Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with the financial information and the notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our outlook, plans and strategy for our business and potential financing, includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or “forward-looking information” within the meaning of Canadian securities laws. These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “remain,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would,” “should,” “potential,” “intention,” “strategy,” “strategic,” “approach,” “subject to,” “possible,” “pending,” “if,” or the negative or plural of these words or similar expressions or variations. Such forward-looking statements and forward-looking information are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements or forward-looking information. Factors that could cause or contribute to such differences include, but are not limited to, those identified in this Quarterly Report on Form 10-Q and those discussed in the section titled “Risk Factors” set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, and in our other SEC and Canadian public filings. Such forward-looking statements reflect our beliefs and opinions on the relevant subject based on information available to us as of the date of this report, and while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements. You should not rely upon forward-looking statements or forward-looking information as predictions of future events. Furthermore, such forward-looking statements or forward-looking information speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements or forward-looking information to reflect events or circumstances after the date of such statements.
Amounts are presented in United States dollars, except as otherwise indicated.
Overview of the Company
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. The Company is evolving with the industry and is in the midst of a transformation to being significantly more customer-centric across its operations, which include cultivation, manufacturing, wholesale and retail business lines. With our core operations strategically located in three limited-license markets through our state-licensed subsidiaries, we cultivate and manufacture cannabis products and distribute these products through our growing network of Green Goods ® and other retail dispensaries we own or operate as well as to third-party dispensaries in the markets in which our subsidiaries hold operating licenses.
The termination of the Arrangement Agreement gives rise to substantial doubt about the Company’s ability to meet its obligations over the next twelve months. Company management is working with the Company’s lenders, counsel, and other applicable parties to implement a plan to effectively mitigate the conditions giving rise to substantial doubt. Elements of this plan may include, but are not limited to, asset sales, debt restructuring, and capital raises. 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. The Company may not be successful in these efforts.
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Three months ended June 30, 2023, Compared to Three months ended June 30, 2022
Revenue
We derived our revenue from cultivating, processing, and distributing cannabis products through our eighteen dispensaries in four states and our wholesale sales to third parties in four states. For the three months ended June 30, 2023, 85% of our revenue was generated from retail dispensaries and 15% from wholesale business. For the three months ended June 30, 2022, 81% of our revenue was generated from retail business and 19% from wholesale business.
For the three months ended June 30, 2023, Minnesota operations contributed approximately 57% of revenues, New York contributed 17%, New Mexico contributed 5%, and Maryland contributed 21%. For the three months ended June 30, 2022, Minnesota operations contributed approximately 48% of revenues, New York contributed 18%, Arizona contributed 6%, New Mexico contributed 11%, and Maryland contributed 17%.
Revenue for the three-months ended June 30, 2023, was $20,196,556, a decrease of $893,592 or 4% compared to revenue of $21,090,148 for the three-months ended June 30, 2022. The decrease is primarily attributable to decreased revenue contributions from the retail business in New Mexico and the lack of Arizona revenues, which was disposed of in 2022, partially offset by Minnesota and Maryland revenue growth. An increased number of operators and store count drove decreased New Mexico revenues, while increased patient count and demand drove increased Minnesota revenues.
Retail revenue for the three months ended June 30, 2023, was $17,143,099 an increase of $101,607 or 1% compared to retail revenue of $17,041,492 for the three months ended June 30, 2022, primarily due to increased revenue contributions from Minnesota and Maryland offset by decreased contributions from New York and New Mexico.
25
Wholesale revenue for the three months ended June 30, 2023, was $3,053,457, a decrease of $995,199 compared to wholesale revenue of $4,048,656 for the three months ended June 30, 2022. The decrease was primarily due to the lack of Arizona wholesale revenues.
Three Months Ended
June 30,
2023
2022
$Change
% Change
Retail:
MN
$
11,479,371
$
9,928,201
$
1,551,170
16
%
NY
2,279,635
2,792,734
(513,099)
(18)
%
NM
911,969
2,340,575
(1,428,606)
(61)
%
MD
2,472,124
1,979,982
492,142
25
%
Total Retail
$
17,143,099
$
17,041,492
$
101,607
1
%
Wholesale:
AZ
$
—
$
1,344,620
$
(1,344,620)
(100)
%
MD
1,837,145
1,565,835
271,310
17
%
NY
1,176,585
909,521
267,064
29
%
NM
39,727
—
39,727
100
%
MN
—
228,680
(228,680)
(100)
%
Total Wholesale
$
3,053,457
$
4,048,656
$
(995,199)
(25)
%
Total Revenue
$
20,196,556
$
21,090,148
$
(893,592)
(4)
%
NM and AZ
$
(951,696)
$
(3,685,195)
$
2,733,499
(74)
%
Total Revenue excluding NM and AZ
$
19,244,860
$
17,404,953
$
1,839,907
11
%
N.M. Not Meaningful
Cost of Goods Sold and Gross Profit
Gross profit reflects total net revenue less cost of goods sold. Cost of goods sold represents the costs attributable to producing bulk materials and finished goods, which includes direct materials, labor, and certain indirect costs such as depreciation, insurance and utilities. Cannabis costs are affected by various state regulations that limit the sourcing and procurement of cannabis product, which may create fluctuations in gross profit over comparative periods as the regulatory environment changes.
Cost of goods sold are determined from costs related to the cultivation and processing of cannabis and cannabis-derived products as well as the cost of finished goods inventory purchased from third parties.
Cost of goods sold for the three months ended June 30, 2023, was $10,865,260, an increase of $142,138 compared to the three months ended June 30, 2022, of $10,723,122.
Gross profit for the three months ended June 30, 2023, was $9,331,296, representing a gross margin of 46%. This is compared to gross profit for the three months ended June 30, 2022, of $10,367,026 or a 49% gross margin. The decrease in gross profit and margin was driven primarily by an increase in inventory valuation adjustments of $529,805.
Our current production capacity has not been fully realized and we expect future gross profits to increase with revenue growth reflective of higher demand, increased product output and new product development. However, we expect gradual price compression as markets mature that could place downward pressure on our retail and wholesale gross margins.
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Total Expenses
Total expenses other than the cost of goods sold consist of selling costs to support customer relationships, marketing, and branding activities. It also includes a significant investment in the corporate infrastructure required to support ongoing business.
Selling costs generally correlate to revenue. In the short-term as a percentage of sales, we expect selling costs to remain relatively flat. However, as positive regulatory developments in our core markets occur, we expect selling costs as a percentage of sales to decrease via growth in our retail and wholesale channels.
General and administrative expenses also include costs incurred at the corporate offices, primarily related to personnel costs, including salaries, benefits, and other professional service costs, as well as corporate insurance, legal and professional fees associated with being a publicly traded company. We expect general and administrative expenses as a percentage of sales to decrease as we realize revenue growth organically and through positive regulatory developments in our core markets.
Total expenses for the three months ended June 30, 2023, were $10,373,340 an increase of $314,499 compared to total expenses of $10,058,841 for the three months ended June 30, 2022. The decrease in total expenses is primarily attributable to a decrease in salaries and wages and professional fees partially offset by an increase in share based compensation expense.
Operating Income (Loss) before Income Taxes
Operating income (loss) before other income (expense) and provision for income taxes for the three months ended June 30, 2023, was ($1,042,044) a decrease of $1,350,229 compared to operating income of $308,185 for the three months ended June 30, 2022.
Total Other Income (Expense)
Total other expense for the three months ended June 30, 2023, was $(4,694,340), a change of $751,921 compared to other expense of $(5,446,261) for the three months ended June 30, 2022. This change is primarily attributable to an increased losses on disposal of assets and interest expense, partially offset by increased other income attributable to the receipt of $4,650,264 related to the CARES Employee Retention credit.
Provision for Income Taxes
Income tax expense is recognized based on the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year-end. For the three months ended June 30, 2023, tax expense totaled $1,592,871 compared to tax expense of $1,045,000 for the three months ended June 30, 2022.
Six months ended June 30, 2023, Compared to Six months ended June 30, 2022
Revenue
We derived our revenue from cultivating, processing, and distributing cannabis products through our eighteen dispensaries in four states and our wholesale sales to third parties in five states. For the six months ended June 30, 2023, 86% of the revenue was generated from retail business and 14% from wholesale business. For the six months ended June 30, 2022, 80% of the revenue was generated from retail dispensaries and 20% from wholesale business.
For the six months ended June 30, 2023, Minnesota operations contributed approximately 57% of revenues, New York contributed 17%, New Mexico contributed 5%, and Maryland contributed 21%. For the six months ended June 30, 2022, Minnesota operations contributed approximately 47% of revenues, New York contributed 20%, Arizona contributed 6%, New Mexico contributed 9%, and Maryland contributed 18%.
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Revenue for the six months ended June 30, 2023, was $39,284,980, an increase of $2,556,260 or 7% compared to revenue of $36,728,720 for the six months ended June 30, 2022. The increase is primarily attributable to increased revenue contributions from the retail business in Minnesota, partially offset by decreased retail revenues in New Mexico, and the lack of Arizona revenues, which was disposed of in 2022. The key revenue driver was increased patient demand in Minnesota, which is the result of the addition of cannabis flower to the Minnesota medical program in March of 2022.
Retail revenue for the six months ended June 30, 2023, was $33,614,899, an increase of $4,161,184 or 14% compared to retail revenue of $29,453,715 for the six months ended June 30, 2022, primarily due to revenue contributions from Minnesota and Maryland, partially offset by decreased New York and New Mexico retail revenues.
Wholesale revenue for the six months ended June 30, 2023, was $5,670,081, a decrease of $1,604,914 compared to wholesale revenue of $7,275,005 for the six months ended June 30, 2022. The decrease was primarily due to the lack of Arizona wholesale revenues.
Six Months Ended
June 30,
2023
2022
$ Change
% Change
Retail:
MN
$
22,198,288
$
16,592,289
$
5,605,999
34
%
NY
4,641,577
5,651,627
(1,010,050)
(18)
%
NM
1,964,285
3,263,928
(1,299,643)
(40)
%
MD
4,810,749
3,945,871
864,878
22
%
Total Retail
$
33,614,899
$
29,453,715
$
4,161,184
14
%
Wholesale:
AZ
$
—
$
2,355,683
$
(2,355,683)
(100)
%
MD
3,401,020
2,828,423
572,597
20
%
NY
2,229,334
1,418,759
810,575
57
%
NM
39,727
—
39,727
100
%
MN
—
672,140
(672,140)
(100)
%
Total Wholesale
$
5,670,081
$
7,275,005
$
(1,604,924)
(22)
%
Total Revenue
$
39,284,980
$
36,728,720
$
2,556,260
7
%
NM and AZ
$
(2,004,012)
$
(5,619,611)
$
3,615,599
(64)
%
Total Revenue excluding NM and AZ
$
37,280,968
$
31,109,109
$
6,171,859
20
%
N.M. Not Meaningful
Cost of Goods Sold and Gross Profit
Cost of goods sold for the six months ended June 30, 2023 was $20,433,471, a decrease of $3,439,545 compared to the six months ended June 30, 2022, of $23,873,016.
Gross profit for the six months ended June 30, 2023 was $18,851,509 representing a gross margin of 48%. This is compared to gross profit for the six months ended June 30, 2022 of $12,855,704 or a 35% gross margin. The increase in margin was driven by increased retail revenue contributions from Minnesota, which carries a high margin profile, both overall and as a percentage of total revenue, and the disposition of all Arizona wholesale operations, which carried a low margin in 2022.
Our current production capacity has not been fully realized and we expect future gross profits to increase with revenue growth reflective of higher demand, increased product output and new product development. However, we expect gradual price compression as markets mature that could place downward pressure on our retail and wholesale gross margins.
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Total Expenses
Total expenses for the six months ended June 30, 2023 were $19,525,045, a decrease of $782,633 compared to total expenses of $20,307,678 for the six months ended June 30, 2022. The decrease in total expenses was attributable to a decrease in general and administrative expenses partially offset by an increase in stock-based compensation expenses driven by increased option issuances in 2023 relative to 2022. The decrease in general and administrative expenses was driven by reduced headcount and other corporate cost savings initiatives.
Operating Loss before Income Taxes
Operating loss before other income (expense) and provision for income taxes for the six months ended June 30, 2023 was ($673,536), a decrease of $6,855,252 compared to $(7,451,974) for the six months ended June 30, 2022.
Total Other Expense
Total other expenses for the six months ended June 30, 2022, were $11,806,817, a decrease of $2,186,067 compared to $13,992,884 for the six months ended June 30, 2022. This decrease is primarily attributable to increased other income attributable to the receipt of $4,650,264 related to the CARES Employee Retention credit and the lack of impairment losses in 2023, partially offset by increased interest expense driven by the Credit Facility and increased losses on disposal of assets related to the Red Barn Growers disposition.
Provision for Income Taxes
Income tax expense is recognized based on the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year-end. For the six months ended June 30, 2023, tax expense totaled $3,254,871 compared to a tax recoveries of $695,000 for the six months ended June 30, 2022.
NON-GAAP MEASURES
EBITDA is a non-GAAP measure that does not have standardized definition under GAAP. The following information provides reconciliations of the supplemental non-GAAP financial measure presented herein to the most directly comparable financial measures calculated and presented in accordance with GAAP. We have provided the non-GAAP financial measure, which is not calculated or presented in accordance with GAAP, as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP. This supplemental non-GAAP financial measure is presented because management has evaluated the financial results both including and excluding the adjusted items and believes that the supplemental non-GAAP financial measure presented provide additional perspective and insights when analyzing the core operating performance of the business. This supplemental non-GAAP financial measure should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented.
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Net income (loss)
$
(7,329,255)
$
(6,183,076)
$
(15,735,224)
$
(20,749,858)
Interest expense, net
7,744,794
5,297,823
14,879,584
9,899,622
Income taxes
1,592,871
1,045,000
3,254,871
(695,000)
Depreciation & Amortization
276,709
335,394
595,985
663,757
Depreciation included in cost of goods sold
559,978
613,863
1,294,065
1,314,056
EBITDA (non-GAAP)
$
2,845,097
$
1,109,004
$
4,289,281
$
(9,567,423)
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Liquidity, Financing Activities During the Period, and Capital Resources
We are an early-stage growth company. We are generating cash from sales and deploying our capital reserves to acquire and develop assets capable of producing additional revenues and earnings over both the immediate and near term. Capital reserves are for capital expenditures and improvements in existing facilities, product development and marketing, customer, supplier, investor, industry relations, and working capital.
Current management forecasts and related assumptions support the view that we can adequately manage the operational needs of the business.
Credit Facility
During 2017 the Company signed a promissory note payable in the amount of $ 1,010,000 . The note bears interest at a rate of 15 % per annum with interest payments required on a monthly basis. In 2019 the Company’s promissory note payable in the amount of $ 1,010,000 was modified to increase the amount payable to $ 1,110,000. The Company has paid off 60,000 in principal, and the remaining $1,050,000 principal balance is due on December 31, 2023.
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.
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.
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.. Obligations under the Credit Facility are secured by substantially all the assets of the Company.
On January 31, 2022, Goodness Growth and certain of its subsidiaries, as borrowers (collectively, “Borrowers”), entered into a Third Amendment to the Credit Facility (the “Third Amendment”) providing for additional delayed draw term loans of up to $55 million (the “Delayed Draw Loans”). The cash interest rate on the Delayed Draw Loans under the Third Amendment is equal to the U.S. prime rate plus 10.375%, with a minimum required rate of 13.375% per annum, in addition to 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. 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. 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.
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
30
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. 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 three months ended June 30, 2023, the Company closed a second and third tranche of Convertible Notes, which are both convertible into Subordinate Voting Shares at a conversion price of $0.145.
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. The value of these warrants and other legal and administrative expenses amounting to $502,538 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.
Cash Used in Operating Activities
Net cash used in operating activities was $2.2 million for the six months ended June 30, 2023, a decrease of $7.7 million as compared to $9.8 million for the six months ended June 30, 2022. The decrease is primarily attributed to more favorable changes in working capital items, and increased gross profit.
Cash Used in Investing Activities
Net cash used in investing activities was $2.2 million for the six months ended June 30, 2023, a decrease of $1.5 million compared to net cash used in investing activities of $3.7 million for the six months ended June 30, 2022. The decrease is primarily attributable to decreased property, plant, and equipment additions relative to the prior year quarter.
Cash Provided (Used) by Financing Activities
Net cash provided by financing activities was $0.5 million for the six months ended June 30, 2023, a change of $14.8 million as compared to $15.4 million provided by financing activities in the six months ended June 30, 2022. The change was principally due to decreased proceeds received from the Credit Facility in 2023 as compared to 2022.
Lease Transactions
As of June 30, 2023, we have entered into lease agreements for the use of buildings used in cultivation, production and/or sales of cannabis products in Maryland, Minnesota, New York, and Puerto Rico.
The lease agreements for all of the retail space used for our dispensary operations are with third-party landlords and remaining duration ranges from 1 to 6 years. These agreements are short-term facility leases that require us to make monthly rent payments as well as funding common area costs, utilities and maintenance. In some cases, we have received tenant improvement funds to assist in the buildout of the space to meet our operating needs. As of June 30, 2023, we operated 14 retail locations secured under these agreements.
We have also entered into sale and leaseback arrangements for our cultivation and processing facilities in Minnesota and New York with a special-purpose real estate investment trust. These leases are long-term agreements that provide, among other things, funds to make certain improvements to the property that will significantly enhance production capacity and operational efficiency of the facility.
31
Excluding any contracts under one year in duration, the future minimum lease payments (principal and interest) on all our leases are as follows:
Operating Leases
Finance Leases
June 30, 2023
June 30, 2023
Total
2023
$
1,042,238
$
5,614,232
$
6,656,470
2024
2,007,051
11,063,698
13,070,749
2025
1,858,102
11,164,577
13,022,679
2026
1,522,046
11,496,826
13,018,872
2027
1,353,809
11,839,086
13,192,895
Thereafter
1,271,640
185,973,220
187,244,860
Total minimum lease payments
$
9,054,886
$
237,151,639
$
246,206,525
Less discount to net present value
(2,745,266)
(157,752,810)
(160,498,076)
Less liabilities held for sale
(4,151,339)
(70,995,636)
(75,146,975)
Present value of lease liability
$
2,158,281
$
8,403,193
$
10,561,474
ADDITIONAL INFORMATION
Outstanding Share Data
As of August 11, 2023, we had 108,610,772 shares issued and outstanding, consisting of the following:
(a) Subordinate voting shares
108,262,130 shares issued and outstanding. The holders of subordinate voting shares are entitled to receive dividends which may be declared from time to time and are entitled to one vote per share at all shareholder meetings. All subordinate voting shares are ranked equally with regards to the Company’s residual assets. The Company is authorized to issue an unlimited number of no-par value subordinate voting shares.
(b) Multiple voting shares
348,642 shares issued and outstanding. The holders of multiple voting shares are entitled to one hundred votes per share at all shareholder meetings. Each multiple voting share is exchangeable for one hundred subordinate voting shares. The Company is authorized to issue an unlimited number of multiple voting shares.
(c) Super voting shares
0 shares issued and outstanding. The holders of super voting shares are entitled to one thousand votes per share at all shareholder meetings. Each super voting share is exchangeable for one hundred subordinate voting shares. The Company is authorized to issue an unlimited number of super voting shares.
Options, Warrants, and Convertible Promissory Notes
As of June 30, 2023, we had 30,185,610 employee stock options outstanding, 3,102,765 RSUs outstanding, 3,037,649 Subordinate Voting Share compensation warrants denominated in C$ related to financing activities, and 6,400,000 Subordinate Voting Share compensation warrants outstanding.
Off-Balance Sheet Arrangements
As of the date of this filing, we do not have any off-balance-sheet arrangements that have, or are reasonably likely to have, a current or future effect on our results of operations or financial condition, including, and without limitation, such considerations as liquidity and capital resources.
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Critical Accounting Policies
There have been no material changes to our critical accounting policies and estimates from the information provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our 2022 Annual Report on Form 10-K for the year ended December 31, 2022.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Quantitative and qualitative disclosures about market risk have been omitted as permitted under rules applicable to smaller reporting companies.
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