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

As a result of the conflicting views between state legislatures and the federal government regarding cannabis, investments in cannabis-related businesses in the United States are subject to inconsistent legislation and regulation. Although a number of U.S. states have legalized cannabis for medical and/or adult use purposes, cannabis remains classified as a Schedule I controlled substance under the U.S. Controlled Substances Act. As a result, the cultivation, manufacture, distribution, sale and possession of cannabis remains illegal under U.S. federal law, regardless of state law compliance.

In August 2013, the U.S. Department of Justice (“DOJ”) issued guidance commonly referred to as the Cole Memorandum, which directed federal prosecutors to focus enforcement resources on certain specified priorities and indicated that conduct in compliance with strong state regulatory systems was less likely to be a federal enforcement priority. However, on January 4, 2018, then-Attorney General Jeff Sessions issued a memorandum rescinding the Cole Memorandum and related guidance. As a result, U.S. federal prosecutors retain broad discretion to enforce federal cannabis laws in jurisdictions that have legalized cannabis under state law.

Since fiscal year 2015, Congress has included provisions in federal appropriations legislation, commonly referred to as the Rohrabacher–Blumenauer amendment, that prohibit the DOJ from using federal funds to prevent states from implementing their medical cannabis laws. Courts have interpreted this rider to limit DOJ enforcement actions against individuals and businesses that are strictly compliant with state medical cannabis laws. However, this protection must be renewed annually by Congress and does not apply to adult-use cannabis activities. Accordingly, there can be no assurance that these appropriations protections will continue in future federal budgets.

Federal policy toward cannabis continues to evolve. Federal agencies and policymakers have recently considered potential reforms, including proposals related to cannabis banking access and the possible rescheduling of cannabis under federal law. However, as of the date of this report, cannabis remains illegal under federal law, and the timing, scope, or outcome of any federal legislative or regulatory reforms remains uncertain.

Pam Bondi was sworn in on February 5, 2025 as the 87th U.S. Attorney General. It remains uncertain what enforcement priorities the DOJ or the current presidential administration will adopt with respect to the cannabis industry. Any shift in federal enforcement priorities could increase the risk of enforcement actions against businesses operating in compliance with state cannabis laws.

Because cannabis remains illegal under federal law, the DOJ could theoretically allege that we and our directors, officers, employees, or shareholders “aided and abetted” violations of federal law by providing financing or services to cannabis-related businesses. Under such circumstances, federal authorities could seek civil or criminal penalties, asset forfeiture, or other remedies, including disgorgement of profits. Any such enforcement actions could result in significant fines, penalties, administrative sanctions, civil proceedings, criminal charges, or settlements.

Violations of federal law could have a material adverse effect on our business, financial condition, and results of operations. In particular, enforcement actions could result in penalties, the seizure of assets, the cessation of business activities, the loss of licenses or regulatory approvals, or the delisting of our securities from stock exchanges. Any such developments could materially harm our reputation, financial position, operating results, liquidity, or the market price of our publicly traded common stock.

As a result of the foregoing, many banks and other financial institutions may be unwilling to provide banking, lending, payment processing or other financial services to cannabis-related businesses, or may provide such services only on limited or restrictive terms. If financial institutions decline to provide, or subsequently withdraw, services to us, our portfolio companies, or the operators with whom we conduct business, our ability to operate efficiently, manage cash flows, receive or remit payments, or obtain financing could be adversely affected.

In addition, if any of our investments, or any proceeds thereof, dividends or distributions therefrom, or any profits or revenues attributable to cannabis-related activity in the United States are determined to involve proceeds of activity deemed unlawful under U.S. federal law, such funds could be subject to regulatory scrutiny or restrictions. Such circumstances could restrict or otherwise jeopardize our ability to declare or pay dividends, effect other distributions, or repatriate funds, which could have a material adverse effect on our business, financial condition and results of operations.

Cannabis is currently classified as a Schedule I controlled substance under the U.S. Controlled Substances Act (“CSA”). Federal policymakers have recently considered potential changes to the scheduling of cannabis, including a proposed rulemaking process initiated in 2024 to transfer cannabis to Schedule III. However, as of the date of this report, cannabis remains a Schedule I controlled substance under federal law, and the timing, scope, and outcome of any federal legislative or regulatory changes remain uncertain.

If cannabis were reclassified under the CSA as a Schedule II, Schedule III, or lower controlled substance, the ability to conduct research on the medical benefits of cannabis could become more accessible. However, such a reclassification could also subject cannabis and cannabis-derived products to a broader range of federal regulatory requirements. For example, products marketed with claims to diagnose, cure, mitigate, treat, or prevent disease, or otherwise intended to affect the structure or function of the body, may be regulated as drugs under the Federal Food, Drug, and Cosmetic Act (“FDCA”), and generally require approval from the FDA before they can be lawfully marketed in interstate commerce.

In addition, if cannabis were rescheduled and our activities, or the activities of our portfolio companies or business partners, were determined to involve controlled substances regulated under the CSA, the manufacture, importation, exportation, distribution, storage, sale, and use of such products could become subject to significant oversight by the U.S. Drug Enforcement Administration (“DEA”). In such circumstances, entities involved in handling controlled substances may be required to obtain DEA registrations and comply with applicable regulatory requirements relating to security, recordkeeping, reporting, and inventory controls designed to prevent diversion.

Obtaining any necessary registrations or regulatory approvals could result in delays in the manufacture or distribution of products. The DEA also conducts inspections of certain registered establishments that handle controlled substances to assess compliance with applicable requirements. Failure to maintain compliance could result in civil penalties, administrative actions, the refusal to issue or renew necessary registrations, or proceedings to suspend, restrict, or revoke registrations. In certain circumstances, violations could also result in criminal proceedings.

In December 2025, the President issued an executive order titled “Increasing Medical Marijuana and Cannabidiol Research,” which directs federal agencies to accelerate the process of reclassifying marijuana under the Controlled Substances Act and to expand federal research into marijuana and cannabidiol (“CBD”). The executive order contemplates potential rescheduling of marijuana from Schedule I to Schedule III; however, the rulemaking process required to implement any such change remains ongoing and there can be no assurance as to the timing or outcome of that process. Until any final rule is adopted, marijuana remains classified as a Schedule I controlled substance under federal law. Even if marijuana were rescheduled, marijuana and marijuana-derived products would remain subject to significant federal regulation.

Climate change could disrupt operations, and adversely affect our financial results.

Climate change presents physical, transition, and adaptation risks that may adversely affect our operations, customers, suppliers, and financial results. Physical risks associated with climate change include the increasing frequency and severity of extreme weather events such as hurricanes, floods, wildfires, extreme heat, extreme cold, and other natural disasters. These events may disrupt our operations or those of our customers, subcontractors, reduce productivity, damage facilities or equipment, increase insurance costs, or result in injuries, fatalities, or reputational harm.

Increases in the cost or reduced availability of materials, equipment, commodities, or energy due to inflation, tariffs, trade policies, or geopolitical events could adversely affect our profitability and operating results.

Our operations require raw materials, equipment, commodities, and energy, and we are exposed to market risks that may increase costs or limit availability. We have experienced, and may continue to experience, cost volatility and supply disruptions resulting from inflationary pressures, changes in tariffs or trade policies, supply chain disruptions, regulatory actions, geopolitical conflicts, sanctions, or other international trade restrictions. Increases in fuel and energy prices may further increase operating expenses.

Changes in trade policies, retaliatory tariffs, sanctions, or other governmental actions may increase the cost of imported materials or restrict the availability of certain products used in our operations. In addition, geopolitical conflicts or global economic instability could negatively impact supply chains, reduce global trade, or increase competition for limited resources. Rising input costs may also affect customer budgets, which could reduce demand for our products.

The Company entered into a definitive agreement to sell its adult use dispensary superstore assets in Santa Ana, including the distribution license, which is pending regulatory approval as of December 31, 2025.

Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024

Revenue, net of Discounts

The Company saw decreases in revenue from both retail operations and wholesale operations during the year ended December 31, 2025. In particular, the flower category suffered from intense price compression and oversupply in the market, contributing to the overall revenue decline in the period. The decline in wholesale revenue during the year ended December 31, 2025 was most severe in the California market, prompting the Company's decision to exit the market at the end of the year.

The decrease in gross profit margin for the year ended December 31, 2025 was the result of several factors including: price compression seen in retail sales channels, as well as in the Nevada and California wholesale markets, particularly in the flower category. In addition, due to the high level of vertical integration in the Nevada and Florida markets, the Company faced issues related to over capacity at its cultivation and production facilities which led to an increase in aged inventory. The Company increased its reserve for slow moving inventory by $3,619,463 during the year ended December 31, 2025 and has implemented additional strategies including a substantial reduction to its cultivation operations in Nevada to help prevent excess inventory build and reduce production costs. California wholesale in the second half of the year was sold largely at, or below, cost to produce, further impacting overall margins. The Company exited the California wholesale market at the end of December, 2025, which will have a positive impact on margin and overall profitability in 2026 and beyond.

General and Administrative Expenses

Depreciation and Amortization decreased 20.5% during the year ended December 31, 2025, when compared to the prior year due to the elimination of depreciation charges as a result of asset impairments near the end of 2024 and during the year ended December 31, 2025 Impairment charges of $29,844,227 were incurred during the year ended December 31, 2025 related to cultivation assets in Nevada and California that the Company determined had carrying values in excess of their fair values. The ongoing decline in the market price for flower in these markets was the indication that these assets may be impaired. The Company shuttered its cultivation facility in Beatty, Nevada and one of two cultivation facilities in Las Vegas, Nevada, while substantially reducing the grow capacity in the other facility in order to eliminate over production, reduce costs and protect the selling price and margin of the Company's premium, indoor grown flower.

Interest expense was $476,721 during the year ended December 31, 2025, compared to interest expense of $333,082 during the year ended December 31, 2024. Interest expense is related to borrowing on our revolving line of credit, net of interest earned on a corresponding money market account, plus interest on a long-term related party note. The balance of long-term debt as of December 31, 2025, was $1,234,353 compared to $1,177,722 as of December 31, 2024.

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, consists of commissions on Automated Teller Machine (“ATM”) fees, and other miscellaneous income including gains/losses on sales of assets and property recovered in legal settlements. Other income equaled $7,487,533 for the year ended December 31, 2025, compared to other income of $257,438 for the year ended December 31, 2024. The increase in Other income was driven primarily by $4,547,846 of cash and property recovered in the El Capitan settlement, $2,611,616 gain on early lease termination agreement and a $1,255,677 gain on settlement of Note payable, including accrued interest. These gains are partially offset by losses on sales of other assets and other miscellaneous items not specifically listed.

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; (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.

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 Options

At the Effective Time, each option to purchase shares of Company Common Stock (each such option, a “Company Option”) that has a per share exercise price that is greater than or equal to the per share value of a Parent Share multiplied by the Exchange Ratio (each, an “Underwater Option”), will, by virtue of the Merger, be cancelled and terminated for no consideration or payment and shall cease to provide the holder with the right to acquire shares of the Company or Parent or otherwise represent any right to any equity interest in Parent or any Affiliate. Immediately prior to the Effective Time, such Underwater Options will be cancelled and terminated without further action of the holder or the parties to the Merger Agreement. At the Effective Time, each Company Option (if any) that is not an Underwater Option and that is outstanding and unexercised immediately prior thereto, whether vested or unvested, will by virtue of the Merger and without any action on the part of any holder of any Company Option or any other Person, be converted into a Parent Option in accordance with the Merger Agreement.

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.

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, is nearing completion of tenant improvements and is expected to be operational in August of 2026, followed by the second location in St. Petersburg, which will begin construction in the second half of 2026.

Net Revenue for the three months ended June 30, 2026 was $22,859,292 vs $21,092,230 in the prior quarter for a sequential increase of 8.4% or $1,767,062. The Company, however experienced a 14.9% decrease in net revenue of $3,995,069 from $26,854,361 in the comparable prior year period. Net Revenue during the six months ended June 30, 2026 was $43,951,522, a 19.9% decrease of $10,934,646 when compared to the prior year period of $54,886,168.