Planet 13 Q3 earnings: net loss narrows to $6.36M
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Planet 13 Holdings Inc. (PLNH) reported third-quarter revenue of $23,079,891, down 0.8% year over year, and a net loss of $6,356,282, compared with a $43,955,853 loss. For the first nine months, revenue fell 14.2% to $67,031,413, while gross profit rose 21.3% to $34,713,339 and net loss narrowed 66.2% to $20,038,530 from $59,304,262. Operating cash used was $175,319 versus $10,570,883 a year earlier. The company says it believes cash on hand is adequate to fund operations over the next 12 months.
Under its proposed merger agreement with Vireo Growth Inc., each outstanding Planet 13 share, except canceled and dissenting shares, would convert into 0.015383618 Vireo subordinate voting share if the deal closes. The transaction remains subject to stockholder and other closing conditions; a special meeting is scheduled for December 10, 2026. Planet 13 completed its exit from California and operates in Nevada, Florida and Illinois. It has decided to exit Nevada wholesale in the fourth quarter of 2026 and expects a negligible revenue impact. If the merger is not completed, the company says limited capital availability may lead it to consider restructuring or reorganizing its operations.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNine-month gross profit rose 21.3% to $34,713,339.
- Moderate pointNine-month net loss narrowed 66.2% to $20,038,530.
- Moderate pointOperating cash used was $175,319, versus $10,570,883 a year earlier.
Negative
- Moderate pointNine-month revenue fell 14.2% to $67,031,413.
Filing Explained
Planet 13 issued 9,648,655 shares on RSU settlements through
Key Figures
Key Terms
gross profit margin financial
working capital financial
restricted stock units financial
Section 280E regulatory
dissenters’ rights regulatory
going concern basis financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What exchange ratio does the proposed PLNH-Vireo merger provide?
When is the PLNH merger vote, and what approvals are required?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended | |
| OR | |
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to ________
Commission File Number:
| PLANET 13 HOLDINGS INC. | ||
| (Exact name of Registrant as Specified in its Charter) |
| | | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
| | | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| | ☒ | Smaller reporting company | |
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 12, 2026, there were
Planet 13 Holdings Inc.
Quarterly Report on Form 10-Q
For Quarterly Period Ended September 30, 2026
Table of Contents
| Page |
||
| PART I |
FINANCIAL INFORMATION |
|
| Item 1. |
Financial Statements. |
5 |
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
24 |
| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk. |
32 |
| Item 4. |
Controls and Procedures. |
32 |
| PART II |
OTHER INFORMATION |
|
| Item 1. |
Legal Proceedings. |
33 |
| Item 1A. |
Risk Factors. |
33 |
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds. |
33 |
| Item 3. |
Defaults Upon Senior Securities. |
33 |
| Item 4. |
Mine Safety Disclosures. |
33 |
| Item 5. |
Other Information. |
33 |
| Item 6. |
Exhibits. |
34 |
| SIGNATURES |
35 |
|
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes “forward-looking information” and “forward-looking statements” within the meaning of applicable United States securities laws and Canadian securities laws. All information, other than statements of historical facts, included in this Quarterly Report on Form 10-Q that addresses activities, events or developments that we expect or anticipate will or may occur in the future is forward-looking information. Forward-looking information is often identified by the words “may,” “would,” “could,” “should,” “will,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “expect” or similar expressions and includes, among others, information regarding: the proposed merger with Vireo Growth Inc. (“Vireo”), including the expected timing of completion, the satisfaction or waiver of closing conditions, the receipt of required stockholder and cannabis regulatory approvals, and the anticipated effects and benefits of the merger; our strategic plans and expansion and expectations regarding the growth of the Nevada, Florida and Illinois cannabis markets; statements relating to the business and future activities of, and developments related to, us after the date of this Quarterly Report on Form 10-Q, including such things as future business strategy, competitive strengths, goals, expansion and growth of our business, operations and plans, new revenue streams, the completion by us of contemplated acquisitions of additional real estate, cultivation and licensing assets, the roll out of new dispensaries, the application for additional licenses and the grant of licenses or renewals of existing licenses that have been applied for, the expansion of existing cultivation and production facilities, the completion of cultivation and production facilities that are under construction, the construction of additional cultivation and production facilities, the expansion into additional U.S. markets, any potential future legalization of adult-use and/or medical cannabis under U.S. federal law; expectations of market size and growth in the United States and the states in which we operate or contemplate future operations; expectations for other economic, business, regulatory and/or competitive factors related to us or the cannabis industry generally; and other events or conditions that may occur in the future.
Readers are cautioned that forward-looking information and statements are not based on historical facts but instead are based on reasonable assumptions and estimates of our management at the time they were provided or made and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, as applicable, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information and statements. Such factors include, among others, risks related to the proposed merger with Vireo, including the possibility that the merger is not completed in a timely manner or at all, the failure to obtain required stockholder or cannabis regulatory approvals or the imposition of conditions on such approvals, the fixed exchange ratio and fluctuations in the market price of Vireo’s subordinate voting shares, the possible payment of a termination fee, restrictions on the conduct of our business during the pendency of the merger, disruption to our business and relationships with employees, customers and suppliers, litigation relating to the merger, and our ability to continue as a going concern if the merger is not completed; our actual financial position and results of operations differing from management’s expectations; our business model; a lack of business diversification; increasing competition in the industry; public opinion and perception of the cannabis industry; expected significant costs and obligations; current reliance on limited jurisdictions; development of our business; access to capital; risks relating to the management of growth; risks inherent in an agricultural business; risks relating to energy costs; risks related to research and market development; risks related to breaches of security at our facilities; reliance on suppliers; risks relating to the concentrated voting control of the Company; risks related to our being a holding company; risks related to service providers withdrawing or suspending services under threat of prosecution; risks related to proprietary intellectual property and potential infringement by third parties; risks of litigation relating to intellectual property; negative clinical trial results; insurance related risks; risk of litigation generally; risks associated with cannabis products manufactured for human consumption, including potential product recalls; risks relating to being unable to attract and retain key personnel; risks relating to obtaining and retaining relevant licenses; risks relating to integration of acquired businesses; risks related to quantifying our target market; risks related to industry growth and consolidation; fraudulent activity by employees, contractors and consultants; cyber-security risks; conflicts of interest; risks related to reputational damage in certain circumstances; leased premises risks; risks related to epidemics and pandemics; U.S. regulatory landscape and enforcement related to cannabis, including political risks; heightened scrutiny by Canadian regulatory authorities; risks related to capital raising due to heightened regulatory scrutiny; risks related to tax liabilities; risks related to U.S. state and local law and regulations; risks related to access to banks and credit card payment processors; risks related to potential violation of laws by banks and other financial institutions; ability and constraints on marketing products; risks related to lack of U.S. federal trademark and patent protection; risks related to the enforceability of contracts; the limited market for our securities; difficulty for U.S. holders of our common stock to resell over the Canadian Securities Exchange; price volatility of our common stock; future sales by shareholders; no guarantee regarding use of available funds; currency fluctuations; risks related to entry into the U.S; and other factors beyond our control, as more particularly described under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, in Part II, Item 1A of this Quarterly Report on Form 10-Q and subsequent reports, and in the proxy statement/prospectus included in the registration statement on Form S-4 filed by Vireo with the SEC on October 9, 2026, as it may be amended.
Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. Although we have attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such forward-looking information and statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such information and statements. Accordingly, readers should not place undue reliance on forward-looking information and statements. The forward-looking information and statements contained herein are presented for the purposes of assisting readers in understanding our expected financial and operating performance and our plans and objectives and may not be appropriate for other purposes.
The forward-looking information and statements contained in this Quarterly Report on Form 10-Q represent our views and expectations as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments may cause our views to change. However, while we may elect to update such forward-looking information and statements at a future time, we have no current intention of doing so except to the extent required by applicable law.
ADDITIONAL INFORMATION
In this Quarterly Report on Form 10-Q, unless the context otherwise requires, the terms “we,” “us,” “our,” “Company,” or “Planet 13” refer to Planet 13 Holdings Inc. together with its wholly-owned subsidiaries.
Unless otherwise indicated, all references to “$,” “US$” or “USD” in this Quarterly Report on Form 10-Q refer to United States dollars, and all references to “C$,” “CAD$,” or “CAD” refer to Canadian dollars.
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
| PLANET 13 HOLDINGS INC. Interim Condensed Consolidated Balance Sheets (Unaudited, In United States Dollars) |
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Restricted Cash | ||||||||
| Accounts Receivable | ||||||||
| Inventory | ||||||||
| Other Receivables | ||||||||
| Prepaid Expenses and Other Current Assets | ||||||||
| Total Current Assets | ||||||||
| Property, Plant and Equipment | ||||||||
| Intangible Assets and Goodwill | ||||||||
| Right of Use Assets - Operating | ||||||||
| Long-term Deposits and Other Assets | ||||||||
| Deferred Tax Asset | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| LIABILITIES | ||||||||
| Current: | ||||||||
| Accounts Payable | $ | $ | ||||||
| Accrued Expenses | ||||||||
| Income Taxes Payable | ||||||||
| Notes Payable - Current Portion | ||||||||
| Operating Lease Liabilities | ||||||||
| Total Current Liabilities | ||||||||
| Long-Term Liabilities: | ||||||||
| Operating Lease Liabilities | ||||||||
| Other Long-term Liabilities | ||||||||
| Uncertain Tax Positions | ||||||||
| Deferred Tax Liability | ||||||||
| Total Liabilities | ||||||||
| SHAREHOLDERS' EQUITY | ||||||||
| Common Stock, no par value, 1,500,000,000 shares authorized, 335,319,455 issued and outstanding at September 30, 2026 and 325,670,800 issued and outstanding at December 31, 2025 | ||||||||
| Preferred Stock, no par value, 50,000,000 shares authorized, 0 issued and outstanding at September 30, 2026 and 0 at December 31, 2025 | ||||||||
| Additional Paid-In Capital | ||||||||
| Deficit | ( | ) | ( | ) | ||||
| Total Shareholders' Equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
| PLANET 13 HOLDINGS INC. Interim Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited, in United States Dollars, except Share Amounts) |
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues, net of discounts | $ | $ | $ | $ | ||||||||||||
| Cost of Goods Sold | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gross Profit | ||||||||||||||||
| Expenses: | ||||||||||||||||
| General and Administrative | ||||||||||||||||
| Sales and Marketing | ||||||||||||||||
| Lease Expense | ||||||||||||||||
| Impairment Loss | ||||||||||||||||
| Depreciation | ||||||||||||||||
| Total Expenses | ||||||||||||||||
| Loss From Operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expense): | ||||||||||||||||
| Interest income (expense), net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Foreign exchange (loss) | ( | ) | ||||||||||||||
| Other income, net | ( | ) | ||||||||||||||
| Total Other Income (Expense) | ( | ) | ||||||||||||||
| Loss Before Provision for Income Taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision For Income Taxes | ||||||||||||||||
| Current Tax Expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Deferred Tax Recovery | ( | ) | ( | ) | ||||||||||||
| ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Net Loss and Comprehensive Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per Share | ||||||||||||||||
| Basic and diluted loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted Average Number of Shares of Common Stock | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
| PLANET 13 HOLDINGS INC. Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited, in United States Dollars, except Share Amounts) |
| Number of | ||||||||||||||||||||
| Shares of Common Stock | Warrants | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders' Equity | ||||||||||||||||
| Balance, December 31, 2024 | $ | $ | ( | ) | $ | |||||||||||||||
| Share based Compensation - RSUs | - | - | ||||||||||||||||||
| Shares Issued on Settlement of RSUs | ||||||||||||||||||||
| Net Loss for the Period | - | - | ( | ) | ( | ) | ||||||||||||||
| Balance, September 30, 2025 | $ | $ | ( | ) | $ | |||||||||||||||
| Balance, December 31, 2025 | $ | $ | ( | ) | $ | |||||||||||||||
| Share based Compensation - RSUs | - | - | ||||||||||||||||||
| Shares Issued on Settlement of RSUs | ||||||||||||||||||||
| Net Loss for the Period | - | - | ( | ) | ( | ) | ||||||||||||||
| Balance, September 30, 2026 | $ | $ | ( | ) | $ | |||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
| PLANET 13 HOLDINGS INC. Interim Condensed Consolidated Statements of Cash Flows (Unaudited, In United States Dollars) |
| Nine Months Ended | ||||||||
| September 30, | September 30, | |||||||
| 2026 | 2025 | |||||||
| CASH USED IN OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments for items not involving cash: | ||||||||
| Shared based compensation | ||||||||
| Non-cash lease expense | ||||||||
| Depreciation | ||||||||
| Loss on impairment of fixed assets | ||||||||
| Loss on impairment of intangible assets | ||||||||
| Loss on disposal of fixed assets | ||||||||
| Gain on disposal of fixed assets | ( | ) | ( | ) | ||||
| Recovery of property in legal settlement | ( | ) | ||||||
| Loss on reserve for slow moving inventory | ||||||||
| Amortization of note payable discount | ||||||||
| Lease incentive amortization | ( | ) | ( | ) | ||||
| ( | ) | ( | ) | |||||
| Net Changes in Non-cash Working Capital Items | ||||||||
| Proceeds from lease incentives | ||||||||
| Repayment of lease liabilities | ( | ) | ( | ) | ||||
| Total Operating | ( | ) | ( | ) | ||||
| FINANCING ACTIVITIES | ||||||||
| Repayment of Lafayette State Bank Note | ( | ) | ||||||
| Bank of Nevada Revolving Line of Credit | ||||||||
| Payment of Promissory Note to former VidaCann Shareholders | ( | ) | ||||||
| Total Financing | ||||||||
| INVESTING ACTIVITIES | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Proceeds from sales of fixed assets | ||||||||
| Proceeds from sale of assets held for sale | ||||||||
| Total Investing | ||||||||
| NET CHANGE IN CASH DURING THE PERIOD | ( | ) | ||||||
| CASH AND RESTRICTED CASH | ||||||||
| Beginning of Period | ||||||||
| End of Period | $ | $ | ||||||
Supplemental cash flow information (Note 14)
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
| PLANET 13 HOLDINGS INC. Notes to the Interim Condensed Consolidated Financial Statements (Unaudited, in United States Dollars, except share amounts) |
| 1. Nature of Operations |
Planet 13 Holdings Inc. (“P13” or the “Company”) was incorporated under the Canada Business Corporations Act on April 26, 2002 and continued under the British Columbia Business Corporations Act on September 24, 2019, and on September 15, 2023 completed its domestication to Nevada.
The Company is a vertically integrated cultivator and provider of cannabis and cannabis-infused products that is licensed under the laws of the States of Nevada, Illinois and Florida. The Company is licensed in these jurisdictions as follows: six Nevada licenses for cultivation (three medical and three adult-use), six Nevada licenses for production (three medical and three adult-use), three Nevada dispensary licenses (one medical and two adult-use), two Nevada licenses for distribution (one active, one conditional), one Medical Marijuana Treatment Center license in Florida (unlimited medical dispensaries, cultivation and processing) and one adult-use dispensary license in Illinois.
As of September 30, 2026, we held no licenses in California. The Company discontinued operations at its Orange County, California retail and distribution facility in February 2026. The sale and transfer of its Coalinga, California cultivation and distribution licenses were completed in August 2026, and the Company has fully exited all California cannabis operations.
P13 is a public company which is listed on the Canadian Securities Exchange (“CSE”) under the symbol PLTH and on the OTCQX exchange under the symbol “PLNH”.
The Company’s registered and head office address is 2548 W. Desert Inn Road, Suite 100, Las Vegas, NV 89109.
While cannabis and CBD-infused products are legal under the laws of several U.S. states (with varying restrictions applicable), the United States Federal Controlled Substances Act classifies all “marijuana” as a Schedule I drug, whether for medical or recreational use. Under U.S. federal law, a Schedule I drug or substance has a high potential for abuse. On April 23, the U.S. Department of Justice issued a Final Order (the “Order”) placing FDA-approved marijuana products and state-regulated medical marijuana from Schedule I to Schedule III of the Controlled Substances Act. The Order does not apply to adult-use cannabis which remains classified as a Schedule I controlled substance. State medical marijuana license holders will no longer be subject to Section 280E of the Internal Revenue Code (the “Code”). The Company continues to assess the impact of these developments and evaluate potential implications for its operations, tax position, and regulatory environment.
The federal government currently is prohibited from prosecuting businesses that operate in compliance with applicable state and local medical cannabis laws and regulations; however, this does not protect adult use cannabis. If the federal government changes this position, it would be financially detrimental to the Company.
| 2. Basis of Presentation |
These unaudited condensed consolidated interim financial statements reflect the accounts of the Company and have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for all periods presented. Certain information and footnote disclosures normally included in the audited annual consolidated financial statements prepared in accordance with GAAP have been omitted or condensed. The information included in these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. These unaudited interim condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments), which, in the opinion of management, are necessary for the fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year.
These unaudited interim condensed consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due.
Failure to arrange adequate financing on acceptable terms and/or achieve profitability may have an adverse effect on the financial position, results of operations, cash flows and prospects of the Company. These unaudited interim condensed consolidated financial statements do not give effect to adjustments to assets or liabilities that would be necessary should the Company be unable to continue as a going concern. Such adjustments could be material. These unaudited interim condensed consolidated financial statements are presented in U.S. dollars, which is also the Company’s and its subsidiaries’ functional currency.
These unaudited condensed consolidated interim financial statements were authorized for issuance by the Board of Directors of the Company on November 12, 2026.
PLANET 13 HOLDINGS INC. Notes to the Interim Condensed Consolidated Financial Statements (Unaudited, in United States Dollars, except share amounts) |
| i) | Basis of consolidation |
These accompanying unaudited condensed consolidated interim financial statements include the accounts of the Company and all subsidiaries. Subsidiaries are entities in which the Company has a controlling voting interest or is the primary beneficiary of a variable interest entity. Subsidiaries are fully consolidated from the date control is transferred to the Company and are deconsolidated from the date control ceases. All intercompany accounts and transactions have been eliminated upon consolidation. The unaudited condensed consolidated interim financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiaries after eliminating intercompany balances and transactions.
These unaudited condensed consolidated interim financial statements include the accounts of the Company and the following entities which are subsidiaries of the Company:
| Subsidiaries as at September 30, 2026 | Jurisdiction of Incorporation | Ownership Interest 2026 | Ownership Interest 2025 | Nature of Business | ||||
| MM Development Company, Inc. ("MMDC") | Nevada, USA | | | Nevada license holding company; vertically integrated cannabis operations | ||||
| BLC Management Company LLC | Nevada, USA | | | Management/holding company | ||||
| LBC CBD LLC ("LBC") | Nevada, USA | | | CBD retail sales and marketing | ||||
| Newtonian Principles Inc. | California, USA | | | California license holding company; cannabis retail sales | ||||
| Crossgate Capital U.S. Holdings Corp. | Nevada, USA | | | Holding company | ||||
| Next Green Wave, LLC | California, USA | | | California license holding company; cannabis cultivation and processing | ||||
| Planet 13 Illinois, LLC | Illinois, USA | | | Illinois license holding company; cannabis retail sales | ||||
| BLC NV Food, LLC | Nevada, USA | | | Holding company for By The Slice LLC | ||||
| By The Slice, LLC | Nevada, USA | | | Subsidiary of BLC NV Food, LLC; restaurant and retail operations | ||||
| Planet 13 Chicago, LLC | Illinois, USA | | | Holding company | ||||
| Planet 13 Real Prop LLC | Florida, USA | | | Holding company | ||||
| Planet 13 Lifestyles LLC | Nevada, USA | Retail sales of apparel and accessories | ||||||
| VidaCann, LLC | Florida, USA | Florida license holding company | ||||||
| Planet 13 Innovations LLC | Nevada, USA | Intellectual property holding company | ||||||
| Estate of Las Palmas LLC | California, USA | Real estate holdings company | ||||||
| Club One Three, LLC | Nevada, USA | Inactive |
| ii) | Functional currency |
These unaudited condensed consolidated interim financial statements are presented in U.S. Dollars (“USD”), which is the Company’s and its subsidiaries’ functional currency.
Foreign currency transactions are remeasured to the respective financial currencies of the Company’s entities at the exchange rates in effect on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are measured to the functional currency at the foreign exchange rate applicable at the balance sheet date. Non-monetary items are carried at historical rates. Non-monetary items carried at face value denominated in foreign currencies are remeasured to the functional currency at the date when the fair value was determined. Realized and unrealized foreign exchange gains and losses are recognized through profit or loss.
PLANET 13 HOLDINGS INC. Notes to the Interim Condensed Consolidated Financial Statements (Unaudited, in United States Dollars, except share amounts) |
| iii) | Emerging growth company |
The Company is an “Emerging Growth Company”, as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and it has taken advantage of certain exemptions that are not applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not has a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial reporting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.
The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public and private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
| 3. Inventory |
Finished goods inventory consists of dried cannabis, concentrates, edibles, and other products that are complete and available for sale (both internally generated inventory and third-party products purchased in the wholesale market). Work in process inventory consists of cannabis after harvest, in the processing stage. Packaging and miscellaneous consist of consumables for use in the transformation of biological assets and other inventory used in the production of finished goods, non-cannabis merchandise and food and beverage items. The Company’s inventory is comprised of:
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Raw materials | $ | $ | ||||||
| Packaging and miscellaneous | ||||||||
| Work in progress | ||||||||
| Finished goods | ||||||||
| $ | $ | |||||||
Cost of Inventory is recognized as an expense when sold and included in the cost of goods sold. During the three and nine months ended September 30, 2026, the Company recognized $
| 4. Prepaid Expenses and Other Current Assets |
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Security deposits | $ | $ | ||||||
| Advertising and Marketing | ||||||||
| Prepaid rent | ||||||||
| Insurance | ||||||||
| License fees | ||||||||
| Miscellaneous | ||||||||
| $ | $ |
| ||||||
PLANET 13 HOLDINGS INC. Notes to the Interim Condensed Consolidated Financial Statements (Unaudited, in United States Dollars, except share amounts) |
| 5. Property, Plant and Equipment |
| Land and | Leasehold | Construction | ||||||||||||||||||||||
| Improvements | Buildings | Equipment | Improvements | in Progress | Total | |||||||||||||||||||
| Gross carrying amount | ||||||||||||||||||||||||
| At December 31, 2025 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Additions | ||||||||||||||||||||||||
| Transfers | ( | ) | ||||||||||||||||||||||
| Disposals | ( | ) | ( | ) | ||||||||||||||||||||
| At September 30, 2026 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Depreciation | ||||||||||||||||||||||||
| At December 31, 2025 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Additions | ||||||||||||||||||||||||
| Disposals | ( | ) | ( | ) | ||||||||||||||||||||
| At September 30, 2026 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Carrying amount | ||||||||||||||||||||||||
| At December 31, 2025 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| At September 30, 2026 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
For the nine months ended September 30, 2026, depreciation expense was $
During the nine months ended September 30, 2026, $
During the nine months ended September 30, 2026, a gain on the sale of fixed assets in the amount of $
During the nine months ended September 30, 2026,
PLANET 13 HOLDINGS INC. Notes to the Interim Condensed Consolidated Financial Statements (Unaudited, in United States Dollars, except share amounts) |
| 6. Intangible Assets and Goodwill |
| Retail Dispensary License Clark County | Cultivation and Production License Clark County | Illinois License | Florida MMTC License-VidaCann | VidaCann Goodwill | Other | Total | ||||||||||||||||||||||
| Gross carrying amount | ||||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Impairments | ||||||||||||||||||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
The company tests and assesses for impairment of intangible asset carrying values annually at a minimum, or when there are indicators of a loss in value, such as a decline in the market or overall business performance. During the nine months ended September 30, 2026,
PLANET 13 HOLDINGS INC. Notes to the Interim Condensed Consolidated Financial Statements (Unaudited, in United States Dollars, except share amounts) |
| 7. Leases |
The Company’s lease agreements are for cultivation, manufacturing, retail, and office premises and for vehicles. The property lease terms range between
PLANET 13 HOLDINGS INC. Notes to the Interim Condensed Consolidated Financial Statements (Unaudited, in United States Dollars, except share amounts) |
The following table provides the components of lease costs recognized in the unaudited interim condensed consolidated statement of operations and comprehensive loss for the three and nine month periods ended September 30, 2026 and 2025:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Operating lease costs | $ | $ | $ | $ | ||||||||||||
| Short term lease expense | ||||||||||||||||
| Total lease costs | $ | $ | $ | $ | ||||||||||||
Other information related to operating and finance leases as of and for the nine months ended September 30, 2026 and 2025 is as follows:
| September 30, 2026 | September 30, 2025 | |||||||
| Operating | Operating | |||||||
| Lease | Lease | |||||||
| Weighted average discount rate | % | % | ||||||
| Weighted average remaining lease term | ||||||||
The maturities of the contractual undiscounted lease liabilities as of September 30, 2026 and December 31, 2025 are:
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Operating | Operating | |||||||
| Lease | Lease | |||||||
| 2026 | $ | $ | ||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| 2031 | ||||||||
| 2032 | ||||||||
| Thereafter | ||||||||
| Total undiscounted lease liabilities | ||||||||
| Interest on lease liabilities | ( | ) | ( | ) | ||||
| Total present value of minimum lease payments | ||||||||
| Lease liability - current portion | ( | ) | ( | ) | ||||
| Lease liability | $ | $ | ||||||
Principally all leases relate to real estate.
For the three and nine months ended September 30, 2026, the Company incurred $
See Note 14 for additional supplemental cash flow information related to leases.
PLANET 13 HOLDINGS INC. Notes to the Interim Condensed Consolidated Financial Statements (Unaudited, in United States Dollars, except share amounts) |
| 8. Notes Payable |
| September 30, | December 31, | Stated Interest | Effective | Maturity | |||||||||||||||
| 2026 | 2025 | Rate | Interest Rate | Date | |||||||||||||||
| Promissory Note to VidaCann former managers, unsecured with interest paid monthly at 7.5%, maturity date May 6, 2029 | % | (1) | % | 5/6/2029 | |||||||||||||||
| Revolving Line of Credit, cash secured with monthly interest paid at an annual rate of 5.65% | % | (2) | % | 6/30/2027 | |||||||||||||||
| $ | $ | ||||||||||||||||||
| Less current portion | ( | ) | ( | ) | |||||||||||||||
| $ | $ | ||||||||||||||||||
| Stated maturities of debt obligations are as follows: | |||||||||||||||||||
| 2026 | $ | $ | |||||||||||||||||
| 2027 | |||||||||||||||||||
| 2028 | |||||||||||||||||||
| 2029 | |||||||||||||||||||
| 2030 | |||||||||||||||||||
| 2031 | |||||||||||||||||||
| Total | $ | $ | |||||||||||||||||
(1) The Promissory note to VidaCann former managers had a face value of $
(2) The Company entered into a cash secured line of credit up to $
| 9. Share Capital |
The Company is authorized to issue
| Number of Shares of Common Stock | |||||||||
| September 30, | December 31, | ||||||||
| 2026 | 2025 | ||||||||
| Common Stock | |||||||||
| Balance at January 1 | |||||||||
| Shares issued on settlement of RSUs | i. | ||||||||
| Total shares of common stock outstanding | |||||||||
i. Shares issued for Restricted Share Units
During the nine months ended September 30, 2026,
During the year ended December 31, 2025,
PLANET 13 HOLDINGS INC. Notes to the Interim Condensed Consolidated Financial Statements (Unaudited, in United States Dollars, except share amounts) |
| 10. Warrants |
The following table summarizes the number of warrants outstanding at September 30, 2026 and December 31, 2025.
| September 30, 2026 | Weighted Average Exercise Price - USD | December 31, 2025 | Weighted Average Exercise Price - USD | |||||||||||||
| Balance - beginning of period | $ | $ | ||||||||||||||
| Balance - end of period | $ | $ | ||||||||||||||
On March 7, 2024, the Company issued and sold
| 11. Share Based Compensation |
At the 2023 Annual General and Special Meeting, the shareholders of Planet 13 voted to approve and adopt the 2023 Equity Plan, which was contingent upon the completion of the Company's domestication, and became effective on September 15, 2023. As of September 15, 2023, the Company may not grant any new awards under the Planet 13 Holdings Inc. 2018 Stock Option Plan and Planet 13 Holdings Inc. 2018 Share Unit Plan (collectively, the “Prior Plans”), and the Prior Plans will continue to govern awards previously granted under them.
On June 29,2026 and July 22, 2025 respectively, the Company authorized an additional
(a) Stock Options
During the three and nine months ended September 30, 2026 and the year ended December 31, 2025
The following table summarizes information about stock options outstanding at September 30, 2026:
| Exercise price | September 30, 2026 | September 30, 2026 | December 31, 2025 | December 31, 2025 | ||||||||||||||||
| Expiry Date | CAD$ | Outstanding | Exercisable | Outstanding | Exercisable | |||||||||||||||
| September 30, 2026 | $ | |||||||||||||||||||
PLANET 13 HOLDINGS INC. Notes to the Interim Condensed Consolidated Financial Statements (Unaudited, in United States Dollars, except share amounts) |
The following table reflects the continuity of stock options for the period presented:
| September 30, 2026 | Weighted Average Exercise Price - CAD | December 31, 2025 | Weighted Average Exercise Price - CAD | |||||||||||||
| Balance - beginning of period | $ | $ | ||||||||||||||
| Expired | ( | ) | ( | ) | ||||||||||||
| Balance - end of period | $ | $ | ||||||||||||||
Share based compensation expense attributable to employee options was $
The total intrinsic value of stock options exercised, outstanding and exercisable as of September 30, 2026 and December 31, 2025 was $
(b) Restricted Share Units
The following table summarizes the RSUs that are outstanding as at September 30, 2026 and December 31, 2025:
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Balance - beginning of period | ||||||||
| Issued | ||||||||
| Exercised | ( | ) | ( | ) | ||||
| Forfeited | ( | ) | ( | ) | ||||
| Balance - end of period | ||||||||
The Company recognized $
During the nine months ended September 30, 2026
No RSU's were granted,
During the nine months ended September 30, 2025
PLANET 13 HOLDINGS INC. Notes to the Interim Condensed Consolidated Financial Statements (Unaudited, in United States Dollars, except share amounts) |
| 12. Loss Per Share |
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Loss available to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of shares outstanding, basic and diluted | ||||||||||||||||
| Basic and diluted loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 13. General and Administrative |
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Salaries and wages | $ | $ | $ | $ | ||||||||||||
| Share based compensation | ||||||||||||||||
| Executive compensation | ||||||||||||||||
| Licenses and permits | ||||||||||||||||
| Payroll taxes and benefits | ||||||||||||||||
| Supplies and office expenses | ||||||||||||||||
| Subcontractors | ||||||||||||||||
| Professional fees (legal, audit and other) | ||||||||||||||||
| Miscellaneous general and administrative expenses | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
PLANET 13 HOLDINGS INC. Notes to the Interim Condensed Consolidated Financial Statements (Unaudited, in United States Dollars, except share amounts) |
| 14. Supplemental Cash Flow Information |
| Nine Months Ended | ||||||||
| September 30, | September 30, | |||||||
| Change in Working Capital | 2026 | 2025 | ||||||
| Accounts Receivable | $ | $ | ( | ) | ||||
| Inventory | ( | ) | ||||||
| Prepaid Expenses and Other Assets | ( | ) | ||||||
| Long-term Deposits and Other Current Assets | ( | ) | ( | ) | ||||
| Deferred Tax Assets | ( | ) | ||||||
| Deferred Tax Liabilities | ( | ) | ||||||
| Accounts Payable | ( | ) | ( | ) | ||||
| Accrued Expenses | ( | ) | ||||||
| Other Liabilities (LT) | ( | ) | ||||||
| Uncertain Tax Positions | ||||||||
| Income Taxes Payable | ||||||||
| $ | $ | |||||||
| Cash Paid | ||||||||
| Interest Paid on Leases | $ | $ | ||||||
| Income Taxes | $ | $ | ||||||
| Non-cash Financing and Investing Activities | ||||||||
| Lease additions | $ | $ | ||||||
| Fixed Asset Amounts in Accounts Payable | $ | $ | ||||||
| Reclassification of long term lease liabilities to current | $ | $ | ||||||
| 15. Related Party Transactions and Balances |
Related party transactions are summarized as follows:
(a) Building Lease
As part of the VidaCann acquisition on May 9, 2024, the Company entered into a long-term lease agreement with Loop's Nursery for a property in St John's Florida that is used as the Company's primary cultivation facility in Florida. Loop's Nursery is primarily owned by David Loop, one of the Company's board members. Payments for rent and associated costs related to the use of this property for the nine months ended September 30, 2026 equaled $
(b) Other
As part of the VidaCann acquisition on May 9, 2024, the Company acquired related party notes payable to David Loop, one of the Company's board members and Mark Ascik, in the amounts of $
Effective September 19, 2025, the Company entered into a three month consulting agreement with Off the House, LLC, an entity owned and operated by the stepson of Robert Groesbeck, the Company's Co-CEO. After the initial three month period, the contract continues on a month to month basis. Total contract payments for the nine months ended September 30, 2026 equaled $
As of September 30, 2026,
| 16. Commitments and Contingencies |
(a) Construction Commitments
The Company had $
PLANET 13 HOLDINGS INC. Notes to the Interim Condensed Consolidated Financial Statements (Unaudited, in United States Dollars, except share amounts) |
(b) Contingencies
The Company’s operations are subject to a variety of local and state regulations. Failure to comply with one or more of those regulations could result in fines, restrictions on its operations, or losses of permits that could result in the Company ceasing operations. While management of the Company believes that the Company is in compliance with applicable local and state regulations at September 30, 2026, medical and adult use cannabis regulations continue to evolve and are subject to differing interpretations. As a result, the Company may be subject to regulatory fines, penalties, or restrictions in the future.
(c) Claims and Litigation
From time to time, we may become involved in legal or regulatory proceedings, lawsuits and other claims arising in the ordinary course of our business. In view of the inherent difficulty of predicting the outcome of such matters, we cannot state what the eventual outcome of such matters will be. However, based on our knowledge, as of September 30, 2026, we are not presently a party to any legal proceedings that, in the opinion of our management, would individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputational harm, and other factors.
(d) Operating Licenses
Although the possession, cultivation, and distribution of marijuana for medical and adult use is permitted in Nevada and California, and for medical use these activities are permitted in Florida, marijuana is a Schedule I controlled substance, and its use remains a violation of federal law. Since federal law criminalizing the use of marijuana pre-empts state laws that legalize its use, strict enforcement of federal law regarding marijuana would likely result in the Company’s inability to proceed with our business plans. In addition, the Company’s assets, including real property, cash, equipment, and other goods, could be subject to asset forfeiture because marijuana is still federally illegal.
| 17. Risks |
Credit risk
Credit risk is the risk that a third party might fail to discharge its obligations under the terms of a financial instrument. Credit risk arises from cash with banks and financial institutions. It is management's opinion that the Company is not exposed to significant credit risk arising from these financial instruments. The Company limits credit risk by entering into business arrangements with high credit-quality counterparties. The Company further limits credit risk to a maximum of $250,000 to any individual counterparty at a given time. Total maximum credit risk for all counterparties combined is estimated at less than $
The Company evaluates the collectability of its accounts receivable and maintains an allowance for credit losses at an amount sufficient to absorb losses inherent in the existing accounts receivable portfolio as of the reporting dates based on the estimate of expected net credit losses.
Interest Rate Risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company currently has some notes payable that are interest bearing, as well as funds held in an interest-bearing money market account. Based on the balances involved, it is management’s opinion that the Company is not exposed to significant interest rate risk.
Price risk
Price risk is the risk that the trading price of the Company’s shares will fluctuate and adversely impact the Company, primarily due to the inability to raise additional funds through future stock offerings. The Company is not exposed to significant price risk.
| PLANET 13 HOLDINGS INC. Notes to the Interim Condensed Consolidated Financial Statements (Unaudited, in United States Dollars, except share amounts) |
Liquidity risk
The Company’s approach to managing risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As of September 30, 2026, the Company’s financial liabilities consist of accounts payable, accrued liabilities, obligations under operating leases, notes payable and taxes. The Company manages liquidity risk by reviewing its capital requirements on an ongoing basis. Historically, the Company’s main source of funding has been the public issuance of common equity. The Company’s access to financing is always uncertain. There can be no assurance of continued access to significant equity financing.
Concentration risk
The Company operates exclusively in Southern Nevada and Florida, and has a small presence in Illinois. Should economic conditions deteriorate within any of these regions, its results of operations and financial position would be negatively impacted.
Banking risk
Notwithstanding that a majority of states have legalized medical marijuana, there has been no change in US federal banking laws related to the deposit and holding of funds derived from activities related to the cannabis industry. Given that US federal law provides that the production and possession of cannabis is illegal, there is a strong argument that banks cannot accept or deposit funds from businesses involved with the marijuana industry. Consequently, businesses involved in the cannabis industry often have difficulty accessing the US banking system and traditional financing sources. The inability to open bank accounts with certain institutions may make it difficult to operate the business of the Company and leave the Company’s cash holdings vulnerable.
Asset forfeiture risk
Because the cannabis industry remains illegal under US federal law, any property owned by participants in the cannabis industry which are either used in the course of conducting such business, or are the proceeds of such business, could be subject to seizure by law enforcement and subsequent civil asset forfeiture. Even if the owner of the property was never charged with a crime, the property in question could still be seized and subject to an administrative proceeding by which with minimal due process, it could be subject to forfeiture.
Currency rate risk
As of September 30, 2026, none of the Company’s financial assets and liabilities were held in Canadian dollars. The same was true as of December 31, 2025. The Company’s objective in managing its foreign currency risk is to minimize its net exposure to foreign currency cash flows by transacting, to the greatest extent possible, with third parties in the functional currency. The Company does not currently use foreign exchange contracts to hedge its exposure of its foreign currency cash flows as management has determined that this risk is not significant at this point in time. The Company’s exposure to a 10% change in the foreign exchange conversion rate at September 30, 2026 equals $nil.
| 18. Disaggregated Revenue |
The following table presents the Company’s disaggregated revenue by sales channel:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Retail | $ | $ | $ | $ | ||||||||||||
| Wholesale | ||||||||||||||||
| Net revenues | $ | $ | $ | $ | ||||||||||||
PLANET 13 HOLDINGS INC. Notes to the Interim Condensed Consolidated Financial Statements (Unaudited, in United States Dollars, except share amounts) |
| 19. Property Recovered in Settlement |
On March 3, 2025 the Company announced significant recovery of funds related to El Capitan, including a settlement and recovery of $2.1 million of funds which were held at Bridge Bank, a division of Western Alliance Bank (collectively "WAB"), bringing the total recovery of funds held at WAB to $5.5 million. Additionally, the Company, through a wholly-owned subsidiary, obtained real estate (the "Real Property") valued at approximately $5.0 million based on comparable sales, and carried on
the balance sheet at a net (after estimated costs to sell) value of $
| 20. Subsequent Events |
On October 9, 2026, Vireo filed a registration statement on Form S-4 with the SEC, which includes a preliminary proxy statement of the Company and a prospectus of Vireo relating to the Parent Shares to be issued in the Merger. The registration statement was declared effective by the SEC on November 2, 2026, and the Company will hold a special meeting of its stockholders to vote on the adoption of the Merger Agreement on December 10, 2026. If the Merger is completed, the Company will become a direct wholly owned subsidiary of Vireo, the Company Common Stock will be delisted from the Canadian Securities Exchange, withdrawn from the OTCQX and deregistered under the Exchange Act, and the Company will no longer file periodic reports with the SEC. If the Merger is not completed, the Company will remain an independent public company.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This management’s discussion and analysis (“MD&A”) of the financial condition and results of operations of Planet 13 is for the three and nine months ended September 30, 2026. It is supplemental to, and should be read in conjunction with, our unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2026 and 2025, and the accompanying notes presented herein. Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Financial information presented in this MD&A is presented in United States dollars (“$”, “USD” or “US$”), unless otherwise indicated.
In this MD&A, unless the context otherwise requires, the terms “we,” “us,” “our,” “Company,” or “Planet 13” refer to Planet 13 Holdings Inc. together with its wholly owned subsidiaries.
This MD&A contains certain “forward-looking statements” and certain “forward-looking information” as defined under applicable United States and Canadian securities laws. Please refer to the discussion of forward-looking statements and information set out under the heading “Cautionary Note Regarding Forward-Looking Statements,” identified in this Quarterly Report on Form 10-Q. As a result of many factors, our actual results may differ materially from those anticipated in these forward-looking statements and information.
Overview
We are a multi-state cannabis operator with licenses to operate in Nevada, Florida, and Illinois. We are headquartered in Las Vegas, Nevada. During 2026, we completed our exit from the California market.
As of September 30, 2026, we employed approximately 650 people and remain focused on providing our customers with the best products, best services, and an experiential shopping experience at our superstore-themed dispensary while expanding our products and sales through neighborhood stores. Each of our state operations is held in state-focused subsidiaries: (a) MM Development Company, Inc. for all licensed Nevada cannabis cultivation, production, distribution, and dispensing, (b) VidaCann LLC. (“VidaCann”) which holds our Florida Medical Marijuana Treatment Center (“MMTC”) license, and (c) Planet 13 Illinois, LLC (“Planet 13 Illinois”) which holds an Illinois social-equity justice impaired dispensing license. We have focused on our large-store dispensing stores as superstores which offer an experiential approach to our customers, including drones, robotics, 3-D mapping projection, cannabis-culture inspired social-media backdrops for customer interaction, customer-facing production, one-on-one sales staffing and customer education, and other interactive marketing elements to differentiate from more traditional dispensing locations, which we refer to herein as “neighborhood stores”. Each of our cannabis facilities is state-licensed as an adult-use cannabis facility, a medical cannabis facility, or a dual-use facility, allowing for both adult-use and medical cannabis licensed activity, as designated below in the state-by-state breakdown.
On July 26, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Vireo Growth Inc., a British Columbia corporation (“Vireo” or “Parent”), and Supernova Merger Sub Inc., a Nevada corporation and a wholly owned subsidiary of Vireo (“Merger Sub”), pursuant to which Vireo will, as a result of the merger contemplated thereby, acquire all of the issued and outstanding equity interests of the Company. Pursuant to the Merger Agreement, Merger Sub will be merged with and into the Company (the “Merger” and, together, with the other transactions contemplated by the Merger Agreement, the “Transactions”), with the Company surviving as a direct wholly owned subsidiary of Vireo. Capitalized terms used but not defined herein have the meanings given to them in the Merger Agreement, except as otherwise indicated.
Proposed Merger
On July 26, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Vireo Growth Inc., a British Columbia corporation (“Vireo” or “Parent”), and Supernova Merger Sub Inc., a Nevada corporation and a wholly owned subsidiary of Vireo (“Merger Sub”), pursuant to which Vireo will, as a result of the merger contemplated thereby, acquire all of the issued and outstanding equity interests of the Company. Pursuant to the Merger Agreement, Merger Sub will be merged with and into the Company (the “Merger” and, together, with the other transactions contemplated by the Merger Agreement, the “Transactions”), with the Company surviving as a direct wholly owned subsidiary of Vireo. Capitalized terms used but not defined herein have the meanings given to them in the Merger Agreement, except as otherwise indicated.
The Company’s board of directors (the “Company Board”), acting on the unanimous recommendation of a special committee of the Company Board, consisting solely of directors who are independent and disinterested directors of the Company (the “Special Committee”), has unanimously, among other things, (i) determined that the Merger Agreement and the transactions contemplated thereby are fair to, and in the best interests of, the Company and its stockholders, (ii) approved, authorized, adopted and declared advisable the Merger Agreement and the transactions contemplated thereby and (iii) resolved to recommend that the stockholders of the Company vote in favor of the adoption of the Merger Agreement and the approval of transactions contemplated thereby, including the Merger.
Upon the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock, no par value, of the Company (“Company Common Stock”) that is issued and outstanding as of immediately prior to the Effective Time (other than Canceled Shares and Dissenting Shares) will be automatically cancelled, extinguished and converted into the right to receive 0.015383618 (the “Exchange Ratio”) of a subordinate voting share of Parent (the “Parent Shares” and such amount, the “Merger Consideration”).
Representations and Warranties; Covenants
The Company, Parent and Merger Sub have each made customary representations, warranties and covenants in the Merger Agreement. Among other things, the Company has agreed, subject to certain exceptions, from the date of the Merger Agreement until the earlier to occur of the termination of the Merger Agreement in accordance with its terms and the Effective Time, subject to specified exceptions, to, (i) use reasonable best efforts to conduct the business of the Company and its Subsidiaries in all material respects in the ordinary course of business and in a manner consistent with past practice and, to the extent consistent therewith, use reasonable best efforts to preserve in all material respects its assets and business organization and maintain in all material respects its existing business relations and goodwill with customers, suppliers, licensors, distributors, Governmental Authorities, independent contractors, employees, and business partners with whom the Company has material business relations, and (ii) not to take certain actions prior to the Effective Time without the prior written consent of Parent.
Treatment of Company Equity Awards
Company RSU Awards
Prior to the Effective Time, the Company will take all actions necessary or appropriate to cause each award of restricted stock units of the Company (a “Company RSU Award”) that is outstanding as of immediately prior to such acceleration, whether vested or unvested, to become fully vested immediately prior to the Effective Time. In connection with such acceleration, the Company will issue to each holder of a Company RSU Award the shares of Company Common Stock underlying such Company RSU Award, subject to the Company’s satisfaction of all applicable tax withholding obligations in accordance with applicable Law, the applicable Company Equity Plan and award agreement, and the Merger Agreement. Each share of Company Common Stock issued pursuant to the preceding sentence will be issued and outstanding immediately prior to the Effective Time and will be converted into the right to receive the Merger Consideration.
Treatment of Company Warrants
At the Effective Time, subject to the option of holders thereof to receive the alternative consideration in respect thereof as set forth in, and in accordance with, the terms of each warrant to purchase Company Common Stock issued by the Company that are issued and outstanding immediately prior to the Effective Time (collectively, the “Company Warrants”), Company Warrants shall become exercisable into Parent Shares in accordance with their terms. Consistent with the terms of the Company Warrants, any such Company Warrant shall be exercisable for a number of Parent Shares (if applicable, rounded in accordance with the terms of the Company Warrants) equal to the product of (x) the aggregate number of shares of Company Common Stock issuable in respect of such Company Warrants immediately prior to the Effective Time multiplied by (y) the Exchange Ratio (the “Assumed Warrants”) and the exercise price (rounded up to the nearest whole cent) of the Assumed Warrants will equal (i) the Exercise Price (as defined in the Company Warrants) of the Company Warrants in effect immediately prior to the Effective Time, divided by (ii) the Exchange Ratio.
Closing Conditions
The closing of the Merger is subject to the satisfaction of certain conditions, including (i) the adoption of the Merger Agreement by (a) the affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock entitled to vote thereon; and (b) the affirmative vote of a simple majority of the votes cast by holders, excluding the votes for shares of Company Common Stock held or controlled by persons described in items (a) through (d) of Section 8.1(2) of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions of the Canadian Securities Administrators, at a special meeting of the Company’s stockholders; and (ii) other customary conditions for a transaction of this type, such as the absence of any legal restraint prohibiting the consummation of the Transactions, the accuracy of the Company’s representations and warranties contained in the Merger Agreement and the absence of any Company Material Adverse Effect since the date of the Merger Agreement.
Non-Solicitation; Company Adverse Recommendation Change
From the date of the Merger Agreement until the earlier of the Effective Time or termination of the Merger Agreement in accordance with its terms, the Company is subject to customary “no-shop” restrictions requiring the Company not to, among other things, directly or indirectly, (a) initiate, seek, solicit, facilitate or knowingly encourage, or induce or take any other action designed or intended to lead to, or that would reasonably be expected to lead to, any inquiry with respect to, or the making, submission or announcement of, any Company Acquisition Proposal, (b) enter into, continue or otherwise participate in any negotiations or discussions with, or furnish or cause to be furnished any information or data to, or furnish access to the Company’s (or any of its Subsidiaries’) properties with respect to, or otherwise cooperate in any way with, any Person (other than Parent or any of its Affiliates or Representatives) relating to any Company Acquisition Proposal or any inquiry, proposal or offer that would reasonably be expected to lead to any Company Acquisition Proposal, or grant any waiver or release under (or terminate, amend or modify any provision of), or fail to enforce to the fullest extent permitted under applicable Law, any confidentiality or standstill or similar agreement, (c) execute or enter into any binding or non-binding letter of intent, agreement in principle, memorandum of understanding, merger agreement, acquisition agreement, option agreement, joint venture agreement, partnership agreement or other agreement, commitment, arrangement or understanding relating to or in connection with, or that is intended to or would reasonably be expected to lead to, any Company Acquisition Proposal, (d) submit to the stockholders of the Company for their approval any Company Acquisition Proposal or Company Superior Proposal, or (e) resolve to do, or agree or announce an intention to do, any of the foregoing.
The Company may, however, prior to obtaining the Company Stockholder Approval, engage in negotiations or substantive discussions with, or furnish any information to, a third party that has made a bona fide, written Company Acquisition Proposal that did not result from a breach of the non-solicitation provisions of the Merger Agreement if the Special Committee and the Company determine in good faith (after consultation with their respective financial advisors and outside legal counsel) that (x) such Company Acquisition Proposal constitutes or is reasonably likely to constitute a Company Superior Proposal and (y) failure to take such action would be inconsistent with the fiduciary duties of the Special Committee or the Company Board under applicable Law.
If, at any time prior to the receipt of the Company Stockholder Approval, the Company, the Company Board or the Special Committee receives a Company Superior Proposal that did not result from a breach of the non-solicitation provisions of the Merger Agreement, the Company Board or the Special Committee may authorize and cause the Company, in certain circumstances, to make a Company Adverse Recommendation Change and cause the Company to terminate the Merger Agreement and to concurrently enter into a definitive agreement relating to a Company Superior Proposal, subject to complying with specified notice requirements to Parent and other conditions set forth in the Merger Agreement, including paying the Company Termination Fee (as defined below) to Parent in specified circumstances, as described below.
Termination Rights
The Merger Agreement contains certain customary termination rights for the Company and Parent, including, (i) if the Merger is not consummated on or before 5:00 p.m. (New York City time) on July 26, 2027, subject to extension to October 26, 2027, solely to the extent that the requisite cannabis regulatory approvals have not been obtained (as extended, if applicable, the “Termination Date”), (ii) if the Company Stockholder Approval is not obtained at a meeting of Company stockholders (or any adjournment or postponement thereof) at which a vote is taken on the adoption of the Merger Agreement, (iii) if the other party breaches its representations, warranties or covenants in a manner that would cause the conditions to the closing of the Transactions with respect to such representations, warranties or covenants to not be satisfied and fails to cure such breach within the applicable cure period, (iv) if any Governmental Authority of competent jurisdiction shall have issued or entered any Order after the date of the Merger Agreement or any Law shall have been enacted or promulgated after the date of the Merger Agreement that has the effect of permanently restraining, enjoining, rendering illegal or otherwise prohibiting the Merger or other transactions contemplated by the Merger Agreement, and in the case of such an Order, such Order shall have become final and non-appealable, and (v) by mutual written agreement of Parent and the Company. In addition, (x) subject to compliance with certain terms of the Merger Agreement, the Merger Agreement may be terminated by the Company (prior to obtaining the Company Stockholder Approval) in order to enter into a definitive agreement providing for a Company Superior Proposal and (y) the Merger Agreement may be terminated by Parent if the Company Board or the Special Committee shall have made a Company Adverse Recommendation Change or the Company or the Company Board, as applicable, shall have materially breached any of its obligations under certain non-solicitation provisions of the Merger Agreement.
Termination Fee
If the Merger Agreement is terminated (i)(a) by Parent on the basis of a breach of a covenant or agreement contained in the Merger Agreement or (b) by either Parent or the Company if the Merger is not consummated on or before the Termination Date or if the Company Stockholder Approval is not obtained at a meeting of Company stockholders (or any adjournment or postponement thereof) at which a vote is taken on the adoption of the Merger Agreement, and prior to such termination, a Company Acquisition Proposal has been publicly disclosed and not publicly withdrawn at least three business days prior to the Company Stockholders’ Meeting or is otherwise known to the Company Board and not withdrawn and within nine months after any such termination, any Company Acquisition Proposal is consummated or the Company enters into a definitive agreement with respect to any Company Acquisition Proposal (regardless of when or whether such transaction is ultimately consummated), (ii) by the Company at any time prior to receipt of the Company Stockholder Approval, in order for the Company to enter into a definitive agreement with respect to a Company Superior Proposal to the extent permitted by the Merger Agreement, or (iii) by Parent if the Company Board or the Special Committee shall have made a Company Adverse Recommendation Change or the Company or the Company Board, as applicable, shall have materially breached any of its obligations under certain non-solicitation provisions of the Merger Agreement, then the Company will be required to pay Parent a termination fee equal to $1,800,000 (the “Termination Fee”).
Concurrently with the execution of the Merger Agreement, and as a condition and inducement to Parent’s willingness to enter into the Merger Agreement, each of Larry Scheffler, Robert Groesbeck, David Loop and Christopher Wren, and certain Affiliates of each of them, entered into a voting agreement (collectively, the “Voting Agreements”) with Parent, pursuant to which each such individual has agreed, among other things, and subject to the terms thereof, to vote the respective shares of Company Common Stock beneficially owned by each such individual in favor of the adoption of the Merger Agreement and against any Company Acquisition Proposal (including any Company Superior Proposal).
The Voting Agreements will terminate upon the earliest of (i) the valid termination of the Merger Agreement in accordance with its terms, (ii) the Effective Time, and (iii) the written agreement of the parties thereto.
Concurrently with the execution of the Merger Agreement, and as a condition and inducement to Parent’s willingness to enter into the Merger Agreement, each of Larry Scheffler, Robert Groesbeck, David Loop and Christopher Wren, and certain Affiliates of each of them, has also entered into a lock-up agreement (collectively, the “Lock-Up Agreements”) with Parent, pursuant to which each such Person has agreed not to transfer Parent Shares beneficially held or to be held by such Person that constitute, or will constitute, Merger Consideration (the “Locked-Up Shares”). With respect to each such group of stockholders, 5% of the Locked-Up Shares will be released at the Effective Time, 31.67% of the Locked-Up Shares will be released nine months after the Effective Time, 31.66% of the Locked-Up Shares will be released 15 months after the Effective Time and 31.67% of the Lock-Up Shares will be released 18 months after the Effective Time.
On October 9, 2026, Vireo filed a registration statement on Form S-4 with the SEC, which includes a preliminary proxy statement of the Company and a prospectus of Vireo relating to the Parent Shares to be issued in the Merger. The registration statement was declared effective by the SEC on November 2, 2026, and the Company will hold a special meeting of its stockholders to vote on the adoption of the Merger Agreement on December 10, 2026. If the Merger is completed, the Company will become a direct wholly owned subsidiary of Vireo, the Company Common Stock will be delisted from the Canadian Securities Exchange, withdrawn from the OTCQX and deregistered under the Exchange Act, and the Company will no longer file periodic reports with the SEC. If the Merger is not completed, the Company will remain an independent public company.
Nevada
As of September 30, 2026, we held the following licensed operations in Nevada: (a) one dual-licensed dispensary superstore adjacent to the Las Vegas Strip with 24,000 square feet of licensed dispensary (the “Planet 13 Las Vegas Superstore”), (b) one adult-use “neighborhood store” at 2,300 square feet of licensed dispensary (the “Medizin dispensary”), (c) three dual-licensed production facilities, one of which is co-located and customer-facing at the Las Vegas SuperStore Entertainment complex with 18,500 square feet of licensed production, (d) three dual-licensed cultivation facilities, one with approximately 16,100 square foot indoor cultivation facility under perpetual harvest cycle, a second with 45,000 square feet co-located with our production license at that facility, and a small-indoor rural site in Beatty, Nevada that is expandable up to 2,300,000 square feet of greenhouse located on 80-acres owned by us, also co-located with our production license at that facility, (e) one cannabis distribution license and (f) one cannabis consumption license operating as DAZED! Consumption lounge, a 3,000 square foot location inside the Planet 13 Las Vegas Superstore Entertainment complex. Of the three Nevada cultivation facilities, the Company is currently only utilizing one, the 45,000 sq ft shared use cultivation/production facility, while the other two facilities are dark and reserved for future expansion, or potential sale.
At the Planet 13 Las Vegas Superstore Entertainment complex, we also offer ancillary services to our customers, including a restaurant with a liquor license, and a retail store, which sells branded merchandise products and other non-regulated items in our facility.
Exit from California
During 2026, we completed our exit from the California market. We discontinued operations at our Orange County, California retail store, with the final day of sales on February 10, 2026, and on August 3, 2026, we completed the transfer and sale of the California licenses associated with our previously sold Coalinga cultivation facility. As of September 30, 2026, we no longer held any California cannabis licenses or conducted cannabis operations in California.
Florida
As of September 30, 2026, we are continuing capital outlays to utilize our Florida MMTC license issued by the Florida Department of Health that was acquired through our acquisition of VidaCann. Licensed MMTCs are vertically integrated and the only businesses in Florida authorized to dispense medical marijuana cannabis to qualified patients and caregivers. MMTCs are authorized to cultivate, process, transport and dispense medical marijuana. As of December 31, 2025 there were 22 companies with MMTC licenses in Florida, many of which are not yet operational. License holders are not subject to restrictions on the number of dispensaries that may be opened or on the number or size of cultivation and processing facilities they may operate. On September 15, 2023, we recorded an impairment charge of $32,750,466 against our previously acquired Florida MMTC License to reflect the value of the Florida MMTC License as of the date we domesticated to Nevada. We recognized an additional impairment of $7,197,418, that brought the carrying value of our Florida MMTC License to $9,000,000, as of December 31, 2023. The amount was equal to the sale price negotiated with a third party who acquired the license from us on May 6, 2024, prior to us closing the acquisition of VidaCann on May 10, 2024. The VidCann acquisition added a cultivation and processing facility, a production facility and a twenty-six (26) retail store network, to which we have added seven (7) additional locations, bringing the total number of medical dispensaries we operate in Florida to thirty three (33).
As part of our Florida expansion, as of the date of this Quarterly Report on Form 10-Q, we have entered into two leases for additional dispensing locations in Florida, which remain subject to completion of tenant improvements and regulatory inspection prior to sales to customers. The first location in Sarasota, became operational on August 21, 2026, which will be followed by the second location in St. Petersburg, beginning construction in the forth quarter of 2026.
Illinois
On August 5, 2021, Planet 13 Illinois won a Conditional Adult Use Dispensing Organization License in the Chicago-Naperville-Elgin region from the Illinois Department of Financial and Professional Regulation. The conditional license was issued to Planet 13 Illinois on July 22, 2022. At the time the license was awarded, we owned 49% of Planet 13 Illinois and 51% was owned by Frank Cowan.
On August 5, 2022, we entered into an option purchase agreement that gives us the option to purchase 51% of Planet 13 Illinois that it does not already own from Frank Cowan for $866,250 in cash and 1,063,377 common shares of the Company. The option was exercisable at our discretion for a period of two years.
On October 14, 2022, the Company, through its wholly owned subsidiary Planet 13 Chicago, LLC, entered into a $2,500,000 real property purchase agreement for a proposed dispensing location in Waukegan, Illinois, for an approximately 8,000 square foot building on 1.9 acres, previously occupied by a financial institution tenant. The Company’s obligation to close on the transaction is conditioned upon obtaining local jurisdiction zoning and land-use approvals, completion of customary due diligence, and that the current non-occupying tenant terminate their lease at the property. On November 1, 2022, the Company provided notice of this site selection to the Illinois cannabis regulator.
On February 7, 2023, we exercised and closed our option to purchase Mr. Cowan’s 51% interest in Planet 13 Illinois. On February 3, 2023, we closed on the purchase of a dispensary location in the town of Waukegan, a suburb of the greater Chicago area, and on December 4, 2023, opened the Planet 13 Illinois dispensary to the public.
As of September 30, 2026 we operate one Planet 13 branded dispensary in Waukegan, Illinois. The Company has plans to leverage its resources in Illinois by introducing its exclusive line of products through licensing agreements for sale at its retail store and wholesale throughout the State in 2026.
Competitive Conditions
The markets in which we operate are highly competitive, with increasing competition from larger, better financed companies, as well as new entrants. Competition has become more intense as competitors offer an increasing number of diversified products and engage in price competition in all markets. Planet 13 is committed to enhancing the customer experience through events, exclusive product offerings, improved pricing and enhancements to its loyalty program to help attract and retain customers in light of this competitive environment.
We expect to continue to focus on several areas, including customer experience, product innovation, production efficiencies, marketing and branding, and ongoing cost control and reductions. The management team constantly monitors ongoing developments in the cannabis and related industries to help us remain competitive. We have been closely tracking the illicit market for cannabis and manufacturers and retailers of intoxicating hemp products as the illicit market also has a direct financial impact on our business.
Recent Developments
On July 26, 2026, we entered into the Merger Agreement with Vireo and Merger Sub, and on October 9, 2026, Vireo filed a registration statement on Form S-4 with the SEC in connection with the Merger, which was declared effective by the SEC on November 2, 2026. The Company will hold a special meeting of its stockholders to vote on the adoption of the Merger Agreement on December 10, 2026. See “Overview” above and Part II, Item 1A, “Risk Factors” for additional information regarding the Merger.
Results of Operations
| Three Months Ended |
||||||||||||
| September 30, |
September 30, |
Percentage |
||||||||||
| Expressed in USD$ |
2026 |
2025 |
Change |
|||||||||
| Revenue |
||||||||||||
| Net revenue |
23,079,891 | 23,270,211 | (0.8 | )% | ||||||||
| Cost of Goods Sold |
(10,104,273 | ) | (18,311,350 | ) | (44.8 | )% | ||||||
| Gross Profit |
12,975,618 | 4,958,861 | 161.7 | % | ||||||||
| Gross Profit Margin % |
56.2 | % | 21.3 | % | ||||||||
| Expenses |
||||||||||||
| General and Administrative |
13,543,891 | 11,987,649 | 13.0 | % | ||||||||
| Sales and Marketing |
1,394,944 | 1,171,083 | 19.1 | % | ||||||||
| Lease expense |
1,120,390 | 1,345,835 | (16.8 | )% | ||||||||
| Depreciation and Amortization |
1,435,121 | 1,855,914 | (22.7 | )% | ||||||||
| Total Expenses |
17,494,346 | 46,204,708 | (62.1 | )% | ||||||||
| Income (Loss) From Operations |
(4,518,728 | ) | (41,245,847 | ) | (89.0 | )% | ||||||
| Other Income (Expense): |
||||||||||||
| Interest expense, net |
(100,445 | ) | (91,934 | ) | 9.3 | % | ||||||
| Foreign exchange gain (loss) |
— |
— |
#DIV/0! |
|||||||||
| Other income, net |
278,902 | (1,799,946 | ) | (115.5 | )% | |||||||
| Total Other Income |
178,457 | (1,891,880 | ) | (109.4 | )% | |||||||
| Loss for the period before tax |
(4,340,271 | ) | (43,137,727 | ) | (89.9 | )% | ||||||
| Provision for income tax (current and deferred) |
(2,016,011 | ) | (818,126 | ) | 146.4 | % | ||||||
| Loss for the period |
(6,356,282 | ) | (43,955,853 | ) | (85.5 | )% | ||||||
| Loss per share for the period |
||||||||||||
| Basic and fully diluted income (loss) per share |
$ | (0.02 | ) | $ | (0.14 | ) | ||||||
| Weighted Average Number of Shares Outstanding |
||||||||||||
| Basic and diluted |
335,319,455 | 325,363,800 | ||||||||||
| Nine Months Ended |
||||||||||||
| September 30, |
September 30, |
Percentage |
||||||||||
| Expressed in USD$ |
2026 |
2025 |
Change |
|||||||||
| Revenue |
||||||||||||
| Net revenue |
67,031,413 | 78,156,379 | (14.2 | )% | ||||||||
| Cost of Goods Sold |
(32,318,074 | ) | (49,531,520 | ) | (34.8 | )% | ||||||
| Gross Profit |
34,713,339 | 28,624,859 | 21.3 | % | ||||||||
| Gross Profit Margin % |
51.8 | % | 36.6 | % | ||||||||
| Expenses |
||||||||||||
| General and Administrative |
36,082,534 | 39,645,372 | (9.0 | )% | ||||||||
| Sales and Marketing |
3,921,486 | 4,344,072 | (9.7 | )% | ||||||||
| Lease expense |
3,440,793 | 4,032,796 | (14.7 | )% | ||||||||
| Depreciation and Amortization |
4,347,413 | 5,442,633 | (20.1 | )% | ||||||||
| Total Expenses |
47,792,226 | 83,309,100 | (42.6 | )% | ||||||||
| Income (Loss) From Operations |
(13,078,887 | ) | (54,684,241 | ) | (76.1 | )% | ||||||
| Other Income (Expense): |
||||||||||||
| Interest expense, net |
(275,070 | ) | (645,635 | ) | (57.4 | )% | ||||||
| Foreign exchange gain (loss) |
— | (3,113 | ) | (100.0 | )% | |||||||
| Other income, net |
2,383,691 | 3,504,281 | (32.0 | )% | ||||||||
| Total Other Income |
2,108,621 | 2,855,533 | (26.2 | )% | ||||||||
| Loss for the period before tax |
(10,970,266 | ) | (51,828,708 | ) | (78.8 | )% | ||||||
| Provision for income tax (current and deferred) |
(9,068,264 | ) | (7,475,554 | ) | 21.3 | % | ||||||
| Loss for the period |
(20,038,530 | ) | (59,304,262 | ) | (66.2 | )% | ||||||
| Loss per share for the period |
||||||||||||
| Basic and fully diluted income (loss) per share |
$ | (0.06 | ) | $ | (0.18 | ) | ||||||
| Weighted Average Number of Shares Outstanding |
||||||||||||
| Basic and diluted |
331,318,143 | 325,362,689 | ||||||||||
Three and Nine Months Ended September 30, 2026 Compared to the Three and Nine Months Ended September 30, 2025
Revenue, net of Discounts
Net Revenue for the three months ended September 30, 2026 was $23,079,891 vs $22,859,292 in the prior quarter for a sequential increase of 1.0% or $220,599. The Company, experienced a slight, 0.8% decrease in net revenue of $190,320 from $23,079,891 in the comparable prior year period. Net Revenue during the nine months ended September 30, 2026 was $67,031,413, a 14.2% decrease of $11,124,966 when compared to the prior year period of $78,156,379.
The quarter over quarter sequential increase was primarily driven by a 15.1% revenue increase in the Florida market vs the prior quarter. Florida also experienced a 45% increase in revenue vs the prior year quarter. The year over year decreases in net revenue were primarily driven by the Company's exit from the California market with the wholesale portion substantially complete at the end of 2025 and the final day of sales at the dispensary on February 10, 2026. California revenue represented approximately $9,555,057 of the overall $11,124,966 revenue decline vs prior year with the remaining decrease coming from the Nevada market.
In Nevada, The Company continues to be impacted by an overall decline in Las Vegas tourism, with a corresponding reduction in tourist foot traffic at the Planet 13 Las Vegas Superstore compared to the prior year. In particular, ongoing pricing pressure and oversupply in the market have had a negative impact on the Nevada wholesale business, which The Company has decided to exit in the fourth quarter of 2026. The impact of the wholesale exit on revenue is expected to be negligible. The Company is focused on driving customer traffic to the Las Vegas Superstore location with local marketing efforts, partnerships with taxi cab and rideshare drivers and targeting high impact events such as certain concerts, events at the Sphere, sporting events, as well as using ongoing social media content to help promote the unique Las Vegas Superstore experience.
Details of net revenue by product category are as follows:
| Three Months Ended | ||||||||||||
| September 30, |
September 30, |
Percentage |
||||||||||
| 2026 |
2025 |
Change |
||||||||||
| Flower |
$ | 10,388,337 | $ | 8,577,585 | 21.1 | % | ||||||
| Concentrates |
8,075,344 | 7,661,562 | 5.4 | % | ||||||||
| Edibles |
3,422,472 | 3,667,384 | (6.7 | )% | ||||||||
| Topicals and Other Revenue |
845,963 | 1,119,393 | (24.4 | )% | ||||||||
| Wholesale |
347,775 | 2,244,287 | (84.5 | )% | ||||||||
| Net revenue |
$ | 23,079,891 | $ | 23,270,211 | (0.8 | )% | ||||||
| Nine Months Ended |
||||||||||||
| September 30, |
September 30, |
Percentage |
||||||||||
| 2026 |
2025 |
Change |
||||||||||
| Flower |
$ | 28,061,968 | $ | 28,728,017 | (2.3 | )% | ||||||
| Concentrates |
23,467,483 | 24,876,348 | (5.7 | )% | ||||||||
| Edibles |
10,881,604 | 12,801,895 | (15.0 | )% | ||||||||
| Topicals and Other Revenue |
2,789,039 | 3,447,300 | (19.1 | )% | ||||||||
| Wholesale |
1,831,319 | 8,302,819 | (77.9 | )% | ||||||||
| Net revenue |
$ | 67,031,413 | $ | 78,156,379 | (14.2 | )% | ||||||
Gross Profit
Gross profit margin for the three months ended September 30, 2026 was 56.2% compared to 21.3% for the three months ended September 30, 2025. Overall gross profit was $12,975,618 and $4,958,861 for the three months ended September 30, 2026 and 2025 respectively, a year over year increase of 161.7% or $8,016,757.
Gross profit margin for the nine months ended September 30, 2026 was 51.8% compared to 36.6% for the nine months ended September 30, 2025. Overall gross profit was $34,713,339 and $28,624,859 for the nine months ended September 30, 2026 and 2025 respectively, a year over year increase of 21.3% or $6,088,480.
The increase in gross profit margin percentage for the nine months ended September 30, 2026 was the result of several factors including: the exit from California wholesale, the cost reductions in Nevada cultivation and improvements in third party procurement in Nevada. The Company also had a positive, ytd adjustment to its inventory reserve balance of $2,093,977 with $1,000,000 impacting Q2 and $1,093,977 impacting Q3. Without the inventory reserve adjustment, gross profit margin would have been 51.5% for the three month and 48.7% for the nine month periods. The Company expects margins to stabilize at this level going forward as a result of the continued efforts in Nevada, and as Florida begins to scale and butane hash oil products are introduced.
General and Administrative Expenses
General and Administrative (“G&A”) expenses (which includes non-cash share-based compensation expenses), decreased by 9.0% during the nine months ended September 30, 2026, when compared to the nine months ended September 30, 2025. The decrease in G&A expenses across board was the result of the focused cost cutting initiatives undertaken by the Company during 2025 now showing in the results. Overall, excluding non-cash share-based compensation expenses and non-operating legal and transaction related costs, G&A expenses decreased $6,907,037 or 18.0%. When expressed as a percentage of revenue, adjusted G&A expenses equaled 47.1% for the nine months ended September 30, 2026, compared to 49.2% for the nine months ended September 30, 2025.
A detailed breakdown of G&A expenses is as follows:
| Three Months Ended |
||||||||||||
| September 30, | September 30, | Percentage | ||||||||||
| 2026 |
2025 |
Change |
||||||||||
| Salaries and wages |
$ | 4,991,362 | $ | 4,793,367 | 4.1 | % | ||||||
| Share-based compensation expense |
360,007 | 616,654 | (41.6 | )% | ||||||||
| Executive compensation |
772,608 | 728,180 | 6.1 | % | ||||||||
| Licenses and permits |
555,601 | 683,859 | (18.8 | )% | ||||||||
| Payroll taxes and benefits |
958,197 | 1,150,290 | (16.7 | )% | ||||||||
| Supplies and office expenses |
137,066 | 200,787 | (31.7 | )% | ||||||||
| Subcontractors |
452,253 | 562,979 | — | % | ||||||||
| Professional fees (legal, audit and other) |
2,927,065 | 1,133,736 | 158.2 | % | ||||||||
| Miscellaneous general and administrative expenses |
2,389,732 | 2,117,797 | 12.8 | % | ||||||||
| $ | 13,543,891 | $ | 11,987,649 | 13.0 | % | |||||||
| Nine Months Ended |
||||||||||||
| September 30, |
September 30, |
Percentage |
||||||||||
| 2026 |
2025 |
Change |
||||||||||
| Salaries and wages |
$ | 13,717,540 | $ | 16,032,900 | (14.4 | )% | ||||||
| Share-based compensation expense |
1,715,500 | 1,174,281 | 46.1 | % | ||||||||
| Executive compensation |
2,265,934 | 2,816,843 | (19.6 | )% | ||||||||
| Licenses and permits |
1,587,041 | 2,030,477 | (21.8 | )% | ||||||||
| Payroll taxes and benefits |
2,971,253 | 3,734,383 | (20.4 | )% | ||||||||
| Supplies and office expenses |
466,273 | 736,928 | (36.7 | )% | ||||||||
| Subcontractors |
1,401,333 | 1,761,008 | (20.4 | )% | ||||||||
| Professional fees (legal, audit and other) |
5,106,998 | 4,114,199 | 24.1 | % | ||||||||
| Miscellaneous general and administrative expenses |
6,850,662 | 7,244,353 | (5.4 | )% | ||||||||
| $ | 36,082,534 | $ | 39,645,372 | (9.0 | )% | |||||||
Non-cash, share-based compensation of $360,007 was recognized during the three months ended September 30, 2026, increasing from $616,654 that was recognized during the three months ended September 30, 2025. The decrease is primarily attributable to fewer Restricted Share Units (“RSUs”) outstanding vs the prior year and no new RSUs being granted in 2026. These amounts are non-cash, and the expense is recognized in accordance with the vesting schedule of the underlying RSUs. See Note 12 to our audited consolidated financial statements filed with our Annual Report on Form 10-K for the year ended December 31, 2025, for additional details on the assumptions used to calculate fair value as well as information regarding the vesting of the various components of the non-cash share-based compensation.
Sales and marketing expenses increased by 19.1% or $223,861 during the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase in marketing expenses was a result of the Company's overall efforts to drive increased customer traffic to the Planet 13 Las Vegas Superstore.
Lease expense decreased by 16.8% during the three months ended September 30, 2026, when compared to the three months ended September 30, 2025. The decrease in Lease expense is primarily due to the exit from the Orange County, California dispensary, which was completed on February 10, 2026, the exit from administrative office space in Nevada and two unprofitable store locations in Miami Florida.
Depreciation and amortization decreased by 22.7% during the three months ended September 30, 2026, when compared to the three months ended September 30, 2025. The reduction is primarily due to the elimination of depreciation charges as a result of the asset sales in California.
Interest expense of $100,445 was incurred during the three months ended September 30, 2026, compared to net interest expense of $91,934 during the three months ended September 30, 2025. The interest expense is net of interest earned on a corresponding money market account. The balance of long-term debt as of September 30, 2026, was $1,282,370 compared to $1,234,353 as of December 31, 2025.
We conduct our operations primarily in United States dollars and hold all of our currency in US dollars. An insignificant amount of expenses are incurred in Canadian dollars, or Euros. The foreign currency gains/losses reflect fluctuations in the underlying exchange rates on the dates expenses are incurred compared to when they are paid. It is our policy not to hedge our foreign exchange exposure.
Other income/expense, consisting of gains on the sale of fixed assets and other miscellaneous transactions, including Automated Teller Machine (“ATM”) fees, and other income, was income of $278,902 for the three months ended September 30, 2026, compared to other income consisting of ATM fees, and other miscellaneous expenses of $1,799,946 for the three months ended September 30, 2025. Other income for the nine months ended September 30, 2026 included $1,565,000 gain on the sale of assets. The prior year other income included the recovery of a property in a legal settlement related to the El Capitan matter valued at $4,570,227.
Income tax expense for the three months ended September 30, 2026, was $2,016,011 compared to $818,126 for the prior year period. The tax expense increased primarily due to a deferred tax recovery benefit of $2,236,050 in the prior year. Non-medical markets are still subject to Section 280E of the Internal Revenue Code (the “Code”), which prohibits businesses from taking deductions or credits in carrying on any trade or business consisting of trafficking in certain controlled substances that are prohibited by federal law. We, to the extent our “trafficking” activities, and/or key contract counterparties directly engaged in trafficking in cannabis, have incurred significant tax liabilities from the application of Section 280E. Our income tax obligations under Section 280E of the Code are typically substantially higher as compared to companies to which Section 280E does not apply. Section 280E essentially requires us to pay federal, and as applicable, state income taxes on gross profit, which presents a significant financial burden that increases our net loss and may make it more difficult for us to generate net profit and cash flow from operations in future periods. In addition, to the extent that the application of Section 280E creates a financial burden on contract counterparties, such burdens may impact the ability of such counterparties to make full or timely payment to us, which would also have a material adverse effect on our business.
The overall net loss for the three months ended September 30, 2026, was $6,356,282 (($0.02) per share) compared to an overall net loss of $43,955,853 (($0.14) per share) for the three months ended September 30, 2025.
Segmented Disclosure
The Company determined that each of its locations represents an operating segment. These operating segments have been aggregated into a single reportable segment as the Company operates as a vertically integrated cannabis company with dispensary, cultivation, production and distribution operations in the States of Nevada and Florida, and dispensary operations in the State of Illinois.
Liquidity and Capital Resources
As of September 30, 2026, our financial instruments consist of cash, deposits, accounts receivable, accounts payable and accrued liabilities, and notes payable. We have no speculative financial instruments, derivatives, forward contracts, or hedges.
As of September 30, 2026, we have working capital of $14,756,340 compared to working capital of $18,564,637 as of September 30, 2025. The working capital reduction is the result of substantially less inventory and accounts receivable related to our former California operations and the reduction in Nevada cultivation, partially offset by a reduction in accounts payable and accrued expenses in the current period. The Company believes that it has adequate liquidity in the form of cash on hand to continue to fund its operations over the next 12 months.
The following table relates to the nine months ended September 30, 2026 and 2025:
| Nine Months Ended |
||||||||
| September 30, | September 30, | |||||||
| 2026 |
2025 |
|||||||
| Cash flows used in operating activities |
$ | (175,319 | ) | $ | (10,570,883 | ) | ||
| Cash flows provided by investing activities |
292,361 | 514,518 | ||||||
| Cash flows provided by financing activities |
- |
1,802,368 | ||||||
Cash Flows from Operating Activities
Net cash used in operating activities was $175,319 for the nine months ended September 30, 2026, compared to cash used in operating activities of $10,570,883 for the nine months ended September 30, 2025. A significant portion of the increase in cash used in operating activities is directly attributable to the net change in certain working capital items during the nine months ended September 30, 2026, when compared to the nine months ended September 30, 2025. This was driven primarily by decreases in accounts receivable, inventory, accounts payable and accrued expense accounts in the six months ended September 30, 2025.
Cash Flows from Investing Activities
Net cash provided by investing activities was $292,361 for the nine months ended September 30, 2026, compared to net cash provided by investing activities of $514,518 for the nine months ended September 30, 2025. Funds received in the current period were related to the sale of dispensary assets in Orange County, California, offset by capital expenditures in Florida. Capital expenditures in the prior year period were primarily related to new store buildouts and upgrades to the cultivation facilities in Florida.
Cash Flows from Financing Activities
Net cash provided by financing activities was $0 during the nine months ended September 30, 2026, compared to net cash provided by financing activities of $1,802,368 for the nine months ended September 30, 2025. The funds received in the prior period were a $9,750,000 draw from the revolving line of credit, mostly offset by the payoff of debts related to the VidaCann acquisition.
Capital Resources
We have a recent history of operating losses. It may be necessary for us to arrange for additional financing to meet our ongoing operational needs and growth initiatives. Under the Merger Agreement, we generally may not issue securities, incur or guarantee certain indebtedness or make certain capital expenditures without Vireo’s prior written consent until the earlier of the completion of the Merger and the termination of the Merger Agreement.
Management believes it will be able to raise equity capital as required in the long term, but recognizes the risks attached thereto. There can be no assurance that it will be able to obtain adequate financing in the future or that the terms of such financing may be favorable.
Should financing not be available, the Company has adequate liquidity in the form of cash on hand and assets for sale to fund all of its planned capital expenditures and expansion plans as well as to continue to fund its operation over the next 12 months, including the planned build-out of its operations in Florida.
If the Merger is not completed, as a result of the limited capital available for small-cap cannabis companies in the current market, we may need to consider other available options to restructure or reorganize our operations.
Capital Management
Our capital consists of shareholders’ equity. Our objective when managing capital is to maintain adequate levels of funding to support the development of our businesses and maintain the necessary corporate and administrative functions to facilitate these activities. This is done primarily through equity financing. Future financings are dependent on market conditions and there can be no assurance we will be able to raise funds in the future. We invest all capital that is surplus to our immediate operational needs in short-term, highly liquid, and high-grade financial instruments. There were no changes to our approach to capital management during the period. We are not subject to externally imposed capital requirements.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements as of September 30, 2026.
Critical Accounting Estimates
The preparation of consolidated financial statements in conformity with GAAP requires our management to make judgements, estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements. Although these estimates are based on management’s best knowledge of the amounts, events or actions, actual results may differ from those estimates. Estimates and judgements are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable.
Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
There have been no material changes to our critical accounting estimates as set forth in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes to our market risk disclosures as set forth in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 4. Controls and Procedures
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Our management, with the participation of our Co-Chief Executive Officers and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act. Based on that evaluation as of September 30, 2026, our Co-Chief Executive Officers and Chief Financial Officer concluded that our Company’s disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance of achieving the desired control objectives. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met. Similarly, an evaluation of controls cannot provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in legal or regulatory proceedings, lawsuits and other claims arising in the ordinary course of our business. In view of the inherent difficulty of predicting the outcome of such matters, we cannot state what the eventual outcome of such matters will be. However, based on our knowledge, we are not presently a party to any legal proceedings that, in the opinion of our management, would individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows. As of the date of this Quarterly Report on Form 10-Q, we are not aware of any litigation that has been filed relating to the Merger. Lawsuits relating to the Merger may be filed in the future against us, Vireo and/or our directors and officers. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputational harm, and other factors.
Item 1A. Risk Factors.
In addition to other information set forth in this report, you should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, which could materially affect our business, financial condition, financial results, or future performance, as well as the risk factors set forth under “Risk Factors” in the proxy statement/prospectus included in the registration statement on Form S-4 filed by Vireo with the SEC on October 9, 2026, as it may be amended. Other than as set forth below, there have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Because the Exchange Ratio is fixed and the market price of Vireo’s subordinate voting shares may fluctuate, our stockholders cannot be certain of the value of the consideration they will receive in the Merger, if completed.
If the Merger is completed, each share of Company Common Stock issued and outstanding immediately prior to the effective time of the Merger, other than shares that are canceled pursuant to the Merger Agreement and shares held by stockholders who properly exercise and perfect applicable dissenters’ rights, will be converted into the right to receive 0.015383618 of a subordinate voting share of Vireo, subject to customary adjustments for stock splits, recapitalizations and similar events as provided in the Merger Agreement. Because the Exchange Ratio is fixed and will not be adjusted to reflect changes in the market price of Vireo’s subordinate voting shares or Company Common Stock, the value of the consideration received by our stockholders will depend on the market price of Vireo’s subordinate voting shares at the time the Merger is completed.
The market prices of Vireo’s subordinate voting shares and the Company Common Stock may fluctuate during the pendency of the Merger. Accordingly, our stockholders will not know or be able to determine the market value of the Merger consideration they will receive until the Merger is completed. Changes in the market prices of Vireo’s subordinate voting shares and the Company Common Stock may result from a variety of factors, including general market and economic conditions, developments affecting the cannabis industry, changes in applicable laws and regulations, changes in Vireo’s or our respective businesses, operations, financial condition and prospects, market assessments of the likelihood and anticipated timing of completion of the Merger and developments relating to the receipt of required regulatory approvals. Many of these factors are beyond Vireo’s and our control.
Completion of the Merger is subject to a number of conditions, and the failure or delay in satisfying those conditions could prevent or delay completion of the Merger and adversely affect our business, financial condition and results of operations.
Completion of the Merger is subject to the satisfaction or, where permitted, waiver of a number of conditions, including, among others: (i) approval of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding shares of the Company Common Stock entitled to vote thereon; (ii) approval by a simple majority of the votes cast by our stockholders, excluding the votes attached to shares held or controlled by persons specified under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions of the Canadian Securities Administrators; (iii) the effectiveness of the Registration Statement on Form S-4 relating to the Vireo subordinate voting shares to be issued in the Merger and the absence of an effective stop order or related SEC proceeding; (iv) approval of the Vireo subordinate voting shares to be issued in the Merger for listing on the Canadian Securities Exchange and receipt of the required acceptance or approval of the Canadian Securities Exchange; (v) the absence of any applicable law or order prohibiting, restraining or making illegal the completion of the Merger; (vi) the receipt and continued effectiveness of certain specified governmental and cannabis regulatory authorizations, permits and consents, including, as applicable, the expiration or termination of applicable waiting periods; (vii) the absence of certain pending governmental proceedings challenging or seeking to restrain the Merger or impose specified limitations or remedies; (viii) the accuracy of the parties’ respective representations and warranties, subject to the standards set forth in the Merger Agreement, and the parties’ performance in all material respects of their respective obligations under the Merger Agreement; (ix) the absence of a material adverse effect with respect to either us or Vireo; and (x) the receipt by each party of an opinion of its counsel regarding the intended U.S. federal income tax treatment of the Merger.
There can be no assurance that these conditions will be satisfied or waived or that the Merger will be completed on the terms or within the timeframe currently contemplated, or at all. Governmental and cannabis regulatory authorities may delay or decline to grant required approvals or may impose conditions, limitations or restrictions in connection with such approvals. Other events, developments or circumstances may also delay or prevent completion of the Merger.
The Merger Agreement generally may be terminated by either party if the Merger has not been completed by July 26, 2027. In specified circumstances relating to the failure to obtain cannabis consents and associated regulatory conditions, and provided that the other applicable closing conditions have been satisfied, waived or are capable of being satisfied at closing, either party may extend the termination date to October 26, 2027 in accordance with the procedures set forth in the Merger Agreement.
If the Merger is not completed, the market price of the Company Common Stock could decline to the extent that its market price reflects an assumption that the Merger will be completed. We would also remain liable for significant transaction expenses incurred in connection with the Merger, and our business may be adversely affected by the diversion of management attention, disruption of our relationships with employees, customers, suppliers and other business partners, negative reactions from the investment community and the loss of potential business opportunities during the pendency of the Merger. In addition, under specified circumstances described in the Merger Agreement, we may be required to pay Vireo a termination fee of $1.8 million. Any of these consequences could materially and adversely affect our business, financial condition, results of operations and the market price of our common stock.
The announcement and pendency of the Merger may disrupt our business, and the Merger Agreement subjects us to restrictions on the conduct of our business until the Merger is completed or the Merger Agreement is terminated.
Uncertainty regarding the Merger may adversely affect our relationships with our employees, customers, suppliers, licensors, distributors, governmental authorities, independent contractors, business partners and other third parties. Employees may experience uncertainty regarding their roles or employment following completion of the Merger, which could adversely affect our ability to attract, retain and motivate key personnel. The loss or distraction of employees, including members of senior management, could adversely affect our business and operations. In addition, our management has devoted, and will continue to devote, significant attention and resources to the completion of the Merger, which may divert attention from our ongoing business and other strategic priorities.
Our customers, suppliers and other business partners may also experience uncertainty concerning their current or future relationships with us or the combined company. Such uncertainty could cause customers to reduce or delay purchases, cause suppliers or other counterparties to seek to modify or terminate existing business relationships, or make it more difficult for us to establish new relationships. Competitors may seek to take advantage of this uncertainty, which could adversely affect our business, financial condition and results of operations.
Under the Merger Agreement, we are generally required to conduct our business in all material respects in the ordinary course consistent with past practice and to use reasonable best efforts to preserve our assets, business organization and material business relationships until the earlier of the effective time of the Merger and termination of the Merger Agreement. Subject to specified exceptions, qualifications and monetary thresholds, we may not take certain actions without Vireo’s prior written consent, including issuing securities, declaring or paying dividends, making certain compensation or employment-related changes, acquiring or disposing of businesses or assets, entering into new lines of business, incurring or guaranteeing certain indebtedness, making certain capital expenditures, entering into, amending or terminating certain material contracts, or settling certain proceedings or claims.
The Merger Agreement also restricts our ability to solicit, initiate, facilitate or knowingly encourage alternative acquisition proposals or engage in discussions or negotiations regarding such proposals. Subject to the procedures and conditions specified in the Merger Agreement, we may furnish information and participate in negotiations regarding a bona fide written acquisition proposal received after execution of the Merger Agreement that did not result from a breach of the applicable restrictions if the required determinations are made regarding the likelihood that the proposal constitutes a superior proposal and the fiduciary duties of the Company Board or the Special Committee. The Merger Agreement also permits us, subject to specified conditions, to terminate the Merger Agreement to enter into a definitive agreement with respect to a superior proposal, in which case we would be required to pay the $1.8 million termination fee.
These restrictions could prevent us from pursuing strategic, operational, financing or other opportunities that may arise prior to completion of the Merger, responding effectively to competitive pressures or industry developments, or taking actions that we might otherwise consider beneficial to our business and stockholders. The adverse effects of these restrictions and the uncertainty associated with the Merger could be exacerbated by any delay in completing the Merger or could continue or accelerate if the Merger is not completed.
If the Merger is not completed, and financing is not available, restructuring of operations or other options may be necessary to raise additional capital.
In the event that the Merger is not completed, as a result of the limited capital available for small-cap cannabis companies in the current market, we may need to consider other available options to restructure or reorganize our operations in order to raise additional funds. Furthermore, if the Merger Agreement is terminated and we seek another business combination, we may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the Merger Agreement.
Members of our board of directors and management have interests in the Merger that are different from, or in addition to, those of our other stockholders.
Our executive officers have arrangements that may provide for severance payments or benefits and other payments or benefits upon completion of the Merger and/or upon a termination of employment under specified circumstances following completion of the Merger, and certain equity-based awards held by our executive officers and directors will vest or otherwise be treated as described in the Merger Agreement. Our executive officers and directors also have rights to indemnification, advancement of expenses and directors’ and officers’ liability insurance that will survive completion of the Merger. Concurrently with the execution of the Merger Agreement, Larry Scheffler, Robert Groesbeck and Christopher Wren entered into employment offer letters with Vireo, effective upon the closing of the Merger, that include awards of restricted stock units subject to the achievement of specified revenue targets. In addition, Larry Scheffler, Robert Groesbeck, Christopher Wren and David Loop, who in the aggregate owned approximately 95,575,867 shares of Company Common Stock as of July 26, 2026, have entered into Voting Agreements and Lock-Up Agreements with Vireo. These interests may cause such persons to view the Merger differently than our other stockholders.
Our stockholders will have a significantly reduced ownership and voting interest in Vireo after the Merger, and the Vireo shares they receive will have different rights from shares of our common stock.
Upon completion of the Merger, our stockholders will become shareholders of Vireo, a British Columbia corporation, and their rights will be governed by Vireo’s articles and applicable British Columbia law, which differ in some respects materially from our articles of incorporation, our bylaws and Nevada law. Our current stockholders will own a minority of Vireo’s outstanding subordinate voting shares following the Merger and will have significantly less influence over the policies of Vireo than they now have over our policies.
Vireo may not achieve the intended benefits of the Merger, and the market price of Vireo shares after the Merger may be affected by factors different from those currently affecting our common stock.
There can be no assurance that Vireo will be able to successfully integrate our business or realize the expected benefits of the Merger, including operational synergies and efficiencies. Integration may involve diversion of management attention, difficulties retaining employees and business relationships, consolidation of corporate and administrative infrastructure, integration of information technology and other systems, and unknown liabilities or unforeseen expenses. Following the Merger, the market price of Vireo shares may be affected by factors different from those affecting our common stock as a standalone company and may decline if Vireo does not achieve the anticipated benefits of the Merger. Vireo is also treated as a United States corporation for U.S. federal income tax purposes while being subject to Canadian taxation, which could adversely affect the combined company.
The Merger may result in a loss of customers, distributors, suppliers, vendors, landlords, lenders and other business partners and may result in the termination of existing contracts.
Following the Merger, some of our customers, distributors, suppliers, vendors, landlords, lenders and other business partners may terminate or scale back their current or prospective business relationships with Vireo. Some customers may not wish to source a larger percentage of their needs from a single company or may feel that Vireo is too closely allied with one of their competitors. In addition, we have contracts with customers, distributors, suppliers, vendors, landlords, lenders and other business partners that may require us to obtain consents from these other parties in connection with the Merger, which may not be obtained on favorable terms or at all. If relationships with customers, distributors, suppliers, vendors, landlords, lenders and other business partners are adversely affected by the Merger, or if Vireo, following the Merger, loses the benefits of our contracts, Vireo’s business and financial performance could suffer.
If the Merger does not qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code, our stockholders may be required to pay substantial U.S. federal income taxes.
The Merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. If the IRS or a court determines that the Merger does not so qualify, a U.S. holder of our common stock generally would recognize gain or loss equal to the difference, if any, between the fair market value of the Vireo shares received in the Merger and such holder’s aggregate tax basis in the shares of our common stock surrendered.
Litigation relating to the Merger, and change in control provisions in our agreements, could result in substantial costs or delay or prevent completion of the Merger.
Securities class action and derivative lawsuits are often brought against public companies that have entered into merger agreements. Lawsuits relating to the Merger could be filed against us, Vireo and/or our respective directors and officers, could prevent or delay completion of the Merger and could result in significant costs, including indemnification costs. In addition, completion of the Merger may trigger change in control or other provisions in certain of our agreements, and if waivers or consents cannot be obtained, counterparties may terminate those agreements, seek damages or require fees or less favorable terms.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
The Company made no unregistered sales of securities during the quarter covered by this report that have not previously been disclosed in a Current Report on Form 8-K.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Insider Trading Arrangements and Policies
Certain of our officers or directors have made elections to participate in, and are participating in, our equity incentive plans and have made, and may from time to time make, elections to have shares withheld to cover withholding taxes, which may be designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act or may constitute non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K).
The Company has adopted an insider trading policy governing the purchase, sale, and other dispositions of the Company’s securities by directors, senior management, and employees. A copy of the insider trading policy is filed as Exhibit 19.1 to our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 6. Exhibits.
EXHIBIT INDEX
| Incorporated by Reference | ||||||||||
| Exhibit No. |
Description |
Form | Exhibit | Filing Date | Filed/Furnished Herewith | |||||
| 31.1 |
Certification of Principal Executive Officer (Robert Groesbeck) pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
✓ | ||||||||
| 31.2 |
Certification of Principal Executive Officer (Larry Scheffler) pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
✓ | ||||||||
| 31.3 |
Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
✓ | ||||||||
| 32.1 |
Certification of Principal Executive Officers and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
✓ | ||||||||
| 101.INS |
Inline XBRL Instance Document |
|||||||||
| 101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
|||||||||
| 101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|||||||||
| 101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|||||||||
| 101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|||||||||
| 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|||||||||
| 104 |
Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101) | ✓ | ||||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: November 12, 2026 |
By: |
/s/ Robert Groesbeck |
|
| Robert Groesbeck |
|||
| Co-Chief Executive Officer |
|||
| (Principal Executive Officer) | |||
| By: |
/s/ Larry Scheffler |
||
| Larry Scheffler |
|||
| Co-Chief Executive Officer |
|||
| (Principal Executive Officer) | |||
| By: |
/s/ Stephen McLean |
||
| Stephen McLean |
|||
| Interim Chief Financial Officer |
|||
| (Principal Financial and Accounting Officer) |