What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-13 compared with 2024-08-06 · 151 added, 111 removed, 604 unchanged (30% of the section changed)

3 unchanged sentences

(In U.S Dollars, unaudited)

September 30,

Current assets:

24 unchanged sentences

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

114,605,008 shares issued and outstanding at June 30, 2024 and 110,007,030 at December 31, 2023)

200,464,196 shares issued and outstanding at September 30, 2024 and 110,007,030 at December 31, 2023)

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

300,714 shares issued and outstanding at June 30, 2024 and 331,193 at December 31, 2023)

298,314 shares issued and outstanding at September 30, 2024 and 331,193 at December 31, 2023)

Super Voting Shares ($- par value;

unlimited shares authorized;

0 shares issued and outstanding at June 30, 2024 and December 31, 2023)

0 shares issued and outstanding at September 30, 2024 and December 31, 2023)

Additional paid in capital

11 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Cost of sales

5 unchanged sentences

Total operating expenses

Income (loss) from operations

( 1,042,044 )

Income from operations

Other income (expense):

1 unchanged sentence

( 2,798,567 )

( 2,747,881 )

Interest expenses, net

13 unchanged sentences

( 5,536,228 )

( 14,229,381 )

Current income tax expenses

2 unchanged sentences

( 6,770,000 )

( 7,357,871 )

Deferred income tax recoveries

3 unchanged sentences

( 12,306,228 )

( 20,964,252 )

Net loss per share - basic and diluted

10 unchanged sentences

( 177,880,963 )

Conversion of MVS shares

Conversion of Super Voting Shares

Stock-based compensation

Warrants issued in financing activities

Obligation to issue shares

Shares issued in financing activities

( 20,964,252 )

Balance at June 30, 2023

Balance at September 30, 2023

( 198,845,215 )

8 unchanged sentences

Shares issued

Conversion of convertible debt

( 12,306,228 )

Balance at June 30, 2024

Balance at September 30, 2024

( 215,734,280 )

4 unchanged sentences

Equity (deficiency)

Balance, April 1, 2023

Balance, July 1, 2023

( 193,616,189 )

( 7,924,810 )

Conversion of MVS shares

Conversion of Super Voting Shares

Stock-based compensation

Obligation to issue shares

Warrants issued in financing activities

Shares issued in financing activities

( 5,229,026 )

Balance at June 30, 2023

Balance at September 30, 2023

( 198,845,215 )

( 12,853,399 )

Balance, April 1, 2024

Balance, July 1, 2024

( 210,807,922 )

2 unchanged sentences

Stock-based compensation

Options exercised

Warrants exercised

Shares issued

Balance at June 30, 2024

Conversion of convertible debt

( 4,926,358 )

Balance at September 30, 2024

( 215,734,280 )

( 11,003,227 )

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

2 unchanged sentences

Dollars, unaudited)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

13 unchanged sentences

Interest Expense

Bad debt expense

Deferred income tax

12 unchanged sentences

( 3,791,248 )

( 2,161,413 )

CASH FLOWS FROM INVESTING ACTIVITIES:

2 unchanged sentences

( 2,630,724 )

Proceeds from note receivable (Note 6)

Intangible license additions

( 1,090,919 )

Proceeds from sale of Red Barn Growers net of cash

13 unchanged sentences

Lease principal payments

( 1,414,698 )

Net cash provided by (used in) financing activities

9 unchanged sentences

Vireo Growth Inc.

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

(“ Vireo Growth ” or the “ Company ”) (formerly, Goodness Growth Holdings, 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 “GDNS”.

6 unchanged sentences

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 acquire all of the issued and outstanding shares of Vireo 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 Vireo 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, Vireo 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 the $ 14,875,000 termination fee and its transaction expenses.

Vireo 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 has no factual or legal basis to justify or support its purported grounds for termination of the Arrangement Agreement.

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

Update on Verano Litigation

On October 21, 2022, Vireo Growth commenced an action in the Supreme Court of British Columbia against Verano Holdings Corp.

(" Verano ") after Verano repudiated the Arrangement Agreement with the Company dated January 31, 2022.

The Company is seeking damages, costs and interest, based on Verano's breach of contract and of its duty of good faith and honest performance.

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.

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

On May 2, 2024, the Company filed an application with the Supreme Court of British Columbia for summary determination.

21 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 June 30, 2024:

Name of entity

36 unchanged sentences

Diluted net loss per share is computed by dividing net loss by the sum of the weighted average number of common shares and the number of potential dilutive common share equivalents outstanding during the period.

Potential dilutive common share equivalents consist of the incremental common shares issuable upon the exercise of vested share options and the incremental shares issuable upon conversion of the convertible notes.

dilutive common share equivalents consist of the incremental common shares issuable upon the exercise of vested share options and the incremental shares issuable upon conversion of the convertible notes.

Potential dilutive common share equivalents consist of stock options, warrants, and restricted stock units.

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 six month periods ended June 30, 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 six month periods ended June 30, 2024, and 2023 were as follows:

The Company recorded a net loss for the three and nine month periods ended September 30, 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 nine month periods ended September 30, 2024, and 2023 were as follows:

September 30,

Stock options

5 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

New accounting pronouncements not yet adopted

12 unchanged sentences

Assets Held for Sale

As of June 30, 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.

As of September 30, 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.

3 unchanged sentences

Assets held for sale

September 30,

Property and equipment

6 unchanged sentences

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 $ 7,757,409 for the six months ended June 30, 2024.

Pre-tax operating losses attributable to the New York business were $ 12,152,587 and $ 10,099,014 for the nine months ended September 30, 2024 and 2023, respectively.

Fair Value Measurements

5 unchanged sentences

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 June 30, 2024, and therefore no impairment charges were recorded.

No indicators of impairment existed as of September 30, 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.

3 unchanged sentences

Trade receivables are comprised of the following items:

September 30,

Trade receivable

Tax withholding receivable

Included in the trade receivables, net balance at June 30, 2024, and December 31, 2023, is an allowance for doubtful accounts of $ 71,349 and $ 95,686 , respectively.

Included in the tax withholding receivable, net balance at June 30, 2024, and December 31, 2023, is an allowance for doubtful accounts of $ 159,275 .

Included in the trade receivables, net balance at September 30, 2024, and December 31, 2023, is an allowance for doubtful accounts of $ 99,736 and $ 95,686 , respectively.

Included in the tax withholding receivable, net balance at September 30, 2024, and December 31, 2023, is an allowance for doubtful accounts of $ 159,275 .

Notes Receivable

As of September 30, 2024, the Company had $ 0 (December 31, 2023 - $ 3,750,000 ) in notes receivable.

During the nine months ended September 30, 2024, the Company received $ 3,600,000 in proceeds related to the repayment of the $ 3,750,000 note receivable, which was consideration received in connection with the divestiture of the Company’s Pennsylvania operations in 2020.

The Company considers the note receivable to be fully paid.

The $ 150,000 difference between the face value of the note and proceeds received is included in other expense on the unaudited condensed consolidated statements of net loss and comprehensive loss.

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,

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

9 unchanged sentences

( 9,096,649 )

For the six months ended June 30, 2024, and 2023, total depreciation on property and equipment was $ 1,267,612 and $ 1,571,256 , respectively.

For the six months ended June 30, 2024, and 2023, accumulated amortization of the right of use asset under finance lease amounted to $ 2,651,438 and $ 2,077,675 , respectively.

For the nine months ended September 30, 2024, and 2023, total depreciation on property and equipment was $ 1,901,198 and $ 2,223,540 , respectively.

For the nine months ended September 30, 2024, and 2023, accumulated amortization of the right of use asset under finance lease amounted to $ 2,408,998 and $ 2,221,116 , respectively.

The right of use asset under finance lease of $ 7,572,566 consists of leased processing and cultivation premises.

The Company capitalized into inventory $ 1,121,141 and $ 1,294,065 relating to depreciation associated with manufacturing equipment and production facilities for the six months ended June 30, 2024, and 2023, respectively.

The Company capitalized into inventory $ 1,678,435 and $ 1,846,419 relating to depreciation associated with manufacturing equipment and production facilities for the nine months ended September 30, 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 June 30, 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 of September 30, 2024 and 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 no impairment charge on property and equipment, net.

Components of lease expenses are listed below:

September 30,

Finance lease cost

6 unchanged sentences

Finance Leases

June 30, 2024

September 30, 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.

On February 22, 2024, the Company executed a lease 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 .

Rent 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.

4 unchanged sentences

Supplemental cash flow information related to leases:

September 30,

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

4 unchanged sentences

Other information about lease amounts recognized in the financial statements:

September 30,

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

2 unchanged sentences

Weighted-average discount rate – finance leases

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

Goodwill - December 31, 2022

Divestitures (Note 3)

Goodwill - December 31, 2023 and June 30, 2024

The Company has no goodwill as of June 30, 2024.

As such, no further impairment testing procedures were performed.

Intangible assets are comprised of the following items:

2 unchanged sentences

Balance, December 31, 2023

Balance, June 30, 2024

Amortization expense for intangibles was $ 204,812 and $ 409,624 during the three and six months ended June 30, 2024, respectively, and $ 159,028 and $ 318,794 during the three and six months ended June 30, 2023, respectively.

The Company capitalized into inventory $ 24,779 (2023 - $ 0 ) and $ 49,557 (2023 - $ 0 ) of amortization for the three and six months ended June 30, 2024, respectively.

Balance, September 30, 2024

Amortization expense for intangibles was $ 204,813 and $ 614,437 during the three and nine months ended September 30, 2024, respectively, and $ 204,813 and $ 523,607 during the three and nine months ended September 30, 2023, respectively.

The Company capitalized into inventory $ 24,778 (2023 - $ 24,779 ) and $ 74,336 (2023 - $ 24,779 ) of amortization for the three and nine months ended September 30, 2024, respectively.

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

2 unchanged sentences

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 repaid the note in full during the six months ended June 30, 2024.

The Company repaid the note in full during the nine months ended September 30, 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.

6 unchanged sentences

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 six months ended June 30, 2024 and 2023.

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.

9 unchanged sentences

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.

On May 1, 2024, The Company executed a short-term extension of the maturity date on the Credit Facility with the Agent.

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

The Credit Facility was extended until June 14, 2024, matching all other terms of the existing agreement.

3 unchanged sentences

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

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

The ninth amendment to the Company’s Credit Facility extends the maturity date on the Credit Facility loans to January 29, 2027, adjusts and

extends the deadline with respect to the Company’s ongoing disposition of its New York operations through July 31, 2025, and amends certain financial measure definitions and covenants within the agreement.

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

These 15,000,000 shares were valued at $ 5,387,500 using a fair value per share of $ 0.431 and considered a deferred financing cost.

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

As of June 30, 2024, $ 66,694 (December 31, 2023 - $ 1,524,531 ) of deferred financing costs remain unamortized.

As of September 30, 2024, $ 5,089,311 (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 period

4 unchanged sentences

( 5,456,100 )

( 1,407,903 )

Amortization of deferred financing costs

2 unchanged sentences

Total long-term debt

As of June 30, 2024, stated maturities of long-term debt were as follows:

As of September 30, 2024, stated maturities of long-term debt were as follows:

Convertible Notes

9 unchanged sentences

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.

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 June 30, 2024, $ 851,477 (December 31, 2023 - $ 1,083,697 ) of deferred financing costs remain unamortized.

As of September 30, 2024, $ 0 (December 31, 2023 - $ 1,083,697 ) of deferred financing costs remain unamortized.

On July 31, 2024, the holders voluntarily converted all outstanding convertible notes into 73,016,061 Subordinate Voting Shares of the Company.

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

September 30,

Beginning of period

2 unchanged sentences

Amortization of deferred financing costs

( 9,774,557 )

End of period

2 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 June 30, 2024.

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, 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 six months ended June 30, 2024, 30,479 Multiple Voting Shares were converted into 3,047,900 Subordinate Voting Shares for no additional consideration.

During the six months ended June 30, 2024, 1,300,078 Subordinate Voting Shares were issued to the Company’s senior secured lender, Chicago Atlantic Opportunity Portfolio, LP, for $ 700,000 of proceeds.

During the six months ended June 30, 2024, employee stock options were exercised for 50,000 Subordinate Voting Shares.

During the nine months ended September 30, 2024, 32,879 Multiple Voting Shares were converted into 3,287,900 Subordinate Voting Shares for no additional consideration.

During the nine months ended September 30, 2024, 12,500,000 Subordinate Voting Shares were issued to the Company’s senior secured lender in connection with the ninth amendment to the Company’s credit agreement (Note 13).

During the nine months ended September 30, 2024, 1,300,078 Subordinate Voting Shares were issued to the Company’s senior secured lender, Chicago Atlantic Opportunity Portfolio, LP, for $ 700,000 of proceeds.

During the nine months ended September 30, 2024, the holders of the Company’s Convertible Notes voluntarily converted all outstanding convertible notes into 73,016,061 Subordinate Voting Shares of the Company

During the nine months ended September 30, 2024, employee stock options were exercised for 50,000 Subordinate Voting Shares.

Proceeds from this transaction were $ 16,500 .

During the six months ended June 30, 2024, stock warrants were exercised for 200,000 Subordinate Voting Shares.

During the nine months ended September 30, 2024, stock warrants were exercised for 303,127 Subordinate Voting Shares.

Proceeds from these transactions were $ 43,953 .

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

Stock-Based Compensation

6 unchanged sentences

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

6 unchanged sentences

Expected Dividend Yield

Stock option activity for the six months ended June 30, 2024, and for the year ended December 31, 2023, is presented below:

Stock option activity for the nine months ended September 30, 2024, and for the year ended December 31, 2023, is presented below:

Weighted Average

6 unchanged sentences

Balance, December 31, 2023

Options Outstanding at June 30, 2024

Options Exercisable at June 30, 2024

During the three and six month periods ended June 30, 2024, the Company recognized ($ 60,751 ) and $ 25,981 in stock-based compensation relating to stock options, respectively.

During the three and six month periods ended June 30, 2023, the Company recognized $ 600,377 and $ 1,999,635 in stock-based compensation relating to stock options, respectively.

As of June 30, 2024, the total unrecognized compensation costs related to unvested stock options awards granted was $ 647,705 .

Options Outstanding at September 30, 2024

Options Exercisable at September 30, 2024

During the three and nine month periods ended September 30, 2024, the Company recognized $ 615,215 and $ 641,196 in stock-based compensation relating to stock options, respectively.

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

As of September 30, 2024, the total unrecognized compensation costs related to unvested stock options awards granted was $ 549,340 .

In addition, the weighted average period over which the unrecognized compensation expense is expected to be recognized is approximately 1.4 years.

The total intrinsic value of stock options outstanding and exercisable as of June 30, 2024, was $ 4,574,605 and $ 4,108,845 , respectively.

The total intrinsic value of stock options outstanding and exercisable as of September 30, 2024, was $ 4,884,187 and $ 4,432,386 , respectively.

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

1 unchanged sentence

Subordinate Voting Share (SVS) warrants entitle the holder to purchase one Subordinate Voting Share of the Company.

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

A summary of the warrants outstanding is as follows:

5 unchanged sentences

Warrants outstanding at December 31, 2023

Warrants outstanding at June 30, 2024

Warrants exercisable at June 30, 2024

Warrants outstanding at September 30, 2024

Warrants exercisable at September 30, 2024

Weighted Average

5 unchanged sentences

Warrants outstanding at December 31, 2023

Warrants outstanding at June 30, 2024

Warrants exercisable at June 30, 2024

During both the three and six month periods ended June 30, 2024, $ 0 (2023 - $ 1,248,224 ) in stock-based compensation expense was recorded in connection with outstanding warrants.

Warrants outstanding at September 30, 2024

Warrants exercisable at September 30, 2024

During both the three and nine month periods ended September 30, 2024, $ 0 in stock-based compensation expense was recorded in connection with outstanding warrants.

During the three and nine month periods ended September 30, 2023, ($ 3,820 ) and $ 1,244,404 was recorded in connection with outstanding warrants.

Restricted Stock Units (“RSUs”)

2 unchanged sentences

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

During the three and six months ended June 30, 2024, the Company recognized $ 183 and $ 93,240 , respectively, in stock-based compensation expense related to RSUs.

During the three and six month periods ended June 30, 2023, the Company recognized $ 188,603 and $ 464,939 , respectively, in stock-based compensation expense related to RSUs.

During the three and nine months ended September 30, 2024, the Company recognized $ 689,704 and $ 782,944 , respectively, in stock-based compensation expense related to RSUs.

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

A summary of RSUs is as follows:

3 unchanged sentences

Balance, December 31, 2023

Balance, June 30, 2024

Vested at June 30, 2024

Balance, September 30, 2024

Vested at September 30, 2024

Commitments and Contingencies

11 unchanged sentences

It no longer has active operations following Vireo Health, Inc.’s acquisition of MaryMed, LLC in 2018.

It is owned and controlled by Kyle E.

It was owned and controlled by Kyle E.

Kingsley and Amber H.

25 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Salaries and benefits

8 unchanged sentences

The Company applied for and received the tax credit under the CARES Act.

During the three and six months ended June 30, 2024, the Company recorded and received

$ 0 (2023 - $ 4,650,264 ) related to the CARES Employee Retention credit in other income on the unaudited condensed consolidated statement of loss and comprehensive loss for the three and six months ended June 30, 2024 and 2023.

During the three and nine months ended September 30, 2024, the Company recorded and received $ 815,422 (2023 - $ 4,650,264 ) related to the CARES Employee Retention credit in other income on the unaudited condensed consolidated statement of loss and comprehensive loss for the three and nine months ended September 30, 2024 and 2023.

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

(“ Grown Rogue ”) entered into a strategic agreement whereby Grown Rogue will support Vireo 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 $ 4,867,643 on June 30, 2024 using a stock price of $ 0.65 , an exercise price of $ 0.164 , an expected life of 4.27 years, an annual risk free rate of 4.33 % , and volatility of 100 % .

The change in fair value for the three and six months ended June 30, 2024, of $ 1,602,412 and $ 2,930,291 , respectively, was recorded as other income in the unaudited condensed consolidated statement of loss and comprehensive loss for the three and six months ended June 30, 2024.

As part of this strategic agreement (the “ Consulting 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 $ 5,221,971 on September 30, 2024 using a stock price of $ 0.70 , an exercise price of $ 0.167 , an expected life of 4.02 years, an annual risk free rate of 3.58 % , and volatility of 100 % .

The change in fair value for the three and nine months ended September 30, 2024, of $ 354,328 and $ 3,284,619 , respectively, was recorded as other income in the unaudited condensed consolidated statement of loss and comprehensive loss for the three and nine months ended September 30, 2024.

Supplemental Cash Flow Information (1)

September 30,

Cash paid for interest

1 unchanged sentence

Change in construction accrued expenses

Stock issued in connection with financing activities

(1) For supplemental cash flow information related to leases, refer to Note 10.

1 unchanged sentence

Credit risk is the risk of loss associated with counterparty’s inability to fulfill its payment obligations.

The Company’s credit risk is primarily attributable to cash, accounts receivable, and notes receivable.

The Company’s credit risk is primarily attributable to cash, and accounts receivable.

A small portion of cash is held on hand, from which management believes the risk of loss is remote.

7 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 June 30, 2024, the Company’s financial liabilities consist of accounts payable, accrued liabilities, debt, convertible debt, liabilities held for sale, and uncertain tax liabilities.

As of September 30, 2024, the Company’s financial liabilities consist of accounts payable, accrued liabilities, debt, convertible debt, liabilities held for sale, and uncertain tax liabilities.

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

16 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 three months ended June 30, 2024, would have resulted in a corresponding change in the statement of loss and comprehensive loss of $ 278,099 .

A change of 100 basis points in interest rates during the nine months ended September 30, 2024, would have resulted in a corresponding change in the statement of loss and comprehensive loss of $ 420,133 .

Related Party Transactions

As of June 30, 2024, and December 31, 2023, there were $ 0 and $ 121,846 due to related parties, respectively.

As of September 30, 2024, and December 31, 2023, there were $ 0 and $ 121,846 due to related parties, respectively.

Subsequent Events

On July 1, 2024, the Company received $ 3,600,000 in proceeds related to the repayment of the outstanding current note receivable of $ 3,750,000 .

The $ 3,750,000 note receivable was consideration received from Jushi Holdings, Inc.

(“Jushi”) in connection with the divestiture of the Company’s Pennsylvania operations in 2020.

The Company has relieved Jushi of any further liability, and considers the note receivable to be fully paid.

On July 31, 2024, the Company executed a ninth amendment to the Company’s Green Ivy credit agreement with Chicago Atlantic and affiliates.

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

The Company will issue 12,500,000 Subordinate Voting Shares to the lenders in consideration for the credit facility amendment.

On July 31, 2024, Chicago Atlantic notified the Company of its intent to voluntarily convert all outstanding convertible notes.

The convertible loan carried an interest rate of 12.0 percent, and was convertible into equity shares of the Company at a strike price of US $ 0.145 .

As a result of the conversion, Vireo will issue approximately 73,000,000 million Subordinate Voting Shares to Chicago Atlantic and its affiliates.

On October 9, 2024, the Company and Grown Rogue, mutually agreed to terminate the Consulting Agreement between the parties dated May 24, 2023, as amended September 20, 2023, effective September 30, 2024.

As part of the termination agreement, Vireo Growth forfeited 4.5 million of the 8.5 million Grown Rogue warrants the Company received under the Consulting Agreement and paid Grown Rogue a lump sum termination fee of $ 800,000 .

On October 10, 2024, Joshua Rosen, Chief Executive Officer, Interim Chief Financial Officer and Director of the Company resigned from all of his positions with the Company.

In conjunction with this event, the parties entered into a separation agreement (“ Separation Agreement ”) dated October 9, 2024 that provides, among other things, for the grant of 500,000 restricted stock units, which vest in 12 equal installments commencing January 1, 2025 and ending on December 1, 2025 and 500,000 immediately exercisable stock options with an exercise price per share of $ 0.50 .

Such options expire October 9, 2027.

Rosen will receive salary continuation for two years at a rate of $ 300,000 per year.

Pursuant to the Separation Agreement, the vesting of 250,000 options granted to Mr.

Rosen in August 2024 were accelerated and are exercisable until October 9, 2027.

On November 1, 2024, the Company entered into a Joinder and Tenth Amendment to the Credit Facility, which provides a financing commitment of up to $ 10.0 million in aggregate principal amount of convertible notes (the “ Convertible Notes ”).

These Convertible Notes are being funded by the Company’s senior secured lender and its affiliates.

The Convertible Notes have a term of three years , with a cash interest rate of 12.0 percent, and such interest shall be paid in cash on the last business day of each calendar month.

All accrued and unpaid interest shall be payable in full on the maturity date or earlier date of prepayment, in each case adjusted for any period of less than one calendar month, if applicable.

The Convertible Notes are convertible at the option of lender, in whole but not in part in a single transaction, at any time into that number of Subordinate Voting Shares of the Company determined by dividing the outstanding principal amount plus all accrued but unpaid interest on the Convertible Notes on the date of such conversion by a conversion price equal to $ 0.625 .

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