ITHUF 10-K & 10-Q changes, risk factors and insider trading

We face and expect to continue to face competition from other companiescompanies, some of which may have longer operating histories, more financial resources, more experience and greater brand recognition than us. Increased competition by larger and well-financed competitors and/or competitors that have longer operating histories, greater brand recognition and more manufacturing and marketing experience than us could have a material adverse effect on our business, financial condition and results of operations. As we operate in an early stageearly-stage industry, we expect to face additional competition from new entrants. Specifically, we expect to face additional competition from new market entrants that are granted licenses within a particular state in which we operate or existing license holders which are not yet active in the industry. If a significant number of new licenses are granted, we may experience increased competition for market share and downward price pressure on our products as new entrants increase production, which could have a material adverse effect on our business.

Some of our subsidiaries have been unable to pay their United States federal and state income taxes for the 2020,2020 2021,through and 20222025 tax years. Those subsidiaries currently owe $19.1$31.4 million for 2020,these $32.8cumulative million for 2021, and $21.2 million for 2022years in United States federal and state income taxes, inclusive of interest and penalties. Interest and penalties will continue to accrue for as long as such taxes, interest and penalties remain unpaid. Our subsidiaries are in the process of negotiating payment agreements or “currently not collectable” status with the United States federal and state tax authorities for these amounts owed to remedy the outstanding balances; however, no assurance can be given that our subsidiaries will be successful in negotiating such payment agreements or “currently not collectable” status.

As of December 31, 2024, we preliminarily recordedhad goodwill of $6.1 million aswhich apertained resultto ofthe preliminary goodwill acquired from the Cheetah Acquisition. WeDuring arethe stillyear finalizingended December 31, 2025, we finalized the purchase price allocation and expectallocated a$4.6 significant portion of this goodwill to be allocatedmillion to identifiable intangible assets relatedacquired tofrom the Cheetah Acquisition. WeAs hada noresult, we held remaining goodwill of $1.6 million as of December 31, 2023.2025.

Historically, we have experienced negative cash flow from operating activities. During the yearyears ended December 31, 2025 and 2024, we achieved positive cash flow from operating activities and believe we will achieve positive cash flow from operating activities in future periods. However, we cannot provide assurance that we will in fact achieve sufficient revenues from sales of cannabis and/or other related products to maintain profitability or positive cash flow from operating activities. Our inability to maintain profitability or positive cash flow from operating activities could have a material adverse effect on our business, financial condition and results of operations.

We have medical marijuana licenses in the states of New York, New Jersey, Florida, Maryland, Massachusetts, ArizonaMassachusetts and Nevada.Arizona. Where we have medical marijuana licenses, we sell our medical marijuana pursuant to applicable state lawslaw only; however, compliance with statesstate lawslaw does not constitute compliance with the CSA or the FDA, and the FDA has not approved our products for sale. Cannabis is currently a Schedule I controlled substance under the U.S. Controlled Substances Act.CSA. A Schedule I controlled substance is defined as a substance that has no currently accepted medical use in the United States, a lack of safety use under medical supervision and a high potential for abuse. Other than Epidiolex (cannabidiol), a cannabis-derived product,products, and three synthetic cannabis-related drug products (Marinol (dronabinol), Syndros (dronabinol) and Cesamet (nabilone)), to our knowledge, the FDA has not approved a marketing application for a cannabis or cannabis-derived product for the treatment of any disease or condition. WeIn addition, we can provide no assurance that our products or operations are in compliance with federal regulations, including those enforced by the FDA. Failure to comply with FDA regulations may result inin, among other things, warning letters, injunctions, product recalls, product seizures, fines and/or criminal prosecutions. Even if cannabis is rescheduled to Schedule III, the production, sale and commercialization of marijuana could be regulated by the FDA and we would not currently be compliant with existing FDA laws, rules and regulations, if enforced.

Litigation, complaints, enforcement actions and governmental inquiries could result from cannabis-related activities in violation of federal law, including, but not limited to, the Racketeer Influenced Corrupt Organizations Act (“RICO”). Among other things, RICO authorizes private parties whose properties or businesses are harmed by such patterns of racketeering activity to initiate a civil action against the individuals involved. A number of RICO lawsuits have been brought by neighbors of state licensed cannabis farms who allege they are bothered by noise and odor associated with cannabis production, which has also led to decreased property values. By alleging that the smell of cannabis interferes with the enjoyment of their property and drives down their property value, plaintiffs in these cases have effectively elevated common law nuisance claims into federal RICO lawsuits. These lawsuits have named not only the cannabis operator,operator but also supply chain partners and vendors that do not directly handle or otherwise “touch” cannabis.

Many courts have denied cannabis businesses bankruptcy protections because the use of cannabis is illegal under U.S. federal law.law, thus making it difficult for lenders and investors to recoup their investments in the cannabis industry in the event of a bankruptcy. In order to receive bankruptcy protections in Canada under the Companies' Creditors Arrangement Act, a company must (i) be incorporated under a Canadian statute or hold property or do business in Canada, (ii) owe at least C$5.0 million to its creditors and (iii) be insolvent. If we were to experience a bankruptcy, there is no guarantee that U.S. federal bankruptcy protections would be available to us, which would have a material adverse effect on us.us, our lenders and other stakeholders.

We are exposed to the risk that our employees, independent contractors and consultants may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities that violatesviolate manufacturing standards and government regulations and laws including regulations with respect to healthcare fraud, abuse laws and regulations or laws that require the true, complete and accurate reporting of financial information or data. It is not always possible for us to identify and deter misconduct by our employees and other third parties. The precautions we take to detect and prevent such misconduct may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending such actions, such actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, contractual damages, reputational harm, diminished profits and future earnings and curtailment of our operations, any of which could have a material adverse effect on our business, financial condition and results of operations.

While certain states in the U.S. have legalized “medical cannabis,” “adult use cannabis” or both, medical and adult-use cannabis remains illegal under federal law. TheAlthough President Trump issued an Executive Order directing the Attorney General to reschedule "marijuana" as a Schedule III substance, the CSA currently still classifies “marijuana” as a Schedule I drug. As such, cannabis-related business activities, including, without limitation, the cultivation, manufacture, importation, possession, use, or distribution of cannabis, remains illegal under U.S. federal law. Individual state laws do not always conform to U.S. federal law or the laws of other states, and there are a number of variations in the laws and regulations of the various states in which we operate. Although we believe our business activities and those of our subsidiaries are compliant with the laws and regulations of the states in which we and our subsidiaries operate, strict compliance with state and local laws with respect to cannabis neither absolves us of liability under U.S. federal law, nor provides a defense to any proceeding that may be brought against us under U.S. federal law. Any proceeding that may be brought against us could have a material adverse effect on our business, financial condition and results of operations. Violations of any U.S. federal laws and regulations could result in significant fines, penalties, administrative sanctions, convictions, or settlements, arising from either civil or criminal proceedings brought by either the U.S. federal government or private citizens, including, but not limited to, property or product seizures, disgorgement of profits, cessation of business activities, or divestiture. Such fines, penalties, administrative sanctions, convictions, or settlements could have a material adverse effect on, among other things:

The majority of our subsidiaries, and all of our operating subsidiaries, are located in the United States. Therefore, we are subject to a variety of laws and regulations in the United States and Canada that involve money laundering, financial recordkeeping and proceeds of crime. Such laws and regulations may include the Bank Secrecy Act, as amended by Title III of the USU.S. PATRIOT ActAct, inSections the United States,1956 and 1957 of U.S.C. Title 18 (Money Laundering Control Act), the Proceeds of Crime (Money Laundering) and Terrorist Financing Act,Act (Canada), as amended, and the rules and regulations thereunder, the Criminal Code (Canada) and any related or similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the United States and Canada. If any of our investments, or any proceeds thereof, any dividends or distributions therefrom, or any profits or revenues accruing from such investments in the United States are found to be in violation of anti-money laundering laws or otherwise, such transactions may be viewed as proceeds of crime, including under one or more of the statutes discussed above.above or any other applicable legislation. Any property, real or personal and its proceeds, involved in or traceable to such a crime is subject to seizure by and forfeiture to governmental authorities. Any such seizure, forfeiture or other action by law enforcement with respect our assets could restrict or otherwise jeopardize our ability to declare or pay dividends, effect other distributions or subsequently repatriate such funds back to Canada and could have a material adverse effect on our business, financial condition and results of operations.

Although,Although the FinCEN Memorandum remains intact, it is unclear whether the current administration will continue to follow its guidelines, or what may happen under future administrations. The DOJ continues to have the right and power to prosecute crimes committed by banks and financial institutions, such as money laundering and violations of the Bank Secrecy Act, that occur in any state including states that have in some form legalized the sale of cannabis. Further, the conduct of the DOJ’s enforcement priorities could change for any number of reasons. A change in the DOJ’s priorities could result in the prosecution of banks and financial institutions for crimes that were not previously prosecuted.

The FinCEN Memorandum does not provide any safe harbors or legal defenses from examination or regulatory or criminal enforcement actions by the DOJ, FinCEN or other federal regulators. Thus, most banks and other financial institutions in the United States do not appear comfortable providing banking services to cannabis-related businesses or relying on this guidance given that it has the potential to be amended or revoked by the current administration.or future administrations. In addition to the foregoing, banks may refuse to process debit card payments and credit card companies generally refuse to process credit card payments for cannabis-related businesses. As a result, we may have limited or no access to banking or other financial services in the United States. In addition, federal money laundering statutes and Bank Secrecy Act regulations discourage financial institutions from working with any organization that sells a controlled substance, regardless of whether the state it operates in permits cannabis sales. Our inability or limitation of our ability to open or maintain bank accounts, obtain other banking services and/or accept credit card and debit card payments may make it difficult for us to operate and conduct our business as planned or to operate efficiently.

In the United States, the “SAFE Banking Act” isand aSAFER Banking Act are previously proposed piecepieces of federal legislation,legislation whichthat would grant banks and other financial institutions immunity from federal criminal prosecution for servicing marijuana-related businesses if the underlying marijuana business follows state law. The U.S. House of Representatives haspreviously passed the SAFE Banking Act on numerous occasions, and the SAFER Banking Act has passed the Senate Banking Committee, but the U.S. Senate has failed to take up either the SAFE Banking Act or the SAFER Banking Act for a vote. It is unclear whether the U.S. Senate will take up the SAFE Banking Act or the SAFER Banking Act will be reintroduced during the current congressional session. While there is strong support in the publicsession, and withineven Congressif for the SAFE Banking Act and similar legislation,reintroduced there can be no assurance that itany such legislation will be passed asand presentlyenacted proposedinto or at all.law.

We may be subject to heightened scrutiny by regulators, exchanges and/or other authorities in Canada and/or the United States, which could affect our ability to operate our business and/or for investors to be able to deposit or trade our common shares.

As cannabis remains illegal under U.S. federal law, those non-U.S. citizens who are employed at or investing in Canadian companies with operations in the U.S. cannabis business could face detention, denial of entry, or lifetime bans from the United States for their business associations with such companies. Entry happens at the sole discretion of the U.S. Customs and Border Protection (the “USCBP”) officers on duty, and these officers have wide latitude to ask questions to determine the admissibility of a foreign national. As a result, the Canadian government warned travelers that previous use of cannabis or any substance prohibited by U.S. federal laws could mean denial of entry to the United States. In addition, business or financial involvement in the legal cannabis industry in Canada or in the United States could also be a reason for USCBP officers to deny entry in the United States. In reaction to the then-impending legalization of cannabis in Canada, the USCBP released a statement outlining its position with respect to enforcement of U.S. federal laws. The statement specified that Canada’s legalization of cannabis would not change the USCBP’s enforcement of U.S. federal laws regarding controlled substances, and because cannabis continues to be a controlled substance under the CSA, working in or facilitating the proliferation of the cannabis industry in states or Canada where cannabis is legal may affect admissibility to the United States. Although,Although the USCBP has affirmed that Canadian citizens “working in or facilitating the proliferation of the legal cannabis industry in Canada, coming to the U.S. for reasons unrelated to the cannabis industry will generally be admissible to the U.S.,” if Canadian citizens, or any other travelers, are “found to be coming to the U.S. for reason related to the cannabis industry, they may be deemed inadmissible” and risk being barred from entry into the United States.

We are engaged in both the medical and adult-use marijuana industry in the United States where local state and territory law permits such activities. Investors are cautioned that in the United States, cannabis is largely regulated at the state and territory level. Pursuant to the Congressional Research Service, as of DecemberMarch 31,10, 2024,2026, (i) nearlyapproximately allforty states plusstates, the District of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands have comprehensive laws and policies allowing forallow the medicinalmedical use of marijuana,cannabis products, (ii) 10approximately additionaleight states allow for the “limited access medical cannabis,” which refers to low-THC cannabis or CBD oil and (iii) 24approximately twenty-four states, the District of Columbia, Guam, the Northern Mariana Islands and the USU.S. Virgin Islands have enacted laws allowing the recreational use of marijuana. Notwithstanding the permissive regulatory environment of cannabis at the state and territory level, cannabis continues to be categorized as a Schedule I controlled substance under the CSA and as such, cultivation, distribution, sale and possession of cannabis violates federal law in the United States. The inconsistency between federalfederal, state and stateterritory laws and regulations is a major risk factor.

The recent change in Presidential administration will result in a change of leadership including the appointment of a new Attorney General of the United States of America. At this time it is uncertain what policies the new President or Attorney General will take regarding the enforcement of federal cannabis laws. Under the priorcurrent administration, federal prosecutors wereare free to utilize their prosecutorial discretion to decide whether to prosecute cannabis activities despite the existence of state-level laws thatwhich may be inconsistent with federal prohibitions, butthough there werehave been no such prosecutions.prosecutions Duethat towe theare factaware theof. leadership of the Department of Justice is changing and has not therefore introduced policies regarding the enforcement of the federal cannabis laws,Nevertheless, there can be no assurance that in the future the federal government will not seek to prosecute cases involving cannabis businesses that are otherwise compliant with state law.laws.

Federal law pre-emptspreempts state law in these circumstances, sosuch that the federal government can assert criminal violations of federal law despite statea state's law. The level of prosecutions of state-legal cannabis operations is entirely unknown, and the current administration and DepartmentDOJ of Justice hashave not articulated a policy regarding state legal cannabis. It is unclear what position the new Attorney General Pam Bondi will take. If the DepartmentDOJ of Justice policy weresought to aggressively pursue financiers or equity owners of cannabis-related business, and United States Attorneys followed such Department of JusticeDOJ policies through pursuing prosecutions,prosecutions of such financiers and equity owners, then we could face (i) seizure of our cash and other assets used to support or derived from our cannabis subsidiaries; and (ii) the arrest of our employees, directors, officers, managers and investors, who could face charges of ancillary criminal violations of the CSA for aiding and abetting the violation of, as well as and conspiring to violateviolate, the CSA.

If the current Administrationadministration and Attorney General do not adopt a policy incorporating some or all of the policies articulated in the Cole Memorandum, then the Department of JusticeDOJ or an aggressive federal prosecutor could allege that we “aided and abetted” violations of federal law by providing financesfinancing and services to our operating subsidiaries. Under these circumstances, it is possible that a federal prosecutor could seek to seize our assets and to recover thewhat could be deemed “illicit profit”. In these circumstances, our operations may cease, and our shareholders maycould lose their entire investment and our directors, officers and/or shareholders maycould be left to defend any criminal charges against them at their own expense and, if convicted, be sent to federal prison.

Violations of any federal laws and regulations could result in significant fines, penalties, administrative sanctions, convictions or settlements arising from civil proceedings conducted by either the federal government or private citizens, or criminal charges, including, but not limited to, disgorgement of profits, cessation of business activities or divestiture. This could have a material adverse effect on us,us (including ourdirectors' reputationand officers' reputations and ability to conduct business,business), our holding (directly or indirectly) of medical and adult-use cannabis licenses in the United States, the listing of our securities on the CSE or OTC Markets, our capital, financial position, operating results, profitability or liquidity or the market price of our listed securities.

Our common shares are listed for trading on the CSE and are quoted over-the-counter in the United States on the OTCQBOTCID of the OTC Markets Group, Inc. The over-the-counter markets provide less liquidity than U.S. national securities exchanges, such as the New York Stock Exchange or Nasdaq. Accordingly, holders of our common shares may be unable to sell or otherwise dispose of their common shares at desirable prices or at all.

Through our subsidiaries, we own and/or operate, as of December 31, 2024,2025, 40 dispensaries and eightfour cultivation and/or processing facilities in sixseven U.S. states. Pursuant to our existing licenses, interests and contractual arrangements, and subject to regulatory approval, as of December 31, 2024, we hadhave the capacity to own and/or operate up to an additional five dispensary licenses and/or dispensary facilities in two states, plus an uncapped number of dispensary licenses in Florida, and up to 18 totalten cultivation, manufacturing and/or processing facilities, and we have the right to manufacture and/or distribute cannabis products in seveneight U.S. states, all subject to the necessary regulatory approvals.

On February 23, 2024, our wholly-owned subsidiary, GreenMart of Nevada NLV, LLC ("GMNV") entered into an Asset Purchase Agreement (the "NV Purchase Agreement") with an unaffiliated third-party buyer (the "NV Buyer"), pursuant to which, GMNV agreed to sell substantially all of the assets of GMNV to the NV Buyer. GMNV currently operates a co-located medical and adult-use cultivation and production facility in North Las Vegas, Nevada and an adult-use dispensary in Las Vegas, Nevada and holds two conditional adult-use dispensary licenses to be located in Henderson and Reno, Nevada (the "Business")..After Theclosing adjustments, the aggregate proceeds to be received from the sale are $6.5$5.9 million. TheOf the total Purchase Price, $3.5 million is paid in cash at the closing of the NV Purchase Agreement is subject to, among other customary conditions, receipt of approval of the Nevada Cannabis Compliance Board (the "NV CCBClosing"). and the remaining balance of the Purchase Price is paid on a quarterly basis, beginning six months after the NV Closing, over 36 months with interest accruing at 8% per annum. On February 23, 2024, GMNV also entered into a Management Agreement (the "NV Management Agreement"), pursuant to which, the NV Buyer's affiliated entity (the "Manager"), will assume full operational and managerial control of the Business, which was approved by the NV CCB and became effective June 24, 2024 (the "NV Management Agreement Effective Date"). Of the total Purchase Price, $3.5 million is paid in cash at the closingAs of the NV PurchaseManagement Agreement (Effective Date, all operational control of GMNV was transferred to the "Closing")Manager and thewe remainingdetermined balancethat we no longer had a controlling financial interest as of the PurchaseNV PriceManagement isAgreement paidEffective Date. We recognized an initial gain on adeconsolidation quarterlyof basis,$2.1 beginningmillion, threewhich months afterwas the Closing,carrying overvalue 36of monthsthe withnet interestliabilities accruingdisposed atfrom 8%deconsolidation per annum. On March 20, 2025,on the NV CCBManagement approvedAgreement Effective Date, which was presented in "interest and other income" on the transactionconsolidated contemplatedstatements byof operations for the NVyear Purchaseended Agreement.December 31, 2024.

AsPrior to the sale of the NVAZ Management Agreement Effective Date, all operational control of GMNV was transferred toNote, the Manager and we determined that we no longer had a controlling financial interest asbalance of the NVAZ ManagementNote Agreementincluding Effectiveaccrued Date.interest Wewas $12.7 million. Following the AZ Note Closing Date, we recognized a gain on deconsolidationloss of $2.1$1.4 million, which was the difference between the aggregate fair value of the consideration and the carrying value of the netAZ liabilities disposed from deconsolidation on the NV Management Agreement Effective Date,Note, which is presented in "interest and other income" on the consolidated statements of operations for the year ended December 31, 2024. As the consideration to be received is contingent on the receipt of the approval from the NV CCB, no consideration has been recognized to date. Once the license transfer has been approved and the consideration has been received from the Buyer, we will recognize the associated gains at such time.2025.

Results of Operations for the Years Ended December 31, 20242025 and 2023 (Adjusted)2024

The Easterneastern region includes our operations in Florida, Maryland, Massachusetts, New York, and New Jersey.Jersey, Resultsas fromwell as our Vermontoperations under the new Cheetah brand in Illinois and CBD businesses were included until March 8, 2023 and May 8, 2023, respectively, when they were deconsolidated.Pennsylvania. The Westernwestern region includes our operations in Arizona and Nevada. Results from our Nevada business waswere included until June 23,24, 2024, when it was then deconsolidated, while our Colorado operations were included until November 14, 2023, the date at which our remaining Colorado assets and investments were sold.deconsolidated.

For the year ended December 31, 2024,2025, gross profit was $60.2$61.0 million, or 46.8%45.7% of sales revenues, as compared to a gross profit of $43.8$60.2 million, or 41.4%46.8% of sales revenues, for the year ended December 31, 2023.2024. Gross profit increased in Maryland and New Jersey by $12.8a millioncombined $2.6 million, due to a favorable change in sales mix as we continue to produce and sell more higher margin in-house products to meet adult-use demand during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023.2024. Gross profit increasedfrom the new markets in NewIllinois Yorkand byPennsylvania $0.6was $1.1 million from higher retail demand during the year ended December 31, 2024,2025, as compared to $Nil during the year ended December 31, 2024. This was partially offset by $2.1 million decrease in gross profit in Florida due to increased competitive pressures which led to price compression and increased sales discounts during the year ended December 31, 2025, as compared to the year ended December 31, 2023, with the sustained revenue growth attributable to marketing activities and other promotional programs in the state. Additionally, gross profits increased by $3.0 million due to lower facility costs in Massachusetts subsequent to the merging of two facilities in the second half of 2023 and focus on producing more in-house products during the year ended December 31, 2024, as compared to the year ended December 31, 2023. Further, we increased sales promotions in Florida to remain competitive against pricing pressures within the state.2024.

During the year ended December 31, 2024,2025, approximately 56,46042,460 pounds of plant material was harvested in the eastern region as compared to approximately 33,73054,460 pounds harvested during the year ended December 31, 2023.2024. ThereThe decrease in harvested plant material is primarily attributed to lower harvest volumes in Florida following the impact of Hurricane Milton on the operating capacity at the shade house at the end of 2024 and the start of 2025, as well as environmental pressures during the third quarter of 2025, which are now resolved; and due to the timing of harvests in Massachusetts during the year ended December 31, 2025, as compared to the year ended December 31, 2024. The decrease was partially offset by an increase in harvested plant material in New Jersey,Jersey primarily attributable to increased cultivation and production activities, following the commencement of adult-use operationsactivities at the Pleasantville facility in July 2023. There were lower volumes in Florida following the impactcontinued expansion of Hurricaneoperations Milton,to andmeet indemand Massachusetts,under harvestedthe plantadult-use material decreasedprogram during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023, as only our Fall River facility was operational during the year ended December 31, 2024, as compared to harvests from both Fall River and Holliston facilities during the year ended December 31, 2023.2024.

For the year ended December 31, 2024,2025, our sales revenues in the western region were $39.0$10.4 million as compared to $53.1$39.0 million for the year ended December 31, 2023,2024, which represents a decrease of 26.5%.73.4%. The decrease in revenuerevenues in the western region is attributable to $12.1 million in lower retail revenues in Arizona, attributed to reduced demand arising from increased competition throughout the state during the year ended December 31, 2024, as compared to the yeardeconsolidation ended December 31, 2023. Additionally, we deconsolidated ourof Nevada operations as of June 24, 2024, and therefore,the less than six months' revenuedeconsolidation of $1.3three milliondispensaries isand consolidatedtwo duringfacility thesites yearin ended December 31, 2024,Arizona as compared to a revenue of $3.3February million14, for the full year ended December 31, 2023.2025.

For the year ended December 31, 2024,2025, gross profit was $14.9$4.7 million, or 38.2%45.0% of sales revenues, as compared to a gross profit of $19.6$14.9 million, or 36.9%38.2% of sales revenues, for the year ended December 31, 2023.2024. The lower gross profit during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, is attributedattributable to lowerthe demand,reduced givenoperational activity in the highlywestern competitiveregion marketfollowing the divestitures in ArizonaNevada and fromcertain deconsolidationassets ofin ourArizona. NevadaNotwithstanding businessthe asdecrease ofin Junegross 24, 2024. Alternatively,profit, the increase in gross margin is primarily attributable to lowera inventoryfavorable purchasesales costsmix and fromwithin the salewestern ofregion, higheras marginthere medicalwere productsminimal wholesale revenues recognized in Arizonawestern markets during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023.2024, which typically earn lower gross margin. In addition, theduring Nevadaprior businessperiods, waswe operatingsold more in-house products that included higher inventory costs incurred from higher facility costs, which is no longer applicable as we sell only third-party products at a loss, and therefore the increaseCrismon in gross profit margin is attributable to lower gross losses from the Nevada business following its deconsolidation.dispensary.

During the year ended December 31, 2024,2025, approximately 4,500560 pounds of plant material was harvested in the western region as compared to approximately 7,4304,500 pounds harvested during the year ended December 31, 2023.2024. The decrease is attributed to lower production activity in Nevada, as the business was deconsolidated asdivestitures of June 24, 2024 compared to a full year of harvests for the year ended December 31, 2023. In addition, there was a decrease in harvest output inour Arizona givenand theNevada lower demand as previously mentioned during the year ended December 31, 2024 as compared to the year ended December 31, 2023.facilities.

Total operating expenses other than those included in costs and expenses applicable to revenues consist of: (i) selling, general, and administrative expenses which are necessary to conduct our ordinary business operations as well as support marketing, technology, and other growth initiatives such as opening new dispensaries and building-out our facilities; (ii) depreciation and amortization charges taken on our fixed and intangible assets; and (iii) any write-downs or impairment on our assets. We have taken measures to control our discretionary spending and to employ capital efficiently. However, we expect total operating expenses to increaseefficiently, as we continue to invest in our operations and capital projects, attract and retain top talent, and implement robust technology systems in our corporate, retail and cultivation and manufacturing facilities.

The decrease in total operating expenses is also attributable to a $2.5$6.1 million decrease in our depreciation and amortization expenses during the year ended December 31, 20242025 as compared to the year ended December 31, 2023.2024. OurWe totalhad a lower depreciable fixed and intangible asset base hasfollowing decreasedthe Arizona and Nevada divestitures. In addition, certain property, plant, and equipment as certainwell as intangible assets were depreciated fully in 2024. This was partially offset by an increase in our total fixed assetassets itemsbase areby now$25.7 fully depreciated, net of any additionsmillion, during the year.year ended December 31, 2025, for ongoing expansion projects in Florida, New York and Maryland.

For the year ended December 31, 2024,2025, our total other expenses were $16.8$7.7 million as compared to $19.7$16.8 million for the year ended December 31, 2023,2024, which represents a decrease of 14.8%.$9.1 million or 53.9%.

For the year ended December 31, 2024,2025, we had a tax expense of $17.0 million, primarily due to changes in our valuation allowance on certain tax loss carryforwards, additional penalties and interest on outstanding tax liabilities and uncertain tax positions related to our Section 280E position. This compares to a benefit of $17.7 million as compared to an expense of $27.2 million for the year ended December 31, 2023,2024, which represents an income tax expense decreaseincrease of 165.1%.196.4%. The $17.7 million benefit in income tax is primarily attributable to changes in our valuation allowance due to our ability to realize certain deferred tax assets from our consolidated income tax filings.

Cash Flow for the Year Ended December 31, 20242025 as Compared to the Year Ended December 31, 2023 (Adjusted)2024

Our net cash flows from operating activities are affected by several factors, including revenues generated by operations, increases or decreases in our operating expenses, including expenses related to the release of new capital projects and development of existing or newly acquired businessesbusinesses, and the level of cash collections received from our customers.

Net cash provided by operating activities during the year ended December 31, 20242025 was $12.5$3.1 million as compared to $3.8$12.5 million for the year ended December 31, 2023.2024. The increasedecrease in our net cash provided from operating activities during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, was primarily due to the following: our net loss of $7.6$40.2 million, offsetadjusted by:for $24.7$19.3 million of depreciation and amortization expense; $17.2$16.6 million in interest expense; $2.1$1.1 million in interest income earned from the Arizona and Nevada promissory notes; $4.9 million of accretion expense; $1.8 million in share-based compensation expense; $4.6$12.1 million of accretion expense; $0.1 million in loss on debt extinguishmentgain from the amendmentdeconsolidation of our SeniorArizona Securedand BridgeNevada Notesoperations; $0.2a milliondecrease loss on our equity method investment; $0.4 million from additionalin inventory reserves of $0.1 million; $1.2$3.0 million in recoveries, write-downs and other charges, net, from $2.6provisions millionmade gain recognized fromagainst the disposalMassachusetts ofpromissory Hollistonnotes, assets; and $0.1 million gain recognizedloss on thedisposal earlyon terminationassets of a lease, partially offset by additionaland credit loss provisions; $1.4 million loss from the sale of $1.2AZ million and settlement costs ofNote; $0.3 million from the remeasurement of contingent consideration related to the Cheetah acquisition; and $5.6$9.3 million from changes in operating assets and liabilities items during the year ended December 31, 2024.2025.

Changes in other operating assets for the year ended December 31, 2024,2025, include: aan decreaseincrease in cash from inventory of $1.2$6.1 million, primarily due to enhancedthe timing of purchases, higher sales planningvolumes in both Maryland and higherNew efficienciesJersey, gainedas withinwell betteras company-widea inventoryramp managementup of Cheetah products following the Cheetah Acquisition, during the year ended December 31, 20242025 as compared to the year ended December 31, 20232024; ana increasedecrease in accounts receivable of $0.9$6.1 million from higher wholesale revenues and timing of collections during the year ended December 31, 20242025 as compared to December 31, 20232024; and an increase in prepaid expenses of $0.2$1.1 million during the year ended December 31, 2024,2025, mainly relating to timing of renewalsprepayments forduring the period, including licenses, and partially offset by monthly amortization of licenses, insurance and rent, as compared to the year ended December 31, 2023.2024.

Changes in other operating liabilities for the year ended December 31, 2024,2025, include ana increasedecrease in uncertain tax position liabilities of $54.3$44.1 million due to certain income taxes being recognized as an uncertain tax position during the year ended December 31, 2024,2025, as compared to the year ended December 31, 20232024; decreasean increase in accrued and other current liabilities of $81.1$53.1 million from additional accrued income taxes and certain amended tax liabilities being reclassified to uncertain tax positions, and a $5.8$3.9 million decreaseincrease in accounts payable, mainly a function of the timing of purchases and increased capex activity, as compared to the year ended December 31, 2023.2024.

Net cash usedprovided inby investing activities during the year ended December 31, 20242025 was $6.3$2.3 million as compared to $4.4net cash used in investing activities of $6.3 million for the year ended December 31, 2023.2024. The increase in cash used infrom investing activities was primarily attributable to: higher$15.8 spendmillion proceeds received from the AZ Transaction; $10.1 million in proceeds received from the sale of the AZ Note; $1.7 million in payments received from the Arizona and Nevada promissory notes; in addition, there was no capital contributions on cultivationinvestments andaccounted dispensaryfor construction expenditures of $5.5 million, mainly related to facility build-out inunder the North-East and additional dispensaries in Florida,equity-method during the year ended December 31, 20242025, as compared to $3.6$0.4 million during the year ended December 31, 2023;2024. lowerThis proceedswas frompartially theoffset saleby of$23.8 certainmillion assetsin ofcapital $0.5expenditures million,for funding cultivation, processing and dispensary projects in Florida, Maryland, New York, and New Jersey, compared to $2.5 million, as we sold our cultivation and dispensary assets in Colorado during the year ended December 31, 2023; we contributed $0.4 million to our investments in associates during the year ended December 31, 2024, as compared to $0.8$5.5 million during the year ended December 31, 20232024; and incurred$1.4 million in consideration payments of $0.7 million with respectrelated to the acquisition of the Cheetah Purchased Assets (the "Cheetah Acquisition") during the year ended December 31, 2024,2025, as compared to $Nil$0.7 duringmillion for the year ended December 31, 2023.2024.

Net cash used in financing activities for the year ended December 31, 20242025 was $0.3$12.7 million as compared to net cash used in financing activities of $0.6$0.3 million for the year ended December 31, 2023.2024. DuringWe repaid $12.4 million of debt during the year ended December 31, 2024,2025, as compared to $0.1 million during the year ended December 31, 2024. In addition, we paid $0.3 million on our employees' behalf as part of RSURSUs issuances asduring compared to $0.6 million duringboth the yearyears ended December 31, 2023.2025 Further,and we repaid $0.1 million of debt during the year ended December 31, 2024, compared to less than $0.1 million debt repaid during the year ended December 31, 2023.2024.

Pursuant to the terms of the Third Amended and Restated Secured Debenture Purchase Agreement (the "Secured DPA"), dated as of June 24, 2022, with ICM, the other Credit Parties (as defined in the Secured DPA), the collateral agent, and the New Secured Lenders,DPA, we have a related party payable of $6.3 million due to certain of the New Secured Lenders, including Gotham Green Fund 1, L.P., Gotham Green Fund 1 (Q), L.P., Gotham Green Fund II, L.P., Gotham Green Fund II (Q), L.P., Oasis Investment Master II Fund LTD., Senvest Global (KY), LP, Senvest Master Fund, LP and Hadron Healthcare and Consumer Special Opportunities Master Fund, for certain out-of-pocket costs, charges, fees, taxes and other expenses incurred by the New Secured Lenders in connection with the closing of the Recapitalization Transaction (the “Deferred Professional Fees”). These New Secured Lenders held greater than 5.0% of the outstanding common shares of the Company upon the closing of the Recapitalization Transaction and are therefore considered to be related parties. We had until December 31, 2022, to pay the Deferred Professional Fees ratably based on the amount of each New Secured Lender’s Deferred Professional Fees. The Deferred Professional Fees accrued simple interest at the rate of 12.0% from the Closing Date until December 31, 2022. Beginning with the first business day of the month following December 31, 2022, interest shall accrue on the Deferred Professional Fees at the rate of 20.0% calculated on a daily basis and is payable on the first business day of every month until the Deferred Professional Fees and accrued interest thereon is paid in full. On February 5, 2025, we entered into consent and release agreement with Secured Lenders to utilize cash proceeds upon the closing of the AZ Transaction to payments in the amount of $5.0 million towards the principal amount outstanding under the Deferred Professional Fees. In addition, the Secured Lenders agreed to reduce the outstanding amount of the Deferred Professional fees by $1.0 million and reduce interest to 8% on the remaining balance. On September 2, 2025, the Company applied cash proceeds from the sale of the AZ Note, utilizing $0.3 million toward the remaining principal and $0.9 million toward accrued interest under the Deferred Professional Fees. As of December 31, 2024,2025, the outstanding related party portion of the Deferred Professional Fees including accrued interest was $9.2$2.2 million (December 31, 20232024 – $8.0$9.2 million). The related party balance is presented in accrued and other current liabilities on the consolidated balance sheets.

Pursuant to the terms of 2024 NJ Amendment, interest accruing after February 16, 2024 will be payable in cash on the last day of each fiscal quarter (the first such interest payment date being May 16, 2024). As of December 31, 2024,2025, the outstanding related party portion of the interest payable was $0.2$0.1 million (December 31, 20232024 - $Nil$0.2 million) presented in accrued and other current liabilities on the consolidated balance sheets.

Inventory is comprised of supplies, raw materials, finished goods and work-in-process such as harvested cannabis plants and by-products to be harvested. Inventory is valued at the lower of cost, determined on astandard cost which approximates weighted average cost basis,cost, and net realizable value. The direct and indirect costs of inventory initially include the costs to cultivate the harvested plants at the time of harvest. They also include subsequent costs such as materials, labor, and overhead involved in processing, packaging, labeling, and inspection to turn raw materials into finished goods. All direct and indirect costs related to inventory are capitalized as they are incurred and are subsequently recorded within costs and expenses applicable to revenues in the consolidated statements of operations at the time of sale.

Inventory is valued at the lower of cost, determined on astandard cost which approximates weighted average cost basis,cost, and net realizable value. Net realizable value is determined as the estimated selling price less a reasonable estimate of the costs of completion, disposal, and transportation. The determination of net realizable value requires significant judgment, including consideration of factors such as shrinkage, the aging of and future demand for inventory, expected future selling price, what we expect to realize by selling the inventory and the contractual arrangements with customers. At the end of each reporting period, we perform an assessment of inventory obsolescence to measure inventory at the lower of cost or net realizable value. Factors considered in determining obsolescence include, but are not limited to, slow-moving inventory or products that can no longer be marketed.

Risk factors that affect our business and financial results are discussed in Part I, Item 1A “Risk Factors,” in our Annual ReportReport. onThere Formhave 10-Kbeen forno thematerial yearchanges endedin Decemberour 31,risk 2025factors (“from those previously disclosed in our Annual Report”).Report. You should carefully consider the risks described in our Reports, which could materially affect our business, financial condition or future results. The risks described in our Reports are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected. There following risk factors have been updated since previously disclosed in our Annual Report:

We are a vertically-integrated, multi-state owner and operator of licensed cannabis cultivation, processing and dispensary facilities in the United States. AlthoughAlthough, we are committed to creating a national retail brand and portfolio of branded cannabis products recognized in the United States, cannabis currently remains illegal under U.S. federal law.

Through our subsidiaries, we own and/or operate,operate as of MarchJune 31,30, 2026, 4041 dispensaries and foursix cultivation and/or processing facilities acrossin seven U.S. states. Pursuant to our existing licenses, interests and contractual arrangements, and subject to regulatory approval, we have the capacity to own and/or operate an uncapped number of dispensary licenses in Florida, and up to ten cultivation, manufacturing and/or processing facilities, and we have the right to manufacture and distribute cannabis products in eight U.S. states, all subject to the necessary regulatory approvals.

Our multi-state operations encompass the full spectrum of medical and adult-use cannabis enterprises, including cultivation, processing, product development, wholesale-distribution and retail. Cannabis products offered by us include flower and trim, products containing cannabis flower and trim (such as packaged flower and pre-rolls), cannabis infused products (such as topical creams and edibles) and products containing cannabis extracts (such as vape cartridges, concentrates, live resins, wax products, oils and tinctures). Under U.S. federal law, adult-use cannabis is classified as a Schedule I controlled substance under the U.S. Controlled Substances Act, but as a result of the April 23, 2026 AG Order No. 6754-2026 (the "Rescheduling Order"), medical cannabis subject to a state medical licenses is a Schedule III controlled substance.Act. A Schedule I controlled substance is defined as a substance that has no currently accepted medical use in the United States, a lack of safety use under medical supervision and a high potential for abuse. A Schedule III controlled substance is defined as a substance with a moderate to low potential for physical and psychological dependence. Notwithstanding the Rescheduling Order, cannabis remains federally illegal in most forms and continues to be subject to significant restrictions under U.S. federal law. Other than Epidiolex (cannabidiol), a cannabis-derived product, and three synthetic cannabis-related drug products (Marinol (dronabinol), Syndros (dronabinol) and Cesamet (nabilone), to our knowledge, the U.S. Food and Drug Administration has not approved a marketing application for cannabis for the treatment of any disease or condition and has not approved any cannabis or cannabis-derived products.

The significant disruption of global financial markets, and specifically, the decline in the overall public equity cannabis markets due to the COVID-19 pandemic negatively impacted our ability to secure additional capital, which caused liquidity constraints. In early 2020, due to the liquidity constraints, we attempted to negotiate temporary relief of our interest obligations with the lenders (the “Secured Lenders”) of our 13.0% senior secured debentures (the “Secured Notes”) issued by our wholly-owned subsidiary, iAnthus Capital Management, LLC (“ICM”). However, we were unable to reach an agreement and did not make interest payments when due and payable to the Secured Lenders or payments that were due to the lendersholders (the “Unsecured Lenders” and together with the Secured Lenders, the “Lenders”) of our 8.0% convertible unsecured debentures (the “Unsecured Debentures”). As a result, we defaulted on our obligations pursuant to the Secured Notes and Unsecured Debentures.

As of the Closing Date, the outstanding principal amount of the Secured Notes (including the interim financing secured notes in the aggregate principal amount of approximately $14.7 million originally due on July 13, 2025) together with interest accrued and fees thereon were forgiven in part and exchanged for (A) the Secured Lender Shares, (B) the issuance of the 8.0% secured debentures (the "June Secured Debentures") to the lender parties (the "New Secured Lenders") in the aggregate principal amount of $99.7 million and (C) the issuance of the 8.0% unsecured debentures (the “June Unsecured Debentures”) to the Secured Lenders in the aggregate principal amount of $5.0 million. Also, as of the Closing Date, the outstanding principal amount of the Unsecured Debentures together with interest accrued and fees thereon were forgiven in part and exchanged for (A) the Unsecured Lender Shares and (B) the June Unsecured Debentures in the aggregate principal amount of $15.0 million. Furthermore, all existing options and warrants to purchase our common shares, including certain debenture warrants and exchange warrants previously issued to the Secured Lenders, the warrants previously issued in connection with the Unsecured Debentures and all other Affected Equity (as defined in the amended and restated plan of arrangement (the "Plan of Arrangement"), were cancelled and extinguished for no consideration.

Results of Operations for the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

DuringAs of the threestart monthsof endedthe March2026 31,fiscal 2026,year, we reassessed our reportable segments in accordance with ASC 280, Segment Reporting. Previously, we reported operations under two reportable segments based on geographic regions: Eastern and Western. Following a review of our operating performance, growth profile, and capital allocation strategy, we determined that the quantitative thresholds under ASC 280-10-50-12 were no longer met under the prior segmentation, and that disaggregating operations based on market maturity and growth profile better reflects how the Chief Operating Decision Maker ("CODM") evaluates performance and allocates resources.

Results of Operations for the Three Months Ended MarchJune 31,30, 2026 and 2025

For the three months ended MarchJune 31,30, 2026, our sales revenues in the established region were $15.0$17.4 million as compared to $20.6$17.5 million for the three months ended MarchJune 31,30, 2025, which represents a marginal decrease of 27.3%.0.5%. The main driverdrivers for the decrease in revenues wasare from: a $3.2$0.5 million decline in Arizona, attributed to thelower deconsolidationtransaction of three dispensariesvolumes, and two facility sites following the sale which closed as of February 10, 2025; a $2.8$0.2 million decrease in Florida due to continued competitive pressures which led to price compression and lower sales volume during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. This was partially offset by a $0.3$0.6 million increase in revenue in Massachusetts from higher transaction volumes and lower discounts during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025.

For the three months ended MarchJune 31,30, 2026, gross profit was $7.5$8.4 million, or 50.1%48.4% of sales revenues, as compared to a gross profit of $11.3$8.6 million, or 54.9%49.0% of sales revenues, for the three months ended MarchJune 31,30, 2025. GrossThe decrease is primarily attributable to a $0.5 million decrease in gross profit decreased by $4.2 million in Florida due to increased competitive pressures which led to price compressioncompression, and increased sales discounts during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. In addition, gross profit decreased by $1.3$0.2 million in Arizona during the three months ended MarchJune 31,30, 20262026, as compared to the three months ended MarchJune 31,30, 2025, followingfrom thelower assetsales divestituresvolume. in February 2025. The decreaseThis was partially offset by increased gross profit in Massachusetts by $1.7$0.6 million due to operationallower efficienciesdiscounts offered on sales and from increased productionefficiency in reducing costs and harvestimproving outputsoutput resultingwithin inthe lowercultivation inventoryand costsproduction processes during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31, 2025, During the three months ended March 31, 2026, approximately 6,440 pounds of plant material was harvested in the established region as compared to approximately 10,750 pounds harvested during the three months ended March 31,30, 2025. The decrease in harvested plant material is primarily attributable to the deconsolidation of our facility sites in Arizona, following the sale which closed on February 10, 2025 and lower volumes in Florida from timing of harvest runs during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.

For the three months ended MarchJune 31,30, 2026, our sales revenues in the emerging region were $18.5$18.0 million as compared to $17.5$17.7 million for the three months ended MarchJune 31,30, 2025, which represents an increase of 5.8%.1.4%. The increase in sales revenues in the emerging region is attributed to higher revenues in Maryland by $0.9 million, and in New Jersey by $0.4$0.8 million from the continued expansion of the wholesale programsprogram in boththe statesstate during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. This was partially offset by a $0.2 million decrease in retail revenue in New York, and a $0.3 million decrease from our Cheetah brand in Illinois and Pennsylvania due to lower wholesale volumes during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025.

For the three months ended MarchJune 31,30, 2026, gross profit was $8.4$7.7 million, or 45.4%42.8% of sales revenues, as compared to a gross profit of $7.6 million, or 43.2%42.8% of sales revenues, for the three months ended MarchJune 31,30, 2025. HigherThe higher gross profit iswas attributabledriven toby a $1.1$0.5 million increase in MarylandMaryland, from increased salestransaction undervolumes tolland processinglower arrangementsdiscounts which yields higher marginsoffered during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. This was partially offset by $0.2a $0.3 million decrease infrom grossIllinois profitand Pennsylvania from lower sales volume and increase in New Jersey from unfavorable sales mix as we sold more bulk materialscredits during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025.

During the three months ended MarchJune 31,30, 2026, approximately 1,7102,220 pounds of plant material was harvested in the emerging region as compared to approximately 2,0201,730 pounds harvested during the three months ended MarchJune 31,30, 2025. The decreaseincrease is attributed to slightly lowerhigher volumes cultivated in New Jersey during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025.

For the three months ended MarchJune 31,30, 2026, our total operating expenses were $18.2$18.4 million as compared to $20.9$21.5 million for the three months ended MarchJune 31,30, 2025, which represents a decrease of 12.8%.14.6%.

The decrease in total operating expenses resulted from a decrease of $2.5$2.3 million in our selling, general, and administrative expenses which is attributable to: $1.9$1.7 million decrease inof legal, marketing and other professional fees during the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025, attributed to decreased advertising and promotional events, and as the prior year period included increased legal fees from a divestiture transactionstransaction; $0.6$0.4 million decrease in marketingfacility, expensesinsurance and technology costs during the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 20252025, mainly from lower software and security charges; $0.3and a $0.2 million decrease in travel and other general corporate expenditures during the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025;2025. This was partially offset by a $0.2 million increase in our salaries, severance and loweremployee facility,expenses insurancefrom andhigher technology costs of $0.3 millionemoluments during the three months ended MarchJune 31,30, 20262026, as compared to the three months ended MarchJune 31,30, 2025.

In addition, the decrease in total operating expenses was attributedattributable to a $0.1$1.0 million net increasedecrease in recoveries, write-downs and other charges, asattributed improvedto collection$0.5 on accounts receivable resulted in lower netmillion credit loss provisions,provisions withon athe recoveryoutstanding balance of $0.2the millionMA Notes during the three months ended MarchJune 31,30, 20262026, as compared to $0.1$1.5 million recoveryin credit loss provisions on the MA notes during the three months ended MarchJune 31,30, 2025.

For the three months ended MarchJune 31,30, 2026, we had aour total other expenses ofwere $5.0$5.1 million as compared to total other incomeexpenses of $11.2$9.2 million for the three months ended MarchJune 31,30, 2025, which represents a decrease of 145.0%.44.5%.

The decrease in total other income and expenses betweenduring the three months ended MarchJune 31,30, 20262026, andas compared to the three months ended June 30, 2025 is primarily attributable to $16.3 million decrease in interest and other income. The decrease in interest and other income ismainly attributable to: $6.2a $4.2 million gainincrease onin other income, as the deconsolidationthree ofmonths certainended assetsJune sold30, as2025 partincluded of AZ Transaction; $5.7$5.2 million gainin fromlegal divestituresettlement ofexpenditures, Nevadaoffset assets;by $3.0a $0.5 million fromincrease in employee retention tax credit refundsrefunds, ina Florida; $1.0 million in deferred professional fees forgiveness; $0.3 million from the Cheetah Acquisition contingent consideration remeasurement; partially offset by $0.1$0.5 million increase in interest income earned from ourthe bankpromissory accounts.notes Inrecognized addition,following totalthe otherAZ income and expenses decreased by $0.1 million due to lower interest expense on our long-term debt which are paid-in-kindTransaction; and lower accretion expenseexpenses of $0.1 million during the three months ended MarchJune 31,30, 20262026, as compared to the three months ended MarchJune 31,30, 2025.

For the three months ended MarchJune 31,30, 2026, our income tax expense was $7.0 million as compared to $4.0$4.1 million for the three months ended MarchJune 31,30, 2025, which represents an increase of 74.5%.70.2%. The increase in income tax expense is attributable to certain non-deductible items and mix of our pre-tax income across various jurisdictionsjurisdictions, impacting our effective tax rate during the three months ended MarchJune 31,30, 20262026, as compared to the three months ended MarchJune 31,30, 2025.

As of MarchJune 31,30, 2026, we held unrestricted cash of $11.1$8.0 million (December 31, 2025—$11.7$11.6 million) and had, an accumulated deficit of $1,389.8$1,404.2 million (December 31, 2025—$1,375.5 million) and a working capital deficit of $21.9$232.7 million (December 31, 2025—$19.8 million). In assessing our liquidity, we monitor our cash on-hand and our expenditures required to execute our day-to-day operations and our long-term strategic plans. To date, we have financed our operations through equity and debt financings and from our cash flows from operations and we anticipate that we will need to raise additional capital to fund our operations and capital plans in the future.operations. We expect to finance theseour activitiesupcoming capital plans through a combination of additional financingsfinancings, divestitures of certain assets and cash flows from our operations. However, we may be unable to raise additional funds when needed and on favorable terms, or at all, which may have a negative impact on our financial condition and could force us to curtail or cease our operations. Furthermore, our outstanding debt instruments impose certain restrictions on our operating and financing activities, including certain restrictions on our ability to incur certain additional indebtedness, grant liens, make certain dividends and other payment restrictions affecting our subsidiaries, issue shares or convertible securities and sell certain assets. Even if we believe we have sufficient funds for our current or future plans, we may seek additional capital due to favorable market conditions and/or for strategic opportunities and initiatives.

While we believe that we have funding necessary for us to continue as a going concern, we may need to raise additional capital and there can be no assurance that such capital will be available to us on favorable terms, if at all. As such, these material circumstances cast substantial doubt on our ability to continue as a going concern for a period of no less than 12 months from the date of this report, and our unaudited interim condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently plan due to incorrect assumptions or due to a decision to expand our activities beyond those currently planned.

Cash Flow for the ThreeSix Months Ended MarchJune 31,30, 20262026, as Compared to the ThreeSix Months Ended MarchJune 31,30, 2025

Net cash provided from operating activities during the threesix months ended MarchJune 31,30, 2026 was $1.0$1.8 million as compared to net cash provided by operating activities of $3.1$6.3 million for the threesix months ended MarchJune 31,30, 2025. The decrease in our net cash provided from operating activities during the threesix months ended MarchJune 31,30, 2026, as compared to the threesix months ended MarchJune 31,30, 2025, was due primarily due to the following: our net loss of $14.3$28.7 million, adjusted for $4.7$9.4 million inof depreciation and amortization expense,expense; $4.1$8.4 million in interest expense; $1.1$1.0 million in share-based compensation expense; $2.2 million of accretion expense; $0.5$0.4 million in share-based compensation expense, $0.3 million from the remeasurement of the contingent consideration related to the Cheetah acquisition; $0.1 million from additional inventory reserves; $0.2 million in recoveries, write-downs and other charges, net, from improved collection on accounts receivable resulting in a lower credit loss provisionprovisions; $0.1$0.2 million in interest income; from$0.1 million gain on our bankequity accountsmethod investment; and $4.9$9.1 million from changes in operating assets and liabilities items during the threesix months ended MarchJune 31,30, 2026.

Changes in other operating assets for the threesix months ended MarchJune 31,30, 2026 include ana increasemarginal decrease in cash from inventory of $0.8$0.1 million primarily due to the timing of purchases, higher sales volumes in Maryland, New Jersey and Massachusettspurchases during the threesix months ended MarchJune 31,30, 2026, as compared to the threesix months ended MarchJune 31,30, 2025, aan decreaseincrease infrom accounts receivable of $0.8$4.7 million from higher wholesale revenuessales and the timing of collections during the threesix months ended MarchJune 31,30, 2026, as compared to the threesix months ended MarchJune 31,30, 2025, and ana increasedecrease in cash from prepaid expenses of $1.6$0.9 million,million during the six months ended June 30, 2026, mainly relating to timing of renewals forand amortization of insurance and rent during the three months ended March 31, 2026rent, as compared to the threesix months ended MarchJune 31,30, 2025.

Changes in other operating liabilities for the threesix months ended MarchJune 31,30, 2026 include an increase in uncertain tax position liabilities of $3.1$6.2 million due to accrued income taxes being recognized as an uncertain tax position during the threesix months ended MarchJune 31,30, 2026, as compared to the threesix months ended MarchJune 31,30, 2025;2025, $1.4 millionan increase in accrued and other current liabilities dueof $8.2 million, mainly related to highercapex activities, $2.3 million of accrued current contingent consideration payable, and a decrease in accounts payable of $9.0 million, related to the timing of purchases and accruals for professional fees, payroll and insurance; $0.4 million increase in accounts payable, mainly a function of the timing of the purchases and capex activityinsurance, as compared to the threesix months ended MarchJune 31,30, 2025.

Net cash used in investing activities during the threesix months ended MarchJune 31,30, 2026,2026 was $1.6$5.1 million as compared to $11.1$7.8 million in net cash provided fromby investing activities during the threesix months ended MarchJune 31,30, 2025. The decrease in cash provided from investing activities was primarily attributable to the $15.8 million proceeds received from the sale of certain assets in Arizona during the threesix months ended MarchJune 31,30, 2025; thisand $0.2 million decrease in payments received from the Nevada promissory notes. This was partially offset by $2.7 million in lower capital expenditures for funding cultivation and dispensary projects in Florida, New York and NewMaryland; Jersey$0.4 asmillion decrease in consideration payments related to the projectsacquisition areof nowcertain nearCheetah completionassets; $0.2 million increase from proceeds from the Arizona and Nevadaless promissory notes; andthan $0.1 million decrease in other intangible assets expenditures primarily related to software development during the threesix months ended MarchJune 31,30, 20262026, as compared to the threesix months ended MarchJune 31,30, 2025.

Net cash used in financing activities for the threesix months ended MarchJune 31,30, 2026 was $0.1$0.3 million as compared to net cash used in financing activities of $8.3$9.3 million for the threesix months ended MarchJune 31,30, 2025. During the threesix months ended MarchJune 31,30, 2026 and 2025,2026, we paid less than $0.1 million on our employees' behalf as part of RSUs issuances.issuances, as compared to $0.1 million during the six months ended June 30, 2025. Further, we repaid $0.1$0.3 million of debt during the threesix months ended MarchJune 31,30, 20262026, as compared to $8.3$9.1 million during the threesix months ended MarchJune 31,30, 2025.

Upon the closing of the Recapitalization Transaction, certain of our lenders held greater than 5% of the voting interests in our Company and therefore are classified as related parties. For further discussion, refer to Note 5 of the unaudited interim condensed consolidated financial statements included in Item 1I of this Quarterly Report on Form 10-Q for the quarter ended MarchJune 31,30, 2026.

Pursuant to the terms of the Secured DPA, we have a related party payable of $6.3 million due to certain of the New Secured Lenders, including Gotham Green Fund 1, L.P., Gotham Green Fund 1 (Q), L.P., Gotham Green Fund II, L.P., Gotham Green Fund II (Q), L.P., Oasis InvestmentInvestments Master II Fund LTD., Senvest Global (KY), LP, Senvest Master Fund, LP and Hadron Healthcare and Consumer Special Opportunities Master Fund, for certain out-of-pocket costs, charges, fees, taxes and other expenses incurred by the New Secured Lenders in connection with the closing of the Recapitalization Transaction (the “Deferred Professional Fees”). These New Secured Lenders held greater than 5.0% of the outstanding common shares of the Company upon the closing of the Recapitalization Transaction and are therefore considered to be related parties. We had until December 31, 2022, to pay the Deferred Professional Fees ratably based on the amount of each New Secured Lender’s Deferred Professional Fees. The Deferred Professional Fees accrued simple interest at the rate of 12.0% from the Closing Date until December 31, 2022. Beginning with the first business day of the month following December 31, 2022, interest shall accrue on the Deferred Professional Fees at the rate of 20.0% calculated on a daily basis and is payable on the first business day of every month until the Deferred Professional Fees and accrued interest thereon is paid in full. On February 5, 2025, we entered into consent and release agreement with Secured Lenders to utilize cash proceeds upon the closing of the AZ Transaction to payments in the amount of $5.0 million towards the principal amount outstanding under the Deferred Professional Fees. In addition, the Secured Lenders agreed to reduce the outstanding amount of the Deferred Professional fees by $1.0 million and reduce interest to 8% on the remaining balance. On September 2, 2025, the Company applied cash proceeds from the sale of the AZ Note, utilizing $0.3 million toward the remaining principal and $0.9 million toward accrued interest under the Deferred Professional Fees. As of MarchJune 31,30, 20262026, the outstanding related party portion of the Deferred Professional Fees including accrued interest payable was $2.2 million (December 31, 2025 -– $2.2 million). The related party balance is presented in accrued and other current liabilities on the unaudited interim condensed consolidated balance sheets.

Pursuant to the terms of 2024 NJ Amendment, interest accruing after February 16, 2024 will be payable in cash on the last day of each fiscal quarter (the first such interest payment date being May 16, 2024). As of MarchJune 31,30, 2026,2026 the outstanding related party portion of the interest payable was $0.1 million (December 31, 2025 - $0.1 million) presented in accrued and other current liabilities on the unaudited interim condensed consolidated balance sheets.

On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act") for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.