What changed in this filing

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Item 1. Financial Statements

2022-08-11 compared with 2022-05-11 · 129 added, 81 removed, 596 unchanged (26% of the section changed)

41 unchanged sentences

Three Months Ended

Six Months Ended

Cost of sales

5 unchanged sentences

Total operating expenses

Loss from operations

Income (loss) from operations

( 3,247,562 )

( 7,451,974 )

( 8,092,335 )

Other income (expense):

1 unchanged sentence

( 5,367,915 )

Loss on sale of property and equipment

Gain on disposal of assets

2 unchanged sentences

( 2,756,358 )

( 9,899,622 )

( 3,782,504 )

Other income (expenses)

1 unchanged sentence

( 5,446,261 )

( 2,854,413 )

( 13,992,884 )

( 3,386,784 )

Loss before income taxes

1 unchanged sentence

( 6,101,975 )

( 21,444,858 )

( 11,479,119 )

Current income tax expenses

5 unchanged sentences

( 7,011,975 )

( 20,749,858 )

( 13,889,119 )

Net loss per share - basic and diluted

17 unchanged sentences

( 13,889,119 )

Balance at March 31, 2021

Balance at June 30, 2021

( 115,622,163 )

5 unchanged sentences

( 20,749,858 )

Balance at March 31, 2022

Balance at June 30, 2022

( 156,173,377 )

16 unchanged sentences

( 3,035,000 )

Loss on Sale of Property and Equipment

Gain on disposal of OMS

3 unchanged sentences

( 1,986,315 )

( 1,531,985 )

Prepaid expenses

3 unchanged sentences

Accounts payable and accrued liabilities

( 4,182,954 )

Change in assets and liabilities held for sale

6 unchanged sentences

( 11,028,976 )

Proceeds from sale of property, plant, and equipment

Proceeds from sale of royalty asset

7 unchanged sentences

Proceeds from long-term debt, net of issuance costs

Convertible debt payment

Proceeds from option exercises

27 unchanged sentences

and other customary conditions of closing .

Since being declared a global pandemic in March 2020, the spread of COVID-19 has severely impacted virtually all areas of the globe.

In many countries, including the United States, businesses were forced to cease or limit operations for long or indefinite periods of time.

Measures taken to contain the spread of the virus, including travel bans, quarantines, social distancing, and closures of non-essential services triggered significant disruptions to businesses worldwide, resulting in an economic slowdown.

Global stock markets have also experienced great volatility.

Governments and central banks have responded with monetary and fiscal interventions to stabilize economic conditions.

The duration and impact of the COVID-19 pandemic, as well as the effectiveness of government and central bank responses, remains unclear at this time.

During 2021, the Company’s revenue, gross profit and operating income were not negatively impacted by COVID-19 and the Company generally maintained the consistency of its operations.

However, the uncertain nature of the spread of COVID-19 may impact its business operations for reasons including the potential quarantine of Goodness Growth employees or those of its supply chain partners.

Summary of Significant Accounting Policies

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, 2021, filed with this Securities and

Exchange Commission, or SEC, on March 15, 2022 (the "

Annual Financial Statements ").

7 unchanged sentences

Results of interim periods should not be considered indicative of the results for the full year.

These unaudited interim condensed consolidated financial statements include estimates and assumptions of management that affect the amounts reported in the unaudited condensed consolidated financial statements.

These unaudited interim condensed consolidated financial statements include estimates and assumptions of management that affect the

amounts reported in the unaudited condensed consolidated financial statements.

Actual results could differ from these estimates.

5 unchanged sentences

The Company initially recorded the equity value of the stock issued at market value on the date of issuance, rather than applying a discount for lack of marketability to account for the lock up provisions.

To correct the immaterial misstatements for the three months ended March 31, 2021, the Company elected to revise its previously issued interim unaudited condensed consolidated statements of net loss and comprehensive loss, stockholders’ equity, and cash flows.

To correct the immaterial misstatements for the three and six month periods ended June 30, 2021, the Company elected to revise its previously issued interim unaudited condensed consolidated statements of net loss and comprehensive loss, stockholders’ equity, and cash flows.

The Company will present the revision of its previously issued interim unaudited condensed consolidated financial statements in connection with the future filing of its Quarterly Reports on Form 10-Q.

The impact of the revisions on the Company’s interim unaudited condensed consolidated financial statements for the three months ended March 31, 2021 is reflected in the following table:

Statement of Net Loss and Comprehensive Loss for the three months ended March 31, 2021 (unaudited)

The impact of the revisions on the Company’s interim unaudited condensed consolidated financial statements for the three and six months ended June 30, 2021 is reflected in the following table:

Statement of Net Loss and Comprehensive Loss for the six months ended June 30, 2021 (unaudited)

As Previously Reported

7 unchanged sentences

Derivative gain (loss)

( 1,689,900 )

Other income (expenses), net

( 1,696,884 )

( 1,689,900 )

( 3,386,784 )

Loss before income taxes

1 unchanged sentence

( 1,421,943 )

( 11,479,119 )

Net income (loss) and comprehensive income (loss)

1 unchanged sentence

( 1,421,943 )

Consolidated Statement of Changes in Stockholders' Equity as of March 31, 2021

( 13,889,119 )

Statement of Net Loss and Comprehensive Loss for the three months ended June 30, 2021 (unaudited)

As Previously Reported

Other income (expense):

Derivative gain (loss)

( 1,531,371 )

Other income (expenses), net

( 1,323,042 )

( 1,531,371 )

( 2,854,413 )

Loss before income taxes

( 4,570,604 )

( 1,531,371 )

( 6,101,975 )

Net income (loss) and comprehensive income (loss)

( 5,480,604 )

( 1,531,371 )

( 7,011,975 )

Consolidated Statement of Changes in Stockholders' Equity as of June 30, 2021 (unaudited)

As Previously Reported

Shares issued in Nevada acquisition

3 unchanged sentences

( 1,421,943 )

Balance at March 31, 2021

Consolidated Statement of Cash Flows for the three months ended March 31, 2021 (unaudited)

( 13,889,119 )

Balance at June 30, 2021

Consolidated Statement of Cash Flows for the six months ended June 30, 2021 (unaudited)

As Previously Reported

2 unchanged sentences

( 1,421,943 )

( 13,889,119 )

Derivative gain

( 1,689,900 )

Share-based payments

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 March 31, 2022:

Name of entity

46 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 month periods ended March 31, 2022 and 2021, 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 periods ending March 31, 2022 and 2021 were as follows:

The Company recorded a net loss for the three and six month periods ended June 30, 2022 and 2021, 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 six month period ending June 30, 2022 and 2021 were as follows:

Stock options

Convertible notes

Revenue Recognition

2 unchanged sentences

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

Six Months Ended

Three Months Ended

2 unchanged sentences

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 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 required date of adoption is January 1, 2023, and the Company is evaluating potential future impacts on the Company’s financial statements.

3 unchanged sentences

As part of this transaction, the Company transferred assets and liabilities with a net book value of $ 712,894 .

Consideration received exceeded OMS’s net assets at the time of sale, resulting in a gain of $ 437,106 which was recorded in the unaudited condensed consolidated statement of loss and comprehensive loss for the three months ended March 31, 2021.

Consideration received exceeded OMS’s net assets at the time of sale, resulting in a gain of $ 437,107 which was recorded in the unaudited condensed consolidated statement of loss and comprehensive loss for the six months ended June 30, 2021.

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 three months ended March 31, 2022.

Asset Acquisitions

8 unchanged sentences

Assets Held for Sale

As of March 31, 2022 the Company identified property, equipment, and lease assets and liabilities associated with the businesses in Maryland and Arizona with carrying amounts that are expected to be recovered principally through sale rather than through continuing use.

As of June 30, 2022 the Company identified property, equipment, and lease assets and liabilities associated with the businesses in Maryland and Arizona with carrying amounts that are expected to be recovered principally through sale 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 motnhs.

As such, these assets and liabilities have been classified as “held for sale.” The carrying value of these net assets exceeded fair value less expected cost to sell,

and as such, the Company recorded an impairment loss of $ 5,313,176 , which is included in the statement of loss and comprehensive loss for the three months ended March 31, 2022.

and as such, the Company recorded an impairment loss of $ 54,739 for the three months ended June 30, 2022, and $ 5,367,915 for the six months ended June 30, 2022.

Assets and liabilities held for sale are as follows:

10 unchanged sentences

Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability.

The following tables present information about the Company’s assets that are measured at fair value on a recurring basis as of March 31, 2022, and December 31, 2021, indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value:

The following tables present information about the Company’s assets that are measured at fair value on a recurring basis as of June 30, 2022, and December 31, 2021, indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value:

Quoted prices in

1 unchanged sentence

identical assets

March 31, 2022

June 30, 2022

December 31, 2021

1 unchanged sentence

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.

In connection with an evaluation of such non-financial assets during the three months ended March 31, 2022, the carrying values of property and equipment were concluded to exceed their fair values.

In connection with an evaluation of such non-financial assets during the six months ended June 30, 2022, the carrying values of property and equipment were concluded to exceed their fair values.

As a result, the Company recorded impairment charges that incorporates fair value measurements based on Level 3 inputs (Note 8).

4 unchanged sentences

Tax withholding receivable

Included in the trade receivables, net balance at March 31, 2022 and December 31, 2021, is an allowance for doubtful accounts of $ 125,564 and $ 215,606 , respectively.

Included in the tax withholding receivable, net balance at March 31, 2022 and December 31, 2021 is an allowance for doubtful accounts of $ 356,474 .

Other receivables, as of March 31, 2022, primarily consists of interest paid in connection with the Credit Facility (Note 13), but subject to reimbursement by Verano per the terms of the Arrangement Agreement.

Included in the trade receivables, net balance at June 30, 2022 and December 31, 2021, is an allowance for doubtful accounts of $ 187,206 and $ 215,606 , respectively.

Included in the tax withholding receivable, net balance at June 30, 2022 and December 31, 2021 is an allowance for doubtful accounts of $ 356,474 .

Other receivables, as of June 30, 2022, primarily consists of deferred financing costs paid in connection with the Credit Facility (Note 13), but subject to reimbursement by Verano per the terms of the Arrangement Agreement.

Inventory is comprised of the following items:

3 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 June 30,

Six Months Ended June 30,

Work-in-progress

13 unchanged sentences

( 7,693,878 )

For the three months ended March 31, 2022 and 2021, total depreciation on property and equipment was $ 856,289 and $ 679,920 , respectively.

For the three months ended March 31, 2022 and 2021, accumulated amortization of the right of use asset under finance lease amounted to $ 2,736,162 and $ 1,802,458 , respectively.

For the six months ended June 30, 2022 and 2021, total depreciation on property and equipment was $ 1,633,280 and $ 1,404,705 , respectively.

For the six months ended June 30, 2022 and 2021, accumulated amortization of the right of use asset under finance lease amounted to $ 3,007,098 and $ 2,024,551 , respectively.

The right of use asset under finance lease of $ 70,048,971 consists of leased processing and cultivation premises.

The Company capitalized into inventory $ 700,193 and $ 508,359 relating to depreciation associated with manufacturing equipment and production facilities for the three months ended March 31, 2022 and 2021, respectively.

The Company capitalized into inventory $ 1,314,056 and $ 986,896 relating to depreciation associated with manufacturing equipment and production facilities for the six months ended June 30, 2022 and 2021, 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 March 31, 2022, in conjunction with the Company’s held for sale assessment, the Company evaluated whether property and equipment showed any indicators of impairment, and it was determined that the recoverable amount of certain net assets were below book value.

As of June 30, 2022, in conjunction with the Company’s held for sale assessment, the Company evaluated whether property and equipment showed any indicators of impairment, and it was determined that the recoverable amount of certain net assets were below book value.

As a result, the Company recorded an impairment charge of $ 5,367,915 (2021 - $ 0 ) on property and equipment, net.

8 unchanged sentences

Finance Leases

March 31, 2022

June 30, 2022

Total minimum lease payments

21 unchanged sentences

( 2,948,655 )

Goodwill - December 31, 2021 and March 31, 2022

Goodwill - December 31, 2021 and June 30, 2022

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

1 unchanged sentence

On this date the Company performed a Step 1 goodwill impairment analysis.

No indicators of impairment exists as of March 31, 2022.

No indicators of impairment exists as of June 30, 2022.

Intangible assets are comprised of the following items:

7 unchanged sentences

Divestitures (Note 3)

Balance, March 31, 2022

Amortization expense for intangibles was $ 172,267 and $ 206,443 during the three months ended March 31, 2022 and 2021, respectively.

Balance, June 30, 2022

Amortization expense for intangibles was $ 172,267 and $ 344,533 during the three and six months ended June 30, 2022, respectively, and $ 206,442 and $ 412,885 during the three and six months ending June 30, 2021, respectively.

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

17 unchanged sentences

The Credit Facility matures on March 31, 2024.

On March 25, 2021, in connection with closing the Credit Facility, Goodness Growth issued (a) five year warrants to the agent and each lender to purchase an aggregate of 2,803,984 subordinate voting shares at an exercise price of C$ 3.50 per share, and (b) a five year warrant to the broker to purchase 233,665 subordinate voting shares at an exercise price of C$ 3.50 per share.

C$ 3.50 per share.

Each warrant provides customary anti-dilution provisions.

12 unchanged sentences

Additionally, the Company incurred $ 115,863 of third party legal fees related to the draw.

The Company expects to be reimbursed by Verano for the $ 1,190,863 in deferred financing pursuant to the Arrangement Agreement.

These fees are included in our other receivables balance (Note 5), and included as other income in the unaudited statement of loss and comprehensive loss for the three months ended March 31, 2022.

The Company will be reimbursed by Verano for the $ 1,190,863 in deferred financing pursuant to the Arrangement Agreement.

These fees are included as other income in the unaudited statement of loss and comprehensive loss for the six months ended June 30, 2022, and to the extent these fees have not been reimbursed, they are included in our other receivables balance (Note 5).

During the three months ended June 30, 2022, the Company drew $ 14,000,000 in principal debt from the Delayed Draw Loans.

Proceeds received, net of deferred financing fees of $ 528,938 , were $ 13,471,062 .

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.

14 unchanged sentences

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 March 31, 2022.

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 June 30, 2022.

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 three months ended March 31, 2022, 28,134 Multiple Voting Shares were redeemed for 2,813,400 Subordinate Voting Shares.

During the three months ended March 31, 2021, 94,177 Multiple Voting Shares were redeemed for 9,417,700 Subordinate Voting Shares.

During the three months ended March 31, 2021, employee stock options were redeemed for 3,130,343 Subordinate Voting Shares.

During the six months ended June 30, 2022, 28,134 Multiple Voting Shares were redeemed for 2,813,400 Subordinate Voting Shares.

During the six months ended June 30, 2021, 131,977 Multiple Voting Shares were redeemed for 13,197,700 Subordinate Voting Shares.

During the six months ended June 30, 2021, employee stock options were redeemed for 3,659,668 Subordinate Voting Shares.

Proceeds from these transactions were $ 1,075,723 .

On June 4, 2021, the Company issued 295,774 shares with a fair value of $ 604,876 to a third party for ongoing corporate advisory services.

The fair value of the issued shares was recorded to stock-based compensation expense in the unaudited condensed consolidated statements of net loss and comprehensive loss for the three and six month periods ended June 30, 2021.

On March 31, 2021, as part of a settlement and release of claims regarding a dispute over certain post-termination terms under his employment agreement, the Company issued 7,110,481 subordinate voting shares to its former Executive Chairman, Bruce Linton, upon a cashless exercise of 10 million warrants that had an exercise price of $ 1.02 per share and issued him 889,519 subordinate voting shares with a fair value of $ 1,441,183 pursuant to an exemption from registration under the Securities Act.

3 unchanged sentences

the additional 889,519 shares are subject to a holding period expiring on August 1, 2021.

He was previously issued 15,000,000 warrants under his employment agreement and as part of the settlement, he surrendered all right, title, and interest in the remaining 5,000,000 warrants for cancellation.

He was previously

issued 15,000,000 warrants under his employment agreement and as part of the settlement, he surrendered all right, title, and interest in the remaining 5,000,000 warrants for cancellation.

Stock-Based Compensation

12 unchanged sentences

Expected Dividend Yield

Stock option activity for the three months ended March 31, 2022 and for the year ended December 31, 2021 is presented below:

Stock option activity for the six months ended June 30, 2022 and for the year ended December 31, 2021 is presented below:

Weighted Average

6 unchanged sentences

Balance, December 31, 2021

Options Outstanding at March 31, 2022

Options Exercisable at March 31, 2022

During the three months ended March 31, 2022 and 2021, the Company recognized $ 591,600 and $ 686,755 in stock-based compensation expense relating to stock options, respectively.

As of March 31, 2022, the total unrecognized compensation costs related to unvested stock options awards granted was $ 3,913,312 .

Options Outstanding at June 30, 2022

Options Exercisable at June 30, 2022

During the six months ended June 30, 2022 and 2021, the Company recognized $ 1,393,718 and $ 1,408,639 in stock-based compensation relating to stock options, respectively.

During the three months ended June 30, 2022 and 2021, the Company recognized $ 802,118 and $ 803,204 in stock-based compensation relating to stock options, respectively.

As of June 30, 2022, the total unrecognized compensation costs related to unvested stock options awards granted was $ 3,093,921 .

In addition, the weighted average period over which the unrecognized compensation expense is expected to be recognized is approximately 2.7 years.

The total intrinsic value of stock options outstanding and exercisable as of March 31, 2022, was $ 36,075,647 and $ 30,434,024 , respectively.

The total intrinsic value of stock options outstanding and exercisable as of June 30, 2022, was $ 16,226,531 and $ 15,293,771 , respectively.

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

17 unchanged sentences

( 7,889,519 )

Warrants outstanding at December 31, 2021 and March 31, 2022

Warrants exercisable at December 31, 2021 and March 31, 2022

Warrants outstanding at December 31, 2021 and June 30, 2022

Warrants exercisable at December 31, 2021 and June 30, 2022

Weighted Average

5 unchanged sentences

Warrants outstanding at December 31, 2021

Warrants outstanding at March 31, 2022

Warrants exercisable at March 31, 2022

Warrants outstanding at June 30, 2022

Warrants exercisable at June 30, 2022

Weighted Average

4 unchanged sentences

Warrants outstanding at December 31, 2021

Warrants outstanding at March 31, 2022

Warrants exercisable at March 31, 2022

During the three months ended March 31, 2022 and 2021, $ 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.

Warrants outstanding at June 30, 2022

Warrants exercisable at June 30, 2022

During the three and six months ended June 30, 2022 and 2021, $ 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.

The expense associated with RSUs is based on closing share price of the Company’s common stock 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 months ended March 31, 2022 the Company recognized $ 51,906 in stock-based compensation expense related to RSUs.

During the three and six months ended June 30, 2022 the Company recognized $295,890 and $346,795, respectively, in stock-based compensation expense related to RSUs.

A summary of RSUs is as follows:

1 unchanged sentence

Balance, December 31, 2021

Balance, March 31, 2022

Balance, June 30, 2022

Commitments and Contingencies

1 unchanged sentence

On February 25, 2019, Dr.

Mark Schneyer (“ Schneyer ”) filed a lawsuit in Minnesota District Court, Fourth District (the “ Court ”), on his own behalf and, derivatively, on behalf of Dorchester Capital, LLC, naming Vireo U.S., Dorchester Management, LLC (“ Dorchester Management ”), and Dorchester Capital, LLC (“ Capital ”), as defendants.

(“ Vireo U.S.

”), Dorchester Management, LLC (“ Dorchester Management ”), and Dorchester Capital, LLC (“ Capital ”), as defendants.

The essence of the claims made by Schneyer is Vireo U.S.

15 unchanged sentences

Under Delaware law, Capital has a right to control the litigation of the Remaining Derivative Claims, the Rejected Derivative Claims, and any other derivative allegations that may be asserted on behalf of Capital.

On August 17, 2021, Management exercised this right for Capital and appointed a second independent special litigation committee (the “ Second SLC ”), a partner at an international law firm, to manage the litigation of the claims raised in Schneyer’s Second Amended Complaint.

On August 17, 2021, Management

exercised this right for Capital and appointed a second independent special litigation committee (the “ Second SLC ”), a partner at an international law firm, to manage the litigation of the claims raised in Schneyer’s Second Amended Complaint.

On August 31, 2021, Capital filed a complaint at the Second SLC’s direction alleging the Remaining Derivative Claims and the Rejected Derivative Claims.

4 unchanged sentences

On February 22, 2022, the Minnesota Court of Appeals denied the immediate review of the December 9, 2021 order.

Following this denial, the litigation will proceed with Schneyer’s three contract claims and a direct fraud claim

against Management and Vireo U.S., as well as the Remaining Derivative Claims brought by Capital.

filed a motion to dismiss the Remaining Derivative Claims brought by Capital that remains pending before the Court.

On June 20,2022 the Court issued an order amending and realigning the complaint brought by Capital for the Remaining Derivative Claims.

The order also denied Vireo U.S.’ and Dorchester Management’s motion to dismiss the Remaining Derivative Claims brought by Capital.

Following this order, the litigation will proceed with Schneyer’s three direct contract claims against Vireo U.S and a direct fraud claim against Management and Vireo U.S.

on an individual basis, as well as the Remaining Derivative Claims brought by Capital.

believes that Schneyer’s claims lack merit and expects to be vindicated in the SLC process or, in the alternative, prevail in the litigation, if and when it proceeds.

3 unchanged sentences

The Company leases various facilities, under non-cancelable finance and operating leases, which expire at various dates through June 2085.

General and Administrative Expenses

General and administrative expenses are comprised of the following items:

Selling, General and Administrative Expenses

Selling, general and administrative expenses are comprised of the following items:

Three Months Ended

Six Months Ended

Salaries and benefits

3 unchanged sentences

Supplemental Cash Flow Information (1)

Three Months Ended

Six Months Ended

Cash paid for interest

17 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 March 31, 2022, the Company’s financial liabilities consist of accounts payable and accrued liabilities, and debt.

As of June 30, 2022, the Company’s financial liabilities consist of accounts payable and accrued liabilities, and debt.

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

17 unchanged sentences

Related Party Transactions

As of March 31, 2022, and December 31, 2021, there were $ 10,000 and $ 98,750 due to related parties, respectively.

For the three months ended March 31, 2022, and 2021, the Company paid a related party (Bengal Impact Partners, of which a member of the Company’s Board of Directors is a managing partner) $ 20,000 and $ 0 , respectively, for ongoing corporate advisory services.

As of June 30, 2022, and December 31, 2021, there were $ 0 and $ 98,750 due to related parties, respectively.

For the six months ended June 30, 2022, and 2021, the Company paid a related party (Bengal Impact Partners, of which a member of the Company’s Board of Directors is a managing partner) $ 60,000 and $ 0 , respectively, for ongoing corporate advisory services.

Certain directors and officers of the Company (Kyle Kingsley, Amber Shimpa, and Stephen Dahmer) owned OMS, which was sold on March 31, 2021 (Note 3).

1 unchanged sentence

Subsequent Events

On April 1, 2022, the Company drew an additional $ 8,000,000 in principal debt from the Delayed Draw Loans.

In July of 2022, the Company drew an additional $ 6,000,000 in net proceeds from the Delayed Draw Loans.

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