financial Officer is a Green Thumb employee and provides services under a shared services agreement. Including Mr. Kovler, two of the Company’s seven directors are affiliated with Green Thumb. Green Thumb, through its subsidiaries, currently holds approximately 33 % of our outstanding shares of common stock and beneficially owns 49.99 % of our common stock, taking into account beneficial ownership limitations contained in the warrants and convertible notes held by subsidiaries of Green Thumb. Of the approximately 10.9 million warrants outstanding as of December 31, 2025, approximately 9.8 million are held by subsidiaries of Green Thumb, subject to 49.99 % beneficial ownership limitations. Of the approximately 3.0 million shares or pre-funded warrants that would be issuable upon the conversion (excluding interest) of the Convertible Notes outstanding as of December 31, 2025, approximately 2.7 million are held by subsidiaries of Green Thumb, subject to 49.99 % beneficial ownership limitations. The outstanding warrants are entitled to pro rata participation in dividends and other distributions to holders of Common Stock. Additional details regarding the shared services arrangement, convertible notes, and intellectual property and licensing agreements with Green Thumb and its affiliates are provided in the sections below. The following table describes the net activity with entities identified as related parties to the Company: Year ended December 31, 2025 (In thousands) 2025 2024 Green Thumb Industries $ 6,793 $ 1 The net activity of $ 6.8 million during the year ended December 31, 2025 consists of $ 9.3 million in salary charges, $ 1.2 million in non-salary chargeback expense performed by Green Thumb on behalf of the Company, $ 4.1 million interest charges, offset by $ 7.8 million of Licensing Revenue from the Company to Green Thumb. The $ 1.2 million of non-royalty chargeback expense represents a net amount and includes a $ 392 thousand inventory purchase from Green Thumb. During the year ended December 31, 2025, the Company provided $ 244 thousand of consulting services and cost reimbursements to Double or Nothing, LLC, a related party. Related Party Licensing Revenue On May 20, 2025, and August 27, 2025, the Company obtained intellectual property Brand Rights, as part of the related party transactions with MC Brands and VCP, respectively. In connection with the transactions, the Company also licensed the Brand Rights back to a Green Thumb affiliate under a license arrangement and recognized related party Licensing Revenue. For further discussion on the transactions and Licensing Revenue, refer to Note 3 and Note 18 included elsewhere in the notes to the consolidated financial statements. F- 33 Convertible Notes On November 5, 2024, the Company issued the November 2024 Note with an original principal amount of $ 10.0 million to RSLGH, an indirect wholly-owned subsidiary of Green Thumb, a related party. On May 22, 2025, the Company issued a May 2025 Note with an original principal amount of $ 27.0 million to RSLGH. On August 25, 2025, the Company issued an August 2025 Note with an original principal amount of $ 45.0 million to RSLGH. For further discussion on these notes, refer to Note 10 included elsewhere in the notes to the consolidated financial statements. Shared Services Agreements On May 20, 2025, the Company entered into an Amended and Restated Shared Services Agreement (the “Services Agreement”) with Vision Management Services, LLC (“VMS”), an indirect wholly-owned subsidiary of Green Thumb, a related party. Under the Services Agreement, VMS will provide certain administrative, supply chain, operations management, sales and marketing, and technical services to the Company and its subsidiaries. As consideration for those services, the Company pays VMS service fees equal to (i) 125 % of the costs incurred by VMS in connection with any services provided by non-dedicated personnel and (ii) 100 % of such costs incurred by VMS in connection with services provided by dedicated personnel and any third-party costs incurred in connection with the services. The service fees are payable in cash or, upon mutual agreement of the Company and VMS and to the extent permitted under applicable Nasdaq listing rules, in Common Stock or in pre-funded warrants, with the value per share of Common Stock or pre-funded warrant being equal to $ 26.68 , the most recent closing price of the Company’s Common Stock on the Nasdaq Capital Market as of the time the Services Agreement was executed. The maximum cost for services provided by non-dedicated personnel during the one-year term of the Services Agreement may not exceed $ 3.0 million unless the parties otherwise agree in writing. On March 21, 2025, we entered into a Shared Services Agreement (the “CFO Services Agreement”) with VMS, pursuant to which Brad Asher provides his services as Chief Financial Officer. As consideration for those services, we pay VMS a monthly fee based on its direct costs in providing such services, with a maximum of $ 72,552 per month. The CFO Services Agreement has a term of one year, is terminable by either party on 90 days’ notice for any or no reason, and will automatically renew for successive one year terms unless terminated by either party at least thirty days prior to the end of the applicable term. As a result of the services provided under the Services Agreement and the CFO Services Agreement, we do not have any direct employees other than our Interim Chief Executive Officer. Note 22 — Segment Reporting The Company has determined that it operates as a single operating and reporting segment in accordance with ASC 280, Segment Reporting. This is due to the key decisions and allocation of resources happening in a centralized manner based on the review of the Company’s Chief Operating Decision Maker (“CODM”), Benjamin Kovler, the Company’s Chairman and Interim Chief Executive Officer , of Operating income from continuing operations of the Company. This profit measure is presented in the consolidated statements of operations and the disaggregation of sales from hemp-derived THC products (non-licensing) and Licensing Revenue is presented in Note 18 – Revenue. There are no significant expenses associated with the Licensing Revenue and the CODM does not review expense allocations, amortization expense or specific assets when reviewing Licensing Revenue. Note 23 — Commitments and Contingencies Legal Matters From time to time, the Company may become involved in material legal proceedings or be subject to claims arising in the ordinary course of our business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. Bud & Mary’s Litigation On September 15, 2022, the Company provided a notice of default to Bud & Mary’s Cultivation, Inc. (“Bud & Mary’s) and certain related parties notifying such parties that Bud & Mary’s was in default of its obligations under the TTK solution between the Company and Bud & Mary (the “Bud & Mary TTK Agreement”). On October 5, 2022, Bud & Mary’s filed a complaint in the Superior Court of Massachusetts in Suffolk County, naming the Company as the defendant (the “Bud & Mary Complaint”). Bud & Mary’s is seeking, among other relief, monetary damages in connection with alleged unfair or deceptive trade practices, breach of contract and conversion arising from the Bud & Mary TTK Agreement. While the Company believes the claim is without merit and will continue to vigorously defend itself against Bud & Mary’s allegations, litigation is inherently unpredictable and there can be no assurance that the Company will prevail in this matter. During the third quarter of 2022, the Company deemed it necessary to fully reserve for the outstanding $ 14.7 million note receivable balance due to the current litigation and the uncertainty of the customer’s ability to repay the balance. As of December 31, 2024, the allowance related to Bud & Mary’s was reduced to $ 14.4 million, reflecting a recovery of allowance for credit losses resulting from a loan repayment of $ 330 thousand that was previously included in the allowance. The $ 14.4 million represents the amount of the contingent loss that the Company has determined to be reasonably possible and estimable. The actual cost of resolving this matter may be higher or lower than the amount the Company has reserved. If the Company is unable to realize revenue from its TTK Solution offerings on a timely basis or at all, or if it incurs an additional loss as a result of the Bud& Mary’s claim, the Company’s business and financial performance will be adversely affected. On November 14, 2022, the Company filed its answers and affirmative defenses to the Bud & Mary Complaint and counterclaims. The Company is seeking, among other relief, monetary damages in connection with the breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and enforcement of the guarantees. This matter is still actively ongoing. This matter is subject to the Cultivation sale escrow litigation reserve agreement where the Company funded $ 1.5 million in January 2025 into escrow for the benefit of settling this and other claims. F- 34 Bowdoin Construction Corp. Litigation On February 22, 2023, Bowdoin Construction Corp. (“Bowdoin”) filed a complaint in the Superior Court of Massachusetts in Norfolk County, Massachusetts (the “Bowdoin Complaint”), naming the Company, Bud & Mary’s and certain related parties as defendants, captioned Bowdoin Construction Corp. v. Agrify Corporation, Bud & Mary’s Cultivation, Inc. and BMLC2, LLC, case no. 2382CV00173. The Bowdoin Complaint relates to a construction contract between Bowdoin and the Company relating to the property that is the subject of the Bud & Mary’s Complaint, and alleges breach of contract by Bud & Mary’s and by the Company due to nonpayment of approximately $ 7.0 million due under the contract and related indemnification claims and mechanics’ liens. $ 6.3 million is included in accounts payable and $ 700 thousand is included in accrued expenses and other current liabilities in the consolidated balance sheet. Two of Bowdoin’s subcontractors, Hannon Electric, Inc. and Electric Supply Center Corp, have filed separate suits against the Company in the amount of $ 1.498 million and $ 93 thousand, respectively. These amounts are part of the $ 7.0 million claimed in Bowdoin’s Complaint. The Bowdoin suit and the subcontractor suits have been consolidated. The Company has denied liability in all such suits. This matter is subject to the sale of the Cultivation Business escrow litigation reserve agreement where the Company funded $ 1.5 million in January 2025 into escrow for the benefit of settling this and other claims. McCutchan, Inc. In December 2021, the Company entered into a standard form of agreement between owner and contractor whereby Valiant Group LLC (“Valiant”) is the general contractor for tenant improvements on certain real property located in Bellevue, Washington (the “Project”). McCutchan, Inc. (“McCutchan”) agreed to be a subcontractor on the Project and engaged various other subcontractors (the “Valiant Agreement”). The Company terminated Valiant as the general contractor for, among other allegations, breach of contract and unjust enrichment. Following the termination of Valiant, in October 2022, the Valiant Agreement was assigned and accepted (the “Assignment”) to Agxion, LLC, a wholly owned Subsidiary of the Company. The Assignment contemplates that, as a subcontractor to the Valiant Agreement, McCutchan is still bound to the subcontract agreement and will continue construction operations on the Project. The Company is pursuing Valiant in a separate litigation to collect no less than approximately $ 1.4 million alleging overbilling, breach of the Valiant Agreement, and violation of Chapter 18.27 and 19.86 of the Revised Code of Washington. On March 5, 2024, McCutchan filed a complaint in the Superior Court of Washington for King County naming the Company, Valiant, and certain related parties as defendants. In the complaint, McCutchan asserts two causes of action against the Company: (1) breach of contract, (2) voidable contract, (3) interference with business or economic expectancy, (4) unjust enrichment, and (5) defamation. McCutchan’s claims are based on allegations of misrepresentations made by the Company to pay McCutchan for work completed on the Project as well as a failure to pay under the Valiant Agreement. In the alternative, McCutchan is alleging the Assignment is void and not a valid contract. McCutchan is seeking to collect no less than $ 3 million against the Company and all other named defendants. This matter is subject to the Cultivation sale escrow litigation reserve agreement where the Company funded $ 1.5 million in January 2025 into escrow for the benefit of settling this and other claims. Labor Law Dispute On February 9, 2022, a former sales Vice President of the Company filed suit against the Company claiming he is owed back wages, commission and is entitled to equity in the company, under theories of liability under Massachusetts labor laws including retaliation, breach of contract, breach of covenant of good faith and fair dealing, fraudulent inducement, tortious interference and unjust enrichment. The Company filed its answer to the initial complaint in January 2023. In November 2025, the parties reached a settlement prior to trial resolving the dispute in the amount of $ 887 thousand, recorded within general and administrative expense within the consolidated statement of operations for the year ended December 31, 2025. Assets Subject to Contingent Repurchase Rights Under the MC Brands and VCP purchase agreements, Green Thumb or its affiliates may repurchase some or all of the MC Brands and/or VCP assets within five years of the respective transaction dates upon the occurrence of specified eligibility conditions, all of which are outside the control of both the Company and Green Thumb. The 2026 Appropriations Act includes an amendment to the definition of hemp under the 2018 Farm Bill that, if implemented as enacted, could materially restrict the commercialization of certain hemp-derived THC products beginning 365 days after enactment. If the amendment becomes effective in its current form and is not repealed, replaced, or otherwise modified prior to its effective date, one of the eligibility conditions under the MC Brands and VCP purchase agreements that could permit the repurchase right to become exercisable would be satisfied. However, the exercise of the repurchase option would remain solely within the discretion of Green Thumb or its affiliates. The full eligibility conditions are set forth in the MC Brands and VCP purchase agreements filed on May 22, 2025 and August 27, 2025, respectively. Other Commitments and Contingencies The Company is potentially subject to claims related to various non-income taxes (such as sales, value-added, consumption, and similar taxes) from various tax authorities, including in jurisdictions in which the Company already collects and remits such taxes. If the relevant taxing authorities successfully pursue these claims, the Company could be subject to additional tax liabilities. Note 24 — Subsequent Events The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the audited condensed consolidated financial statements were issued and concluded that there were no subsequent events that required recognition or disclosure in the financial statements. F- 35