What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-07 compared with 2023-11-14 · 171 added, 270 removed, 466 unchanged (49% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(In U.S Dollars, unaudited and condensed)

September 30,

(In U.S Dollars, unaudited)

Current assets:

Accounts receivable, net of allowance for doubtful accounts of $ 344,937 and $ 453,860 , respectively

Accounts receivable, net of credit losses of $ 205,894 and $ 254,961 , respectively

Income tax receivable

Prepayments and other current assets

Notes receivable, current

Warrants receivable

Warrants held

Assets Held for Sale

2 unchanged sentences

Operating lease, right-of-use asset

Notes receivable, long-term

Intangible assets, net

Deferred tax assets

Current liabilities

2 unchanged sentences

Right of use liability

Uncertain tax liability

Liabilities held for sale

3 unchanged sentences

Convertible debt, net

Long-Term debt, net

Total liabilities

Commitments and contingencies (refer to Note 17)

Stockholders’ equity (deficiency)

Stockholders’ deficiency

Subordinate Voting Shares ($- par value, unlimited shares authorized;

108,332,330 shares issued and outstanding)

111,041,230 shares issued and outstanding at March 31, 2024 and 110,007,030 at December 31, 2023)

Multiple Voting Shares ($- par value, unlimited shares authorized;

347,940 shares issued and outstanding)

320,851 shares issued and outstanding at March 31, 2024 and 331,193 at December 31, 2023)

Super Voting Shares ($- par value;

unlimited shares authorized;

0 shares issued and outstanding)

0 shares issued and outstanding at March 31, 2024 and December 31, 2023)

Additional Paid in Capital

2 unchanged sentences

( 203,428,052 )

Total stockholders' equity (deficiency)

Total stockholders' deficiency

( 22,575,320 )

Total liabilities and stockholders' equity (deficiency)

( 16,043,649 )

Total liabilities and stockholders' deficiency

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

1 unchanged sentence

CONSOLIDATED STATEMENTS OF NET LOSS AND COMPREHENSIVE LOSS

Dollars, unaudited and condensed)

Dollars, except per share amounts, unaudited)

Three Months Ended

Nine Months Ended

September 30,

Cost of sales

6 unchanged sentences

Income (loss) from operations

( 7,641,130 )

Other income (expense):

Impairment of long-lived assets

( 2,108,703 )

( 7,476,618 )

Gain (loss) on disposal of assets

( 2,798,567 )

Gain (loss) on sale of property and equipment

Interest expenses, net

1 unchanged sentence

( 7,134,789 )

( 22,795,242 )

( 15,472,885 )

Other income (expenses)

2 unchanged sentences

( 7,112,476 )

( 19,427,337 )

( 21,587,516 )

Loss before income taxes

1 unchanged sentence

( 6,743,970 )

( 14,229,381 )

( 29,228,646 )

Current income tax expenses

1 unchanged sentence

( 1,725,000 )

( 7,357,871 )

( 4,130,000 )

Deferred income tax recoveries

2 unchanged sentences

( 8,405,970 )

( 20,964,252 )

( 29,173,646 )

Net loss per share - basic and diluted

Weighted average shares used in computation of net loss per share - basic & diluted

Weighted average shares used in computation of net loss per share - basic and diluted

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

1 unchanged sentence

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

Dollars, unaudited and condensed)

Dollars, unaudited)

Super Voting Shares

4 unchanged sentences

( 177,880,963 )

Conversion of MVS shares

Options exercised

Stock-based compensation

( 29,173,646 )

Balance at September 30, 2022

( 164,597,165 )

Balance, January 1, 2023

( 177,880,963 )

Conversion of MVS shares

Conversion of Super Voting Shares

Stock-based compensation

Shares issued in financing activities

Warrants issued in financing activities

( 20,964,252 )

Balance at September 30, 2023

( 198,845,215 )

( 12,853,399 )

Super Voting Shares

Additional Paid-

Stockholders'

Equity (deficiency)

Balance, July 1, 2022

Obligation to issue shares

( 8,405,970 )

Conversion of MVS shares

Options exercised

Stock-based compensation

( 8,405,970 )

Balance at March 31, 2023

( 186,286,933 )

Balance at September 30, 2022

( 2,067,655 )

Balance, July 1, 2023

Balance, January 1, 2024

( 203,428,052 )

1 unchanged sentence

Conversion of MVS shares

Conversion of Super Voting Shares

Stock-based compensation

Shares issued in financing activities

( 6,711,460 )

Balance at September 30, 2023

Balance at March 31, 2024

( 210,139,512 )

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Dollars, except for per share data, unaudited and condensed)

September 30,

Dollars, unaudited)

For the Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

8 unchanged sentences

Stock-based payments

Warrants receivable

Warrants held

( 1,327,879 )

Interest Expense

Impairment of long-lived assets

Deferred income tax

( 4,185,000 )

Loss (gain) on sale of property and equipment

Loss on disposal of Red Barn Growers

Loss (gain) on disposal of assets

Gain on disposal of royalty asset

Change in operating assets and liabilities:

Accounts Receivable

( 1,408,580 )

Prepaid expenses

( 1,230,547 )

( 1,932,554 )

( 2,205,236 )

Uncertain tax position liabilities

Accounts payable and accrued liabilities

Change in assets and liabilities held for sale

Net cash used in operating activities

( 1,141,057 )

CASH FLOWS FROM INVESTING ACTIVITIES:

PP&E Additions

Changes in operating lease liabilities

Change in assets and liabilities held for sale

( 1,037,417 )

Net cash provided by (used in) operating activities

( 1,190,332 )

Intangible license additions

( 3,794,958 )

Proceeds from sale of Red Barn Growers net of cash

Proceeds from sale of property, plant, and equipment

Proceeds from sale of royalty asset

CASH FLOWS FROM INVESTING ACTIVITIES:

PP&E Additions

Net cash provided by (used in) investing activities

( 1,049,364 )

( 4,796,979 )

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long-term debt, net of issuance costs

Proceeds from convertible debt, net of issuance costs

Proceeds from option exercises

Debt principal payments

1 unchanged sentence

Lease principal payments

( 1,414,698 )

( 1,437,346 )

Net cash provided by (used in) financing activities

( 1,121,066 )

Net change in cash

( 3,360,762 )

( 4,803,734 )

Cash, beginning of period

5 unchanged sentences

Goodness Growth Holdings, Inc.

(“ Goodness Growth ” or the “ Company ”) (formerly, Vireo Health International, Inc.) was incorporated under the Alberta Business Corporations Act on November 23, 2004, as Dominion Energy, Inc..

Vireo Health, Inc., (“ VHI ”) was incorporated under the laws of the State of Delaware on December 28, 2017, with an effective date of January 1, 2018.

Through a series of transactions known, colloquially, as a “reverse-triangular merger,” on March 18, 2019, VHI was acquired by a subsidiary of the Company, with the result that the former shareholders of VHI comprised over 99 % of the shareholders of the Company.

The Company was previously listed on the Canadian Securities Exchange (the “ CSE ”) under ticker symbol “VREO.” On June 9, 2021, the Company changed its name to Goodness Growth Holdings, Inc.

(“ Goodness Growth ” or the “ Company ”) (formerly, Vireo Health International, Inc.) was incorporated under the Alberta Business Corporations Act on November 23, 2004.

The Company was previously listed on the Canadian Securities Exchange (the “ CSE ”) under ticker symbol “VREO”.

On June 9, 2021, the Company changed its name to Goodness Growth Holdings, Inc.

and its ticker symbol on the CSE to “GDNS.”

Goodness 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.

Goodness Growth operates cannabis cultivation, production, and dispensary facilities in Maryland, Minnesota, and New York, and formerly in New Mexico, Arizona, and Ohio.

While marijuana and CBD-infused products are legal under the laws of many U.S.

Goodness Growth operates cannabis cultivation, production, and dispensary facilities in Maryland, Minnesota, and New York, and formerly in Arizona and New Mexico.

While marijuana and CBD-infused products are legal under the laws of several U.S.

states (with vastly differing restrictions), the United States Federal Controlled Substances Act classifies all “marijuana” as a Schedule I drug.

federal law, a Schedule I drug or substance has a high potential for abuse, no accepted medical use in the United States, and a lack of safety for the use of the drug under medical supervision.

Recently some federal officials have attempted to distinguish between medical cannabis use as necessary, but recreational use as “still a violation of federal law.” At the present time, the distinction between “medical marijuana” and “recreational marijuana” does not exist under U.S.

Recently some federal officials have attempted to distinguish between medical cannabis use as necessary, but adult-use as “still a violation of federal law.” At the present time, the distinction between “medical marijuana” and “adult-use marijuana” does not exist under U.S.

On January 31, 2022, the Company entered into an Arrangement Agreement (the “Arrangement Agreement”) with Verano Holdings Corp.

(“ Verano ”), pursuant to which Verano was to have acquired all of the issued and outstanding shares of Goodness Growth pursuant to a plan of arrangement (the “ Plan of Arrangement ”) under the Business Corporations Act (British Columbia) (the “ Arrangement ”).

Subject to the terms and conditions set forth in the Arrangement Agreement and the Plan of Arrangement, holders of Goodness Growth Shares were to receive 0.22652 of a subordinate voting share of Verano (each a “ Verano Subordinate Voting Share ”), subject to adjustment as described in the Arrangement Agreement (the “ Exchange Ratio ”), for each Subordinate Voting Share held, and 22.652 Verano Subordinate Voting Shares for each Multiple Voting Share and Super Voting Share held, immediately prior to the effective time of the Arrangement.

(“ Verano ”), pursuant to which Verano was to acquire all of the issued and outstanding shares of Goodness Growth pursuant to a plan of arrangement (the “Plan of Arrangement”) under the Business Corporations Act (British Columbia) (the “ Arrangement ”).

Subject to the terms and conditions set forth in the Arrangement Agreement and the Plan of Arrangement, holders of Goodness Growth Shares would receive 0.22652 of a subordinate voting share of Verano (each a “ Verano Subordinate Voting Share ”), subject to adjustment as described below (the “ Exchange Ratio ”), for each Subordinate Voting Share held, and 22.652 Verano Subordinate Voting Shares for each Multiple Voting Share and Super Voting Share held, immediately prior to the effective time of the Arrangement.

On October 13, 2022, Goodness Growth received a notice of purported termination of the Arrangement Agreement (the “ Notice ”) from Verano.

The Notice asserted certain breaches of the Arrangement Agreement, including claims the Company’s public filings and communications with respect to its business and ongoing operations were misleading and that the Company breached its representations to Verano under the Arrangement Agreement.

Verano also claimed, as a result of such breaches, it is entitled to payment of a $ 14,875,000 termination fee and its transaction expenses.

Verano also claimed, as a result of such breaches, it is entitled to payment of the $ 14,875,000 termination fee and its transaction expenses.

Goodness Growth denies all of Verano’s allegations and affirmatively asserts that it has complied with its obligations under the Arrangement Agreement, and with its disclosure obligations under US and Canadian law, in all material respects at all times.

The Company believes that Verano had no factual or legal basis to justify or support purported termination of the Arrangement Agreement, which the Company determined to treat as a repudiation of the Arrangement Agreement.

The Company believes that Verano has no factual or legal basis to justify or support its purported grounds for termination of the Arrangement Agreement.

On October 21, 2022, Goodness Growth commenced an action in the Supreme Court of British Columbia against Verano after Verano repudiated the Arrangement Agreement.

1 unchanged sentence

On November 14, 2022, Verano filed counterclaims against the Company for the termination fee and transaction expenses described above.

Throughout 2023, the Company served 4 lists of documents, reviewed document production from Verano, and prepared for examinations for discovery.

The Company also prepared materials in anticipation of seeking summary determination of its claim.

Due to uncertainties inherent in litigation, it is not possible for Goodness Growth to predict the timing or final outcome of the legal proceedings against Verano or to determine the amount of damages, if any, that may be awarded.

3 unchanged sentences

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

However, the Company’s continuance as going concern is dependent on its future profitability and implementation of the aforementioned plan.

However, the Company’s continuance as a going concern is dependent on its future profitability and implementation of the aforementioned plan.

The Company may not be successful in these efforts.

1 unchanged sentence

Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2 to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the United States Securities and Exchange Commission (“ SEC ”) on March 31, 2023, (the "

Annual Financial Statements ").

The Company’s significant accounting policies are described in Note 2 to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the United States Securities and Exchange Commission (“ SEC ”) on April 1, 2024, (the " Annual Financial Statements "), as amended on April 29, 2024.

There have been no material changes to the Company’s significant accounting policies.

9 unchanged sentences

Basis of consolidation

These unaudited condensed consolidated financial statements include the accounts of the following entities wholly owned, or effectively controlled by the Company during the period ended September 30, 2023:

Name of entity

9 unchanged sentences

Maryland, USA

1776 Hemp, LLC

Delaware, USA

Vireo Health of Massachusetts, LLC

2 unchanged sentences

Massachusetts, USA

EHF Cultivation Management, LLC

Vireo Health of New Mexico, LLC

Delaware, USA

Red Barn Growers, Inc.

New Mexico, USA

Resurgent Biosciences, Inc.

8 unchanged sentences

The entities listed are wholly owned or effectively controlled by the Company and have been formed or acquired to support the intended operations of the Company, and all intercompany transactions and balances have been eliminated in the Company's unaudited condensed consolidated financial statements.

Red Barn Growers, Inc.

and all New Mexico assets and liabilities were divested in June of 2023.

Recently adopted accounting pronouncements

In October of 2021 FASB issued ASU 2021-08 Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

The update is intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer.

The adoption of the standard on January 1, 2023, did not have a material impact on the Company's results of operations or cash flows.

Net loss per share

5 unchanged sentences

In computing diluted earnings per share, common share equivalents are not considered in periods in which a net loss is reported, as the inclusion of the common share equivalents would be anti-dilutive.

The Company recorded a net loss for the three and nine month periods ended September 30, 2023, and 2022, presented in these financial statements, and as such there is no difference between the Company’s basic and diluted net loss per share for these periods.

The anti-dilutive shares outstanding for the nine month period ending September 30, 2023, and 2022 were as follows:

September 30,

The Company recorded a net loss for the three month periods ended March 31, 2024, and 2023, presented in these financial statements, and as such there is no difference between the Company’s basic and diluted net loss per share for these periods.

The anti-dilutive shares outstanding for the three month period ending March 31, 2024, and 2023 were as follows:

Stock options

2 unchanged sentences

The Company’s primary source of revenue is from wholesale of cannabis products to dispensary locations and direct retail sales to eligible customers at the Company-owned dispensaries.

Substantially all of the Company’s retail revenue is from the direct sale of cannabis products to medical customers.

Substantially all of the Company’s retail revenue is from the direct sale of cannabis products to adult-use and medical customers.

The following table represents the Company’s disaggregated revenue by source:

Three Months Ended

September 30,

Nine Months Ended

September 30,

New accounting pronouncements not yet adopted

ASU 2023-07 In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2023-07, Improvements to Reportable Segment Disclosures (Topic 280) .

This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss.

This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources.

The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company has not adopted the standard for the interim periods presented herein, but will adopt the standard on or before December 31, 2024.

This ASU will result in additional required disclosures when adopted, where applicable.

ASU 2023-09 In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740) .

The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid.

The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024.

Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance.

Once adopted, this ASU will result in additional disclosures.

Business Combinations and Dispositions

On June 23, 2023, the Company divested all the assets and liabilities of Red Barn Growers, Inc., a New Mexico nonprofit organization effectively controlled by the Company’s subsidiary company, Vireo Health of New Mexico, LLC, to 37 Management Group, Inc., a New Mexico corporation (“ 37 Management ”).

As part of this transaction, the Company is to be paid $ 1,000,000 , less cash on hand of $ 60,814 , of which $ 439,186 was paid at closing, and $ 500,000 is to be paid within one year of the close date.

Consideration received was less than the net book value of the transferred assets and liabilities of $ 3,848,943 , resulting in a loss of $ 2,909,757 which was recorded in the consolidated statement of loss and comprehensive loss for the nine months ended September 30, 2023.

On March 31, 2022, the Company sold the rights to a 10 % royalty on future net revenues generated by High Gardens, Inc., a former subsidiary of the Company that was divested in 2020, for cash consideration of $ 236,635 .

The carrying value of the intangible royalty asset prior to disposition was $ 68,276 , resulting in a gain of $ 168,359 which was recorded in the unaudited condensed consolidated statement of loss and comprehensive loss for the nine months ended September 30, 2022.

Assets Held for Sale

As of September 30, 2023, the Company identified property, equipment, and lease assets and liabilities associated with the businesses in New York, Nevada, Puerto Rico, and Massachusetts with carrying amounts that are expected to be recovered principally through sale or disposal rather than through continuing use such that the Company can better manage working capital and generate more favorable future cash flows.

As of March 31, 2024, the Company identified property and equipment, deposits, and lease assets and liabilities associated with the businesses in New York, Nevada, and Massachusetts with carrying amounts that are expected to be recovered principally through sale or disposal rather than through continuing use.

The sale of these assets and liabilities is highly probable, they can be sold in their immediate condition, and the sales are expected to occur within the next twelve months.

As such, these assets and liabilities have been classified as “held for sale.” Assets and liabilities held for sale are as follows:

As such, these assets and liabilities have been classified as “held for sale.” Management does not believe these divestitures represent a strategic shift that has or will have a major effect on an entity’s operations and financial results, and as such, none of these divestitures are considered a discontinued operation.

The carrying value of these net assets did not exceed fair value less expected cost to sell, and as such, the Company recorded no impairment loss.

Assets and liabilities held for sale are as follows:

Assets held for sale

2 unchanged sentences

Operating lease, right-of-use asset

Deferred Tax Assets

Total assets held for sale

2 unchanged sentences

Total liabilities held for sale

Current assets and liabilities held by our New York business have not been classified as held for sale.

Pre-tax operating losses attributable to the New York business were $ 3,698,934 for the three months ended March 31, 2024.

Fair Value Measurements

The Company complies with ASC 820, Fair Value Measurements, for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.

In general, fair values determined by Level 1 inputs utilize quoted prices

(unadjusted) in active markets for identical assets or liabilities.

In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities.

Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves.

1 unchanged sentence

Items measured at fair value on a non-recurring basis

The Company’s non-financial assets, such as prepayments and other current assets, long lived assets, including property and equipment, goodwill, and intangible assets, are measured at fair value when there is an indicator of impairment and are recorded at fair value only when an impairment charge is recognized.

No indicators of impairment existed as of September 30, 2023, and therefore no impairment charges were recorded.

The Company’s non-financial assets, such as prepayments and other current assets, long lived assets, including property and equipment and intangible assets, are measured at fair value when there is an indicator of impairment and are recorded at fair value only when an impairment charge is recognized.

No indicators of impairment existed as of March 31, 2024, and therefore no impairment charges were recorded.

The carrying value of the Company’s accounts receivable, accounts payable, and accrued liabilities approximate their fair value due to their short-term nature, and the carrying value of notes receivable, long-term debt, and convertible debt approximates fair value as they bear a market rate of interest.

The carrying value of the Company’s warrants held utilize Level 3 inputs given there is no market activity for the asset.

The inputs used are further described in Note 19.

Accounts Receivable

Trade receivables are comprised of the following items:

September 30,

Trade receivable

Tax withholding receivable

Included in the trade receivables, net balance at September 30, 2023, and December 31, 2022, is an allowance for doubtful accounts of $ 60,777 and $ 169,699 respectively.

Included in the tax withholding receivable, net balance at September 30, 2023, and December 31, 2022, is an allowance for doubtful accounts of $ 284,161 .

Included in the trade receivables, net balance at March 31, 2024, and December 31, 2023, is an allowance for doubtful accounts of $ 46,619 and $ 95,686 respectively.

Included in the tax withholding receivable, net balance at March 31, 2024, and December 31, 2023, is an allowance for doubtful accounts of $ 159,275 .

Inventory is comprised of the following items:

September 30,

Work-in-progress

2 unchanged sentences

Inventory valuation adjustments included in cost of sales on the statements of net loss and comprehensive loss is comprised of the following:

Three Months Ended September 30,

Nine Months Ended September 30,

Work-in-progress

2 unchanged sentences

Prepayments and other current assets are comprised of the following items:

September 30,

Prepaid Insurance

2 unchanged sentences

Property and equipment, net consisted of the following:

September 30,

Buildings and leasehold improvements

5 unchanged sentences

( 9,096,649 )

For the nine months ended September 30, 2023, and 2022, total depreciation on property and equipment was $ 2,223,540 and $ 2,446,700 , respectively.

For the nine months ended September 30, 2023, and 2022, accumulated amortization of the right of use asset under finance lease amounted to $ 2,221,116 and $ 3,121,441 , respectively.

For the three months ended March 31, 2024, and 2023, total depreciation on property and equipment was $ 633,728 and $ 893,598 , respectively.

For the three months ended March 31, 2024, and 2023, accumulated amortization of the right of use asset under finance lease amounted to $ 2,507,998 and $ 1,934,235 , respectively.

The right of use asset under finance lease of $ 7,938,138 consists of leased processing and cultivation premises.

The Company capitalized into inventory $ 1,846,419 and $ 1,959,536 relating to depreciation associated with manufacturing equipment and production facilities for the nine months ended September 30, 2023, and 2022, respectively.

The Company capitalized into inventory $ 560,180 and $ 734,087 relating to depreciation associated with manufacturing equipment and production facilities for the three months ended March 31, 2024, and 2023, respectively.

The capitalized depreciation costs associated are added to inventory and expensed through Cost of Sales Product Cost on the unaudited condensed consolidated statements of net loss and comprehensive loss.

As of September 30, 2023, in conjunction with the Company’s held for sale assessment and disposal of certain long-lived assets, the Company evaluated whether property and equipment showed any indicators of impairment, and it was determined that the recoverable amount of certain net assets was above book value.

As a result, the Company recorded an impairment charge of $ 0 (2022 - $ 7,476,618 ) on property and equipment, net.

As of March 31, 2024, in conjunction with the Company’s held for sale assessment and disposal of certain long-lived assets, the Company evaluated whether property and equipment showed any indicators of impairment, and it was determined that the recoverable amount of certain net assets was above book value.

As a result, the Company recorded no impairment charge (2023 - $ 0 ) on property and equipment, net.

Components of lease expenses are listed below:

September 30,

Finance lease cost

6 unchanged sentences

Finance Leases

September 30, 2023

March 31, 2024

Total minimum lease payments

9 unchanged sentences

The Company has entered into various lease agreements for the use of buildings used in production and retail sales of cannabis products.

On February 22, 2024, the Company executed a lease with its landlord on a site for cannabis cultivation and manufacturing facilities.

Per the terms of the lease the landlord agreed to provide the Company with $ 2,000,000 of tenant improvement allowances.

Rent payments will not commence until January 1, 2025, at which time monthly base rent will be $ 82,500 .

Starting January 1, 2025, the Company has the option to purchase the property.

The initial purchase price is $ 13,000,000 increasing by 3 % at the start of each calendar year until the option expires on December 31, 2028.

The lease expires on December 31, 2034.

On February 24, 2023, the Company signed the fourth amendment to the existing lease agreements for the cultivation and processing facilities in New York.

1 unchanged sentence

Supplemental cash flow information related to leases:

September 30,

Cash paid for amounts included in the measurement of lease liabilities:

Lease principal payments

Lease principal payments - finance

Lease principal payments - operating

Non-cash additions to ROU assets

1 unchanged sentence

Other information about lease amounts recognized in the financial statements:

September 30,

Weighted-average remaining lease term (years) – operating leases

3 unchanged sentences

The following table shows the change in carrying amount of goodwill:

Goodwill - December 31, 2021 and 2022

Goodwill - December 31, 2022

Divestitures (Note 3)

Goodwill - September 30, 2023

Goodwill is tested for impairment annually or more frequently if indicators of impairment exist or if a decision is made to dispose of the business.

The valuation date for the Company’s annual impairment testing is December 31.

Following the divestiture of Red Barn Growers (Note 3), the carrying value of goodwill is $ 0 .

Goodwill - December 31, 2023 and March 31, 2024

The Company has no goodwill as of March 31, 2024.

As such, no further impairment testing procedures were performed.

Intangible assets are comprised of the following items:

Royalty Asset

Licenses & Trademarks

Balance, December 31, 2022

Transfer to held for sale (Note 3)

Balance, December 31, 2023

Divestitures (Note 3)

Balance, September 30, 2023

Amortization expense for intangibles was $ 204,813 and $ 523,607 during the three and nine months ended September 30, 2023, respectively, and $ 172,267 and $ 516,800 during the three and nine months ending September 30, 2022, respectively.

Balance, March 31, 2024

Amortization expense for intangibles was $ 204,812 and $ 159,766 during the three months ended March 31, 2024 and 2023, respectively.

Amortization expense is recorded in operating expenses on the unaudited condensed consolidated statements of net loss and comprehensive loss.

During the nine months ended September 30, 2023, the Company paid $ 1,090,919 in conversion fees to obtain licenses to grow, process, and sell recreational cannabis products in Maryland.

These conversion fees were capitalized as intangible asset licenses and will be amortized over a five year useful life.

The Company estimates that amortization expense will be $ 819,655 per year for the next five fiscal years.

1 unchanged sentence

Accounts payable and accrued liabilities are comprised of the following items:

September 30,

Accounts payable – trade

7 unchanged sentences

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 has paid off $ 60,000 in principal, and the remaining $ 1,050,000 principal balance is due on December 31, 2023.

The Company repaid the note in full during the three months ended March 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.

The maturity date of the note is November 19, 2023 , and the note is secured by 25 % of the membership interests in Vireo Health of Charm City, 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.

The remaining principal balance of $ 1,000,000 is due on November 19, 2024 , and the note is secured by 25 % of the membership interests in Vireo Health of Charm City, LLC.

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 interest payable monthly.

The Credit Facility matures on March 31, 2024.

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 is included in interest expense in the consolidated statements of loss and comprehensive loss for the three months ended March 31, 2024 and 2023.The Credit Facility matures on March 31, 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 and PIK interest of 2 % per annum and a maturity date of November 29, 2024.

2 unchanged sentences

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 paid-in-kind 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 "

Agent "), an affiliate of Green Ivy Capital, and a group of lenders.

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 " Agent "), 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 and considered a deferred financing cost.

It 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.

These 15,000,000 shares were valued at $ 1,407,903 using a fair value per share of $ 0.094 and considered 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.

The Company has the potential to extend the maturity date on its Delayed Draw Loans up to January 31, 2026 with the satisfaction of certain financial performance-related conditions.

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 March 31, 2024, $ 201,015 (December 31, 2023 - $ 1,524,531 ) of deferred financing costs remain unamortized.

The following table shows a summary of the Company’s long-term debt:

September 30,

Beginning of year

1 unchanged sentence

( 1,050,000 )

Deferred financing costs

( 2,976,362 )

Deferred financing costs

( 1,407,903 )

3 unchanged sentences

Total long-term debt

As of September 30, 2023, stated maturities of long-term debt were as follows:

As of March 31, 2024, stated maturities of long-term debt were as follows:

Convertible Notes

On April 28, 2023, the Company closed on a new convertible debt facility which enables the Company to access up to $ 10,000,000 in aggregate principal amount of convertible notes (the “Convertible Notes”).

The convertible facility has a term of three years , with an annual interest rate of 12.0 % , 6.0 % cash and 6.0 % paid-in-kind.

The initial tranche's principal amount of Convertible Notes outstanding in the amount of $ 2,000,000 , plus all paid-in-kind interest and all other accrued but unpaid interest thereunder, is convertible into Subordinate Voting Shares of the Company at the option of the holders at any time by written notice to the Company, at a conversion price equal to $ 0.145 .

The convertible facility has a term of three years , with an annual interest rate of 12.0 %, comprised of 6.0 % cash and 6.0 % PIK.

The initial tranche's principal amount of Convertible Notes outstanding in the amount of $ 2,000,000 , plus all PIK and all other accrued but unpaid interest thereunder, is convertible into Subordinate Voting Shares of the Company at the option of the holders at any time by written notice to the Company, at a conversion price equal to $ 0.145 .

For each future tranche advanced, the principal amount of Convertible Notes outstanding, plus all paid-in-kind interest and all other accrued but unpaid interest thereunder, is convertible into Subordinate Voting Shares of the Company at the option of the holders at any time by written notice to the Company, at a conversion price equal to the lesser of $ 0.145 or a 20.0 % premium over the 30-day volume weighted average price of the Company’s Subordinate Voting Shares calculated on the day prior to the date on which each tranche is advanced, if permitted by the Canadian Securities Exchange.

The lenders also have the right to advance any remaining undrawn funds on the convertible loan facility to the Company at any time.

If the notes are not converted, the outstanding principal amount and unpaid paid-in-kind interest is due on April 30, 2026.

During the nine months ended September 30, 2023, the Company closed four additional tranche of Convertible Notes, which are convertible into Subordinate Voting Shares at a conversion price of $ 0.145 .

If the notes are not converted, the outstanding principal amount and unpaid PIK interest is due on April 30, 2026.

During the year ended December 31, 2023, the Company closed eight additional tranches of Convertible Notes, which are convertible into Subordinate Voting Shares at a conversion price of $ 0.145 .

Total proceeds received from these tranches amounted to $ 8,000,000 .

In connection with this financing, the Company issued 6,250,000 warrants to purchase Subordinate Voting Shares of the Company to the lenders.

These warrants have a five year term, a strike price of $ 0.145 , and were valued at $ 497,055 (Note 16).

These warrants have a five year term, a strike price of $ 0.145 , and were valued at $ 497,055 .

The value of these warrants and other legal and administrative expenses amounting to $ 1,346,793 are treated as deferred financing costs.

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 March 31, 2024 $ 967,587 (December 31, 2023 - $ 1,083,697 ) of deferred financing costs remain unamortized.

The following table shows a summary of the Company’s convertible debt:

September 30,

Beginning of year

2 unchanged sentences

Amortization of deferred financing costs

End of period

current portion

1 unchanged sentence

Stockholders’ Equity

The Company’s certificate of incorporation authorized the Company to issue the following classes of shares with the following par value and voting rights as of September 30, 2023.

The Company’s certificate of incorporation authorized the Company to issue the following classes of shares with the following par value and voting rights as of March 31, 2024.

The liquidation and dividend rights are identical among shares equally in the Company’s earnings and losses on an as converted basis.

15 unchanged sentences

Shares Issued

During the nine months ended September 30, 2023, the Company issued the 15,000,000 Subordinate Voting Shares to its senior secured lender, Chicago Atlantic Admin, LLC, an affiliate of Green Ivy Capital, and a group of lenders in connection with the fifth amendment to its Credit Facility signed on March 31, 2023 (Note 13).

During the nine months ended September 30, 2023, 65,411 Super Voting Shares were redeemed for 6,541,100 Subordinate Voting Shares

During the nine months ended September 30, 2023, 702 Multiple Voting Shares were redeemed for 70,200 Subordinate Voting Shares

During the nine months ended September 30, 2022, 47,336 Multiple Voting Shares were redeemed for 4,733,600 Subordinate Voting Shares

During the nine months ended September 30, 2022, employee stock options were redeemed for 15,002 Subordinate Voting Shares.

Proceeds from these transactions were $ 7,201 .

During the three months ended March 31, 2024, 10,342 Multiple Voting Shares were redeemed for 1,034,200 Subordinate Voting Shares.

Stock-Based Compensation

4 unchanged sentences

Incentive stock options have a maximum term of 10 years from the date of grant.

The incentive stock options vest at the discretion of the Board.

The incentive stock options vest at the discretion of the Board of Directors.

Options granted under the equity incentive plan were valued using the Black-Scholes option pricing model with the following weighted average assumptions:

September 30,

Risk-Free Interest Rate

Weighted Average Exercise Price

Weighted Average Stock Price

Expected Life of Options (years)

Expected Annualized Volatility

Grant Fair Value

Expected Forfeiture Rate

Expected Dividend Yield

Stock option activity for the nine months ended September 30, 2023, and for the year ended December 31, 2022, is presented below:

Stock option activity for the three months ended March 31, 2024, and for the year ended December 31, 2023, is presented below:

Weighted Average

6 unchanged sentences

Balance, December 31, 2023

( 3,618,186 )

Options Outstanding at September 30, 2023

Options Exercisable at September 30, 2023

During the three and nine months ended September 30, 2023, the Company recognized $ 248,000 and $ 2,247,635 in stock-based compensation relating to stock options, respectively.

During the three and nine months ended September 30, 2022, the Company recognized $ 600,191 and $ 1,993,908 in stock-based compensation relating to stock options, respectively.

As of September 30, 2023, the total unrecognized compensation costs related to unvested stock options awards granted was $ 554,218 .

Options Outstanding at March 31, 2024

Options Exercisable at March 31, 2024

During the three month periods ended March 31, 2024 and 2023, the Company recognized $ 86,732 and $ 1,399,258 in stock-based compensation relating to stock options, respectively.

As of March 31, 2024, the total unrecognized compensation costs related to unvested stock options awards granted was $ 416,563 .

In addition, the weighted average period over which the unrecognized compensation expense is expected to be recognized is approximately 1.7 years.

The total intrinsic value of stock options outstanding and exercisable as of September 30, 2023, was $ 25,224 and $ 15,626 , respectively.

The total intrinsic value of stock options outstanding and exercisable as of March 31, 2024, was $ 3,388,310 and $ 2,973,949 , respectively.

The Company does not estimate forfeiture rates when calculating compensation expense.

2 unchanged sentences

Multiple Voting Share (MVS) warrants entitle the holder to purchase one multiple voting share of the Company.

Warrants issued were valued using the Black-Scholes option pricing model with the following assumptions:

September 30,

Risk-Free Interest Rate

Expected Life (years)

Expected Annualized Volatility

Expected Forfeiture Rate

Expected Dividend Yield

A summary of the warrants outstanding is as follows:

5 unchanged sentences

Warrants outstanding at December 31, 2023

Warrants outstanding at September 30, 2023

Warrants exercisable at September 30, 2023

Warrants outstanding at March 31, 2024

Warrants exercisable at March 31, 2024

Weighted Average

5 unchanged sentences

Warrants outstanding at December 31, 2023

Warrants outstanding at September 30, 2023

Warrants exercisable at September 30, 2023

Weighted Average

Exercise Price

Remaining Life

Warrants outstanding at December 31, 2021

Warrants outstanding at December 31, 2022 and September 30, 2023

Warrants exercisable at September 30, 2023

During the three and nine months ended September 30, 2023, and 2022, $ 0 in stock-based compensation expense was recorded in connection with the SVS compensation warrants and $ 0 in stock-based compensation was recorded in connection with the MVS warrants.

On May 25, 2023, the Company and Grown Rogue International, Inc.

(“Grown Rogue”) entered into a strategic agreement whereby Grown Rogue will support Goodness Growth in the optimization of its cannabis flower products, with a particular focus on improving the quality and yield of top-grade “A” cannabis flower across its various operating markets, starting with Maryland and Minnesota.

As part of this strategic agreement the Company is obligated to issue 10,000,000 warrants

to purchase subordinate voting shares of Goodness Growth to Grown Rogue, with a strike price equal to a 25.0 percent premium to the 10-day volume weighted average price (“VWAP”) of Goodness Growth’s subordinate voting shares prior to the effective date of the agreement.

These warrants have not been granted as of September 30, 2023, but were considered an accrued expense at a valuation $ 1,244,404 and included within stock-based compensation on the unaudited condensed consolidated statement of loss and comprehensive loss for the three and nine month periods ended September 30, 2023.

Warrants outstanding at March 31, 2024

Warrants exercisable at March 31, 2024

During the three months ended March 31, 2024, and 2023, $ 0 in stock-based compensation expense was recorded in connection with outstanding warrants.

Restricted Stock Units (“RSUs”)

The expense associated with RSUs is based on the closing share price of the Company’s subordinate voting shares on the business day immediately preceding the grant date, adjusted for the absence of future dividends and is amortized on a straight-line basis over the periods during which the restrictions lapse.

1 unchanged sentence

The awards are generally subject to forfeiture in the event of termination of employment.

During the three and nine months ended September 30, 2023, the Company recognized $ 52,437 and $ 517,376 , respectively, in stock-based compensation expense related to RSUs.

During the three and nine months ended September 30, 2022 the Company recognized $ 295,890 and $ 642,686 , respectively, in stock-based compensation expense related to RSUs.

During the three months ended March 31, 2024, the Company recognized $ 93,057 and $ 276,336 , respectively, in stock-based compensation expense related to RSUs.

A summary of RSUs is as follows:

2 unchanged sentences

Balance, December 31, 2022

Granted on March 15, 2022

Granted on December 15, 2022

Balance, December 31, 2022

Balance, September 30, 2023

Vested at September 30, 2023

Balance, December 31, 2023 and March 31, 2024

Vested at March 31, 2024

Commitments and Contingencies

28 unchanged sentences

On November 14, 2022, Verano filed counterclaims against the Company for the termination fee and transaction expenses described above.

On July 31, 2023, the Company filed a requisition for adjournment of its application filed July 14, 2023, and set for hearing on July 31, 2023 to compel Verano’s compliance with document production based upon the Company’s belief that Verano was engaging in tactics to delay the litigation.

Throughout 2023, the Company served 4 lists of documents, reviewed document production from Verano, and prepared for examinations for discovery.

The Company also prepared materials in anticipation of seeking summary determination of its claim, which it anticipates filing within 30 days .

The damages sought will be significant and material given that Verano’s breach left the Company in a vulnerable position resulting in the Company being constrained in its ability to fund growth initiatives that were desirable and that its competitors were able to undertake, most notably in Minnesota and New York markets.

Lease commitments

3 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Salaries and benefits

3 unchanged sentences

Other Income (Expense)

The CARES Act provides an employee retention credit (“CARES Employee Retention credit”), which is a refundable tax credit against certain employment taxes of up to $5,000 per employee for eligible employers.

The tax credit is equal to 50% of qualified wages paid to employees during a quarter, capped at $10,000 of qualified wages per employee through December 31, 2020.

Additional relief provisions were passed by the United States government, which extend and slightly expand the qualified wage caps on these credits through December 31, 2021.

Based on these additional provisions, the tax credit is now equal to 70% of qualified wages paid to employees during a quarter, and the limit on qualified wages per employee has been increased to $10,000 of qualified wages per quarter.

The Company qualifies for the tax credit under the CARES Act.

During the nine months ended September 30, 2023, the Company recorded and received

$ 4,650,264 (2022 - $ 0 ) related to the CARES Employee Retention credit in other income on the unaudited condensed consolidated statement of net loss and comprehensive loss for the nine months ended September 30, 2023.

On May 25, 2023, the Company and Grown Rogue International, Inc.

As part of this strategic agreement the Grown Rogue is obligated to grant the Company 8,500,000 warrants to purchase subordinate voting shares of Grown Rogue to Goodness Growth.

These warrants have not been granted as of September 30, 2023, but were considered a warrant receivable at a black-scholes valuation of $ 1,566,445 and included within other income on the unaudited condensed consolidated statement of net loss and comprehensive loss for the nine month period ended September 30, 2023.

An exercise price of $ 0.166 , an expected life of 5 years, an annual risk-free interest rate of 4.13 %, and volatility of 100 % were the valuation assumptions used in the black-scholes model.

(“Grown Rogue”) entered into a strategic agreement whereby Grown Rogue will support Goodness Growth in the optimization of its cannabis flower products.

As part of this strategic agreement Grown Rogue granted the Company 8,500,000 warrants to purchase subordinate voting shares of Grown Rogue on October 5, 2023.

These warrants were valued at $ 3,265,231 on March 31, 2024 using a stock price of $ 0.45 , an exercise price of $ 0.17 , an expected life of 4.52 years, an annual risk free rate of 4.21 % , and volatility of 100 % .

The change in fair value relative to December 31, 2023 of $ 1,327,879 was recorded as other income in the unaudited condensed consolidated statement of loss and comprehensive loss for the three months ended March 31, 2024.

Supplemental Cash Flow Information (1)

September 30,

Cash paid for interest

1 unchanged sentence

Change in construction accrued expenses

Warrants issued in connection with financing activities

(1) For supplemental cash flow information related to leases, refer to Note 9 .

6 unchanged sentences

The Company’s maximum credit risk exposure is equivalent to the carrying value of these instruments.

The Company has been granted licenses pursuant to the laws of the states of Maryland, Massachusetts, Minnesota, Nevada, New York, and Puerto Rico with respect to cultivating, processing, and/or distributing marijuana.

The Company has been granted licenses pursuant to the laws of the states of Maryland, Minnesota, and New York with respect to cultivating, processing, and/or distributing marijuana.

Presently, this industry is illegal under United States federal law.

2 unchanged sentences

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due.

As of September 30, 2023, the Company’s financial liabilities consist of accounts payable and accrued liabilities, and debt.

As of March 31, 2024, the Company’s financial liabilities consist of accounts payable, accrued liabilities, debt,

and convertible debt.

The Company manages liquidity risk by reviewing its capital requirements on an ongoing basis.

Historically, the Company’s main source of funding has been additional funding from shareholders and debt financing.

Historically, the Company’s main source of funding has been additional funding from investors and debt issuances.

The Company’s access to financing is always uncertain.

14 unchanged sentences

The Company currently carries variable interest-bearing debt subject to fluctuations in the United States Prime rate.

A change of 100 basis points in interest rates during the nine months ended September 30, 2023, would have resulted in a corresponding change in the statement of loss and comprehensive loss of $ 414,345 .

A change of 100 basis points in interest rates during the three months ended March 31, 2024, would have resulted in a corresponding change in the statement of loss and comprehensive loss of $ 138,570 .

Related Party Transactions

As of September 30, 2023, and December 31, 2022, there were $ 0 and $ 1,613 due to related parties, respectively.

For the nine months ended September 30, 2023, and 2022, the Company paid a related party (Bengal Impact Partners, of which Joshua Rosen, who is the Company’s interim Chief Executive Officer and a member of the Company’s Board of Directors, is a managing partner) $ 1,613 and $ 90,000 , respectively, for corporate advisory services.

As of March 31, 2024, and December 31, 2023, there were $ 0 and $ 121,846 due to related parties, respectively.

Subsequent Events

On October 5, 2023, Goodness Growth issued 10,000,000 warrants to purchase subordinate voting shares of Goodness Growth to Grown Rogue, with a strike price equal to C$ 0.317 (US$ 0.233 ), which represented a 25.0 percent premium to the 10 -day volume weighted average price (“VWAP”) of Goodness Growth’s subordinate voting shares on the trading day immediately prior to the effective date of the Agreement.

Similarly, Grown Rogue issued 8,500,000 warrants to purchase shares of Grown Rogue to Goodness Growth, with a strike price equal to C$ 0.225 (US$ 0.166 ), which represented a 25.0 percent premium to the 10 -day VWAP of Grown Rogue’s subordinate voting shares on the trading day immediately prior to the effective date of the Agreement.

The warrants exchanged in the agreement were issued with five-year terms to exercise (provided that the Grown Rogue warrants may terminate earlier on an insolvency event relating to Goodness Growth), may not be registered with the United States Securities & Exchange Commission or qualified by any Canadian provincial securities commission, and are not assignable except as set forth in the warrant certificates, as more particularly described in the May 25, 2023 announcement.

On October 30, 2023, the Company executed a fifth amendment to its lease with its landlord on its cannabis cultivation and manufacturing facilities located in Johnstown, New York.

As part of the fifth amendment to the lease in Johnstown, the Company and its landlord have agreed to increase the tenant improvement allowance on the lease by an additional $ 14.0 million.

The increase in tenant improvement funds will be utilized to support the completion of the construction of the indoor expansion project that was announced in September 2021.

The parties have also agreed to a monthly base rental increase of $ 210,000 beginning November 2023.

In October of 2023, the Company closed on the two additional tranches of Convertible Notes, which are convertible into Subordinate Voting Shares at a conversion price of $ 0.145 .

Total proceeds received, net of deferred financing costs of $ 152,124 , were $ 1,847,876 .

On April 1, 2024, the Company executed a eighth amendment to its lease with its landlord on its cannabis cultivation and manufacturing facilities located in Johnstown, New York.

As part of the eighth amendment to the lease in Johnstown, the Company extended its option to terminate the lease.

Written notice of termination now needs to be provided by June 15, 2024.

Additionally, the Company has a purchase option to buy the premises for $ 81,000,000 .

The purchase option extends through March 27, 2026, and the purchase price increases 3 % every six months.

On April 1, 2024, ACE Ventures, LLC (“Ace”), a minority-owned business partnership in the State of New York, and the Company executed a binding term sheet whereby Ace plans to acquire the Company’s subsidiary, Vireo Health of New York (“VireoNY”), pending the satisfaction of closing conditions, including secured capital commitments and regulatory approval.

Terms of the transaction include a purchase price between $ 3.0 and $ 5.0 million for Vireo Health of New York’s licenses, inventory and assets, as well as either Ace’s assumption of the lease agreement with Innovative Industrial Properties (“IIP”) for the Johnstown, NY cannabis cultivation and manufacturing campus or Ace’s acquisition of this campus.

Ace has agreed to take financial responsibility for VireoNY’s operations, including its operating losses, beginning on April 1, 2024.

These activities are expected to be supported initially by a $ 2.5 million unsecured loan from the Company to VireoNY.

On May 1, 2024, The Company announced that Josh Rosen, who has served as Interim CEO since February of 2023, has been appointed as Chief Executive Officer, effective immediately.

Rosen, retains his Interim Chief Financial Officer title.

On May 1, 2024, The Company announced that it is in ongoing discussions with its senior secured lender, Chicago Atlantic Admin, LLC, an affiliate of Green Ivy Capital, to finalize a longer-term extension of its credit agreement.

While this process remains ongoing, the parties have agreed to a short-term extension of the maturity date on their term loan until June 14, 2024, matching all other terms of the existing agreement.

On May 2, 2024, the Company announced that it has filed an application with the Supreme Court of British Columbia for summary determination in its ongoing litigation with Verano Holdings, Inc.

(“Verano”) related to Verano’s wrongful termination of the share exchange agreement (the “Arrangement Agreement”) between the parties pursuant to which Verano agreed to acquire all of the outstanding capital stock of the Company in a transaction announced on February 1, 2022.

The Company is seeking substantial damages, specifically US $ 869.0 million, as well as other costs and legal fees, based on Verano’s breach of contract and of its duty of good faith and honest performance.

While the Company’s filing of its application for summary determination reflects its belief that Verano’s defense against its claims of unlawful conduct is without merit, the Company can make no assurances regarding the expected timeframe to resolve this litigation, or its ability to recover damages from Verano.

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

What changed 10-Q

Item 1. Financial Statements