What changed in this filing

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Item 1. Financial Statements

2025-08-13 compared with 2025-05-09 · 490 added, 205 removed, 447 unchanged (61% of the section changed)

4 unchanged sentences

Current assets:

Restricted Cash

Marketable Securities

Accounts receivable, net of credit losses of $ 166,765 and $ 244,264 , respectively

7 unchanged sentences

Intangible assets, net

Indemnified Assets

Current liabilities

1 unchanged sentence

Long-term debt, current portion

Right of use liability

Right of use liability, current

Uncertain tax liability

2 unchanged sentences

Right-of-use liability

Other long-term liabilities

Convertible debt, net

Long-term debt, net

Convertible debt, net

Contingent consideration

Other long-term liabilities

Total liabilities

Commitments and contingencies (refer to Note 16)

Stockholders’ equity (deficiency)

Stockholders’ equity

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

339,475,288 shares issued and outstanding at March 31, 2025 and 337,512,681 at December 31, 2024)

923,839,190 shares issued and outstanding at June 30, 2025 and 337,512,681 at December 31, 2024)

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

278,170 shares issued and outstanding at March 31, 2025 and 285,371 at December 31, 2024)

259,632 shares issued and outstanding at June 30, 2025 and 285,371 at December 31, 2024)

Additional paid in capital

2 unchanged sentences

( 231,435,561 )

Total stockholders' equity (deficiency)

Total liabilities and stockholders' equity (deficiency)

Total stockholders' equity

Total liabilities and stockholders' equity

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

3 unchanged sentences

Three Months Ended

Six Months Ended

Cost of sales

Product costs

Non-cash product costs

Inventory valuation adjustments

4 unchanged sentences

Total operating expenses

Income from operations

Income (loss) from operations

( 2,018,690 )

Other income (expense):

2 unchanged sentences

( 7,518,454 )

( 15,247,339 )

( 16,241,091 )

Gain (loss) on disposal of assets

3 unchanged sentences

( 6,022,433 )

( 14,870,818 )

( 13,548,337 )

Loss before income taxes

1 unchanged sentence

( 14,913,819 )

( 2,994,870 )

Current income tax expenses

1 unchanged sentence

( 6,529,000 )

( 4,385,000 )

Net loss and comprehensive loss

1 unchanged sentence

( 21,442,819 )

( 7,379,870 )

Net loss per share - basic and diluted

2 unchanged sentences

VIREO GROWTH INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

Dollars, except share amounts, unaudited)

8 unchanged sentences

Stock-based compensation

Options exercised

Warrants exercised

Shares issued

( 7,379,870 )

Balance at March 31, 2024

Balance at June 30, 2024

( 210,807,922 )

4 unchanged sentences

Stock-based compensation

Stock issuance

Shares issued

Net settlement of stock-based compensation

1 unchanged sentence

Warrants exercised

Shares issued in Wholesome acquisition

Shares issued in Proper acquisition

Shares issued in Deep Roots acquisition

( 21,442,819 )

Balance at March 31, 2025

Balance at June 30, 2025

( 252,878,380 )

Super Voting Shares

Additional Paid-

Stockholders'

Equity (deficiency)

Balance, April 1, 2024

( 210,139,511 )

( 22,575,319 )

Conversion of MVS shares

Stock-based compensation

Options exercised

Warrants exercised

Shares issued

Balance at June 30, 2024

( 210,807,922 )

( 22,558,798 )

Balance, April 1, 2025

( 237,944,351 )

Conversion of MVS shares

Stock-based compensation

Options exercised

Shares issued

Net settlement of stock-based compensation

Shares issued in Wholesome acquisition

Shares issued in Proper acquisition

Shares issued in Deep Roots acquisition

( 14,934,029 )

Balance at June 30, 2025

( 252,878,380 )

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

2 unchanged sentences

Dollars, unaudited)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

2 unchanged sentences

Adjustments to reconcile net loss to net cash used in operating activities:

Non-cash amortization of inventory step up included in product costs

Inventory valuation adjustments

7 unchanged sentences

Interest Expense

Bad debt expense

Accretion of interest on right-of-use finance lease liabilities

2 unchanged sentences

Accounts Receivable

( 2,314,274 )

Prepaid expenses

3 unchanged sentences

Changes in operating lease liabilities

Purchase of marketable securities

( 1,004,479 )

Change in assets and liabilities held for sale

5 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

PP&E Additions

Purchases of property, plant, and equipment

( 4,804,492 )

Net cash used in investing activities

( 4,088,734 )

Acquisition of WholesomeCo, Inc., net of cash paid

Acquisition of Deep Roots Holdings, Inc., net of cash paid

Acquisition of Proper Holdings Management, Inc., net of cash paid

Capitalized software development costs

Net cash provided by (used in) investing activities

( 4,238,834 )

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long-term debt, net of issuance costs

Proceeds from convertible debt, net of issuance costs

Proceeds from issuance of shares

Proceeds from warrant exercises

2 unchanged sentences

( 10,061,221 )

( 1,062,000 )

Lease principal payments

Net cash used in financing activities

Net cash provided by (used in) financing activities

( 10,202,091 )

1 unchanged sentence

( 4,735,368 )

( 3,360,762 )

Cash, beginning of period

7 unchanged sentences

) 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”.

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

On July 8, 2024, the Company changed its name to Vireo Growth Inc., its ticker symbol on the CSE to “VREO” and its ticker symbol on the OTCQX to “VREOF.”

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

Vireo Growth operates cannabis cultivation, production, and dispensary facilities in Maryland, Minnesota, and New York.

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

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

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

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

Recently some federal officials have attempted to distinguish between medical cannabis use as necessary, but 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.

Update on Verano Litigation (Note 16)

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

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

Recently, some federal officials have attempted to distinguish between medical cannabis and adult-use cannabis by indicating that medical cannabis is necessary while adult-use cannabis is “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.

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.

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

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

On May 2, 2024, the Company filed a Notice of Application (the " Summary Trial Application ") with the Supreme Court of British Columbia seeking summary determination.

The Company is seeking substantial damages, specifically $ 860.9 million, as well as other costs and legal fees, based on Verano’s breach of contract and of its duty of good faith and honest performance.

The Company is seeking substantial damages, totaling $ 860.9 million, as well as other costs and legal fees, based on Verano’s breach of contract and breach of its duty of good faith and honest performance.

On June 19, 2024, Verano filed a Notice of Application (the “ Preliminary Suitability Application ”) seeking orders dismissing the Summary Trial Application on the basis that certain issues in the action are not suitable for summary determination.

The Preliminary Suitability Application is currently set for hearing on June 15 and 16, 2025.

The Preliminary Suitability Application is in the process of being scheduled.

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

See Note 16 “Commitments and Contingencies” for additional information.

Merger Agreements with Deep Roots, Proper and Wholesome

On December 18, 2024, we entered into the Merger Agreements with respect the Mergers.

Each Merger is an all-share transaction whereby, at the closing of each applicable transaction, (i) a new wholly-owned subsidiary of the Company would merge with and into Deep Roots, (ii) a new wholly-owned subsidiary of the Company would merge with and into Wholesome, and (ii) the Proper entities would each merge with and into new wholly-owned subsidiaries of the Company.

None of the Deep Roots Merger, the Proper Mergers or the Wholesome Merger is contingent on the completion of any of the other Mergers (Note 3).

On December 18, 2024, the Company entered into merger agreements (each a “ Merger Agreement ” and collectively, the “ Merger Agreements ”) with each of (i) Deep Roots Holdings, Inc.

(“ Deep Roots ”) (the “ Deep Roots Merger ”), (ii) Proper Holdings, LLC (“ Proper ”), NGH Investments, Inc.

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

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

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

Each Merger was an all-share transaction whereby, at the closing of each Merger, (i) a new wholly-owned subsidiary of the Company merged with and into Deep Roots, (ii) a new wholly-owned subsidiary of the Company merged with and into Wholesome, and (iii) the Proper Companies each merged with and into new wholly-owned subsidiaries of the Company.

Each of the Deep Roots Merger, the Proper Mergers and

Wholesome Merger closed during the quarter ended June 30, 2025.

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

Summary of Significant Accounting Policies

12 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 March 31, 2025:

These unaudited condensed consolidated financial statements include the accounts of the following entities that were wholly owned, or effectively controlled by the Company during the period ended June 30, 2025:

Name of entity

2 unchanged sentences

Maryland, USA

Mayflower Botanicals, Inc.

Massachusetts, USA

Vireo Health of Minnesota, LLC

5 unchanged sentences

Verdant Grove, Inc.

Massachusetts, USA

Delaware, USA

Vireo Health de Puerto Rico, Inc.

8 unchanged sentences

Maryland, USA

Vireo DR Merger Sub Inc.

Delaware, USA

Vireo WH Merger Sub Inc.

Delaware, USA

Vireo PR Merger Sub Inc.

Delaware, USA

Missouri, USA

Vireo PR Merger Sub II Inc.

Missouri, USA

Deep Roots Holdings, Inc.

Wholesomeco, Inc.

Delaware, USA

New Growth Horizon, LLC

Missouri, USA

Nirvana Investments, LLC and Subsidiaries

Missouri, USA

2178 State Highway 29A LLC

1 unchanged sentence

XAAS Agro, Inc.

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

Vireo Marketing, LLC

Minnesota, USA

Deep Roots Harvest, Inc.

Deep Roots Aria AcqCo, Inc.

Deep Roots Operating, Inc.

Deep Roots Properties, LLC

WC Staffing, LLC

Wholesome Goods, LLC

Wholesome Ag, LLC

Wholesome Direct, LLC

Wholesome Therapy, LLC

Arches IP, Inc.

Delaware, USA

The entities listed above were formed or acquired to support the intended operations of the Company.

All intercompany transactions and balances have been eliminated from the Company's unaudited condensed consolidated financial statements.

Recently adopted accounting pronouncements

3 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.

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

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 (“ RSUs ”).

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, 2025 and 2024, 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 ended March 31, 2025 and 2024, were as follows:

Three Months Ended

The Company recorded a net loss for each of the three and six-month periods ended June 30, 2025 and 2024, as 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, 2025 and 2024, were as follows:

Six Months Ended

Stock options

1 unchanged sentence

Revenue Recognition

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

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

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

1 unchanged sentence

Three Months Ended

Six Months Ended

New accounting pronouncements not yet adopted

Business Combinations and Dispositions

On December 18, 2024, Vireo Growth Inc.

(the “Company”), entered into Merger Agreements with respect to a business combination with each of (i) Deep Roots Holdings, Inc., a Nevada corporation (“Deep Roots”) (the “Deep Roots Merger”);

(ii) Proper Holdings Management, Inc.

and NGH Investments, Inc., both Missouri corporations (together, “Proper”) (the “Proper Mergers”);

and (iii) WholesomeCo, Inc., a Delaware corporation (“Wholesome”) (the “Wholesome Merger” and, collectively with the Deep Roots Merger and the Proper Mergers, the “Mergers”).

None of the Deep Roots Merger, the Proper Mergers or the Wholesome Merger is contingent on the completion of any of the other Mergers.

As of March 31, 2025, none of the Merger Transactions have closed, and as such, no financial results of the single-state operators have been presented or consolidated herein.

The consideration to be paid to acquire each of Deep Roots, Proper and Wholesome is based, in each case, in part on an estimated multiple of a 2024 “Reference EBITDA”, which is pro-forma for pending acquisitions as well as planned new retail openings and expansion projects, and a US $ 0.52 share reference price for the Company’s subordinate voting shares.

Pursuant to the Merger Agreements, former stockholders of each of Deep Roots, Proper and Wholesome may qualify for earnout payments made with the Company’s subordinate voting shares following December 31, 2026, based on each target’s Adjusted EBITDA (as defined in the applicable Merger Agreement) growth compared to such target’s Reference EBITDA (at a 4 x multiple), adjusted for incremental debt and certain other matters, respectively, and paid out using a share price for the Company’s subordinate voting shares of the higher of US $ 1.05 or the 20 -day volume weighted average price of the Company’s subordinate voting shares on the Canadian Securities Exchange, converted to United States Dollars based on the average exchange rate posted by the Bank of Canada as of the end of each trading day during such 20 -day period, as reported by Bloomberg Finance L.P.

(“VWAP”) as of December 31, 2026.

Reference EBITDA for Deep Roots, Proper and Wholesome are US $ 31.0 million, US $ 31.0 million, and US $ 16.0 million, respectively.

EBITDA growth is defined as the increase between Reference EBITDA and the higher of 2026 Adjusted EBITDA or trailing nine-month annualized Adjusted EBITDA as of December 31, 2026.

In no event shall the number of earnout shares issued under each Merger Agreement exceed the number of shares issued as closing merger consideration in each Merger Agreement.

Each of the Merger Agreements provides for the clawback of up to 50 % of the upfront merger consideration (excluding, in the case of Proper and Wholesome, the amounts attributable to Arches, as defined below) on December 31, 2026, if, in each case, (a) 2026 Adjusted EBITDA underperforms 96.5 % of the Reference EBITDA, and (b) retail revenue market share or EBITDA margin for 2026 is less (or lower) than 2024 and (c) the 20 -day VWAP as of December 31, 2026 is greater than US $ 1.05 per share.

The amount of shares subject to a clawback would be equal to the Acquisition Multiple (as defined in each Merger Agreement) for each of Deep Roots, Proper and Wholesome, respectively, multiplied by the EBITDA shortfall, and subject to certain other adjustments set forth in the applicable Merger Agreement, divided by US $ 0.52 per share, not to exceed 50 % of the upfront consideration.

In connection with the Wholesome Merger Agreement (as defined herein) and Proper Merger Agreement (as defined herein), the Company will include in the stock merger consideration calculation an amount equal to (i) US $ 11,860,800 for the stockholders of Wholesome and (ii) US $ 2,139,200 for the stockholders of Proper for all of the outstanding equity interests in Arches IP, Inc.

On December 18, 2024, the Company, entered into Merger Agreements with respect to the Mergers.

Each Merger was an all-share transaction whereby, at the closing of each applicable Merger, (i) a new wholly-owned subsidiary of the Company merged with and into Deep Roots, (ii) a new wholly-owned subsidiary of the Company merged with and into Wholesome, and (iii) the Proper entities each merged with and into new wholly-owned subsidiaries of the Company.

None of the Deep Roots Merger, the Proper Mergers or the Wholesome Merger were contingent on the completion of any of the other Mergers.

The consideration paid to acquire each of Deep Roots, Proper and Wholesome was based, in each case, in part, on an estimated multiple of a 2024 “Closing EBITDA,” which was pro forma for pending acquisitions, planned new retail

openings and expansion projects, and a US $ 0.52 share reference price for the Company’s subordinate voting shares (each subordinate voting share an “ SVS ” and collectively, the “ SVSs ”).

Pursuant to the Merger Agreements, former stockholders of Proper, Wholesome, and certain former stockholders of Deep Roots may qualify for earnout payments made with the Company’s SVSs following December 31, 2026, based on each target’s Adjusted EBITDA (as defined in the applicable Merger Agreement) growth compared to such target’s Closing EBITDA (as defined in the applicable Merger Agreement) (plus, with respect to Deep Roots, $ 1,000,000 in earnings before interest, taxes, depreciation and amortization (“ EBITDA ”) attributed to a new retail location) (at a 4 x multiple), adjusted for incremental debt and certain other matters, respectively, and paid out using a share price for the Company’s SVSs of the higher of US $ 1.05 or the 20 -day volume weighted average price of the Company’s SVSs on the CSE, converted to United States Dollars based on the average exchange rate posted by the Bank of Canada as of the end of each trading day during such 20 -day period, as reported by Bloomberg Finance L.P.

(the “ VWAP ”) as of December 31, 2026.

The Closing EBITDA for Deep Roots, Proper and Wholesome are US $ 30.0 million, US $ 31.0 million, and US $ 16.0 million, respectively.

EBITDA growth is defined as the increase between the Closing EBITDA and the higher of 2026 Adjusted EBITDA or the trailing nine-month annualized Adjusted EBITDA as of immediately prior to December 31, 2026.

In no event shall the number of earnout shares issued under each Merger Agreement exceed the number of shares issued as closing merger consideration under each Merger Agreement.

Each of the Merger Agreements provides for the clawback of up to 50 % of the upfront merger consideration (excluding, in the case of Proper and Wholesome, the amounts described in the next paragraph that are attributable to Arches, as defined below) on December 31, 2026, if (1) for Wholesome and Deep Roots, (a) 2026 Adjusted EBITDA underperforms 96.5 % of the Closing EBITDA, and (b) the retail revenue market share or EBITDA margin for 2026 is less (or lower) than 2024 and (c) the 20 -day VWAP as of immediately prior to December 31, 2026 is greater than US $ 1.05 per share, and (2) for Proper, 2026 Adjusted EBITDA underperforms 96.5 % of the Closing EBITDA.

The amount of shares subject to a clawback would be equal to the Acquisition Multiple (as defined in each Merger Agreement) of 4.175 for each of Deep Roots, Proper and Wholesome, respectively, multiplied by the EBITDA shortfall, and subject to certain other adjustments f or incremental debt and certain other matters, set forth in the applicable Merger Agreement, divided by US$ 0.52 per share.

In connection with the Merger Agreement with Wholesome (the “ Wholesome Merger Agreement ”) and the Merger Agreement with Proper (the “ Proper Merger Agreement ”), the Company will include in the stock merger consideration calculation an amount equal to (i) US $ 11,860,800 for Wholesome and (ii) US $ 2,139,200 for Proper for all of the outstanding equity interests in Arches IP, Inc.

(“ Arches ”) owned by Wholesome and Proper, respectively.

Subject to the terms and conditions of the Wholesome Merger Agreement and the Proper Merger Agreement, each of Wholesome, Proper and Arches option holders are collectively entitled to earnout payments based on performance of Arches, based on the greater of US $ 37.5 million or 5 x certain revenue percentages of Arches, with such revenue percentage amounts measured at the higher of trailing-twelve-month or nine-month annualized amounts as of December 31, 2026, paid out using a share price for the Company’s subordinate voting shares at the higher of US $ 1.05 or 20 -day VWAP as of December 31, 2026.

In connection with each of the Merger Agreements, the Company will enter into an Investor Rights Agreement with the persons receiving the Company’s subordinate voting shares in the Mergers.

Each Investor Rights Agreement will require the Company in certain circumstances to prepare and file with the Securities and Exchange Commission (the “SEC”) a

registration statement covering the resale of the Company’s subordinate voting shares issued pursuant to the Merger Agreements, in each case following the expiration of the initial 12 month lock-up period following the closing of the transactions under each Merger Agreement.

Each Investor Rights Agreement will also provide such persons with certain piggyback registration rights in certain circumstances.

The closing of each of the Mergers is subject to closing conditions and contained in the Merger Agreements.

Pursuant to rules adopted by the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), a Schedule 14C information statement dated March 21, 2025, was prepared by the Company and filed with the SEC and mailed to the stockholders of the Company relating to stockholder approval of the issuance of the Company’s subordinate voting shares in the Mergers and approvals required under the rules of the Canadian Stock Exchange, which was obtained by written consent of the stockholders.

Subject to the terms and conditions of the Wholesome Merger Agreement and the Proper Merger Agreement, each of Wholesome, Proper and Arches option holders are collectively entitled to earnout payments based on the performance of Arches, based on the greater of US $ 37.5 million or 5 x certain revenue percentages of Arches minus $ 4,000,000 , with such revenue percentage amounts measured at the higher of the trailing-twelve-month or nine-month annualized amounts as of December 31, 2026, paid out using a share price for the Company’s SVSs at the higher of US $ 1.05 or the 20 -day VWAP as of immediately prior to December 31, 2026.

On May 12, 2025, the Company closed the Wholesome Merger contemplated by the Wholesome Merger Agreement.

The Company analyzed the acquisition under Accounting Standards Update (“ ASU ”) 2017-01, Business Combinations (Topic 805):

Clarifying the Definition of a Business and determined that the Wholesome Merger should be accounted for as a business combination.

Goodwill represents the premium the Company paid over the fair value of the net tangible and intangible assets acquired.

The goodwill arising from the Wholesome Merger primarily consists of the synergies and economies of scale expected from combining the operations of the Company and Wholesome, including growing the Company's customer base, acquiring assembled workforces, and expanding its presence in new and existing markets.

These benefits were not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets.

The following table summarizes the allocation of consideration exchanged for the estimated fair value of tangible and identifiable intangible assets acquired and liabilities assumed:

Cash and cash equivalents

Other current assets

Property and equipment

Operating lease, right-of-use asset

Indemnification asset

Intangible assets, license

Intangible assets, developed technology

Accounts payable and accrued liabilities

Right-of-use liability

Long-term debt, net

Uncertain tax liability

Total liabilities

Net assets acquired

Consideration:

Share consideration

Contingent consideration

Total Consideration

The acquired intangible assets include cannabis licenses and developed technology which are treated as definite-lived intangible assets amortized over a 15 -year useful life.

Under the terms of the Merger Agreement, the selling shareholders of Wholesome may become eligible to receive contingent consideration in the form of the Company’s subordinate voting shares based on the growth in Adjusted EBITDA of the respective target company as of December 31, 2026, relative to a predefined Reference EBITDA.

The earnout amount is calculated using a 4 x multiple of the EBITDA increase (defined as the greater of actual 2026 Adjusted EBITDA or trailing nine-month annualized Adjusted EBITDA as of December 31, 2026, less the Reference EBITDA), subject to certain adjustments for incremental debt and other factors as defined in the Merger Agreements.

Additionally, the Wholesome Merger Agreement contains a clawback provision whereby up to 50 % of the initial merger consideration shares may be forfeited on December 31, 2026, if (a) 2026 Adjusted EBITDA underperforms 96.5 % of the Reference EBITDA, and (b) retail revenue market share or EBITDA margin for 2026 is less (or lower) than 2024 and (c) the 20 -day VWAP as of December 31, 2026 is greater than US $ 1.05 per share.

As of June 30, 2025, the Company has recorded a contingent consideration liability of $ 5,595,000 , which represents the estimated fair value of the potential earnout payments based on management’s current projections of Adjusted EBITDA performance relative to the Reference EBITDA thresholds.

This contingent consideration is classified as a Level 3 liability within the fair value hierarchy and will be remeasured at each reporting date with changes in fair value recognized in earnings.

As part of the Wholesome Merger, the sellers contractually agreed to indemnify the Company for certain pre-closing liabilities, including those related to unpaid uncertain tax liabilities.

On May 12, 2025, the Company recognized a liability of $ 8,910,000 for uncertain tax positions related to the pre-acquisition periods in accordance with Accounting Standards Codification (“ ASC ”) 740, Income Taxes.

Consistent with the provisions of ASC 805-20-25-27, the Company also

recognized a corresponding indemnification asset of $ 6,910,000 , measured on the same basis as the related liability, which represents the uncertain tax liability recognized of $ 8,910,000 less $ 2,000,000 of tax specific cash contributions from Wholesome.

The indemnification asset was classified as a non-current asset in the Company’s condensed consolidated balance sheet as of June 30, 2025, and will be adjusted in future periods if the related liability is settled, released, or remeasured.

Changes in the fair value of the indemnification asset, if any, will be recorded in earnings in the same financial statement line item as the change in the related liability.

As of June 30, 2025, there were been no changes in the estimated amount of indemnified tax exposure or the related asset.

Supplemental pro forma information (unaudited)

The unaudited pro forma information for the periods set forth below gives effect to the Wholesome Merger as if the acquisition had occurred on January 1, 2025.

This pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the transaction been consummated as of that time nor does it purport to be indicative of future financial operating results.

Proforma revenues attributable to common shareholders for the three and six-month periods ended June 30, 2025 were $ 13,477,708 and $ 26,676,103 , respectively.

Proforma net loss attributable to common shareholders for the three and six month periods ended June 30, 2025 were $ 5,688,371 and $ 3 ,363,722, respectively.

Unaudited pro forma net income reflects the adjustment of sales between the companies, and adjustments for alignment of significant differences in accounting principles and elections.

On June 5, 2025, the Company closed the Proper Mergers contemplated by the Proper Merger Agreement.

The Company analyzed the acquisition under ASU 2017-01, Business Combinations (Topic 805):

Clarifying the Definition of a Business and determined that the Proper Mergers should be accounted for as a business combination.

Goodwill represents the premium the Company paid over the fair value of the net tangible and intangible assets acquired.

The goodwill arising from the Proper Mergers primarily consists of the synergies and economies of scale expected from combining the operations of the Company and Proper, including growing the Company's customer base, acquiring assembled workforces, and expanding its presence in new and existing markets.

These benefits were not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets.

The following table summarizes the allocation of consideration exchanged for the estimated fair value of tangible and identifiable intangible assets acquired and liabilities assumed:

Cash and cash equivalents

Income tax receivable

Other current assets

Property and equipment

Operating lease, right-of-use asset

Indemnification asset

Intangible assets, license

Intangible assets, developed technology

Accounts payable and accrued liabilities

Right-of-use liability

Long-term debt, net

Uncertain tax liability

Other long-term liabilities

Total liabilities

Net assets acquired

Consideration:

Share consideration

Contingent consideration

Total Consideration

The acquired intangible assets include cannabis licenses and developed technology which are treated as definite-lived intangible assets amortized over a 15 -year useful life.

Under the terms of the Proper Merger Agreement, Proper Holdings LLC may become eligible to receive contingent consideration in the form of the Company’s SVSs based on the growth in 2026 Adjusted EBITDA of the respective target companies, relative to a predefined Closing EBITDA.

The earnout amount is calculated using a 4 x multiple of the EBITDA increase (defined as the greater of the actual 2026 Adjusted EBITDA or the trailing nine-month annualized Adjusted EBITDA as of December 31, 2026, less the Closing EBITDA), subject to certain adjustments for incremental debt and other factors as defined in the Merger Agreements.

Additionally, the Proper Merger Agreement contains a clawback provision whereby up to 50 % of the initial merger consideration shares may be forfeited, if 2026 Adjusted EBITDA underperforms 96.5 % of the Closing EBITDA.

As of June 30, 2025, the Company recorded a contingent consideration liability of $ 2,411,000 , which represents the estimated fair value of the potential earnout payments based on management’s current projections of Adjusted EBITDA performance relative to the Closing EBITDA thresholds.

This contingent consideration was classified as a Level 3 liability within the fair value hierarchy and will be remeasured at each reporting date with changes in fair value recognized in earnings.

As part of the Proper Merger, the sellers contractually agreed to indemnify the Company for certain pre-closing liabilities, including those related to unpaid uncertain tax liabilities.

On June 5, 2025, the Company recognized a liability of $ 12,570,000 for uncertain tax positions related to the pre-acquisition periods in accordance with ASC 740, Income Taxes.

Consistent with the provisions of ASC 805-20-25-27, the Company also recognized a corresponding indemnification asset

of $ 5,311,551 , measured on the same basis as the related liability, which represents the uncertain tax liability recognized of $ 12,570,000 less $ 4,258,449 of income taxes receivable and $ 3,000,000 of tax specific cash contributions from Proper.

Changes in the fair value of the indemnification asset, if any, will be recorded in earnings in the same financial statement line item as the change in the related liability.

As of June 30, 2025, there were no changes in the estimated amount of indemnified tax exposure or the related asset.

Supplemental pro forma information (unaudited)

The unaudited pro forma information for the periods set forth below gives effect to the Proper Merger as if the acquisition had occurred on January 1, 2025.

Proforma revenues attributable to common shareholders for the three and six-month periods ended June 30, 2025 were $ 24,902,524 and $ 46,305,802 , respectively.

Proforma net loss attributable to common shareholders for the three and six-month periods ended June 30, 2025 were $ 999,238 and $ 261,022 , respectively.

Unaudited pro forma net income reflects the adjustment of sales between the companies, and adjustments for alignment of significant differences in accounting principles and elections.

On June 6, 2025, the Company closed the Deep Roots Merger contemplated by the Merger Agreement with Deep Roots (the “ Deep Roots Merger Agreement ”).

The Company analyzed the acquisition under ASU 2017-01, Business Combinations (Topic 805):

Clarifying the Definition of a Business and determined that the Deep Roots Merger should be accounted for as a business combination.

Goodwill represents the premium the Company paid over the fair value of the net tangible and intangible assets acquired.

The goodwill arising from the Deep Roots Merger primarily consists of the synergies and economies of scale expected from combining the operations of the Company and Deep Roots, including growing the Company's customer base, acquiring assembled workforces, and expanding its presence in new and existing markets.

These benefits were not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets.

The following table summarizes the allocation of consideration exchanged for the estimated fair value of tangible and identifiable intangible assets acquired and liabilities assumed:

Cash and cash equivalents

Income tax receivable

Other current assets

Property and equipment

Operating lease, right-of-use asset

Indemnification asset

Intangible assets, license

Accounts payable and accrued liabilities

Right-of-use liability

Long-term debt, net

Uncertain tax liability

Total liabilities

Net assets acquired

Consideration:

Share consideration

Contingent consideration

Total Consideration

The acquired intangible assets include cannabis licenses which are treated as definite-lived intangible assets amortized over a 15 -year useful life.

As part of the Deep Roots Merger, the sellers contractually agreed to indemnify the Company for certain pre-closing liabilities, including those related to unpaid uncertain tax liabilities.

On June 6, 2025, the Company recognized a liability of $ 15,603,307 for uncertain tax positions related to the pre-acquisition periods in accordance with ASC 740, Income Taxes.

Consistent with the provisions of ASC 805-20-25-27, the Company also recognized a corresponding indemnification asset of $ 5,307,586 , measured on the same basis as the related liability, which represents the uncertain tax liability recognized of $ 15,603,307 less $ 8,295,721 of income taxes receivable and $ 2,000,000 of tax specific cash contributions from Deep Roots.

Under the terms of the Deep Roots Merger Agreement, the selling shareholders of Deep Roots may become eligible to receive contingent consideration in the form of the Company’s SVSs based on the growth in the Adjusted EBITDA of the respective target company as of December 31, 2026, relative to a predefined Closing EBITDA plus $ 1,000,000 in EBITDA attributed to a new retail location .

Additionally, the Deep Roots Merger Agreement contains a clawback provision whereby up to 50 % of the initial merger consideration shares may be forfeited, if (a) 2026 Adjusted EBITDA underperforms 96.5 % of the Closing EBITDA, and (b) the retail revenue market share or EBITDA margin for 2026 is less (or lower) than 2024 and (c) the 20 -day VWAP as of immediately prior to December 31, 2026 is greater than US$ 1.05 per share.

As of June 30, 2025, the Company recorded a contingent consideration liability of $ 2,625,000 , which represents the estimated fair value of the potential earnout payments based on management’s current projections of Adjusted EBITDA performance relative to the Closing EBITDA thresholds.

This contingent consideration was classified as a Level 3 liability within the fair value hierarchy and will be remeasured at each reporting date with changes in fair value recognized in earnings.

Changes in the fair value of the indemnification asset, if any, will be recorded in earnings in the same financial statement line item as the change in the related liability.

As of June 30, 2025, there were no changes in the estimated amount of the indemnified tax exposure or the related asset.

Supplemental pro forma information (unaudited)

The unaudited pro forma information for the periods set forth below gives effect to the Deep Roots Merger as if the acquisition had occurred on January 1, 2025.

Proforma revenues attributable to common shareholders for the three and six-month periods ended June 30, 2025 were $ 25,110,791 and $ 48,795,832 , respectively.

Proforma net loss attributable to common shareholders for the three and six-month periods ended June 30, 2025 were $ 2,121,500 and $ 700,182 , respectively.

Unaudited pro forma net income reflects the adjustment of sales between the companies, and adjustments for alignment of significant differences in accounting principles and elections.

Purchase Price Allocations

The above purchase price allocations are provisional specifically for determination of any deferred tax impact, valuation of contingent consideration, fair value of assets and liabilities including measurement of working capital adjustments pending the adjustment periods defined within the acquisition transaction agreements.

The Company will continue to examine the above during the measurement period and adjustments will be made based on facts and circumstances that existed at the acquisition date once subsequently finalized and within the measurement period.

Assets Held for Sale

As of March 31, 2025, the Company identified property and equipment, deposits, and lease assets and liabilities associated with the businesses in New York, Nevada, and Massachusetts with carrying amounts that are expected to be recovered principally through sale or disposal rather than through continuing use.

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

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

As of June 30, 2025, 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 Company believes the sale of these assets and liabilities is highly probable, they can be sold in their immediate condition, and the sales are expected to occur within the next twelve months.

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

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

Assets and liabilities held for sale are as follows:

Assets and liabilities held for sale as of June 30, 2025 and December 31, 2024 were as follows:

Assets held for sale

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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 $ 4,859,841 and $ 3,698,934 for the three months ended March 31, 2025 and 2024, respectively.

Pre-tax operating losses attributable to the New York business were $ 8,531,224 and $ 7,757,409 for the six months ended June 30, 2025 and 2024, respectively.

Fair Value Measurements

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

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.

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

Items measured at fair value on a non-recurring basis

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

No indicators of impairment existed as of March 31, 2025, and therefore no impairment charges were recorded.

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

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

No indicators of impairment existed as of June 30, 2025, and therefore no impairment charges were recorded.

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

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

The inputs used are further described in Note 18.

Accounts Receivable

Trade receivables are comprised of the following items:

Trade receivable, net

Tax withholding receivable

Included in the trade receivables, net balance at March 31, 2025, and December 31, 2024, is an allowance for doubtful accounts of $ 84,990 and $ 84,989 , respectively.

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

Inventory is comprised of the following items:

Trade receivables as of June 30, 2025 and December 31, 2024 were comprised of the following items:

Trade receivables, net

Tax withholding receivables, net

Included in the trade receivables, net balance at June 30, 2025, and December 31, 2024, was an allowance for doubtful accounts of $ 166,765 and $ 84,989 , respectively.

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

Inventory as of June 30, 2025 and December 31, 2024 was comprised of the following items:

Work-in-progress

Finished goods

Non-cash fair value step up

In connection with the closing of the Mergers, the Company recorded the acquired inventories at their estimated fair values in accordance with ASC 805, Business Combinations .

Fair value represents the estimated selling price of the acquired inventory, less the expected costs to sell the inventory.

The estimated fair value of the inventory exceeded cost, resulting in a fair value step-up adjustment to acquired inventories totaling $ 16,549,749 .

During the three and six-months ended June 30, 2025, $ 4,152,108 of amortization associated with this fair value step-up was recorded.

This amortization was recorded to cost of sales in the consolidated statement of loss and comprehensive loss for the three and six month periods ended June 30, 2025.

Inventory is written down for any obsolescence, spoilage and excess inventory or when the net realizable value of inventory is less than the carrying value.

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

Inventory valuation adjustments included in cost of sales on the statements of net loss and comprehensive loss for the three and six months ended June 30, 2025 and 2024 were comprised of the following:

Three Months Ended June 30,

Six Months Ended June 30,

Work-in-progress

Finished goods

Prepayments and other current assets

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

Prepaid Insurance

Other Prepaid Expenses

On February 14, 2024, Proper entered into, among other things, an Asset Purchase Agreement (the “ OGI Asset Purchase Agreement ”) and a Management Service Agreement (the “ Management Service Agreement ”) with Occidental Group,

In connection with the OGI Asset Purchase Agreement, Proper advanced $ 4,365,858 , which is fully refundable in the event the OGI Asset Purchase Agreement does not close.

Given that the OGI Asset Purchase Agreement had not closed as of June 30, 2025, the advance was included in deposits at June 30, 2025 on the condensed consolidated balance sheet.

The transactions contemplated by the OGI Asset Purchase Agreement closed on July 10, 2025.

On August 20, 2024, Proper entered into an agreement to acquire a dispensary license from ROI Wellness Center IV, LLC.

In accordance with the agreement, Proper made an advance of $ 2,500,000 , which is fully refundable in the event the Missouri Department of Health Senior Services does not approve the transfer of the license.

The license transfer has not been approved, and as such, the advance was included in deposits at June 30, 2025 on the condensed consolidated balance sheet.

At June 30, 2025 and December 31, 2024, the Company’s deposits were comprised of the following:

Occidental Group Inc.

ROI Wellness, LLC

Other Deposits

Property and Equipment, Net

Property and equipment, net consisted of the following:

As of June 30, 2025 and December 31, 2024, the Company’s property and equipment, net consisted of the following:

Buildings and leasehold improvements

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( 10,319,975 )

For the three months ended March 31, 2025, and 2024, total depreciation on property and equipment was $ 622,364 and $ 633,728 , respectively.

For the three months ended March 31, 2025, and 2024, accumulated amortization of the right of use asset under finance lease amounted to $ 2,594,332 and $ 2,507,998 , 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 $ 545,262 and $ 560,180 relating to depreciation associated with manufacturing equipment and production facilities for the three months ended March 31, 2025, and 2024, 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, 2025 and 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.

For the six months ended June 30, 2025 and 2024, total depreciation on property and equipment was $ 1,853,234 and $ 1,267,612 , respectively.

For the six months ended June 30, 2025 and 2024, accumulated amortization of the right of use asset under finance lease amounted to $ 2,676,844 and $ 2,651,438 , respectively.

The right of use asset (the “ ROU ”) under finance lease of $ 7,572,566 consists of leased processing and cultivation premises.

The Company capitalized $ 1,388,536 and $ 1,121,141 into inventory relating to depreciation associated with manufacturing equipment and production facilities for the six months ended June 30, 2025 and 2024, respectively.

The associated capitalized depreciation costs are added to inventory and expensed as cost of sales when the product is sold.

As of each of June 30, 2025 and 2024, in conjunction with the Company’s held for sale assessment and disposal of certain long-lived assets, the Company evaluated whether property and equipment showed any indicators of impairment, and it was determined that the recoverable amount of certain net assets was above book value.

As a result, the Company recorded no impairment charge on property and equipment, net.

Components of lease expenses are listed below:

Components of the Company’s lease expenses as of June 30, 2025 and 2024 are listed below:

Finance lease cost

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Finance Leases

March 31, 2025

June 30, 2025

Total minimum lease payments

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Present value of lease liability

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 for cannabis cultivation and manufacturing facilities.

Rent commenced on January 1, 2025, at which time monthly base rent will be $ 82,500 .

Base rent escalates at a rate of 4 % per annum.

Per the terms of the lease the Company has the option to draw up to $ 2,000,000 of tenant improvement allowances.

As of December 31, 2024, no draws have been taken.

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

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

The lease expires on December 31, 2034, with an option to renew for two additional five-year terms.

Supplemental cash flow information related to leases:

Three Months Ended

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

Supplemental cash flow information related to the Company’s leases for the six months ended June 30, 2025 and 2024 is detailed below:

Six Months Ended

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

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Amortization of operating leases

Other information about lease amounts recognized in the financial statements:

Three Months Ended

Other information about the Company’s lease amounts as of June 30, 2025 and 2024 is recognized in the financial statements and outlined below:

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

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Weighted-average discount rate – finance leases

Intangible assets are comprised of the following items:

Intangible assets as of June 30, 2025 and December 31, 2024 were comprised of the following items:

Licenses & Trademarks

Developed Technology

Balance, December 31, 2023

Balance, December 31, 2024

Balance, March 31, 2025

Amortization expense for intangibles was $ 204,810 and $ 204,812 during the three months ended March 31, 2025 and 2024, respectively.

The Company capitalized into inventory $ 24,778 (2024 - $ 24,778 ) of amortization for the three months ended March 31, 2024, respectively.

Acquisitions (Note 3)

Balance, June 30, 2025

Amortization expense for the Company’s intangibles was $ 729,681 and $ 934,491 during the three and six months ended June 30, 2025, respectively, and $ 204,812 and $ 409,624 during the three and six months ended June 30, 2024, respectively.

The Company capitalized into inventory $ 15,358 and $ 40,136 of amortization for the three and six months ended June 30, 2025, respectively, and $ 24,779 and $ 49,557 for the three and six months ended June 30, 2024, respectively.

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

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

Accounts Payable and Accrued Liabilities

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

The Company estimates that amortization expenses will be $ 6,100,255 per year for the next five fiscal years.

Accounts Payable, Accrued Liabilities, and Restricted Cash

Accounts payable and accrued liabilities as of June 30, 2025 and December 31, 2024 were comprised of the following items:

Accounts payable – trade

2 unchanged sentences

Contract liability

Liability to sellers

Total accounts payable and accrued liabilities

In connection with the closing of the Mergers and the related Merger Agreements, the Company is required to distribute cash to the former equity holders of Deep Roots and Proper.

At June 30, 2025, $ 7,054,563 had yet to be distributed to the former stockholders of such entities.

As such, the Company reclassified this cash as restricted cash, and recorded an associated liability, on the unaudited condensed consolidated balance sheet at June 30, 2025.

The restricted cash was subsequently distributed after June 30, 2025 .

See Note 3 “Business Combinations and Dispositions” and Note 23 “Subsequent Events” for additional information

Long-Term Debt

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

In connection with the Credit Facility, the Company also pays a monthly credit monitoring fee in the amount of $ 130,400 which is included in interest expense in the consolidated statements of loss and comprehensive loss for the three months ended March 31, 2025 and 2024.

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

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

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

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

On January 31, 2022, Vireo Growth and certain of its subsidiaries, as borrowers (collectively, “ 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 ”).

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

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

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

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

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

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

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

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

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

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

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 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.

On June 14, 2024, another short-term extension was executed which extended the maturity date on the Credit Facility to July 31, 2024, matching all other terms of the existing agreement.

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

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

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

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

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

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

2 unchanged sentences

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

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

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

Long-Term Debt Arising from Acquisitions

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

The unpaid principal amounts outstanding bear interest at a rate of (a) 11 %, payable monthly in cash, and

(b) 3.00 % per annum PIK interest, payable monthly.

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

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

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

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

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

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

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

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

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

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

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

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

As of March 31, 2025, $ 5,704,752 (December 31, 2024 - $ 6,576,985 ) of deferred financing costs remain unamortized.

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

Beginning of year

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

The following table shows a summary of the Company’s long-term debt as of June 30, 2025, and December 31, 2024:

Beginning of period

Acquired long-term debt (Note 3)

Principal repayments

( 10,061,221 )

( 1,234,000 )

Deferred financing costs

1 unchanged sentence

Amortization of deferred financing costs

End of period

current portion

Total long-term debt

As of March 31, 2025, stated maturities of long-term debt were as follows:

As of June 30, 2025, stated maturities of long-term debt were as follows:

Convertible Notes

On July 31, 2024, holders voluntarily converted convertible notes issued in 2023 into 73,016,061 Subordinate Voting Shares of the Company.

On November 1, 2024, the Company entered into a Joinder and Tenth Amendment to Credit Agreement.

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

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

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

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

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

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

As of March 31, 2025, $ 125,472 (December 31, 2024 - $ 137,622 ) of deferred financing costs remain unamortized.

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

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

The following table shows a summary of the Company’s convertible debt as of June 30, 2025 and December 31, 2024:

Beginning of period

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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, 2025.

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, 2025.

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

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Shares Issued

During the three months ended March 31, 2025, 7,201 Multiple Voting Shares were converted into 720,100 Subordinate Voting Shares for no additional consideration.

During the three months ended March 31, 2025, employee stock options were exercised for 138,655 Subordinate Voting Shares.

During the six months ended June 30, 2025, 134,229,986 Subordinate Voting Shares were issued in connection with the Wholesome Merger.

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

During the six months ended June 30, 2025, 196,212,265 Subordinate Voting Shares were issued in connection with the Proper Merger.

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

During the six months ended June 30, 2025, 251,210,053 Subordinate Voting Shares were issued in connection with the Deep Roots Merger.

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

During the six months ended June 30, 2025, 25,739 Multiple Voting Shares were converted into 2,573,900 Subordinate Voting Shares for no additional consideration.

During the six months ended June 30, 2025, employee stock options were exercised for 448,547 Subordinate Voting Shares.

Proceeds from this transaction were $ 80,614 .

During the three months ended March 31, 2025, stock warrants were exercised for 265,626 Subordinate Voting Shares.

During the six months ended June 30, 2025, stock warrants were exercised for 265,626 Subordinate Voting Shares.

Proceeds from these transactions were $ 38,516 .

During the three months ended March 31, 2025, 1,077,859 shares were issued in connection with the settlement of restricted stock units.

During the six months ended June 30, 2025, 1,752,003 shares were issued in connection with the settlement of RSUs.

365,871 shares were net settled to pay payroll taxes associated with the issuance, resulting in the final issuance of 1,386,132 shares.

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

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.

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.

Proceeds from these transactions were $ 29,000 .

Stock-Based Compensation

Stock Options

In January 2019, the Company adopted the 2019 Equity Incentive Plan under which the Company may grant incentive stock options, restricted shares, restricted share units, or other awards.

Under the terms of the plan, a total of ten percent of the number of shares outstanding assuming conversion of all super voting shares and Multiple Voting Shares to Subordinate Voting Shares are permitted to be issued.

The exercise price for incentive stock options issued under the plan will be set by the Compensation Committee but will not be less 100 % of the fair market value of the Company’s shares on the date of grant.

In January 2019, the Company adopted the 2019 Equity Incentive Plan (the “ EIP ”) under which the Company may grant incentive stock options, restricted shares, restricted share units, or other awards.

Under the terms of the EIP, a total of ten percent of the number of shares outstanding, assuming conversion of all super voting shares and MVSs to SVSs are permitted to be issued.

The exercise price for incentive stock options issued under the EIP will be set by the compensation committee of the Company’s board of directors but will not be less than 100 % of the fair market value of the Company’s shares on the date of grant.

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

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

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

Three Months Ended

The incentive stock options vest at the discretion of the Company’s board of directors.

Options granted under the EIP as of June 30, 2025 and 2024 were valued using the Black-Scholes option pricing model with the following weighted average assumptions:

Risk-Free Interest Rate

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Expected Dividend Yield

Stock option activity for the three months ended March 31, 2025, and for the year ended December 31, 2024, is presented below:

Stock option activity for the six months ended June 30, 2025, and for the year ended December 31, 2024, is presented below:

Weighted Average

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Options Outstanding at December 31, 2024

Options Outstanding at March 31, 2025

Options Exercisable at March 31, 2025

During the three month periods ended March 31, 2025 and 2024, the Company recognized $ 172,721 and $ 86,732 in stock-based compensation relating to stock options, respectively.

As of March 31, 2025, the total unrecognized compensation costs related to unvested stock options awards granted was $ 617,196 .

Options Outstanding at June 30, 2025

Options Exercisable at June 30, 2025

During the three and six-month periods ended June 30, 2025, the Company recognized $ 185,345 and $ 358,067 , respectively, in stock-based compensation related to stock options, respectively.

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

As of June 30, 2025, the total unrecognized compensation costs related to unvested stock options awards granted was $ 428,091 .

In addition, the weighted average period over which the unrecognized compensation expense is expected to be recognized is approximately 1.5 years.

The total intrinsic value of stock options outstanding and exercisable as of March 31, 2025, was $ 4,382,709 and $ 4,183,499 , respectively.

The total intrinsic value of stock options outstanding and exercisable as of June 30, 2025, was $ 3,364,604 and $ 3,227,358 , respectively.

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

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Warrants outstanding at December 31, 2024

Warrants outstanding at March 31, 2025

Warrants exercisable at December 31, 2024

Warrants outstanding at June 30, 2025

Warrants exercisable at June 30, 2025

Weighted Average

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Warrants outstanding at December 31, 2023 and 2024

Warrants outstanding at March 31, 2025

Warrants exercisable at March 31, 2025

Restricted Stock Units (“RSUs”)

Warrants outstanding at June 30, 2025

Warrants exercisable at June 30, 2025

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

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

During the three months ended March 31, 2025 and 2024, the Company recognized $ 1,288,129 and $ 93,057 , respectively, in stock-based compensation expense related to RSUs.

During the three and six-months ended June 30, 2025, the Company recognized $ 3,965,285 and $ 5,253,414 , respectively, in stock-based compensation expense related to RSUs.

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

A summary of RSUs is as follows:

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( 1,752,453 )

Balance, March 31, 2025

Vested at March 31, 2025

Balance, June 30, 2025

Vested at June 30, 2025

Commitments and Contingencies

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On June 19, 2024, Verano filed the Preliminary Suitability Application seeking orders dismissing the Summary Trial Application on the basis that certain issues in the action are not suitable for summary determination.

The Preliminary Suitability Application is currently set for hearing on June 15 and 16, 2025.

The Preliminary Suitability Application is in the process of being scheduled

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Selling, General and Administrative Expenses

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

Selling, general and administrative expenses were comprised of the following items for the three and six months ended June 30, 2025 and 2024:

Three Months Ended

Six Months Ended

Salaries and benefits

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Other Income (Expense)

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

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

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

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

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

During the three months ended March 31, 2025, the Company recorded and received $ 972,888 (2024 - $ 0 ) related to the CARES Employee Retention credit in other income on the unaudited condensed consolidated statement of loss and comprehensive loss for the three months ended March 31, 2025.

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

The CARES Employee Retention Credit was initially equal to 50% of qualified wages paid to employees during a quarter, capped at $10,000 of qualified wages per employee through December 31, 2020.

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

Based on these additional provisions, the CARES Employee Retention Credit is now equal to 70% of qualified wages paid to employees during a quarter, and the

limit on qualified wages per employee has been increased to $10,000 of qualified wages per quarter.

The Company applied for and received a CARES Employee Retention Credit equal to $ 0 and $ 972,888 , respectively, for the three and six months ended June 30, 2025 and $ 0 for each of the three and six months ended June 30, 2024.

These amounts were recorded in other income on the unaudited condensed consolidated statement of loss and comprehensive loss for the three and six months ended June 30, 2025 and 2024.

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

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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.

Subsequently, on October 9, 2024, the Company and Grown Rogue mutually agreed to terminate the advisory agreement.

Subsequently, on October 9, 2024, the Company and Grown Rogue mutually agreed to terminate the strategic agreement.

As part of the termination agreement, the Company forfeited 4,500,000 of the previously granted 8,500,000 warrants.

On March 31, 2025, these 4,000,000 warrants were revalued at a fair value of $ 1,751,906 (December 31, 2024 - $ 2,270,964 ).

The Company’s remaining 4,000,000 warrants were revalued at a fair value of $ 1,272,440 and $ 2,270,964 at June 30, 2025 and December 31, 2024, respectively.

The fair value was derived from a Black-Scholes valuation using a stock price of $ 0.40 , an exercise price of $ 0.165 , an expected life of 3.27 years, an annual risk free rate of 3.79 % , and volatility of 100 % .

The change in valuation from December 31, 2024, to March 31, 2025, of $ 519,058 (March 31, 2024 - $ 1,327,879 of other income) was recorded as other expense in the statement of net loss and comprehensive loss for the three month period ended March 31, 2025.

The three and six-months ended June 30, 2025 saw a change in fair value of $ 479,465 and $ 998,524 , respectively, which was recorded as other expense in the statement of net loss and comprehensive loss for the three and six month periods ended June 30, 2025.

Segment Reporting

The Company utilized the guidance in ASC 280 to determine how many reportable segments the Company has.

We considered various attributes of the overall Company including but not limited to the nature of products and services, the nature of production processes, the types of customers, the regulatory environment, business geography, and the level at which the Chief Operating Decision Maker evaluates the performance and allocates resources.

Given the similarities in the types of products, cannabis products in various form factors, the types of customers, retail and wholesale customers, the geography and regulatory environment in which sales are made, the United States, and the Chief Operating Decision Maker, the Chief Executive Officer, assesses performance and allocates resources at the consolidated level, the Company has determined that it only has one reportable segment, cannabis.

The Company’s Chief Executive Officer is the Company’s chief operating decision maker.

The chief operating decision maker assesses performance for the cannabis segment and decides how to allocate resources based on operating profit and net income that also is reported on the income statement as consolidated net income.

The Company considered various factors including, but not limited to, the Company’s products and services, production processes, customers, regulatory environment, and business geography, as well as the degree to which the Company’s Chief Operating Decision Maker evaluates the Company’s performance and allocates resources.

The Company determined that cannabis is its one and only reportable segment because (a) the company’s products and services are limited to various forms of cannabis products, (b) the company’s customers include retail and wholesale customers, (c) the Company’s geography and regulatory environment are the United States, and (d) the Company’s Chief Operating Decision Maker assesses performance and allocates resources at the consolidated level.

The Company’s Chief Executive Officer serves as the Company’s Chief Operating Decision Maker.

The Company’s Chief Operating Decision Maker assesses performance for the cannabis segment and decides how to allocate resources based on operating profit and net income that also is reported on the income statement as consolidated net income.

The measure of segment assets is reported on the balance sheet total as consolidated assets.

The chief operating decision maker uses net income to evaluate income generated from segment assets in deciding the appropriate capital allocation strategy.

A comparison of budgeted results to actual results is also used by the chief operating decision maker to assess business performance.

The Company’s Chief Operating Decision Maker uses net income to evaluate income generated from segment assets in deciding the appropriate capital allocation strategy.

A comparison of budgeted results to actual results is also used by the Company’s Chief Operating Decision Maker to assess business performance.

The Company’s cannabis segment cultivates, processes and distributes medical and adult-use cannabis products in a variety of formats, as well as related accessories, in the United States.

Revenue is derived from the sale of these products in the United States, and the assets used to produce these products are also held in the United States.

The accounting policy for recording revenue, and all other accounting policies, are the same as those described in the summary of significant accounting policies footnote (Note 2).

The accounting policy for recording revenue, and all other accounting policies, are the same as those described in Note 2 “Summary of Significant Accounting Policies.”

Supplemental Cash Flow Information (1)

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Change in construction accrued expenses

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

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

Financial Instruments

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Liquidity risk

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, 2025, 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.

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

The Company’s access to financing is always uncertain.

There can be no assurance of continued access to significant equity or debt financing.

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

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

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

The Company’s accounts receivable relate primarily to wholesale sales.

The Company does not have significant credit risk with respect to customers.

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

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

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

The Company has adhered, and intends to continue to adhere, strictly to the applicable state statutes in its operations.

Vireo Growth operates in the United States.

federal government regulates drugs through the Controlled Substances Act (21 U.S.C.

§ 811), which places controlled substances, including cannabis, in a schedule.

federal government regulates drugs through the CSA, which places controlled substances, including cannabis, in a schedule.

Cannabis is classified as a Schedule I drug.

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

federal law, a Schedule I drug or substance has a high potential for abuse, has no accepted medical use in the U.S., and lacks accepted safety for use under medical supervision.

Food and Drug Administration has not approved marijuana as a safe and effective drug for any indication.

marijuana is largely regulated at the state level.

State laws regulating cannabis are in direct conflict with the federal Controlled Substances Act, which makes cannabis use and possession federally illegal.

In the U.S., marijuana is largely regulated at the state level.

State laws regulating cannabis are in direct conflict with the federal CSA, which makes cannabis use and possession federally illegal.

Foreign currency risk

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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 March 31, 2025, would have resulted in a corresponding change in the statement of loss and comprehensive loss of $ 140,878 .

A change of 100 basis points in interest rates during the three months ended June 30, 2025, would have resulted in a corresponding change in the statement of loss and comprehensive loss of $ 384,000 .

Related Party Transactions

As of March 31, 2025, and December 31, 2024, there were $ 0 due to related parties.

Details surrounding the lending relationships between the Company and Chicago Atlantic, are described in Notes 12 and 13.

Our Chief Executive Officer, John Mazarakis, serves as a partner of Chicago Atlantic Group, LP, which is an affiliate of the Agent, our senior secured lender under the Credit Facility.

Given his ownership interest in the Agent and its affiliates, Mr.

Mazarakis has an approximate 29 % interest in the Company’s transactions with the Agent.

As of each of June 30, 2025 and December 31, 2024, the Company owed $ 0 to related parties.

In connection with the Proper Mergers and related Proper Merger Agreement, the Company assumed a lease of property in Missouri that is owned by employees of Proper, who are now members of the Company.

During the three and six months ended June 30, 2025, the Company made lease payments of $ 15,167 .

Monthly rent is $ 15,167 .

In connection with the Wholesome Merger and related Wholesome Merger Agreement, the Company assumed a lease of property in Grantsville, Utah that is owned by Wholesome employees, which are now members of the Company.

During the three and six-month periods ended June 30, 2025, the Company made lease payments totaling $ 142,794 .

Monthly rent is approximately $ 71,397 .

In connection with the closing of the Wholesome Merger and the related Wholesome Merger Agreement, the Company acquired $ 1,000,000 of promissory notes that bore a 13 % interest rate due to current employees.

The notes were repaid in full on July 7, 2025 in connection with the First Lien Term Loan (as defined below) and Chicago Atlantic Term Loan (as defined below).

See Note 23 “Subsequent Events” for additional information.

Details surrounding the lending relationships between the Company and Chicago Atlantic Admin, are described in Note 12 “Long-Term Debt” and Note 13 “Convertible Debt.”

John Mazarakis, Vireo Growth’s Chief Executive Officer, is a partner of Chicago Atlantic Group, LP, an affiliate of Chicago Atlantic Admin.

See "Item 13.

Certain Relationships and Related Transactions and Director Independence" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Certain Relationships and Related Transactions and Director Independence" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 for more information.

Subsequent Events

On July 7, 2025, the Company entered into a Loan and Security Agreement (the “ First Lien Term Loan ”), effective July 3, 2025, by and among the Company and each of its subsidiaries (together with Vireo Growth, each individually, a “ Borrower ” and collectively, jointly and severally, the “ Borrowers ”), the guarantors from time to time party thereto (the “ Guarantors ”), the financial institutions from time to time party thereto (the “ Lenders ”), East West Bank, a California banking corporation (“ East West Bank ”), as the administrative agent for the Lenders (the “ Administrative Agent ”), Western Alliance Bank, an Arizona corporation, as the co-administrative agent for the Lenders (the “ Co-Admin Agent ”), East West Bank, as the collateral agent for the Lenders (the “ Collateral Agent ” and each of the Collateral Agent, the Administrative Agent and the Co-Admin Agent, an “ Agent ” and two or more, the “ Agents ”), and East West Bank and Western Alliance Bank, as joint lead arrangers (collectively, in such capacities, the “ Joint Lead Arrangers ”).

The First Lien Term Loan provides for an aggregate principal amount of $ 120,000,000 to be loaned to the Borrowers.

The aggregate principal amount of the First Lien Term Loan amortizes in quarterly installments of $ 3,000,000 (or 10 % per annum of the original principal amount of the First Lien Term Loan).

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

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

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

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

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

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

Amortization payments are due and payable monthly on each payment date in an amount equal to 1 % of

the loan amount starting November 30, 2025.

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

The Chicago Atlantic Term Loan bears interest at the U.S.

prime rate (subject to a 7.5 % floor) plus 5.5 % per annum.

The Company issued a $ 10 million convertible note (the “ Convertible Note ”) to Chicago Atlantic Opportunity Finance, LLC, also with a second priority interest, that (a) matures on October 2, 2028 with an option to extend for an additional year subject to a 1 % extension fee of all Chicago Atlantic Admin loans advanced, (b) has a cash interest rate of the U.S.

prime rate, subject to a 7.5 % floor, plus 5.0 % per year, and (c) is convertible into the Company’s SVSs at an amount determined by dividing the outstanding principal amount, plus all accrued but unpaid interest on the convertible notes on the date of such conversion, by a conversion price of $ 0.625 .

The proceeds from the Convertible Note, Chicago Atlantic Term Loan, and First Lien Term Loan were used to:

(i) retire all of the Company’s existing senior secured debt;

(ii) retire the Company’s existing first priority interest in the $ 10,000,000 convertible note issued on November 1, 2024 pursuant to the Tenth Amendment;

(iii) refinance the undrawn amount of the first priority interest $ 11,500,000 secured credit agreement among the Company, the Company’s wholly-owned subsidiary, Vireo Health of Minnesota, LLC, and Chicago Atlantic Lincoln, LLC;

(iv) refinance the undrawn first priority $ 15,000,000 principal amount loan with Stearns Bank National Association and (v) recapture all debt principal payments made for the six month period ending June 30, 2025.

All remaining proceeds were used to pay transaction-related expenses.

On July 10, 2025, the Company closed the OGI Asset Purchase Agreement after receiving approval from the Missouri Department of Health and Senior Services.

In connection with closing, the Company paid Occidental Group, Inc.

approximately $ 7,000,000 .

Subsequent to June 30, 2025, the Company distributed approximately $ 6,700,000 to the former stockholders of Proper and Deep Roots.

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