What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-12 compared with 2025-08-13 · 125 added, 155 removed, 132 unchanged (68% of the section changed)

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References to “we,” “our,” “us,” the “Company,” and “Vireo Growth” refer to Vireo Growth, Inc.

together with its subsidiaries unless the context otherwise requires.

Amounts are presented in United States dollars, except as otherwise indicated.

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Overview of the Company

Vireo Growth is a cannabis company whose mission is to provide safe access, quality products and value to its customers while supporting its local communities through active participation and restorative justice programs.

The Company is evolving with the industry and is in the midst of a transformation towards becoming significantly more customer-centric across its operations, which include cultivation, manufacturing, wholesale and retail business lines.

With our core operations strategically located in three limited-license markets through our state-licensed subsidiaries, we cultivate and manufacture cannabis products and distribute these products through our growing network of Green Goods ® and other retail dispensaries that we own or operate, as well as to third-party dispensaries in the markets in which our subsidiaries hold operating licenses.

Vireo Growth was founded in 2014 as a medical cannabis company and has since developed a disciplined, strategically aligned platform within the cannabis industry.

The Company’s mission is to provide safe access, quality products, and value to its customers.

Vireo Growth operates cultivation, production, and dispensary facilities in Maryland, Minnesota, Missouri, Nevada, New York, and Utah.

The Company allocates capital and talent to areas expected to generate long-term value and operates with a commitment to accountability, efficiency, and its stakeholders, including customers, employees, shareholders, and the communities it serves.

Operating Segment

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We cultivate, manufacture, and distribute cannabis products to third parties in wholesale markets and cultivate, manufacture, and sell cannabis products directly to approved patients and adult-use-customers in our owned or operated retail stores.

During the three months ended June 30, 2025, the Company had operating revenue in six states:

During the three and nine months ended September 30, 2025, the Company had operating revenue in six states:

Maryland, Minnesota, New York, Missouri, Nevada, and Utah.

Retail revenues during the three months ended June 30, 2025 were derived from sales in 36 dispensaries throughout these six states.

Retail revenues during the three and nine months ended September

30, 2025 were derived from sales in 36 dispensaries throughout these six states.

We had eight operational dispensaries in Minnesota, four in New York, two in Maryland, eleven in Missouri, ten in Nevada, and one in Utah.

Wholesale revenues were derived from sales of products to third parties in Maryland, Minnesota, and New York.

Merger Agreements with Deep Roots, Proper and Wholesome

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(“ NGH ”), and Proper Holdings Management, Inc.

(“ Proper MSA Newco ” and together with NGH, the “ Proper Companies ”) (the “ Proper Mergers ”), and (iii) WholesomeCo, Inc.

(“ Proper MSA Newco ” and together with NGH and Proper, the “ Proper Companies ”) (the “ Proper Mergers ”), and (iii) WholesomeCo, Inc.

(“ Wholesome ”) (the “ Wholesome Merger ” and collectively with the Deep Roots Merger and the Proper Mergers, the “ Mergers ” and each, a “ Merger ”).

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None of the Mergers were contingent upon the completion of any of the other Mergers.

During the three months ended June 30, 2025, all of the Mergers closed.

During the nine months ended September 30, 2025, all of the Mergers closed.

More specifically, the Wholesome Merger closed on May 12, 2025, the Proper Mergers closed on June 5, 2025, and the Deep Roots Merger closed on June 6, 2025.

Three months ended June 30, 2025, Compared to Three months ended June 30, 2024

We derived our revenue from cultivating, processing, and distributing cannabis products through our fourteen dispensaries in three states and our wholesale sales to third parties in three states.

For the three months ended June 30, 2025, 77% of our revenue was generated from retail dispensaries and 23% from the wholesale business.

For the three months ended June 30, 2024, 83% of our revenue was generated from retail business and 17% from wholesale business.

For the three months ended June 30, 2025, Minnesota operations contributed approximately 23% of revenues, New York contributed 11%, Maryland contributed 23%, Utah contributed 15%, Nevada contributed 13%, and Missouri contributed 15%.

For the three months ended June 30, 2024, Minnesota operations contributed approximately 49% of revenues, New York contributed 10%, and Maryland contributed 41%.

Revenue for the three months ended June 30, 2025, was $48,063,010, an increase of $22,954,763 or 91% compared to revenue of $25,108,247 for the three-months ended June 30, 2024.

The increase was primarily attributable to the closing of the Mergers resulting in the addition of Utah, Nevada, and Missouri revenues.

Retail revenue for the three months ended June 30 2025, was $36,772,560 an increase of $15,953,541 or 77% compared to retail revenue of $20,819,019 for the three months ended June 30, 2024.

This increase was primarily due to the closing of the Mergers and the related Merger Agreements, resulting in the addition of Utah, Nevada, and Missouri revenues.

Wholesale revenue for the three months ended June 30, 2025, was $11,290,450, an increase of $7,001,222 compared to wholesale revenue of $4,289,228 for the three months ended June 30, 2024.

The increase was primarily due to increased

contributions from New York, and the closing of the Mergers and the related Merger Agreements, resulting in the addition of Utah, Nevada, and Missouri revenues.

Three months ended September 30, 2025, Compared to Three months ended September 30, 2024

We derived our revenue from cultivating, processing, and distributing cannabis products through our 36 dispensaries in six states and our wholesale sales to third parties in six states.

For the three months ended September 30, 2025, 83% of our revenue was generated from retail dispensaries and 17% from the wholesale business.

For the three months ended September 30, 2024, 78% of our revenue was generated from retail business and 22% from wholesale business.

For the three months ended September 30, 2025, Minnesota operations contributed approximately 13% of revenues, New York contributed 7%, Maryland contributed 11%, Utah contributed 15%, Nevada contributed 27%, and Missouri contributed 27%.

For the three months ended September 30, 2024, Minnesota operations contributed approximately 46% of revenues, New York contributed 11%, and Maryland contributed 43%.

Revenue for the three months ended September 30, 2025, was $91,655,155, an increase of $66,489,812 or 264% compared to revenue of $25,165,343 for the three-months ended September 30, 2024.

The increase was primarily attributable to the closing of the Mergers resulting in the addition revenues from our operations in Utah, Nevada, and Missouri.

Retail revenue for the three months ended September 30 2025, was $75,951,983 an increase of $56,211,196 or 285% compared to retail revenue of $19,740,787 for the three months ended September 30, 2024.

This increase was primarily due to the closing of the Mergers and the related Merger Agreements, resulting in the addition of revenues from our operations in Utah, Nevada, and Missouri.

Wholesale revenue for the three months ended September 30, 2025, was $15,703,172, an increase of $10,278,616 compared to wholesale revenue of $5,424,556 for the three months ended September 30, 2024.

The increase was primarily

due to increased contributions from New York, and the closing of the Mergers and the related Merger Agreements, resulting in the addition of revenues from our operations in Utah, Nevada, and Missouri.

Three Months Ended

September 30,

Total Wholesale

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Cost of sales are determined from costs related to the cultivation and processing of cannabis and cannabis-derived products as well as the cost of finished goods inventory purchased from third parties and valuation adjustments.

Cost of sales for the three months ended June 30, 2025, was $27,645,163, an increase of $16,087,559 compared to the three months ended June 30, 2024, of $11,557,604.

Gross profit for the three months ended June 30, 2025, was $20,417,847, representing a gross margin of 42%.

In comparison, gross profit for the three months ended June 30, 2024, was $13,550,643 or a 54% gross margin.

The increase in gross profit was driven by the closing of the Mergers and related Merger Agreements, which added the gross profit of Deep Roots, Proper, and Wholesome.

The decrease in gross margin is primarily attributable to the amortization of the non-cash inventory fair value step initially recognized in connection with the closing of the Merger Agreements.

Excluding this amortization, gross profit would have been approximately 51% for the three months ended June 30, 2025.

We believe our current production capacity has not been fully realized and we expect future operations to benefit from increased revenue growth reflective of higher demand, increased product output and new product development.

However, we expect gradual price compression as markets mature, which could place downward pressure on our retail and wholesale gross margins.

Cost of sales for the three months ended September 30, 2025, was $54,272,156, an increase of $41,430,783 compared to the three months ended September 30, 2024, of $12,841,373.

The increase in cost of sales was driven by the increase in revenues.

Gross profit for the three months ended September 30, 2025, was $37,382,999, representing a gross margin of 41%.

In comparison, gross profit for the three months ended September 30, 2024, was $12,323,970 or a 49% gross margin.

The increase in gross profit was driven by the closing of the Mergers, which added the gross profit of Deep Roots, Proper, and Wholesome.

The decrease in gross margin is primarily attributable to the amortization of the non-cash inventory fair value step initially recognized in connection with the closing of the Mergers.

Excluding this amortization of $12,397,641 from the gross profit figure of $37,382,999 would have resulted in gross profit of $49,780,640 and gross margin of approximately 54% for the three months ended September 30, 2025.

Total Expenses

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We expect general and administrative expenses as a percentage of sales to decrease as we realize revenue growth both organically and through anticipated positive regulatory developments in our core markets.

Total expenses for the three months ended June 30, 2025, were $22,436,537 an increase of $14,679,916 compared to total expenses of $7,756,621 for the three months ended June 30, 2024.

The increase in total expenses was primarily attributable to an increase in transaction expenses associated with the Mergers, an increase in stock-based compensation expense, and the addition of the operating expenses of Deep Roots, Proper, and Wholesome given the Mergers closed during the three months ended June 30, 2025.

Operating Income (Loss) before Other Income (Expense) and Income Taxes

Operating income (loss) before other income (expense) and provision for income taxes for the three months ended June 30, 2025, was ($2,018,660) a decrease of $7,812,712 compared to $5,794,022 for the three months ended June 30, 2024.

Total expenses for the three months ended September 30, 2025, were $36,574,043 an increase of $28,101,520 compared to total expenses of $8,472,523 for the three months ended September 30, 2024.

Operating Income before Other Income (Expense) and Income Taxes

Operating income before other income (expense) and provision for income taxes for the three months ended September 30, 2025, was $808,956 a decrease of $3,042,491 compared to $3,851,447 for the three months ended September 30, 2024.

Total Other Expense

Total other expense for the three months ended June 30, 2025, was $8,061,339, an increase of $2,038,906 compared to total other expense of $6,022,433 for the three months ended June 30, 2024.

This change was primarily attributable to decreased other income driven by the decreasing value of the warrants we hold in Grown Rogue.

Total other expense for the three months ended September 30, 2025, was $13,760,817, an increase of $7,368,012 compared to total other expense of $6,392,805 for the three months ended September 30, 2024.

This change was primarily attributable to the loss on extinguishment of existing debt of $8,627,647, which was recorded in connection with the First Lien Term Loan and Chicago Atlantic Term Loan.

Provision for Income Taxes

Income tax expense is recognized based on the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year-end.

For the three months ended June 30, 2025, tax expense totaled $4,854,000 compared to tax expense of $440,000 for the three months ended June 30, 2024.

Six months ended June 30, 2025, compared to six months ended June 30, 2024

We derived our revenue from cultivating, processing, and distributing cannabis products through our fourteen dispensaries in three states and our wholesale sales to third parties in three states.

For the six months ended June 30, 2025, 77% of our revenue was generated from retail dispensaries and 23% from the wholesale business.

For the six months ended June 30, 2024, 82% of our revenue was generated from retail business and 18% from wholesale business.

For the six months ended June 30, 2025, Minnesota operations contributed approximately 31% of revenues, New York contributed 10%, Maryland contributed 30%, Utah contributed 10%, Nevada contributed 9%, and Missouri contributed 10%.

For the six months ended June 30, 2024, Minnesota operations contributed approximately 48% of revenues, New York contributed 11%, and Maryland contributed 41%.

Revenue for the six months ended June 30, 2025, was $72,603,651, an increase of $23,408,089 or 48% compared to revenue of $49,195,562 for the six-months ended June 30, 2024.

The increase was primarily attributable to the closing of The Merger Agreements, resulting in the addition of Utah, Nevada, and Missouri revenues.

Retail revenue for the six months ended June 30 2025, was $56,006,201 an increase of $15,587,742 or 39% compared to retail revenue of $40,418,459 for the six months ended June 30, 2024.

This increase was primarily due to the closing of the Merger Agreements, resulting in the addition of Utah, Nevada, and Missouri revenues.

Wholesale revenue for the six months ended June 30, 2025, was $16,597,450, an increase of $7,820,347 compared to wholesale revenue of $8,777,103 for the six months ended June 30, 2024.

This increase was primarily due to increased contributions from New York, and the closing of the Merger Agreements, resulting in the addition of Utah, Nevada, and Missouri revenues.

Six Months Ended

For the three months ended September 30, 2025, tax expense totaled $13,347,000 compared to tax expense of $2,385,000 for the three months ended September 30, 2024.

The increase in tax expense was driven by the increase in gross profit relative to the prior year.

Nine months ended September 30, 2025, compared to nine months ended September 30, 2024

We derived our revenue from cultivating, processing, and distributing cannabis products through our 36 dispensaries in six states and our wholesale sales to third parties in six states.

For the nine months ended September 30, 2025, 80% of our revenue was generated from retail dispensaries and 20% from the wholesale business.

For the nine months ended September 30, 2024, 81% of our revenue was generated from retail business and 19% from wholesale business.

For the nine months ended September 30, 2025, Minnesota operations contributed approximately 21% of revenues, New York contributed 8%, Maryland contributed 20%, Utah contributed 13%, Nevada contributed 19%, and Missouri contributed 20%.

For the nine months ended September 30, 2024, Minnesota operations contributed approximately 48% of revenues, New York contributed 11%, and Maryland contributed 41%.

Revenue for the nine months ended September 30, 2025, was $164,258,806, an increase of $89,897,901 or 121% compared to revenue of $74,360,905 for the nine-months ended September 30, 2024.

The increase was primarily attributable to the closing of the Mergers, resulting in the addition of revenues from our operations in Utah, Nevada, and Missouri.

Retail revenue for the nine months ended September 30 2025, was $131,958,184 an increase of $71,798,938 or 119% compared to retail revenue of $60,159,246 for the nine months ended September 30, 2024.

This increase was primarily due to the closing of the Mergers, resulting in the addition of retail revenue from our operations in Utah, Nevada, and Missouri.

Wholesale revenue for the nine months ended September 30, 2025, was $32,300,622, an increase of $18,098,963 compared to wholesale revenue of $14,201,659 for the nine months ended September 30, 2024.

This increase was primarily due to increased contributions from New York, and the closing of the Mergers, resulting in the addition of wholesale revenue from our operations in Utah, Nevada, and Missouri.

Nine Months Ended

September 30,

Total Wholesale

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Cost of sales for the six months ended June 30, 2025, was $39,773,492, an increase of $16,373,000 compared to the six months ended June 30, 2024, of $23,400,492.

Gross profit for the six months ended June 30, 2025, was $32,830,159, representing a gross margin of 45%.

This is compared to gross profit for the six months ended June 30, 2024, of $25,795,070 or a 52% gross margin.

The increase in gross profit was driven by the closing of the Merger Agreements, which added the gross profit of Deep Roots, Proper, and

The decrease in gross margin was primarily attributable to the amortization of the non-cash inventory fair value step initially recognized in connection with the closing of the Merger Agreements.

Excluding this amortization, gross profit would have been approximately 51% for the six months ended June 30, 2025.

However, we expect gradual price compression as markets mature, which could place downward pressure on our retail and wholesale gross margins.

Cost of sales for the nine months ended September 30, 2025, was $94,045,648, an increase of $57,803,783 compared to the nine months ended September 30, 2024, of $36,241,865.

The increase in cost of sales was driven by the increase in revenues.

Gross profit for the nine months ended September 30, 2025, was $70,213,158, representing a gross margin of 43%.

This is compared to gross profit for the nine months ended September 30, 2024, of $38,119,040 or a 51% gross margin.

The increase in gross profit was driven by the closing of the Mergers, which added the gross profit of Deep Roots, Proper, and Wholesome.

The decrease in gross margin was primarily attributable to the amortization of the non-cash inventory fair value step initially recognized in connection with the closing of the Mergers.

Excluding this amortization of $16,549,749 from the gross profit figure of $70,213,158 would have resulted in gross profit of $86,762,907 and gross margin of approximately 53% for the nine months ended September 30, 2025.

Total Expenses

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We expect general and administrative expenses as a percentage of sales to decrease as we realize revenue growth organically and through anticipated positive regulatory developments in our core markets.

Total expenses for the six months ended June 30, 2025, were $32,873,160 an increase of $17,631,557 compared to total expenses of $15,241,603 for the six months ended June 30, 2024.

Operating Income (Loss) before Other Income (Expense) and Income Taxes

Operating income (loss) before other income (expense) and provision for income taxes for the six months ended June 30, 2025, was ($43,001) a decrease of $10,596,468 compared to $10,553,467 for the three months ended June 30, 2024.

Total expenses for the nine months ended September 30, 2025, were $69,447,203, an increase of $45,733,077 compared to total expenses of $23,714,126 for the nine months ended September 30, 2024.

Operating Income before Other Income (Expense) and Income Taxes

Operating income before other income (expense) and provision for income taxes for the nine months ended September 30, 2025, was $765,955 a decrease of $13,638,959 compared to $14,404,914 for the nine months ended September 30, 2024.

Total Other Expense

Total other expense for the six months ended June 30, 2025, was $14,870,818, an increase of $1,322,481 compared to other expense of $13,548,337 for the six months ended June 30, 2024.

This change was primarily attributable to decreased other income driven by the decreasing value of the warrants we hold in Grown Rogue International, Inc.

(“ Grown Rogue ”) .

Total other expense for the nine months ended September 30, 2025, was $28,631,635, an increase of $8,690,493 compared to other expense of $19,941,142 for the nine months ended September 30, 2024.

This change was primarily attributable to the loss on extinguishment of existing debt of $8,627,647, which was recorded in connection with the First Lien Term Loan and Chicago Atlantic Term Loan.

Provision for Income Taxes

Income tax expense is recognized based on the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year-end.

For the six months ended June 30, 2025, tax expense totaled $6,529,000 compared to tax expense of $4,385,000 for the six months ended June 30, 2024.

For the nine months ended September 30, 2025, tax expense totaled $19,876,000 compared to tax expense of $6,770,000 for the nine months ended September 30, 2024.

The increase in tax expense was driven by the increase in gross profit.

NON-GAAP MEASURES

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is a non-GAAP measure that does not have a standardized definition under the United States generally accepted accounting principles (“ GAAP”).

Total revenues, excluding revenues from states where we have divested operations, is also a non-GAAP measure that does not have a

standardized definition under GAAP.

The following information provides reconciliations of the supplemental non-GAAP financial measure EBITDA presented herein to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Earnings before interest, taxes, depreciation and amortization (“ EBITDA ”) and Adjusted EBITDA are non-GAAP measures that do not have standardized definitions under the United States generally accepted accounting principles (“ GAAP ”).

Total revenues, excluding revenues from states where we have divested operations, is also a non-GAAP

measure that does not have a standardized definition under GAAP.

The following information provides reconciliations of the supplemental non-GAAP financial measures EBITDA and Adjusted EBITDA presented herein to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Reconciliations of the supplemental non-GAAP financial measure, total revenues, that exclude revenues from states where we have divested operations presented herein to the most directly comparable financial measures calculated in accordance with GAAP can be found in the tables above where the measure appears.

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net income (loss)

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Transaction related expenses

Severance expense

Loss on disposal of assets

Adjusted EBITDA (non-GAAP)

Included in the table below is a reconciliation of Pro Forma EBITDA.

Pro Forma EBITDA and Pro Forma Adjusted EBITDA reflects the financial results of the Company giving effect to the Mergers as if they had occurred on January 1, 2025 .

Pro Forma EBITDA and Pro Forma Adjusted EBITDA are non-GAAP measures that do not have a standardized definition under the generally accepted accounting principles in the United States of America (“ GAAP”).

The following information provides reconciliations of the supplemental non-GAAP financial measure Pro Forma EBITDA presented herein to the most directly comparable financial measures calculated and presented in accordance with GAAP.

We have provided these non-GAAP financial measures, which are not calculated or presented in accordance with GAAP, as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP.

These supplemental non-GAAP financial measures are presented because management has evaluated the financial results both including and excluding the adjusted items and believes that the supplemental non-GAAP financial measures presented provide additional perspective and insights when analyzing the core operating performance of the business.

These supplemental non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented.

Net income (loss)

Interest expense, net

Depreciation & Amortization

EBITDA (non-GAAP)

Non-cash inventory adjustments

Stock-based compensation

Transaction related expenses

Other (income) expense

Debt financing costs

Severance expense

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Current management forecasts and related assumptions support the view that we can adequately manage the operational needs of the business.

Credit Facility

During 2017 the Company signed a promissory note payable in the amount of $1,010,000.

The note bears interest at a rate of 15% per annum with interest payments required on a monthly basis.

In 2019 the Company’s promissory note payable in the amount of $1,010,000 was modified to increase the amount payable to $1,110,000.

The Company paid the note off in full during the year ended December 31, 2024.

On November 19, 2021, the Company signed a promissory note payable in the amount of $2,000,000 in connection with the acquisition of Charm City Medicus, LLC.

The note bears an interest rate of 8% per annum with interest payments due on the last day of each calendar quarter.

On November 19, 2023, the Company and lender amended the note.

Per the terms of the amendment, the interest rate was modified to 15%, and the Company paid off $1,000,000 of principal.

On November 27, 2024, the Company and lender executed the second amendment to the note.

Per the terms of the amendment, the maturity date was extended, the interest rate was increased to 18%, and the Company repaid $100,000 in principal.

The remaining principal balance of $900,000 was repaid in full during the three months ended March 31, 2025.

On March 25, 2021, the Company entered into a credit agreement for a senior secured delayed draw term loan with an aggregate principal amount of up to $46,000,000 (the “ Credit Facility ”) and executed a draw of $26,000,000 in principal.

The unpaid principal amounts outstanding under the Credit Facility bear interest at a rate of (a) the U.S.

prime rate plus 10.375%, payable monthly in cash, and (b) 2.75% per annum paid in kind (“ PIK ”) interest payable monthly.

In connection with the Credit Facility, the Company also pays a monthly credit monitoring fee in the amount of $130,400 which was included in interest expense in the consolidated statements of loss and comprehensive loss for the six months ended June 30, 2025, and 2024.

On November 18, 2021, the Company and lenders amended the Credit Facility to provide for an additional loan of $4,200,000 with a cash interest rate of 15% per annum, PIK interest of 2% per annum and a maturity date of November 29, 2024.

Obligations under the Credit Facility are secured by substantially all the assets of the Company.

On January 31, 2022, Vireo Growth and certain of its subsidiaries, as borrowers (collectively, the “ Borrowers ”), entered into a Third Amendment to the Credit Facility (the “ Third Amendment ”) providing for additional delayed draw term loans of up to $55 million (the “ Delayed Draw Loans ”).

The cash interest rate on the Delayed Draw Loans under the Third Amendment is equal to the U.S.

prime rate plus 10.375%, with a minimum required rate of 13.375% per annum, in addition to PIK interest of 2.75% per annum.

On March 31, 2023, the Company executed a fifth amendment to its Credit Facility with its senior secured lender, Chicago Atlantic Admin, LLC (the " Chicago Atlantic Admin "), an affiliate of Green Ivy Capital, and a group of lenders.

The amended credit facility extends the maturity date on its Delayed Draw Loans to April 30, 2024, through the issuance of 15,000,000 Subordinate Voting Shares in lieu of a cash extension fee.

These 15,000,000 shares were valued at $1,407,903 using a fair value per share of $0.094 were recorded as a deferred financing cost.

The fair value per share reflects a 22% discount to the market price at the time of issuance to account for the four-month trading lock-up imposed on the shares.

The amendment also provides the Company with reduced cash outlays by eliminating required amortization of the loan and requires the Company to divest certain assets to improve its liquidity position and financial performance.

On April 30, 2024, the Company executed a short-term extension of the maturity date on the Credit Facility with Chicago Atlantic Admin.

The Credit Facility was extended until June 14, 2024 and then further extended to July 31, 2024.

In connection with these extensions, no other changes were made to the material terms of the existing agreement.

On May 21, 2024 the Company executed a $1,200,000 term loan with Chicago Atlantic Admin to assist with the purchase of a site for a new dispensary location.

The loan bears an interest rate of 12.0% and is due on May 28, 2027.

Financing costs of $68,600 were incurred in connection with the closing of the loan.

On July 31, 2024, the Company executed a ninth amendment to the Company’s Credit Facility.

The ninth amendment to the Company’s Credit Facility extends the maturity date on the Credit Facility loans to January 29, 2027, adjusts and extends the deadline with respect to the Company’s ongoing disposition of its New York operations through July 31, 2025, and amends certain financial measure definitions and covenants within the agreement.

The Company issued 12,500,000 Subordinate Voting Shares to the lenders in consideration for the amendment.

These 12,500,000 shares were valued at $5,387,500 using a fair value per share of $0.431 and were recorded as a deferred financing cost.

Long-Term Debt Arising from Acquisitions

In connection with the closing of the Proper Mergers, the Company acquired $25,502,655 of notes payable due to Chicago Atlantic Admin.

The unpaid principal amounts outstanding bear interest at a rate of (a) 11%, payable monthly in cash, and (b) 3.00% per annum PIK interest, payable monthly.

In addition, 1% amortization of the original principal value of the note, or $27,100,000, is payable monthly, and the note matures on November 28, 2025.

Long-Term Debt Arising from the Mergers

In connection with the closing of the Proper Mergers, the Company became obligated under $25,502,655 of notes payable due to Chicago Atlantic Admin, LLC.

The unpaid principal amounts outstanding bore interest at a rate of (a) 11%, payable monthly in cash, and (b) 3.00% per annum PIK interest, payable monthly.

In addition, 1% amortization of the original principal value of the note, or $27,100,000, was payable monthly, and the note was set to mature on November 28, 2025.

See Note 3 “Business Combinations and Dispositions” for additional information.

In connection with the closing of the Deep Roots Merger, the Company acquired $19,166,670 of notes payable due to Chicago Atlantic Admin.

The unpaid principal amounts outstanding bear interest at a rate of (a) the U.S.

In connection with the closing of the Deep Roots Merger, the Company became obligated under $19,166,670 of notes payable due to Chicago Atlantic Admin, LLC.

The unpaid principal amounts outstanding bore interest at a rate of (a) the U.S.

prime rate, with a floor of 8.00%, plus (b) 6.50%, payable monthly in cash.

In addition, 0.83% amortization of the original principal value of the note, or $20,000,000, is payable monthly, and the note matures on August 15, 2027.

In addition, 0.83% amortization of the original principal value of the note, or $20,000,000, was payable monthly, and the note was set to mature on August 15, 2027.

See Note 3 “Business Combinations and Dispositions” for additional information.

In connection with the closing of the Wholesome Merger, the Company acquired a $8,766,340 term loan bearing an interest rate of 11.25%, payable monthly in cash.

In connection with the closing of the Wholesome Merger, the Company became obligated on a $8,766,340 term loan bearing an interest rate of 11.25%, payable monthly in cash.

The term loan was repaid in full on May 13, 2025.

Additionally, the Company acquired $1,000,000 of promissory notes bearing an interest rate of 13.00%, payable monthly cash.

Additionally, the Company became obligated on $1,000,000 of promissory notes bearing an interest rate of 13.00%, payable monthly cash.

See Note 3 “Business Combinations and Dispositions” for additional information.

First Lien Term Loan and Chicago Atlantic Term Loan

On July 7, 2025, the Company entered into a Loan and Security Agreement (the “First Lien Term Loan”), effective July 3, 2025, with East West Bank, a California banking corporation (“East West Bank”), as Administrative Agent (the “Administrative Agent”), and Western Alliance Bank, an Arizona corporation, as co-administrative agent (the “Co-Admin Agent”).

The First Lien Term Loan provides for an aggregate principal amount of $120,000,000.

The aggregate principal amount of the First Lien Term Loan amortizes in quarterly installments of $3,000,000.

The Company will make such quarterly amortization payments commencing on December 31, 2025 and on the last business day of each quarter thereafter through and including June 30, 2028.

Upon maturity of the First Lien Term Loan on July 31, 2028, the remaining outstanding principal amount of the First Lien Term Loan, and all accrued and unpaid interest thereon, will be due and payable in full.

The First Lien Term Loan bears interest at the one-month Term Secured Overnight Financing Rate (subject to a 3% floor) plus 4% per annum.

The First Lien Term Loan shall, at the Administrative Agent’s option, convert to a Prime Rate Loan at the end of the First Lien Term Loan’s current one-month interest period if an event of default shall occur and be continuing, at which time an additional 2% of default interest will also be applicable to the First Lien Term Loan.

On July 7, 2025, the Company entered into a secured term loan (the “Chicago Atlantic Term Loan”), effective July 3, 2025, with Chicago Atlantic Opportunity Finance, LLC, as a Lender, Chicago Atlantic Admin, LLC, as Administrative Agent and Collateral Agent (“2L Agent”) and Chicago Atlantic Credit Advisers, LLC, as Lead Arranger (“Lead Arranger”).

The Chicago Atlantic Term Loan provides for a principal amount of $33,000,000 to be loaned to the Company along with a $50,000,000 accordion feature, available to support future strategic initiatives, subject to the sole discretion of the Lender and 2L Agent.

Amortization payments are due and payable monthly on each payment date in an amount equal to 1% of the loan amount starting November 30, 2025.

All unpaid and accrued interest is due and payable on the maturity date of October 2, 2028, with an option to extend for an additional year subject to a 1% extension fee of all loans advanced by lenders under the Chicago Atlantic Term Loan.

The Chicago Atlantic Term Loan bears interest at the Prime Rate (subject to a 7.5% floor) plus 5.5% per annum.

The First Lien Term Loan is secured by a perfected first priority security interest in all assets and future assets of the Company.

The Chicago Atlantic Term Loan is secured by a second priority security interest in and lien on all existing assets and future assets of the Company.

The proceeds from the First Lien Term Loan and Chicago Atlantic Term Loan were used to retire all of the Company’s existing debt obligations, including the debt arising from acquisitions, including the Mergers.

In connection with the retirement of the existing debt, the Company recorded a loss on extinguishment of $8,627,647, which is included in other expense on the statement of loss and comprehensive loss for the three and nine months ended September 30, 2025.

Unless otherwise specified, all deferred financing costs are treated as a contra-liability, to be netted against the outstanding loan balance and amortized over the remaining life of the loan.

As of June 30, 2025, and December 31, 2024, $5,161,990 and $6,576,985 of deferred financing costs remained unamortized, respectively.

As of September 30, 2025, and December 31, 2024, $5,704,695 and $6,576,985 of deferred financing costs remained unamortized, respectively.

Convertible Notes

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On November 1, 2024, the Company entered into the Joinder and Tenth Amendment to the Credit Agreement (the “ Tenth Amendment ”).

The Tenth Amendment provides a convertible note facility (the “ New Convertible Notes ”) with a maximum principal amount of $10,000,000.

The New Convertible Notes mature on November 1, 2027, have a cash interest rate of 12.0% per year, and are convertible into the Company’s SVSs at an amount determined by dividing the outstanding principal amount, plus all accrued but unpaid interest on the New Convertible Notes on the date of such conversion, by a conversion price of $0.625.

The Tenth Amendment provides a convertible note facility (the “ Convertible Notes ”) with a maximum principal amount of $10,000,000.

The Convertible Notes mature on November 1, 2027, have a cash interest rate of 12.0% per year, and are convertible into the Company’s SVSs at an amount determined by dividing the outstanding principal amount, plus all accrued but unpaid interest on the Convertible Notes on the date of such conversion, by a conversion price of $0.625.

The Company incurred $145,717 in financing costs in connection with the signing of the Tenth Amendment.

On July 7, 2025, the Company retired the Convertible Notes, and issued a $10 million convertible note (the “New Convertible Notes”) to Chicago Atlantic Opportunity Finance, LLC, also with a second priority interest, that matures on October 2, 2028 with an option to extend for an additional year subject to a 1% extension fee of all Chicago Atlantic loans advanced, has a cash interest rate of Prime Rate (subject to a 7.5% floor) plus 5.0% per year, and is convertible into that number of the Company’s subordinate voting shares determined by dividing the outstanding principal amount plus all accrued but unpaid interest on the convertible notes on the date of such conversion by a conversion price of $0.625.

All deferred financing costs are treated as a contra-liability, to be netted against the outstanding loan balance and amortized over the remaining life of the loan.

As of June 30, 2025 and December 31, 2024, $113,336 and $137,622 of deferred financing costs remained unamortized, respectively.

As of September 30, 2025 and December 31, 2024, $103,891 and $137,622 of deferred financing costs remained unamortized, respectively.

Cash Used in Operating Activities

Net cash used in operating activities was $8.2 million for the six months ended June 30 2025, an increase of $7.0 million as compared to $1.2 million for the six months ended June 30, 2024.

The increase was primarily attributed to less favorable changes in working capital, particularly assets held for sale, and increased transaction costs associated with the Mergers.

Net cash used in operating activities was $14.9 million for the nine months ended September 30, 2025, an increase of $11.1 million as compared to $3.8 million for the nine months ended September 30, 2024.

The increase was primarily attributed to an increase in assets held for sale, payment of approximately $14 million of accrued expenses assumed in the Mergers including distributions to former stockholders of Deep Roots, Proper, and Wholesome, and increased transaction costs associated with the Mergers, and approximately $3.7 million of cash debt extinguishment costs.

Cash Used in Investing Activities

Net cash provided by investing activities was $32.9 million for the six months ended June 30, 2025, an increase of $37.2 million compared to net cash used in investing activities of $4.2 million for the six months ended June 30, 2024.

The increase was primarily attributable to the cash acquired through the closing of the Merger Transactions during the six-months ended June 30, 2025.

Net cash provided by investing activities was $18.2 million for the nine months ended September 30, 2025, an increase of $23.7 million compared to net cash used in investing activities of $5.5 million for the nine months ended September 30, 2024.

The increase was primarily attributable to the cash acquired through the closing of the Mergers during the nine-months ended September 30, 2025, partially offset by increased purchases of property, plant, and equipment.

Cash Used in Financing Activities

Net cash used in financing activities was $10.2 million for the six months ended June 30, 2025, a change of $10.9 million as compared to $0.7 million provided by financing activities in the six months ended June 30, 2024.

The change was principally due to increased debt principal payments during the six-months ended June 30, 2025, as compared to the six months ended June 30, 2024.

Net cash provided by financing activities was $22.7 million for the nine months ended September 30, 2025, a change of $22.1 million as compared to $0.6 million provided by financing activities in the nine months ended September 30, 2024.

The change was principally due to the receipt of proceeds from the First Lien Term Loan and Chicago Atlantic Term Loan.

Lease Transactions

As of June 30, 2025, we entered into lease agreements for the use of buildings used in the cultivation, production and/or sales of cannabis products in Maryland, Minnesota, New York, Missouri, Nevada, and Utah.

As of September 30, 2025, we are party to lease agreements for the use of buildings used in the cultivation, production and/or sales of cannabis products in Maryland, Minnesota, New York, Missouri, Nevada, and Utah.

The lease agreements for all of the retail spaces used for our dispensary operations are with third-party landlords and the remaining durations range from one to ten years.

These agreements are short-term facility leases that require us to make monthly rent payments and fund common area costs, utilities and maintenance.

In some cases, we have received tenant improvement funds to assist in the buildout of the spaces to meet our operating needs.

As of June 30, 2025, we operated 36 retail locations secured under these agreements.

In some cases, we have received tenant

improvement funds to assist in the buildout of the spaces to meet our operating needs.

As of September 30, 2025, we operated 36 retail locations secured under these agreements.

We also entered into sale and leaseback arrangements for our cultivation and processing facilities in Minnesota and New York with a special-purpose real estate investment trust.

These leases are long-term agreements that provide, among other

things, funds to make certain improvements to the properties that will significantly enhance the production capacity and operational efficiency of the facilities.

These leases are long-term agreements that provide, among other things, funds to make certain improvements to the properties that will significantly enhance the production capacity and operational efficiency of the facilities.

Excluding any contracts under one year in duration, the future minimum lease payments (principal and interest) on all our leases are as follows:

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Finance Leases

June 30, 2025

June 30, 2024

September 30, 2025

Total minimum lease payments

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Outstanding Share Data

As of August 11, 2025, we had 949,802,390 shares issued and outstanding on an as converted basis, consisting of the following:

As of November 11, 2025, we had 1,064,669,823 shares issued and outstanding on an as converted basis, consisting of the following:

(a) Subordinate Voting Shares

923,839,190 shares issued and outstanding.

1,038,706,623 Subordinate Voting Shares issued and outstanding.

The holders of Subordinate Voting Shares are entitled to one vote per share at all shareholder meetings.

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(b) Multiple Voting Shares

259,634 shares issued and outstanding.

259,634 Multiple Voting Shares issued and outstanding.

The holders of Multiple Voting Shares are entitled to one hundred votes per share at all shareholder meetings.

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The Company is authorized to issue an unlimited number of Multiple Voting Shares.

Options, Warrants, and Convertible Promissory Notes

As of June 30, 2025, we had 30,359,033 employee stock options outstanding, 72,098,150 RSUs outstanding, 3,037,649 Subordinate Voting Share compensation warrants denominated in C$ related to financing activities, and 15,503,937 Subordinate Voting Share compensation warrants outstanding.

Options, RSUs, and Warrants

As of September 30, 2025, we had 27,933,898 employee stock options outstanding, 73,173,350 RSUs outstanding, 3,037,649 Subordinate Voting Share compensation warrants denominated in C$ related to financing activities, and 15,503,937 Subordinate Voting Share compensation warrants outstanding.

Off-Balance Sheet Arrangements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis