Exhibit 99.1

Proper Holdings, LLC, Subsidiaries and Affiliates

CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended

March 31, 2025, And 2024

Proper Holdings, LLC, Subsidiaries and Affiliates

Table of Contents

For the Three Months Ended March 31, 2024 and 2023



Consolidated Balance Sheets	3-5

Consolidated Statements of Operations	5

Consolidated Statement of Changes in Members’ Equity	6

Consolidated Statements of Cash Flows	7

Notes to Consolidated Financial Statements	8-25

Proper Holdings, LLC, Subsidiaries and Affiliates

Consolidated Balance Sheets

As of March 31, 2025 and December 31, 2024


ASSETS	2025		2024
CURRENT ASSETS
Cash and Cash Equivalents	$	18,038,568	$	15,692,405
Accounts Receivable, Net of Credit Losses of $212,047.		3,231,952		3,310,640
Inventory		9,426,140		8,961,309
Notes Receivable		9,365,858		9,365,858
Deposit		2,500,000		2,500,000
Other Receivables		—		191,989
Prepaid Expense		1,016,470		1,115,936

Total Current Assets	$	43,578,988	$	41,138,137

PROPERTY AND EQUIPMENT
Buildings	$	25,696,050	$	25,610,208
Leasehold Improvements		5,414,622		5,372,922
Machinery and Equipment		7,411,014		7,074,115
Vehicles		1,190,251		803,572
Furniture and Fixtures		1,616,965		1,596,560
Construction in Progress		718,627		1,566,794

	$	42,047,529	$	42,024,171
Less Accumulated Depreciation		(5,935,343)		(5,232,417)

Net Property and Equipment	$	36,112,186	$	36,791,754

OTHER ASSETS
Intangible Assets, Net	$	5,840,520	$	5,840,520
Right of Use Asset, Net - Operating		3,507,308		3,656,058
Right of Use Asset, Net - Financing		1,636,362		1,680,193
Security Deposit		131,808		131,808
Deferred Income Tax		105,000		115,000
Investment - Arches IP Inc.		1,400,000		1,400,000

Total Other Assets	$	12,620,998	$	12,823,579

TOTAL ASSETS	$	92,312,172	$	90,753,470

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Consolidated Balance Sheets

As of March 31, 2025 and December 31, 2024


LIABILITIES AND MEMBERS' EQUITY	2025		2024
CURRENT LIABILITIES
Accounts Payable	$	4,828,213	$	6,365,808
Accrued Expenses		4,767,133		4,073,209
Accrued Loyalty Liability		1,590,969		1,393,933
Current Portion of Notes Payable		26,379,726		27,040,786
Current Portion of Financing Liability - Related Party		56,489		56,489
Current Portion of Operating Lease Liabilities		603,538		588,523
Current Portion of Financing Lease Liabilities		100,528		179,745
Other Current Liabilities		—		56,200
Income Tax Payable		6,982,109		4,822,109

Total Current Liabilities	$	45,308,705	$	44,576,802

LONG-TERM LIABILITIES
Notes Payable - Net of Current Portion		326,933	$	326,933
Convertible Notes		5,900,000		—
Financing Liability - Related Party, Less Current Portion		463,511		463,511
Operating Lease Liabilities - Net of Current Portion		3,047,424		3,205,396
Financing Lease Liabilities - Net of Current Portion		1,849,107		1,793,056
Series B Share Liability		8,615,935		8,615,935
Advance from Hub Inc.		1,434,159		1,434,159

Total Long-Term Liabilities	$	21,637,068	$	15,838,990

Total Liabilities	$	66,945,773	$	60,415,792

MEMBERS' EQUITY	$	25,366,399	$	30,337,678

TOTAL LIABILITIES AND MEMBERS' EQUITY	$	92,312,172	$	90,753,470

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Consolidated Statements of Operations

For the Three Months Ended March 31, 2025 and 2024


	2025		2024
NET SALES	$	21,405,478	$	23,004,991

COST OF GOODS SOLD		11,347,960		9,345,717

GROSS PROFIT (LOSS)	$	10,057,518	$	13,659,274

OPERATING EXPENSES
Selling General and Administrative Expenses	$	7,080,026	$	6,382,795

TOTAL OPERATING EXPENSES	$	7,080,026	$	6,382,795

OPERATING INCOME (EXPENSE)	$	2,977,492	$	7,276,479

OTHER INCOME (EXPENSE)
Interest (Expense)	$	(904,414)	$	(851,829)
Interest Income		86,232		112,983
Royalty and Sublet Income		164,256		70,880

TOTAL OTHER INCOME (EXPENSE)	$	(653,926)	$	(667,966)

INCOME (LOSS) BEFORE INCOME TAXES	$	2,323,566	$	6,608,513

PROVISION FOR INCOME TAXES		2,170,000		2,840,000

NET INCOME (LOSS)	$	153,566	$	3,768,513

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Consolidated Statement of Changes in Members’ Equity

For the Three Months Ended March 31, 2025


MEMBERS' EQUITY AT DECEMBER 31, 2024	$	30,337,678

DISTRIBUTIONS TO MEMBERS OF SUBSIDIARY PER OPERATING AGREEMENT		(824,845)

DISTRIBUTIONS TO PARENT COMPANY		(4,300,000)

NET INCOME (LOSS)		153,566

MEMBERS' EQUITY AT MARCH 31, 2025	$	25,366,399

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2025 and 2024


	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)	$	153,566	$	3,768,513
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided (Used) by Operating Activities
Depreciation and Amortization		702,926		1,733,293
Amortization of Operating Lease Right of Use Assets		148,750		(1,339,460)
Amortization of Financing Lease Right of Use Assets		43,831		(14,610)
Bad Debt Allowance		—		(62,301)
Inventory Valuation Adjustment		—		(1,200,000)
Changes in Operating Assets and Liabilities
Accounts Receivable		78,688		(1,734,481)
Inventory		(464,831)		(623,695)
Other Receivables		191,989		88,405
Prepaid Expenses		99,466		99,478
Security Deposits		—		(69,868)
Accounts Payable		(1,537,595)		3,367,813
Accrued Expenses		693,924		2,344,351
Accrued Loyalty Liability		197,036		(997,115)
Operating Lease Liabilties		(142,958)		206,339
Other Current Liabilities		(56,200)		368,164
Accrued Income Taxes		2,160,000		4,970,015
Deferred Income Tax		10,000		285,000

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES	$	2,278,592	$	11,189,841

CASH FLOWS FROM INVESTING ACTIVITIES
Issuance of Note Receivable	$	—	$	(6,865,858)
Payment for Acquistion of Nirvana Investment LLC		—		(2,365,089)
Purchase of Series Seed-2 Preferred Stock - Arches IP Inc.		—		(1,400,000)
Payment of Deposits		—		(500,000)
Purchases of Property and Equipment		(23,358)		(14,182,648)

NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES	$	(23,358)	$	(25,313,595)

CASH FLOWS FROM FINANCING ACTIVITIES
Payments on Notes Payable	$	(661,060)	$	(3,358,033)
Proceeds from Related Party Debt		—		624,584
Proceeds from Issuance of Series B Preferred Shares		—		180,706
Issuance of Convertible Note		5,900,000		—
Payments on Finance Lease Liabilities		(23,166)		82,414
Proceeds from Lease Obligation		—		520,000
Net Contribution (Distribution)		(5,124,845)		8,317,629

NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES	$	90,929	$	6,367,300

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	$	2,346,163	$	(7,756,454)

CASH AND CASH EQUIVALENTS - Beginning of Quarter		15,692,405		23,523,055

CASH AND CASH EQUIVALENTS - End of Quarter	$	18,038,568	$	15,766,601

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Notes to Consolidated Financial Statements

March 31, 2025 and 2024

NOTE 1:NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Proper Holdings, LLC, Subsidiaries and Affiliates, (the Company) was organized as domestic business corporation on October 10, 2019 and is engaged in the business of operating a vertically integrated adult-use cannabis operation under the State of Missouri, Department of Health and Senior Services. Beginning in 2021, the Company began to cultivate, manufacture, and dispense marijuana and marijuana-infused products. Beginning in February 2022, recreational cannabis has been legal in Missouri.

Principles of Consolidation

The consolidated financial statements include the accounts of the following entities:


	Ownership %
Business Name	2025
Proper Holdings, LLC	100	%
New Growth Horizon, LLC	100	%
NGH Investments, LLC	100	%
SLCC, LLC	100	%
Nirvana Investments, LLC and Subsidiaries	—
Occidental Group, Inc.	—

All significant intercompany balances and transactions have been eliminated in consolidation. (See: Note 16 – Affiliates and Note 17 – Commitments) for details.

Basis of Accounting

The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP).

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates.

Fair Value Measurement

The estimated fair values of the Company’s short-term financial instruments, including receivables and payables arising in the ordinary court of business, approximate their individual carrying amounts due to the relatively short period of time between their origination and expected realization.

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Notes to Consolidated Financial Statements

March 31, 2025 and 2024

NOTE 1:NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At times, cash and cash equivalents may be in excess of FDIC insurance limits. The Company deposits held in excess of federally insured limits as of March 31, 2025 and December 31, 2024 was $17,788,568 and $15,442,405 respectively.

Accounts Receivable-Allowance for Credit Losses

The Company uses the allowance method to account for bad debts. This method provides allowances for doubtful receivables equal to the estimated losses that will be incurred in the collection of receivables. The estimated losses are based on historic collection experience coupled with a review of the current status of existing receivables. This estimate is adjusted for management’s assessment of current conditions, reasonable and supportable forecasts regarding future events and any other factors deemed relevant by the Company. The Company writes off uncollectible accounts after they have exhausted the collection process. The Company extends unsecured credit to its customers in the normal course of business.

Inventories

Inventory is stated at the weighted average method for valuing inventories at the lower of cost or net realizable value. The Company manufactures a majority of its finished goods sold through its dispensaries. The Company captures into inventory all costs of materials plus direct labor and overhead costs of the following departments: cultivation, production and manufacturing.

Property and Equipment

Purchase of property and equipment are recorded at cost. Improvements and replacements of property and equipment are capitalized. Maintenance and repairs that do not improve or extend the lives of property and equipment are charged to expense as incurred. When assets are sold or retired, their cost and related accumulated depreciation are removed from the accounts and any gain or loss is reported in the Statement of Operations. Depreciation is provided over the estimated economic useful lives of each class of assets and is computed using the straight-line method and accelerated methods. Total depreciation expense was $702,926 and $565,978 for the for the three months ended March 31, 2025 and 2024, respectively.

Estimated economic useful lives of property and equipment range from 3 to 39 years.

Impairment of Long-Lived Assets

The carrying value of long-lived assets are reviewed when facts and circumstances suggest that the assets may be impaired or that the amortization period may need to be changed. The Company considers internal and external factors relating to each asset, including cash flows, local market developments, industry trends and other publicly available information. If these factors and the projected undiscounted cash flows of the Company over the remaining amortization period indicate that the asset will not be recoverable, the carrying value will be adjusted to the fair market value. No adjustment was considered necessary for the three months ended March 31, 2025 or for the year 2024, respectively.

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Notes to Consolidated Financial Statements

March 31, 2025 and 2024

NOTE 1:NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Intangible Assets

Intangible assets acquired through acquisitions are recorded at cost. The Company’s intangible assets consist of a license for a dispensary. The intangible asset is being amortized over a 10-year period. (See: Note 5 – “Intangibles Assets, Net” and Note 15 – “Acquisition”) for additional details.

Investment in Arches IP, Inc.

Investment in Arches IP, Inc has been recorded at cost. The Company has less than 20% ownership of Arches IP, Inc. and the Company exerts no influence over the investment that it owns. When a dividend income is received, it will be recognized as income on the consolidated statement of operations.

Accrued Loyalty Liability

The Company has a loyalty program which allows customers to earn points for each purchase completed which creates a contract liability. Points earned enable customers to receive credits that may be redeemed on future purchases. The relative standalone selling price of points earned through the Company’s loyalty program is deferred and included in Accrued Loyalty Liability based on the percentage of points estimated to be redeemed on future product purchases. The Company recognized revenue for this performance obligation when the customer redeems the points for the purchase of a product. The accrued loyalty liability was $1,590,969 and $1,393,933 on March 31, 2025 and December 31, 2024, respectively.

Income Taxes

Proper Holdings, LLC, and NGH Investments LLC are taxed as partnerships for income tax purposes. The owners of are taxed on their proportionate shares of the taxable income from these entities. Accordingly, no liability for federal or state income taxes and no provision for federal or state income taxes have been included in the consolidated financial statements for the activity of these entities.

New Growth Horizon, LLC elected to be classified as an association taxable as a corporation. Occidental Group, Inc is taxed as a corporation. Accordingly, these Companies have recorded income tax provisions for federal or state income taxes which have been included in the consolidated financial statements for the activity of these entities.

All other Variable Interest entities are taxed as partnerships for income tax purposes. Accordingly, no liability for federal or state income taxes and no provision for federal or state income taxes have been included in the consolidated financial statements for the activity of these entities.

The Company is subject to income tax examinations by the U.S. federal, state, or local tax authorities since inception. Interest and penalties are classified as expense as incurred.

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Notes to Consolidated Financial Statements

March 31, 2025 and 2024

NOTE 1:NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes (continued)

Income tax benefits are recognized for income tax positions taken or expected to be taken in a tax return, only when it is determined that the income tax position will more-likely than-not be sustained upon examination by taxing authorities. The Company has analyzed tax positions taken for filings with the Internal Revenue Service and all tax jurisdictions where it operates. The Company believes that income tax filing positions will be sustained upon examination and does not anticipate any adjustments that would result in a material adverse effect on the Company’s financial condition, results of operations or cash flows. Accordingly, the Company has not recorded any reserves, or related accruals for interest and penalties for uncertain income tax positions at December 31, 2024 and March 31, 2025.

Under Federal law, the Company is a taxable entity and is subject to Federal income tax. Pursuant to Section 280E of the Internal Revenue Code of 1986, as amended (Section 280E) the Company may not be permitted to take tax deductions for certain operating expenses. According to Section 280E, cost of goods sold are considered the only deductible expenses under Federal case law. Cost of goods sold determined under U.S. GAAP may differ from that calculated under Section 280E.

Revenue Recognition

The Company recognizes revenue in accordance with FASB Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers, which provides a five-step model for recognizing revenue from contracts with customers as follows:

Identify the contract with a customer

Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price to the performance obligations in the contract

Recognize revenue when or as performance obligations are satisfied

The Company’s revenue streams consist of retail product sales and wholesale product sales.

Revenue is recognized at the time control of the product has been transferred to the customer. Control transfers to retail customers upon delivery of the product to the customer at the dispensary and to wholesale customers when the product is delivered. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company will defer any revenue for which the product or services has not been delivered or provided or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered, or no refund will be required.

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Notes to Consolidated Financial Statements

March 31, 2025 and 2024

NOTE 1:NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue Recognition (Continued)

For performance obligations related to the sale of product, control transfers to the customer at a point in time. The payment terms and conditions require payment at the point of sale in the dispensaries and when delivered to wholesale customers. Delivery to wholesale customers is typically completed within a few days of the sale.

The Company’s business gives rise to variable consideration because of their customer loyalty program, that generally decreases the transaction price and revenue recognized at the point of sale. These variable amounts are generally credited to the customer, based on achieving certain levels of sales activity. Variable consideration is estimated at the most likely amount that is expected to be earned using a probability-weighted approach based on historical experience and known trends and require significant judgment.

Sales Tax

The State of Missouri charges a 4% tax on medical marijuana and marijuana product sales and a 6% tax on adult use marijuana and marijuana product sales. The tax applies to the net retail price when a product is sold. The Company has elected to present revenue net of this sales tax.

Leases

In February 2016, the FASB issued ASC Update No. 2016-02, Leases (FASB ASC Topic 842, Leases). The update requires lessees to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company elected the “package of practical expedients” under the transition guidance within Topic 842, in which the Company does not reassess (1) the historical lease classification, (2) whether any existing contracts at transition are or contain leases, or (3) the initial direct costs for any existing leases.

The Company determines if an arrangement is or contains a lease at inception, which is the date on which the terms of the contract are agreed to, and the agreement creates enforceable rights and obligations. A contract is or contains a lease when (1) explicitly or implicitly identified assets have been deployed in the contract and (2) the Company obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company also considers whether its service arrangements include the right to control the use of an asset.

The Company made an accounting policy election available under Topic 842 not to recognize ROU assets and lease liabilities for leases with a term of 12 months or less. For all other leases, ROU assets and lease liabilities are measured based on the present value of future lease payments over the lease term at the commencement date of the lease. The ROU assets also include any initial direct costs incurred and lease payments made at or before the commencement date and are reduced by any lease incentives.

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Notes to Consolidated Financial Statements

March 31, 2025 and 2024

NOTE 1:NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Leases (Continued)

The Company accounts for lease and non-lease components in its contracts as a single lease component for its real estate and vehicle asset classes. The non-lease components typically represent additional services transferred to the Organization, such as common area maintenance for real estate or maintenance packages for vehicles, which are variable in nature and are recorded in lease expense in the period incurred.

Marketing and Advertising Costs

Sales and marketing costs are charged to operations in the year incurred. Advertising costs for the three months ended March 31, 2025 and 2024 was $469,657 and $262,443, respectively.

Subsequent Events

The Company has evaluated subsequent events through July 31, 2025, the date on which the consolidated financial statements were issued.

New Accounting Pronouncements - CECL

The Company adopted ASU No. 2016-13, “Measurement of Credit Losses (Topic 326) on Financial Instruments,” which introduces the current expected credit losses methodology (CECL) for estimating allowances for credit losses, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected loss (CECL) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance. In addition, ASC 326 made changes to the accounting for available-for-sale securities.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized costs and off balance sheet credit exposures. Results for reporting periods after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable U.S. GAAP. There were no transition adjustments as of January 1, 2023.

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Notes to Consolidated Financial Statements

March 31, 2025 and 2024

NOTE 2:INVENTORY

Detail of inventories are as follows, as of March 31, 2025 and December 31, 2024:


	2025		2024
Packaging and Label Materials	$	3,002,775	$	3,200,555
Plants		623,862		623,862
Work in Progress		1,890,036		2,733,530
Finished Goods		3,909,467		2,403,362
Total	$	9,426,140	$	8,961,309

In November 2024 the Company experienced a flood event in its main production facility. The Cost of involuntarily destroyed inventory was $624,043. No flood insurance policy was in place at the time.

NOTE 3:DEPOSIT


	2025		2024
On August 20, 2024, the Company entered into an agreement to acquire a dispensary license from ROI Wellness Center IV, LLC. The Company has requested a transfer of ownership with the Missouri Department of Health Senior Services. As part of the agreement, the Company made a deposit. See Note 18 - Commitments.	$	2,500,000	$	2,500,000

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Notes to Consolidated Financial Statements

March 31, 2025 and 2024

NOTE 4:NOTES RECEIVABLE

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Notes to Consolidated Financial Statements

March 31, 2025 and 2024

NOTE 5:INTANGIBLE ASSETS, NET

Intangible assets are comprised of the following items:


	License		Brand		Total
Balance December 31, 2023	$	1,960,803		2,500		1,963,303
Acquisition		4,349,530		—		4,349,530
Amortization		(472,313)		—		(472,313)
Balance December 31, 2024	$	5,838,020	$	2,500	$	5,840,520

Amortization expense for intangibles was $472,313 during the year ended December 31, 2024. No indications of impairment existed and no impairment of intangible assets was recorded for the year ended December 31, 2024.

The Company estimates that amortization expense will be $430,026 per year, for the next five years.

NOTE 6:INVESTMENT IN ARCHES IP, INC.

On May 4, 2024, the Company purchased Series Seed-2 Preferred Stock for $1.4 million. The Company accounts for the investment under the cost method. As of March 31, 2025 the Company’s ownership was 15.3% on a diluted basis.

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Notes to Consolidated Financial Statements

March 31, 2025 and 2024

NOTE 7:NOTES PAYABLE

The following is a summary of the notes payable at March 31, 2025 and December 31, 2024:


	2025		2024
Promissory Note - Chicago Atlantic Admin, LLC dated May 9, 2022 which accrues interest at the rate of 11% per annum on the unpaid principal balance and an additional per annum of Paid-In-Kind (“PIK”) interest is applicable to the outstanding principal The entire principal balance and all accrued interest are due and payable on May 30, 2025.	$	26,379,726	$	26,312,510

Promissory Note - Captiva Healing, LLC dated May 4, 2022 which requires interest accrues at the rate of 5.5% per annum on the unpaid principal balance. The entire principle balance and all accured interest are due and payable on May 1, 2025. Commencing on May 1, 2022, the Company is required to make quarterly payments of $60,000 until April 30, 2024. The note is personally secured by members of the Company; Mr. Pennington and Mr. Parker and their respective spouses.		326,933		840,000

	$	26,706,659	$	27,152,510
Less: Unamortized Debt Issuance Costs		—		(111,724)
	$	26,706,659	$	27,040,786
Less: Current Portion		26,379,726		27,040,786
Long-Term Debt - Net of Current Portion	$	326,933	$	—

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Notes to Consolidated Financial Statements

March 31, 2025 and 2024

NOTE 7:NOTES PAYABLE (Continued)

Principal maturities on notes payable are as follows:


Year	Amount
2025	$	26,379,726
Thereafter		326,933
	$	26,706,659

NOTE 8:CONVERTIBLE DEBT


Convertible Notes - issued on March 7, 2025 to unrelated investors. The convertible note bears interest at 11% per annum, with an additional 2% Paid-In-Kind (PIK) interest for a total rate of 13%. The note requres monthly payments of $59,000 beginning on March 31, 2025 and continuing until March 31, 2027 when the remaining balance becomes due.		$	5,900,000

On March 31, 2025, accrued interest was $51,133. All payments of principal shall be paid on the maturity date in cash or in shares of voting common stock at the Holder’s election.

Principal maturities on long-term debt as of March 31, 2025 are as follows:


Year	Amount
2025	$	590,000
2026		708,000
2027		4,602,000
Total	$	5,900,000

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Notes to Consolidated Financial Statements

March 31, 2025 and 2024

NOTE 9:LEASES

The components of lease expense are as follows for the months ended March 31, 2025 and year ended December 31, 2024:


	2025		2024
Finance lease expense
Amortization of ROU assets	$	43,831	$	175,324
Interest on lease liabilities		62,934		254,614
Operating lease expense		258,437		1,031,573
Short-term lease expense		—		—
Variable lease expense		—		—
Total	$	365,203	$	1,461,512

Supplemental cash flow information and other information related to leases was as follows for the months ended March 31, 2025 and year ended December 31, 2024.


	2025			2024
(Gains) losses on sale-leaseback transactions, net *
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases (i.e. Interest)	$	86,100		$	172,200
Financing cash flows from finance leases (i.e. principal portion)		—			—
Operating cash flows from operating leases		252,871			947,843
ROU assets obtained in exchange for new finance lease liabilities		—			—
ROU assets obtained in exchange for new operating lease liabilities		—			765,935
Weighted-average remaining lease term in years for finance leases		9.33			9.58
Weighted-average remaining lease term in years for operating leases		0.92			6.24
Weighted-average discount rate for finance leases		13.00	%		13.00	%
Weighted-average discount rate for operating leases		10.00	%		11.65	%

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Notes to Consolidated Financial Statements

March 31, 2025 and 2024

NOTE 9:LEASES (Continued)

Maturities of lease liabilities are as follows:


	Finance	Operating
2025-12	344,400	969,420
2026-12	344,400	914,314
2027-12	344,400	823,190
2028-12	344,400	678,656
2029-12	367,360	576,553
Thereafter	1,641,640	1,158,017
Total undiscounted cash flows	3,386,600	5,120,150
Less: present value discount	(1,436,965)	(1,469,189)
Total lease liabilities	1,949,635	3,650,961
Less Current Potion	(100,528)	(603,537)
Long-Term Lease Obligations	1,849,107	3,047,424

NOTE 10:FINANCING LIABILITY – RELATED PARTY


	2025		2024
Financing Liability -On December 24, 2024 the Company entered into a sale leaseback transaction with a CPJP2, LLC which is owned by two major members of the Company. The lease agreement requires monthly payments of $15,167 per month for five years. The lease has an option for five more years. The annual imputed interest rate was 24.216%		520,000		520,000

Financing Liability - monthly payments of	$	520,000	$	520,000
Less: Current Portion		56,489		56,489
Long-Term Debt - Net of Current Portion	$	463,511	$	463,511

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Notes to Consolidated Financial Statements

March 31, 2025 and 2024

NOTE 10:FINANCING LIABILITY – RELATED PARTY (Continued)

Principal Maturities on Financing Liability – Related Party are as follows:


Year	Amount
2025		56,489
2026		78,045
2027		99,189
2028		126,062
Thereafter		160,215
	$	520,000

NOTE 11:SERIES B SHARE LIABILITY

The Company issued 1,648 Series B Shares without par value, for $8,615,935 subject to the approval of Missouri Department of Health and Senior Services (DHSS). As of March 31, 2025, the issuance of the Series B Shares has not been approved by the DHSS.

NOTE 12:ADVANCE FROM HUB INC.

On July 6, 2023, the Company entered into a Management Service Agreement with Nirvana Investments LLC and all subsidiaries (Nirvana). The Company has included the Advance from Hub Inc. as part of the affiliate’s obligation in the amount of $1,434,159 as of March 31, 2025. Hub Inc. is owned by the same ownership of Nirvana Investments, LLC and Subsidiaries.

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Notes to Consolidated Financial Statements

March 31, 2025 and 2024

NOTE 13:MEMBERS’ EQUITY

The membership Units of the Company consist of Class A Units and Class B Units, as follows:

Class A Membership Units are issued only to the members who held an interest in the initial organization of the Company. A total of Seven Thousand, (7,000) Class A Members Units out of an authorized Twenty Thousand (20,000) have been issued. On April 15, 2022, the Company re-entered a Unit Grant agreement with an existing shareholder for 350 Restricted Units that vest at a rate of 70 per annum, beginning on December 26, 2020. Of those, 6,860 are vested and unrestricted Units, and 140 remain restricted.

Between April and July 2020, the Company entered into a series of agreements with unrelated parties to issue convertible debt with the potential for conversion of up to 2,950 of an Authorized 20,000 Class B Membership Units. As of May 31, 2024, the Company has requested authorization from the State of Missouri to convert this debt into Units, but has not received it as of March 31, 2025. The Company reasonably still expects affirmative authorization.

Priority of distribution:

Pursuant to Section 3.6.3 of the Amended and Restated Operating Agreement, subject to distribution limitations, the Company shall make cash distributions in the following order:

First, to the Class B Members, pursuant to their respective Class B Preference Percentage during the Preferred Distribution Period. The Preferred Distribution Period extends until the Company has distributed cash to Class B Members totaling their initial contributions. Initial contributions totaled $5,900,000, which were converted in 2024.

Second, after the Preferred Distribution Period, and once all required Preferred Distributions have been made, then Distributions will be made to Class A Members, Class B Members, and Members holdings Restricted Units of any kind, in accordance with their respective Percentage Interests.

Third, distributions to Restricted Units shall not be made unless and until the total amounts distributed to other Members exceed the Threshold Amount, which is the total amount contributed by all other members. The intent of this limitation is to treat Restricted Units as a profits interest rather than a liquidation interest.

Liquidation distributions:

Pursuant to Section 3.7 of the Amended and Restated Operating Agreement, upon Company liquidation, and after satisfaction of all the Company liabilities, and the establishment of a reserve appropriate to fund necessary work to wind up the Company’s affairs, the Company shall make distribution to all Members in the same manner as distributions are made under Section 3.6.3 of the Amended and Restated Operating Agreement.

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Notes to Consolidated Financial Statements

March 31, 2025 and 2024

NOTE 14:EMPLOYEE BENEFIT PLAN

During the year, the Company is an adopting employer of the Wurk 401(k)-plan. The Plan covers all employees who attain age 21 and complete one year of eligibility service, which is 1,000 hours of service. The Company may make a discretionary matching contribution. Discretionary employer contributions to the plan was $180,812 for the year ended December 31, 2024.

NOTE 15:ACQUISITION

On February 7, 2024, the Company completed the acquisition of SLCC, LLC, a single dispensary operation located in Kansas City, MO.

The following table presents the fair value of the assets acquired and liabilities assumed as of the acquisition date and allocation of the consideration to net assets acquired:


Inventory	$	325,538
Licenses		4,349,530
Right-of Use Assets		542,851
Accounts Payable		(40,621)
Other Liablilities Assumed		(166,559)
Operating Lease Liabilities		(560,024)
Working Capital Adjustment		17,173
Net Assest Acquired	$	4,467,888

Consideration paid in Cash, Net of Working Capital Adjustment	$	4,467,888

NOTE 16:AFFILIATES

The following information presents information regarding affiliates that been determined to be a Variable Interest Entity (VIE) which are included in the consolidated financial statements. All of these entities were determined to be VIEs as the Company possesses the power to direct activities through a Manage Service Agreement (MSA). (See: Note 3 – “Deposits”, Note 4 - “Notes Receivable” and Note 17 – “Commitments”).

On July 6, 2023, the Company entered into a Member Interest Purchase Agreement with the Members of Nirvana Investments LLC and all subsidiaries and a Management Service Agreement of Nirvana Investments LLC. The purchase agreement has not closed as of March 31, 2025.

On February 14, 2024, the Company entered into an Asset Purchase Agreement and a Management Service Agreement with Occidental Group, Inc. The purchase agreement has not closed as of March 31, 2025.

On October February 7, 2024, the Company completed the acquisition of SLCC, LLC, a single dispensary operation located in Kansas City, MO. SLCC, LLC was determined to be a VIE during the year ended December 31, 2024. (See: Note 15 – “Acquisition”).

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Notes to Consolidated Financial Statements

March 31, 2025 and 2024

NOTE 17:COMMITMENTS

On July 6, 2023, the Company entered into a Member Interest Purchase Agreement with the Members of Nirvana Investments LLC and all subsidiaries (“Nirvana”) and a Management Service Agreement of Nirvana. The purchase price is $27,000,000 cash. On the signing of the agreements, the Company paid $2,500,000 on July 6, 2023, and an additional $2,500,000 on October 7, 2024, for a total Note Receivable of $5,000,000 (See Note 4 – “Notes Receivable”). The balance of the purchase prices of $22,000,000 is due upon the closing of the transaction. The $22,000,000 will be in the form of members interest in the Company. The closing of the transaction will be completed upon the review and approval form the Missouri Department of Health and Senior Services.

On February 14, 2024, the Company entered into an Asset Purchase Agreement and a Management Service Agreement with Occidental Group, Inc. The aggregate purchase price is $12,750,000. On the signing of the agreements, the Company advance $4,365,858 for a Note Receivable (See Note 4 – “Notes Receivable”). The balance of the purchase price of $8,384,142 is due upon the Closing of the Transaction. The closing of the transaction will be completed upon the review and approval form the Missouri Department of Health and Senior Services.

On August 20, 2024, the Company entered into an Asset Purchase Agreement with ROI Wellness Center IV, LLC. The closing of the transaction is subject to and contingent upon the written approval of the Missouri Department of Health and Senior Services (“DHSS”). The aggregate purchase prices shall be $5,250,000. An initial deposit of $2,500,000 was provided at the execution of the agreement. Within ten days of receipt of the zoning approval from all applicable authorities for operation of the business a payment of $1,500,000 is due. Within ten days of the approval from the Missouri Department of Health and Senior Services to commence operations of the business under the license a payment of $1,000,000 is due. The remaining $250,000 is due and payable at closing.

NOTE 18:CONTINGENCIES

From time to time, the Company may be party to various legal actions and administrative proceedings arising in the ordinary course of business. Management is not aware of any current claims.

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Proper Holdings, LLC, Subsidiaries and Affiliates

Notes to Consolidated Financial Statements

March 31, 2025 and 2024

NOTE 19:RELATED PARTY TRANSACTIONS

The Company had a note receivable in 2023 from a company controlled by the majority of members, which was repaid in 2024.

The Company has a lease liability to an entity owned by two largest members. See Note 9 – Financing Liability – Related Party for details.

NOTE 20:SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for income taxes for the three-month periods ended March 31, 2025 and 2024 was $0 and $0 respectively.

Cash paid for interest for the three-month periods ended March 31, 2025 and 2024 was $769,615 and $652,037 respectively.

See Note 9 – Leases for supplement cash flow information related to leases.

NOTE 21:SUBSEQUENT EVENTS

The Company’s operating agreement entitles B-1 members to a preferred return of $5,900,000. The Company is obligated to distribute the first $5,900,000 of distributions to these members, but it is discretionary when it occurs. On March 7, 2025 the Company secured additional financing to fulfil this obligation (See: Note 7 – Convertible Debt). As of March 31, 2025 $4,300,000 had been distributed. The additional $1,600,000 was distributed in April.

The Company entered into a merger agreement with Vireo Growth, Inc. (Vireo) on December 18, 2024. This transaction is subject to the approval of holders of a majority of Vireo’s voting shares and regulatory approvals. Approval was granted, and the acquisition subsequently close on June 5, 2025.

In May, 2025, the Company fulfilled its commitments to Nirvana Investments, LLC (See: Note 17 – “Commitments”).

In July, 2025, the Company fulfilled its commitments to Occidental Group, Inc. (See: Note 17 – “Commitments”).

See Independent Accountant’s Compilation and the Notes to the Consolidated Financial Statements

Exhibit 99.2

DEEP ROOTS HOLDINGS, INC. AND
SUBSIDIARIES

CONSOLIDATED FINANCIAL

STATEMENTS

AS OF AND FOR THE THREE

MONTHS ENDED MARCH 31, 2025

AND 2024 (UNAUDITED)

Deep Roots Holdings, Inc. and Subsidiaries

Table of Contents

March 31, 2025 (Unaudited) and December 31, 2024


		Page

CONSOLIDATED FINANCIAL STATEMENTS:

Consolidated Balance Sheets		1

Consolidated Statements of Income		2

Consolidated Statements of Changes in Shareholders’ Equity		3

Consolidated Statements of Cash Flows		4

Notes to the Consolidated Financial Statements		5 - 19

Deep Roots Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

March 31, 2025 (unaudited) and December 31, 2024


	March 31, 2025		December 31, 2024
ASSETS

Current Assets:
Cash	$	19,506,626	$	16,066,753
Accounts receivable, net		206,247		574,886
Inventories		13,582,368		12,497,987
Income tax receivable		8,295,721		8,295,721
Prepaid expenses and other current assets		2,148,335		1,906,506

Total current assets		43,739,297		39,341,853

Property and equipment, net		32,480,491		32,266,079
Right-of-use assets - operating, net		15,748,110		19,546,621
Intangible assets, net		19,943,709		20,286,062
Goodwill, net		6,252,267		6,415,705
Investments		13,100,000		13,100,000
Deferred tax asset		17,640		23,714

TOTAL ASSETS	$	131,281,514	$	130,980,034

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES
Current Liabilities:
Accounts payable	$	4,388,696	$	3,921,761
Accrued liabilities		8,479,510		7,212,969
Note payable, current portion		1,617,257		1,617,257
Operating lease liabilities, current portion		2,563,887		2,937,157

Total current liabilities		17,049,350		15,689,144

Long-Term Liabilities:
Operating lease liabilities, net of current portion		13,576,849		17,112,526
Note payable, net of current portion		16,972,551		17,378,174
Uncertain tax position liabilities		14,202,308		12,282,308

Total long-term liabilities		44,751,708		46,773,008

TOTAL LIABILITIES		61,801,058		62,462,152

SHAREHOLDERS’ EQUITY
Common stock - authorized 200,000,000 shares; $0.001 par value:
issued and outstanding 99,999,999 shares		100,000		100,000
Additional paid-in capital		16,908,335		16,079,910
Retained earnings		52,472,121		52,337,972

TOTAL SHAREHOLDERS’ EQUITY		69,480,456		68,517,882

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	131,281,514	$	130,980,034

See Accompanying Notes to the Consolidated Financial Statements

Deep Roots Holdings, Inc. and Subsidiaries

Consolidated Statements of Income

For the Three Months Ended March 31, 2025 and 2024 (Unaudited)


	Three Months Ended March 31,
	2025		2024
Revenues, net of discounts	$	23,681,612		16,869,469
Cost of goods sold		11,822,904		7,289,049

Gross profit		11,858,708		9,580,420

Operating expenses:
General and administrative		6,741,719		4,393,190
Provision for credit losses - note receivable		259,615		—
Sales and marketing		633,202		398,544
Share-based compensation		828,425		—
Transaction expenses		63,040		—

Total operating expenses		8,526,001		4,791,734

Income from operations		3,332,707		4,788,686

Other income (expense):
Loss on disposal of property and equipment		(27,396)		—
Interest expense		(823,736)		—
Interest income		340,348		163,936

Total other income (expense)		(510,784)		163,936

Net income before income taxes		2,821,923		4,952,622

Provision for income taxes		(2,687,774)		(2,021,914)

Net income	$	134,149	$	2,930,708

See Accompanying Notes to the Consolidated Financial Statements

Deep Roots Holdings, Inc. and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

For the Three Months Ended March 31, 2025 and 2024 (Unaudited)


	COMMON STOCK
	AUTHORIZED	ISSUED	COMMON		ADDITIONAL		RETAINED
	# OF SHARES	# OF SHARES	STOCK		PAID-IN CAPITAL		EARNINGS		TOTAL
Balance, January 1, 2024	200,000,000	99,999,999	$	100,000	$	11,167,589	$	48,675,918	$	59,943,507

Dividends to shareholders	—	—		—		—		(449,999)		(449,999)

Net income	—	—		—		—		2,930,708		2,930,708

Balance, March 31, 2024	200,000,000	99,999,999		100,000		11,167,589		51,156,627		62,424,216

Balance, January 1, 2025	200,000,000	99,999,999	$	100,000	$	16,079,910	$	52,337,972	$	68,517,882

Share-based compensation	—	—		—		828,425		—		828,425

Net income	—	—		—		—		134,149		134,149

Balance, March 31, 2025	200,000,000	99,999,999	$	100,000	$	16,908,335	$	52,472,121	$	69,480,456

See Accompanying Notes to the Consolidated Financial Statements

Deep Roots Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2025 and 2024 (Unaudited)


	Three Months Ended March 31,
	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	134,149	$	2,930,708
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,151,256		378,491
Amortization of debt issuance costs		94,375		—
Non-cash interest income		(259,615)		—
Provision for obsolete inventories		978,010		—
Provision for credit losses-note receivable		259,615		—
Loss on sale of property and equipment		27,396		—
Deferred tax		6,074		1,238
Amortization of operating right-of-use assets		3,798,511		462,138
Share-based compensation		828,425		—
Changes in operating assets and liabilities:
Accounts receivable		368,639		(27,153)
Inventories		(2,062,391)		(791,022)
Prepaid expenses and other current assets		(241,829)		109,250
Accounts payable		466,935		(158,803)
Accrued liabilities		1,266,543		672,897
Uncertain tax position liabilities		1,920,000		1,041,560
Operating lease liabilities		(3,908,947)		(410,567)

NET CASH PROVIDED BY OPERATING ACTIVITIES		4,827,146		4,208,737

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(887,273)		(805,870)

NET CASH USED IN INVESTING ACTIVITIES		(887,273)		(805,870)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable		(500,000)		—
Dividends to shareholders		—		(449,999)

NET CASH USED IN FINANCING ACTIVITIES		(500,000)		(449,999)

NET INCREASE IN CASH		3,439,873		2,952,868

CASH, BEGINNING OF PERIOD		16,066,753		19,793,647

CASH, END OF PERIOD	$	19,506,626	$	22,746,515

Supplemental disclosure for cash flow information
Cash paid for interest	$	718,958	$	—

See Accompanying Notes to the Consolidated Financial Statements

Deep Roots Holdings, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

For the Three Months Ended March 31, 2025 and 2024 (Unaudited)

1.NATURE OF OPERATIONS

(a)

Business Description

Deep Roots Holdings, Inc. (“Deep Roots” or the “Company”) is an established cannabis operator licensed by the State of Nevada. The Company owns, operates, and invests in legal cannabis cultivation, processing, and retail operations. The Company is headquartered in Mesquite, Nevada.

The Company operated five dispensaries and a cultivation and manufacturing facility, all of which are located in Nevada. In October 2024, the Company acquired most of the assets of a Nevada operator, The Source Holdings, LLC, including four retail operations two provisional retail licenses and on operating facility for cultivation.

On December 18, 2024, the Company entered into a definitive agreement with Vireo Growth Inc. (“Vireo”) to purchase substantially all of the assets of the Company. On June 6, 2025, Vireo announced that it had closed on the transaction to acquire Deep Roots.

Total consideration for the transaction was $132.7 million, paid in the form of 255.2 million Subordinate Voting Shares of Vireo at a reference price per share of $0.52. The purchase price of the Deep Roots transaction represents a multiple of 4.175x 2024 “Closing EBITDA” of $30 million. The transaction is subject to claw back provisions if 2026 EBITDA is below Closing EBITDA as of December 31, 2026. The selling shareholders agreed to voluntary share lock-up provisions, with tranches of shares received in connection with the closing unlocking over a 33-month period.

(b)

The Regulatory Environment

The Company’s operations are subject to a variety of local and state regulations. Failure to comply with one or more of those regulations could result in fines, restrictions on its operations, or losses of permits that could result in the Company ceasing operations. While management believes that the Company is in compliance with applicable local and state regulations as of March 31, 2025, and through the date these consolidated financial statements were issued, cannabis regulations continue to evolve and are subject to differing interpretations, and accordingly, the Company may be subject to regulatory fines, penalties or restrictions in the future.

State laws that permit and regulate the production, distribution, and use of cannabis for adult use or medical purposes are in direct conflict with the Controlled Substances Act (21 U.S.C. § 811) (the “CSA”), which makes cannabis use and possession federally illegal. Although certain states and territories of the U.S. authorize medical and/or adult use cannabis production and distribution by licensed or registered entities, under U.S. federal law, the possession, use, cultivation, and transfer of cannabis and any related drug paraphernalia is illegal and any such acts are criminal acts under federal law under the CSA. Although the Company’s activities are believed to be compliant with applicable state and local laws, strict compliance with state and local laws with respect to cannabis may neither absolve the Company of liability under U.S. federal law, nor may it provide a defense to any federal proceeding which may be brought against the Company.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)

Basis of Accounting and Principles of Consolidation

The Company’s consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”) as issued by the Financial Accounting Standards Board (“FASB”) and reflect the accounts and operations of the Company. The consolidated financial statements have been prepared on the going concern basis, under the historical cost convention. Intercompany balances have been eliminated. The Company’s consolidated financial statements include Deep Roots Holdings, Inc. and its wholly-owned subsidiaries Deep Roots Harvest, Inc., Deep Roots Operating, Inc., and Deep Roots Aria Acqco, Inc.

Deep Roots Holdings, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

For the Three Months Ended March 31, 2025 and 2024 (Unaudited)

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(b)

Cash

Cash includes cash deposits in financial institutions and cash held at the Company’s facility and retail locations.

(c)

Accounts Receivable and Allowance for Credit Losses

Accounts receivable are recorded net of an allowance for credit losses. The Company estimates the allowance for credit losses based on existing contractual payments terms, actual payment patterns of its customers and individual customer circumstances. As of March 31, 2025, there was no allowance for credit losses. As of December 31, 2024, the Company estimated an allowance for credit losses accounts of $48,896.

The Company’s accounts receivable is primarily due from wholesale customers. Credit is extended to customers based on an evaluation of each customer’s creditworthiness and financial condition and collateral is not required. The Company maintains allowances for credit losses, returns and discounts. The Company evaluates the collectability of its accounts receivable based on a combination of prospective factors. The allowance for credit losses is based on the aging of such receivables and any known specific collectability exposures as well as financial stability of its customers. Accounts are written off when deemed uncollectible. It is reasonably possible that the Company’s estimate of the allowance for credit losses will change.

(d)

Inventories

Inventories are primarily comprised of raw materials, internally produced work in process, and finished goods.

Costs incurred during the production process are capitalized as incurred to the extent that cost is less than net realizable value. These costs include materials, labor and manufacturing overhead used in the production processes. Inventories of purchased finished goods and packing materials are initially valued at cost and subsequently at the lower of cost and net realizable value.

Net realizable value is determined as the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Cost is determined using the weighted average cost basis and is a significant estimate. Products for resale and supplies and consumables are valued at lower of cost and net realizable value. The Company reviews inventory for obsolete, redundant and slow-moving goods and any such inventories are written down to net realizable value. The Company estimated a reserve for obsolete inventories of $978,010 as of March 31, 2025. There were no reserves for obsolete inventories as of December 31, 2024.

(e)

Notes Receivable

The Company provides financing to businesses within the cannabis industry. These notes are accounted for as financial instruments in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 310 Receivables. The Company recognizes impairment on notes receivable when, based on all available information, it is probable that a loss has been incurred based on past events and conditions existing at the date of the consolidated financial statements.

Deep Roots Holdings, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

For the Three Months Ended March 31, 2025 and 2024 (Unaudited)

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(f)

Property and Equipment

Purchases of property and equipment are recorded at cost, net of accumulated depreciation and impairment losses, if any. Improvements and replacements of property and equipment are capitalized. Maintenance and ordinary repairs that do not improve or extend the lives of property and equipment are charged to expense as incurred. Depreciation is calculated on a straight-line basis over the estimated economic useful lives of each class of assets using the following terms:


Buildings		39 Years
Leasehold Improvements		Shorter of Remaining Life of the Lease or Useful Life

Furniture and Equipment		5 - 7 Years
Computer and Equipment		5 Years
Vehicles		5 Years

The assets’ residual values, useful lives, and methods of depreciation are reviewed at each consolidated financial statement year-end and adjusted prospectively, if appropriate.

When assets are sold or retired, its cost and related accumulated depreciation are removed from the accounts and any gain or loss is reported in the consolidated statement of income. Construction in progress is transferred when available for use and depreciation of the assets commences at that point.

(g)

Impairment of Long-Lived Assets

The carrying value of long-lived assets are reviewed when facts and circumstances suggest that the assets may be impaired or that the amortization period may need to be changed. The Company considers internal and external factors relating to each asset, including cash flows, local market developments, industry trends and other publicly available information. If these factors and the projected undiscounted cash flows of the Company over the remaining amortization period indicate that the asset will not be recoverable, the carrying value will be adjusted to the fair market value. No impairment charges for long-lived assets have been recorded for the three months ended March 31, 2025 and 2024 or for the year ended December 31, 2024.

(h)

Intangible Assets

Intangible assets are recorded at cost, less accumulated amortization and impairment losses, if any. Intangible assets acquired by the Company in a business combination are measured at fair value at the acquisition date. Amortization periods of assets with finite lives are based on the Company’s estimates as of the dates of acquisitions. Intangible assets with finite lives are amortized over their estimated useful lives. The estimated useful lives, residual values and amortization methods are reviewed at each year end, and any changes in estimates are accounted for prospectively. The Company amortizes intangible assets, which are comprised of licenses, over 15 years.

(i)

Goodwill

Goodwill is the excess cost of an acquired business over the fair value amounts assigned to identifiable assets acquired and liabilities assumed. The Company has elected to amortize goodwill on a straight-line basis over ten years and to test goodwill for impairment at the entity level. The Company evaluates the facts and circumstances as of the end of each reporting period to determine whether a triggering event exists and, if so, whether it is more likely than not that goodwill is impaired.

The Company has elected to account for both goodwill and certain customer and noncompete intangibles in accordance with ASC 350-20-35-63 and ASC 805-20-25-30. Under these standards, a private company may amortize goodwill on a line straight line basis over ten years.

Deep Roots Holdings, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

For the Three Months Ended March 31, 2025 and 2024 (Unaudited)

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(j)

Leased Assets

A lease of property and equipment is classified as a finance lease if it transfers substantially all the risks and awards incidental to ownership to the Company. A lease of property and equipment is classified as an operating lease whenever the terms of the lease do not transfer substantially all of the risks and rewards of ownership to the lessee. Lease payments are recognized as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which the economic benefits are consumed. The Company’s incremental borrowing rate is used in determining the present value of future payments at the commencement date of each lease. The Company considers whether a leased asset qualifies as such under ASC 842. Management uses certain policy elections when evaluating a lease. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

(k)

Investments

The Company’s investments in three private companies represent equity interests without a readily determinable fair value. The Company follows ASC 321, Investments – Equity Securities and has elected to measure at cost and remeasure to fair value when impaired or upon observable transaction prices. There were no impairment charges and there were no observable transaction prices the three months ended March 31, 2025 and 2024 for the for the year ended December 31, 2024.

(l)

Fair Value of Financial Instruments

The Company applies fair value accounting for all financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers all related factors of the asset by market participants in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and credit risk.

The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels, and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; and

Level 3 – Inputs for the asset or liability that are not based on observable market data.

Deep Roots Holdings, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

For the Three Months Ended March 31, 2025 and 2024 (Unaudited)

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(m)

Income Taxes

The Company is taxed as a C corporation. Accordingly, the Company accounts for income taxes for the activity of this entity under Accounting Standards Codification (ASC) 740 Income Taxes.

Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

Income tax positions are assessed using a two-step process. A determination is first made as to whether it is more-likely-than-not that the income tax position will be sustained, based upon technical merits, upon the examination by tax authorities. If the income tax position is expected to meet the more-likely-than-not criteria, the benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. The Company records interest and penalties due to taxing authorities as incurred.

As discussed further in Note 10, under Federal law, the Company is a taxable entity and is subject to Federal income tax. Pursuant to Section 280E of the Internal Revenue Code of 1986, as amended (“Section 280E”). The section disallows deductions and credits attributable to a trade or business of trafficking in controlled substances. Under U.S. law marijuana is a Schedule I controlled substance.

(n)

Revenue Recognition

Revenue is recognized by the Company in accordance with FASB Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606). Through application of the standard, the Company recognizes revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

In order to recognize revenue under ASU 2014-09, the Company applies the following five (5) steps:

Identify a customer along with a corresponding contract;

Identify the performance obligation(s) in the contract to transfer goods or provide distinct services to a customer;

Determine the transaction price the Company expects to be entitled to in exchange for transferring promised goods or services to a customer;

Allocate the transaction price to the performance obligation(s) in the contract;

Recognize revenue when or as the Company satisfies the performance obligation(s).

Revenues consist of wholesale and retail sales of cannabis, which are generally recognized at a point in time when control over the goods have been transferred to the customer and is recorded net of sales discounts. Payment is typically due upon transferring the goods to the customer or within a specified time period permitted under the Company’s credit policy. Sales discounts were not material during the for the three months ended March 31, 2025 and 2024 or for the year ended December 31, 2024.

Revenue is recognized upon the satisfaction of the performance obligation. The Company satisfies its performance obligation and transfers control upon delivery and acceptance by the customer.

Deep Roots Holdings, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

For the Three Months Ended March 31, 2025 and 2024 (Unaudited)

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(o)

Share-Based Compensation

The Company has an equity-based compensation plan that allows for various awards, including restricted stock. The Company accounts for its share-based awards in accordance with ASC 718 Compensation – Stock Compensation (ASC 718), which requires fair value measurement on the grant date and recognition of compensation expensed for all share-based payment awards made to employees. The fair value of restricted stock is based upon the estimated value of the Company’s common shares on the date of grant. The fair value is expensed over the requisite service periods of the awards, net of estimated forfeitures, which is generally the performance period and the related amount is recognized in the consolidated statement of income.

(p)

Advertising Costs

Advertising costs are charged to operations when incurred. Advertising expenses, included in sales and marketing expenses, was $633,202 and $398,544 for the three months ended March 31, 2025 and 2024, respectively

(q)

Related Party Transactions

The Company follows FASB ASC subtopic 850-10, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. Pursuant to ASC 850-10-20, related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which consolidated statements of income are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the consolidated financial statements; c) the dollar amounts of transactions for each of the periods for which consolidated statements of income are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amounts due from or to related parties as of the date of each consolidated balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

(r)

Business Combinations

Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value at the date of acquisition. Acquisition related transaction costs are expensed as incurred. Identifiable assets and liabilities, including intangible assets, of acquired businesses are recorded at their fair value at the date of acquisition. When the Company acquires control of a business, any previously held equity interest also is remeasured to fair value. The excess of the purchase consideration and any previously held equity interest over the fair value of identifiable net assets acquired is goodwill.

Deep Roots Holdings, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

For the Three Months Ended March 31, 2025 and 2024 (Unaudited)

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(s)

Significant Accounting Judgments, Estimates, and Assumptions

The preparation of the Company’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Significant estimates inherent in the preparation of the Company’s consolidated financial statements include the assumptions related to the estimated useful lives for property and equipment and inventories. In calculating the value of inventory, management is required to make a number of estimates, including standard costs allocated to work in-process inventory, estimates of the amount of spoiled or expired inventory and comparisons of the inventory cost to estimated net realizable value. Allocation of overhead costs to work in process is based on an estimate of a standard cost of production based on normal conditions. Due to the uncertainties inherent in the estimation process and changes to normal conditions as the Company continues to grow, it is at least reasonably possible that the standard cost of production will be revised, as applicable.

The Company’s business is subject to a variety of state laws, regulations, and local ordinances. Certain states have legalized the possession, distribution, and cultivation of marijuana for medical and/or non-medical purposes; these activities remain illegal under federal law, which cause higher federal income taxation (IRC Section 280E) and difficulty in obtaining traditional banking relationships. If the federal government elects to enforce the laws as currently written or otherwise changes the laws in an adverse way with respect to marijuana it could have an adverse effect on the Company’s operations, including potential prosecution under the laws and liquidation of the Company.

The classification of an acquisition as a business combination or an asset acquisition depends on whether the assets acquired constitute a business, which can be a complex judgement. Whether an acquisition is classified as a business combination or asset acquisition can have a significant impact on the entries made on and after acquisition.

3. INVENTORIES

Inventories as of March 31, 2025 and December 31, 2024 consisted of the following:


	March 31,		December 31,
	2025		2024
Raw Materials	$	4,372,534	$	2,199,756
Work-in-Process		3,638,088		3,800,304
Finished Goods		6,549,756		6,497,927
Reserve for obsolete inventories		(978,010)		—

Total Inventories	$	13,582,368	$	12,497,987

Deep Roots Holdings, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

For the Three Months Ended March 31, 2025 and 2024 (Unaudited)

4.PROPERTY AND EQUIPMENT

Property and equipment, net as of March 31, 2025 and December 31, 2024 consisted of the following:


	March 31,		December 31,
	2025		2024
Buildings	$	3,190,448	$	3,190,448
Leasehold Improvements		24,205,131		22,034,828
Furniture and Equipment		6,649,029		6,775,997
Computer Equipment		2,287,287		1,661,271
Vehicles		859,033		480,261
Land		480,832		480,832
Construction in Progress		2,578,561		4,864,999

Total Property and Equipment, Gross		40,250,321		39,488,636
Less: Accumulated Depreciation		(7,769,830)		(7,222,557)

Property and Equipment, Net	$	32,480,491	$	32,266,079

Depreciation expense totaled $645,465 and $378,491 of which $345,743 and $192,784 was included in cost of goods sold for the three months ended March 31, 2025 and 2024, respectively.

5.NOTE RECEIVABLE

The Company had a note receivable due from a third party that was issued in connection with the third party’s refinancing of its mortgage. As part of the refinance, the third party entered into a secured promissory note in the amount of $5,000,000 due to the Company with an annual interest rate of 17.25% and maturity date of September 13, 2024. In October 2024, the interest portion of the note receivable was refinanced at 18.25%. The interest income totaled $259,615 for the three months ended Mach 31, 2025. The Company has fully reserved for this amount as collectability is uncertain as of March 31, 2025 and December 31, 2024.

In December 2024, the principal amount of $5,000,000 was converted to equity in exchange for preferred units in the underlying investment.

Deep Roots Holdings, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

For the Three Months Ended March 31, 2025 and 2024 (Unaudited)

6.INTANGIBLE ASSETS

As of March 31, 2025 and December 31, 2024, intangible assets consisted of the following:


	Licenses
Balance as of January 1, 2024	$	—
Addition from business combination		20,541,184
Balance as of December 31, 2024	$	20,541,184

Accumulated amortization
Balance as of January 1, 2024	$	—
Amortization - year ended December 31, 2024		255,122
Balance as of December 31, 2024	$	255,122

Amortization - three months ended March 31, 2025		342,353
Balance as of March 31, 2025	$	19,943,709

Intangible assets are comprised of licenses and are amortized over 15 years.

The Company recorded amortization expense of $342,353 for the three months ended March 31, 2025.

The following table outlines the estimated annual amortization expense related to intangible assets as of March 31, 2025, which is subject to amortization of 15 years.


	Estimated
Year Ending December 31,	Amortization
2025	$	1,027,059
2026		1,369,412
2027		1,369,412
2028		1,369,412
2029		1,369,412
Thereafter		13,439,002
Total	$	19,943,709

Deep Roots Holdings, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

For the Three Months Ended March 31, 2025 and 2024 (Unaudited)

7.GOODWILL

As of March 31, 2025 and December 31, 2024, goodwill consisted of the following:


	Goodwill
Balance as of January 1, 2024	$	—
Addition from business combination		6,537,500
Balance as of December 31, 2024	$	6,537,500

Accumulated amortization
Balance as of January 1, 2024	$	—
Amortization - year ended December 31, 2024		121,795
Balance as of December 31, 2024	$	121,795

Amortization - three months ended March 31, 2025		163,438
Balance as of March 31, 2025	$	6,252,267

The Company recorded amortization expense for goodwill of $163,438 for the three months ended March 31, 2025.

The following table outlines the estimated annual amortization expense related to goodwill as of March 31, 2025 which is subject to amortization of 10 years.


	Estimated
Year Ending December 31,	Amortization
2025	$	490,313
2026		653,750
2027		653,750
2028		653,750
2029		653,750
Thereafter		3,146,954
Total	$	6,252,267

Deep Roots Holdings, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

For the Three Months Ended March 31, 2025 and 2024 (Unaudited)

8.NOTE PAYABLE

The Company has a loan and security agreement with a lender with an aggregate commitment of $20,000,000. The note bears interest at the prime rate (7.5% at March 31, 2025 and December 31, 2024) with a floor of 8% plus 6.5%. The effective interest rate as of March 31, 2025 and December 31, 2024 was 14.5%. The balance is due on August 15, 2027 and $2,000,000 of principal is due in 2025 and 2026. The note is collateralized by substantially all assets of the Company and is subject to certain covenants.

Amortization of debt issuance costs that were deducted from the carrying amount of long-term debt for the three months ended March 31, 2025 totaled $94,375. Interest expense totaled $729,361.

The following table presents the note payable as of March 31, 2025.


Secured note payable	$	19,500,002
Less: Unamortized debt issuance costs		(910,194)

Total note payable, net		18,589,808

Less: current portion		(1,617,257)

Note payable, net of current portion and debt issuance costs	$	16,972,551

Stated maturities of debt obligations are as follows:


	Principal		Unamortized Debt		Total Debt
	Payments		Issuance Costs		Payable
2025	$	1,500,002	$	288,368	$	1,211,634
2026		2,000,000		382,743		1,617,257
2027		16,000,000		239,083		15,760,917

Total	$	19,500,002	$	910,194	$	18,589,808

Deep Roots Holdings, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

For the Three Months Ended March 31, 2025 and 2024 (Unaudited)

9.SHARE-BASED COMPENSATION

On June 14, 2024, the Company granted certain employees and advisors 8,700,000 shares of restricted stock. The Company recognizes compensation expense on a straight-line basis over the requisite service period of the award. Estimates are subsequently revised if there is any indication that the number of shares expected to vest differs from the previous estimate. Any cumulative adjustment prior to vesting is recognized in the current period with no adjustment to prior periods for expense previously recognized.

During the three months ended March 31, 2025, shares totaling 637,250 vested. As of March 31, 2025, 4,284,042 shares were unvested. During the year ended December 31, 2024, shares totaling 3,778,708 vested. As of December 31, 2024, 4,921,292 shares were unvested.

There were no forfeitures during the three months ended March 31, 2025 December 31, 2024. The grant date fair value was $1.30 and share-based compensation recognized for the three months ended March 31, 2025 was $828,425. The shares were valued based on the estimated fair market value of the Company.

10.INCOME TAXES

As the Company operates in the cannabis industry, it is subject to the limitations of IRC Section 280E under which the Company is only allowed to deduct expense directly related to the sale of product. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E. Therefore, the effective tax rate can be highly variable and may not necessarily correlate with pre-tax income or loss. The Company has taken a position that it does not owe taxes attributable to the application of Section 280E of the Internal Revenue Code.

The Company is subject to examination of its income tax returns by tax authorities. Because tax matters that may be challenged by tax authorities are typically complex, the ultimate outcome of these challenges is uncertain. The Company does not anticipate unrecognized tax benefits to be resolved in the next twelve months and anticipates that the total amount of unrecognized tax benefits may change within the next twelve months for additional uncertain tax position taken on a go-forward basis. The Company is no longer subject to income tax examination by tax authorities for years before 2020.

The Company has an income tax receivable of $8,295,721 as of March 31, 2025 and December 31, 2024 with uncertain tax position liabilities of $14,202,308 as of March 31, 2025 and $12,282,308 as of December 31, 2024. The deferred tax asset and related benefit and expense relates to depreciation for the three months ended March 31, 2025 and 2024. There is no state income tax for the state of Nevada.

Deep Roots Holdings, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

For the Three Months Ended March 31, 2025 and 2024 (Unaudited)

11.LEASE OBLIGATIONS

The Company has operating leases for its retail dispensaries and cultivation and processing facility located throughout the state of Nevada. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term and commencement date.

Leases with an initial term of twelve months or less are not recorded on the consolidated balance sheet. Certain leases require payments for taxes, insurance, and maintenance and are considered non-lease components. The Company accounts for non-lease components separately.

The Company determines if an arrangement is a lease at inception. The Company must consider whether the contract conveys the right to control the use of an identified asset.

The Company leases certain business facilities from third parties under non-cancellable operating lease agreements that contain minimum rental provisions that expire through 2031. Some leases also contain renewal provisions and provide for rent abatement and escalating payments.

The Company recorded $743,044 and $829,135 in operating lease expense, of which $247,055 and $327,031 was included in the cost of goods sold for the three months ended March 31, 2025 and 2024, respectively.

Other information related to operating leases as of and for the three months ended March 31, 2025 and 2024 were as follows:


	March 31, 2025		March 31, 2024
Weighed average remaining lease term - years	5.53		6.46
Weighed average discount rate	6.0	%	6.0	%

Maturities of lease liabilities for operating lease as of March 31, 2025 were as follows:


	Maturities of
Year Ending December 31,	Lease Liabilities
2025	$	2,615,117
2026		3,391,674
2027		3,492,115
2028		3,284,388
2029		3,365,641
Thereafter		2,886,238
Total Lease Payments		19,035,173
Less: Imputed Interest		(2,894,437)
Present Value of Lease Liability	$	16,140,736

Deep Roots Holdings, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

For the Three Months Ended March 31, 2025 and 2024 (Unaudited)

12.RELATED PARTY TRANSACTIONS

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control. Related parties may be individuals or corporate entities. A transaction is considered to be a related party when there is a transfer of resources or obligations between related parties.

The Company entered into certain transactions with DRN Properties LP (“DRN”), which is a related party due to common ownership. The Company leases its cultivation and production facility, along with one of its dispensary and office spaces from DRN. The Company paid $371,418 and $495,865 for rent for the three months ended March 31, 2025 and 2024, respectively. The lease expense totaled $242,452 and $529,117 for the three months ended March 31, 2025 and 2024, respectively. No amounts were due to or due from DRN, LLC as of March 31, 2025. Related party operating lease right-of-use assets and operating lease liabilities totaled $6,991,407 and $7383,213, respectively as of March 31, 2025. Related party operating lease right-of-use assets and operating lease liabilities totaled $10,372,474 and $10,919,485, respectively as of December 31, 2024. The weighted average remaining lease term for related party leases was approximately three years.

13.CONCENTRATIONS

Financial instruments which potentially subject the Company to concentration of credit risks include cash in financial institutions, which under U.S. federal law, money obtained from activities related to the marijuana industry cannot be federal insured. As of March 31, 2025, the Company had a balance of $19,506,626.

14.LOYALTY OBLIGATIONS

The Company has customer loyalty programs where retail customers accumulate points for each dollar of spending, net of tax. These points are recorded as a contractual liability until customers redeem their points for discount on eligible products as part of an in-store sales transaction. In addition, the Company records a performance obligation as a reduction of revenue based on the estimated probability of point obligation incurred.

The Company offers a customer loyalty rewards program that allows members to earn discounts on future purchases. Unused discounts earned by loyalty rewards program members are included in accrued liabilities and recorded as a sales discount at the time a qualifying purchase is made. The value of points accrued as of March 31, 2025 and December 31, 2024 was approximately $584,000. The amount has been included in accrued liabilities in the Company’s consolidated balance sheets.

15.COMMITMENTS AND CONTINGENCIES

(a)

Claims and Litigation

From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. As of March 31, 2025, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of the Company’s operations. There are also no proceedings in which any of the Company’s directors, officers or affiliates is an adverse party or has a material interest adverse to the Company’s interest.

(b)

Contingencies

The Company’s operations are subject to a variety of local and state regulation. Failure to comply with one or more of those regulations could result in fines, restrictions on its operations, or losses of permits that could result in the Company ceasing operations. While management of the Company believes that the Company is in compliance with applicable local and state regulation as of December 31, 2024, cannabis regulations continue to evolve and are subject to differing interpretations. As a result, the Company may be subject to regulatory fines, penalties, or restrictions in the future.

Deep Roots Holdings, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

For the Three Months Ended March 31, 2025 and 2024 (Unaudited)

16.SUBSEQUENT EVENTS

Management has evaluated significant events or transactions that have occurred since the consolidated balance sheet date and through August 4, 2025. Management has determined that no events or transactions have occurred subsequent to March 31, 2025, that require additional disclosure in the consolidated financial statements or notes.

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On June 5, 2025, Vireo Growth Inc. (the “Company” or “Vireo”) completed its previously announced acquisition of NGH Investments, Inc. (“NGH”), and Proper Holdings Management, Inc. (“Proper MSA Newco” and together with NGH, the “Proper Companies”), which were owned by Proper Holdings, LLC (“Proper), where pursuant to the Agreement and Plan of Merger (“Proper Merger Agreement”), Vireo acquired all of the issued and outstanding shares of the Proper Companies (the “Proper Merger”) in exchange for the issuance of 196,212,265 subordinate voting shares (the “Subordinate Voting Shares”) of Vireo (subject to the clawback provisions of the Proper Forfeiture Amount, as defined below), representing a value of $78,777,889 (the “Merger Consideration”), including the potential Proper EBITDA Earn-Out Shares and Proper E-Commerce Earn-Out Shares, as defined below. The number of Subordinate Voting Shares issued at the closing date of the Proper Merger (the “Proper Closing Date”) was calculated by dividing the Merger Consideration as of the date the Proper Merger Agreement was entered into by a share price reference of $0.52 for Vireo’s Subordinate Voting Shares. In general, the Merger Consideration is based upon a multiple of a $31,000,000 earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted for certain items as described in the definition of Merger Consideration in the Proper Merger Agreement, including cash, indebtedness, transaction expenses, working capital, and tax items.

At the Proper Closing Date, each share of common stock of NGH (the “NGH Common Stock”) was converted into, in accordance with the terms of the Proper Merger Agreement, the applicable portion of the Merger Consideration, subject to a post-closing purchase price adjustment mechanism, which consideration was paid via newly issued shares of the Company’s Subordinate Voting Shares, which had a fair value of $0.39 per share.

At the Proper Closing Date, each share of the common stock of Proper MSA Newco (the “Proper MSA Newco Common Stock”) was converted into, in accordance with the terms of the Proper Merger Agreement, the applicable portion of the Merger Consideration, subject to a post-closing purchase price adjustment mechanism, which consideration was paid via newly issued shares of the Company’s Subordinate Voting Shares, which had a fair value of $0.39 per share.

Proper, as the sole holder of NGH Common Stock and Proper MSA Newco Common Stock, is also be eligible to receive additional Subordinate Voting Shares through an earn-out mechanism based upon the EBITDA performance of the Proper Companies and their subsidiaries (excluding Arches IP, Inc. (“Arches”)) during 2026 (the “Proper EBITDA Earn-Out Shares”), and the revenue performance of Arches during 2026 (the “Proper E-Commerce Earn-Out Shares” and together with the Proper EBITDA Earn-Out Shares, the “Proper Earn-Out Shares”).

The Proper Merger was accounted for as a business combination in accordance with U.S. GAAP, with management concluding Vireo is the accounting acquirer.

The following unaudited pro forma condensed combined financial information is based on the historical financial statements of Vireo and the Proper Companies adjusted to give effect to the Proper Merger and related transactions. The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.”

The following unaudited pro forma condensed combined financial information is based on the historical financial statements of Vireo and the Proper Companies, both of which have December 31 fiscal year ends, as adjusted to give effect to the Proper Merger. The unaudited pro forma condensed combined balance sheet as of March 31, 2025 gives effect to the Proper Merger as if it had occurred on March 31, 2025. The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2025 gives effect to the Proper Merger as if it had occurred on January 1, 2025.

The pro forma adjustments are based on available information and assumptions that management believes are reasonable. Included in the unaudited pro forma condensed combined financial information is an estimate of the consideration exchanged for the Proper Companies, which is based on a purchase price allocation, which includes known information and preliminary estimates of fair value for certain equity instruments and contingent consideration. While this is management’s best estimate at this time, the valuation of these equity instruments and contingent consideration is still in progress and subject to change. All estimates and assumptions included in the unaudited pro forma condensed combined financial information could change significantly as management finalizes its assessment of the allocation and fair value of the net tangible and intangible assets acquired, most of which are dependent on the completion of valuations that will be performed by independent valuation specialists. The unaudited pro forma condensed combined financial information does not include adjustments to reflect any synergies or dis-synergies, any future operating efficiencies, associated costs savings or any possible integration costs that may occur related to the Proper Merger. Actual results may be materially different from the unaudited pro forma condensed combined financial information presented herein.

The unaudited pro forma condensed combined financial information does not necessarily reflect what the combined company’s financial condition or results of operations would have been had the Proper Merger occurred on the dates indicated. The unaudited pro forma condensed combined financial information also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial condition and results of operations of the combined company may differ significantly from the pro forma amounts reflected herein due to a variety of factors, including differences in accounting policies, elections, and estimates, which while accounted for to the extent known, are still in process of being determined.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF MARCH 31, 2025


					Transaction
			Proper		Accounting			Pro Forma
	Vireo		Companies		Adjustments			Combined
ASSETS
Current assets
Cash	$	86,260,997	$	18,038,568	$	(4,951,367)	A	$	99,348,198
Accounts receivable, net		3,983,466		3,231,952		—			7,215,418
Income tax receivable		11,367,067		—		—			11,367,067
Inventory		23,343,300		9,426,140		—			32,769,441
Prepayments and other current assets		1,785,664		1,016,470		—			2,802,134
Warrants held		1,751,906		—		—			1,751,906
Assets held for sale		99,941,960		—		—			99,941,960
Total current assets		228,434,360		31,713,130		(4,951,367)			255,196,124
Deferred tax asset		—		105,000		—			105,000
Property and equipment, net		32,836,175		36,112,186		—			68,948,361
Operating lease, right-of-use asset		7,660,568		5,143,670		—			12,804,238
Notes receivable		—		9,365,858		—			9,365,858
Intangible assets, net		7,694,517		5,840,520		6,279,808	B1		19,814,845
Deposits		421,244		2,631,808		—			3,053,052
Goodwill		—		—		44,542,622	B1		47,131,683
						2,589,061	E
Investments		—		1,400,000		—			1,400,000
Total assets	$	277,046,864	$	92,312,172	$	48,460,124		$	417,819,161

LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	$	12,197,467	$	18,224,913	$	(1,520,682)	A	$	28,901,698
Long-term debt, current portion		—		26,379,726		—			26,379,726
Right-of-use liability		1,148,991		704,066		—			1,853,057
Uncertain tax position liability		34,959,000		—		—			34,959,000
Liabilities held for sale		89,351,157		—		—			89,351,157
Total current liabilities		137,656,615		45,308,705		(1,520,682)			181,444,639
Right-of-use liability, net of current portion		16,437,288		4,896,531		—			21,333,819
Long-term debt, net of current portion		62,603,583		326,933		—			62,930,516
Convertible debt		9,874,521		5,900,000		—			15,774,521
Other long-term liabilities		37,278		1,897,670		—			1,934,948
Series B share liability		—		8,615,935		—			8,615,935
Contingent consideration liabilities		—		—		2,589,061	E		2,589,061
Total liabilities		226,609,285		66,945,774		1,068,379			294,623,439

STOCKHOLDERS’ EQUITY
Subordinate voting shares ($- par value, unlimited shares authorized; 339,475,288 shares issued and outstanding at March 31, 2025)		—		—		—			—
Multiple voting shares ($- par value, unlimited shares authorized; 278,170 shares issued and outstanding at March 31, 2025)		—		—		—			—
Common stock		—		—		—
Additional paid in-capital		288,381,930		—		50,822,430	B1		364,570,758
						25,366,398	B2
Retained earnings (accumulated deficit)		(237,944,351)		25,366,398		(3,430,685)	A		(241,375,036)
						(25,366,398)	B2
Total stockholders’ equity		50,437,579		25,366,398		47,391,745			123,195,722
Total liabilities and stockholders’ equity	$	277,046,864	$	92,312,172	$	48,460,124		$	417,819,161

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2025


					Transaction Accounting
	Vireo		Proper Companies		Adjustments			Pro Forma Combined
Revenue	$	24,540,641	$	21,405,478	$	—		$	45,946,119
Cost of sales
Product costs		11,695,329		11,347,959		—			23,043,288
Inventory valuation adjustments		433,000		—		—			433,000
Gross profit		12,412,312		10,057,519		—			22,469,831
Operating expenses:
Selling, general and administrative expenses		7,473,943		5,690,783		—			13,164,726
Stock-based compensation expenses		1,460,850		—		—			1,460,850
Transaction related expenses		1,244,696		587,001		3,430,685	AA		5,262,382
Depreciation		77,102		702,927		—			780,029
Amortization		180,032		99,315		102,690	BB		382,037
Total operating expenses		10,436,623		7,080,026		3,533,375			21,050,024

Income from operations		1,975,689		2,977,493		(3,533,375)			1,419,807

Other income (expense):
Interest expense, net		(7,599,517)		(818,182)		—			(8,417,699)
Other income		790,038		164,256		—			954,294
Other income (expense), net		(6,809,479)		(653,926)		—			(7,463,405)

(Loss) income before income taxes		(4,833,790)		2,323,567		(3,533,375)			(6,043,598)

Income tax expense		(1,675,000)		(2,170,000)		—			(3,845,000)
Net (loss) income and comprehensive (loss) income	$	(6,508,790)	$	153,567	$	(3,533,375)		$	(9,888,598)
Net loss per share - basic and diluted	$	(0.02)						$	(0.02)
Weighted average shares used in computation of net loss per share - basic and diluted		366,800,177							563,012,442

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED AND CONSOLIDATED FINANCIAL INFORMATION

Note 1.Basis of Presentation

The unaudited pro forma condensed combined financial information represents the combined companies’ (Vireo and the Proper Companies) unaudited pro forma condensed combined balance sheet as of March 31, 2025 and unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2025. The unaudited pro forma condensed combined financial information is based on the historical financial statements of Vireo and Proper, adjusted to give effect to the Proper Merger, and should be read in conjunction with the historical financial statements from which they are derived.

The unaudited pro forma condensed combined financial information is presented in United States dollars.

The unaudited pro forma condensed combined balance sheet gives effect to the Proper Merger as if it had occurred on March 31, 2025. The unaudited pro forma condensed combined statement of operations gives effect to the Proper Merger as if it had occurred on January 1, 2025.

In preparing the unaudited pro forma condensed combined balance sheet and unaudited pro forma condensed combined statement of operations, the following historical information was used:

●

Vireo’s unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2025, as filed with the SEC on May 9, 2025; and

●

The Proper Companies’ unaudited condensed combined financial statements as of and for the three months ended March 31, 2025.

The unaudited pro forma condensed combined balance sheet and unaudited pro forma condensed combined statement of operations should be read in conjunction with the historical financial statements including the notes thereto, as listed above.

The unaudited pro forma condensed combined financial information has been prepared for illustrative purposes only and may not be indicative of the operating results or financial condition that would have been achieved if the Proper Merger had been completed on the dates or for the period presented, nor do they purport to project the results of operations or financial position for any future period or as of any future date. The actual financial position and results of operations may differ materially from the pro forma amounts reflected herein due to a variety of factors.

The unaudited pro forma condensed combined financial information does not reflect operational and administrative cost savings that may be achieved as a result of the Proper Merger.

Note 2.Accounting Policies and Reclassifications

Subsequent to the consummation of the Proper Merger, management has commenced a comprehensive review of the entities’ accounting policies. As a result of the review, management may identify differences between the accounting policies of the entities which, when conformed, could have a material impact on the financial statements of the post-combination company. Based on its initial analysis, management did not identify any differences that would have a material impact on the unaudited pro forma condensed combined financial information. As a result, the unaudited pro forma condensed combined financial information does not assume any differences in accounting policies.

As part of the preparation of the unaudited pro forma condensed combined financial information, certain reclassifications were made to align the Proper Companies’ financial statement presentation with that of Vireo.

Note 3.Adjustments to Unaudited Pro Forma Condensed Combined Financial Information

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Proper Merger and related transactions and has been prepared for informational purposes only.

The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” Release No. 33-10786 replaces the existing pro forma adjustment criteria with simplified requirements to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). Vireo has elected not to present Management’s Adjustments and will only be presenting Transaction Accounting Adjustments in the unaudited pro forma

condensed combined financial information. Vireo and the Proper Companies have not had any historical relationship prior to the Proper Merger. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

The pro forma basic and diluted net loss per share amount presented in the unaudited pro forma condensed combined statement of operations is based upon the pro forma number of shares of Vireo stock outstanding, assuming the Proper Merger and related transactions occurred on January 1, 2025.

Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet

The pro forma adjustments included in the unaudited pro forma condensed combined balance sheet as of March 31, 2025 are as follows:

Represents Vireo’s and Proper’s total estimated transactions costs of $5,955,067, which include advisory, banking, legal and due diligence fees that will be expensed as part of the Proper Merger. Of the total estimated transaction costs, $1,522,482 were incurred and reflected in Vireo and Proper’s December 31, 2024 historical financial statements and an additional $1,001,900 have been incurred and are reflected within Vireo and Proper’s March 31, 2025 historical financial statements. As of March 31, 2025, $1,520,682 was recorded in ‘Accounts payable and accrued liabilities’ and $1,003,700 had been paid in cash through March 31, 2025. The remaining $3,430,685 of estimated transaction costs are expected to be incurred after March 31, 2025 (refer to adjustment AA for the impact of these additional estimated transaction costs). The remaining unpaid amount of $4,951,367(consisting of the $1,520,682 of transaction costs accrued as of March 31, 2025 and $3,430,685 expected to be incurred after March 31, 2025) will be paid in cash at the close of the Proper Merger.

Represents the following preliminary adjustments related to applying the acquisition method of accounting given the Proper Merger is being accounted for as a business combination under Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”):

Represents adjustments related to (1) the estimated preliminary purchase price allocation for the Proper Merger, including the issuance of Vireo’s Subordinated Voting Shares to Proper as consideration transferred; (2) the step up to fair value for acquired historical intangible assets of $4,488,220; and (3) the recognition of acquired intangible assets and goodwill of $1,791,588 and $44,542,622, respectively. An additional $2,589,061 of goodwill was recognized associated with the Earn-out liability. Refer to adjustment E below. Refer to the table in Note 4 below for additional information related to these adjustments.

Represents the elimination of the Proper Companies’ historical equity as a result of the business combination by reclassifying the Proper Companies’ ‘Retained earnings’ balance of $25,366,398 to Additional paid-in capital.

Not used.

Represents the assumed net fair value of the contingent consideration for the potential Proper E-Commerce Earn-Out Shares, the Proper EBITDA Earn-Out Shares, and the Proper Forfeiture Shares related to the Proper Merger, as defined below. Refer to Note 4 for additional information related to the Proper Forfeiture Shares, the Proper EBITDA Earn-Out Shares and the Proper E-Commerce Earn-Out Shares.

Adjustments to Unaudited Pro Forma Condensed Combined Statement of Operations

The pro forma adjustments included in the unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2025 are as follows:

Represents estimated remaining transaction costs not already reflected in the March 31, 2025 or December 31, 2024 historical financial statements of Vireo and Proper of $3,430,685 as if incurred on January 1, 2025, the date the Proper Merger occurred for purposes of the unaudited pro forma condensed combined statement of operations.

Represents adjustment to record Proper’s additional amortization of $102,690 associated with the stepped up fair value of intangible assets and newly acquired intangible assets.

Note 4.Estimated Purchase Price Consideration

The estimated preliminary purchase price allocation for the Proper Merger and the corresponding aggregate Merger Consideration is presented in the table below as if the Proper Merger closed on March 31, 2025. Following the close of the Proper Merger on June 5, 2025, the purchase price allocation for the Proper Merger has been prepared and is preliminary and subject to revision and as additional information about the fair value of the assets acquired and liabilities assumed becomes available. In general, due to the nature of certain assets acquired and liabilities assumed, the Company has preliminarily determined that the carrying value of those assets and liabilities as of March 31, 2025 approximate their fair value. Management has not finalized the purchase price allocation. Accordingly, the unaudited pro forma condensed combined financial information includes a preliminary allocation of the purchase price based on assumptions and estimates that, while considered reasonable under the circumstances, are subject to changes, and such changes may be material. Management will continue to refine its identification and valuation of assets acquired and liabilities assumed as further information becomes available. The final allocation is expected to be completed within twelve months of the Proper Closing Date and could differ materially from the preliminary allocation used in the transaction accounting adjustments. The final allocation may include (1) changes in fair values of inventory and property and equipment; (2) changes in allocations to intangible assets, such as trade names, licenses, and customer relationships, as well as goodwill; and (3) other changes to assets and liabilities.


Components of total estimated purchase price consideration:	Fair Value
Merger consideration - Subordinate Voting Shares	$	76,188,828
Contingent consideration - Proper EBITDA Earn-Out Shares		9,914,865
Contingent consideration - Proper E-Commerce Earn-Out Shares		661,975
Contingent consideration - Proper Forfeiture Amount		(7,987,779)
Total consideration	$	78,777,889

Assets acquired:
Cash	$	18,038,568
Inventory		9,426,140
Accounts receivable		3,231,952
Notes receivable		9,365,858
Deposits		2,631,808
Prepayments and other current assets		1,016,470
Property and equipment		36,112,186
Operating lease, right-of-use asset		5,143,670
Investments		1,400,000
Deferred tax asset		105,000
Total tangible assets		86,471,652
Historical intangible assets		10,328,740
Acquired intangible assets		1,791,588
Goodwill		47,131,683
Total assets		145,723,663
Accounts payable and accrued liabilities		(18,224,913)
Long-term debt		(26,706,659)
Right-of-use liability		(5,600,597)
Convertible debt		(5,900,000)
Series B share liability		(8,615,935)
Other long-term liabilities		(1,897,670)
Total liabilities assumed		(66,945,774)
Net assets acquired	$	78,777,889

Total estimated purchase price consideration

The estimated fair values of the components included in the purchase price consideration are preliminary and may materially vary from final results. The Company is still finalizing its conclusions on the accounting treatment associated with the components of the purchase consideration, along with the valuations and necessary calculations related to these components, as described in further detail below. For purposes of preparing the unaudited pro forma condensed combined financial information, the Company has included an estimated amount for the ‘Contingent consideration - Proper EBITDA Earn-Out Shares’, the ‘Contingent consideration - Proper E-Commerce Earn-Out Shares’, and the ‘Contingent consideration - Proper Forfeiture Amount’. The final conclusions surrounding the accounting treatment, valuations, and necessary calculations for each of the components will be finalized within twelve months of the Proper Closing Date.

Merger Consideration: Estimated Merger Consideration of $78,777,889 is based on the Company’s closing share price of $0.39 on June 5, 2025 multiplied by the number of Vireo Subordinate Voting Shares issued of 196,212,265 (of which up to 50% of such shares are subject to the clawback provisions of the Proper Forfeiture Amount, as defined below, and is included as contingent consideration in the table above), in exchange for acquiring all of the issued and outstanding shares of the Proper Companies.

On the Proper Closing Date, 10% of the Subordinate Voting Shares (the “Proper Escrow Shares”) were delivered to an escrow agent (the “Proper Escrow Agent”) under an escrow agreement (the “Proper Escrow Agreement”). The Proper Escrow Shares will be held by the Proper Escrow Agent pursuant to the Proper Escrow Agreement as a recourse of the Company in support of the purchase price adjustment mechanisms stated in the Proper Merger Agreement. The Proper Escrow Shares that are not otherwise subject to any indemnification claims of the Company indemnified parties will be released to the Proper Companies stockholder following the date that is twenty-four months after the Proper Closing Date.

Contingent consideration

Proper EBITDA Earn-Out Shares: The Proper equity holders, and other subsequent recipients of Subordinate Voting Shares from Proper pursuant to the Proper Merger Agreement (collectively with Proper, the “Proper Share Recipients”) will be eligible to receive a potential earn-out amount (the “Proper EBITDA Earn-Out Amount”) subject to the satisfaction of certain EBITDA performance thresholds during the period beginning on the Proper Closing Date and ending on December 31, 2026 (the “Proper Earn-Out Period”). The Proper Earn-Out Amount will be calculated as an amount equal to (i) the product of four multiplied by the following (which may be a positive or negative number):

(a) the greater of (1) the trailing twelve month adjusted EBITDA of the Proper Companies and their subsidiaries (excluding Arches) for the twelve calendar months ending December 31, 2026 and (2) the trailing nine month adjusted EBITDA of the Proper Companies and their subsidiaries (excluding Arches) for the last nine months of calendar year 2026, with such amount annualized to reflect a full 12-month period, minus

(b) the closing EBITDA of $31,000,000, minus (ii) the aggregate amount of any indebtedness for borrowed money incurred by the Proper Companies or their subsidiaries (excluding Arches) after the Proper Closing Date, plus (iii) certain tax refund amounts held for the benefit of the Proper Share Recipients pursuant to the Proper Merger Agreement.

The Proper EBITDA Earn-Out Amount shall be paid by the Company through the issuance of newly issued Subordinate Voting Shares at a share price of the greater of $1.05 and the 20-day volume weighted average price of such Subordinate Voting Shares immediately prior to the end of the Proper Earn-Out Period.

Proper E-Commerce Earn-Out Shares: The Proper Share Recipients will be eligible to receive a potential earn-out amount (the “Proper E-Commerce Earn-Out Amount”) based on the revenue performance of Arches during the Proper Earn-Out Period. The Proper E-Commerce Earn-Out Amount will be equal to 15.28% of the greater of (i) $37,500,000 or (ii) subtracting $4,000,000 from the product of five multiplied by:

(1) 5% of the aggregate dollar amount of all delivery sales processed through the Arches platform plus (2) 2.5% of the aggregate dollar amount of certain online pick-up, curbside, or drive thru sales processed through the Arches platform plus (3) 1% of the aggregate dollar amount of certain walk-in sales processed through the Arches platform, with such amount in (ii) measured either (A) during the full twelve month 2026 calendar year or (B) the April 1, 2026 through December 31, 2026 period annualized to reflect a full twelve month period, depending on which measurement period provides the greater sum (the “Proper E-Commerce Revenue Amount”), with such Proper E-Commerce Revenue Amount reduced to take into account the value of the Proper E-Commerce Revenue Amount attributable to any options or similar grants to purchase equity interests of Arches issued and outstanding as of the Proper Closing Date.

The Proper E-Commerce Earn-Out Amount shall be paid by the Company through the issuance of newly issued Subordinate Voting Shares at a share price of the greater of $1.05 and the 20-day volume weighted average price of such Subordinate Voting Shares immediately prior to the end of the Proper Earn-Out Period.

Proper Forfeiture Amount: The Proper Share Recipients will be required to forfeit a portion of the Subordinate Voting Shares received by such Proper Share Recipients calculated and determined in connection with the final actual amount of the Merger Consideration (the “Proper Actual Closing Merger Consideration”) in the event that (i) (a) the higher of (I) the consolidated trailing twelve month adjusted EBITDA of the Proper Companies and their subsidiaries (excluding Arches) for the twelve full calendar months ending December 31, 2026, and (II) the consolidated trailing nine month adjusted EBITDA of the Proper Companies and their subsidiaries (excluding Arches) for the last nine months of calendar year 2026, such amount annualized to reflect a full 12-month period, is less than (b) the closing EBITDA of $31,000,000 (the absolute value of the amount of the deficiency (a) to the amount calculated in (b) if any, the “Proper EBITDA Deficiency”).

In the event that the foregoing occurs, the Proper Share Recipients will be required to forfeit an aggregate number of Subordinate Voting Shares to the Company equal to the Proper Forfeiture Amount (as defined below) divided by the closing share price of $0.52, with such forfeited shares capped at fifty percent (50%) of the total Subordinate Voting Shares issued as Proper Actual Closing Merger Consideration (the “Proper Forfeiture Shares”). The Proper Forfeiture Amount will be calculated as an amount equal to the sum of (i) the product of the Proper acquisition multiple multiplied by the Proper EBITDA Deficiency, plus (ii) the aggregate amount of any indebtedness for borrowed money incurred by the Proper Companies or their subsidiaries (excluding Arches) after the Proper Closing Date, minus (iii) the amount of any cash remaining in the Proper member representative expense fund, and minus (iv) certain tax refund amounts held for the benefit of the Proper Share Recipients pursuant to the Proper Merger Agreement.

The accounting treatment of the Proper Earn-Out Shares and potential forfeitures related to the Proper Forfeiture Shares are expected to be recognized at fair value upon the closing of the Proper Merger. The Company has determined this feature to be liability classified. As the Proper Earn-Out Shares and potential forfeitures related to the Proper Forfeiture Shares were determined to be classified as a liability on the balance sheet, Vireo will recognize subsequent changes in the fair value of such items as a gain or loss at each reporting period during the Proper Earn-Out Period, pursuant to the provisions of ASC Topic 815, Derivatives and Hedging.

Identifiable Net Assets Acquired

In connection with the Proper Merger, the Company will recognize $10,328,740 of identifiable intangible assets pertaining to certain cannabis licenses being acquired in the acquisition of the Proper Companies, $1,791,588 of additional acquired developed technology, and $47,131,683 of goodwill, which represents the excess purchase price over fair value of identifiable net assets acquired, pursuant to the preliminary purchase price allocation. Goodwill will not be amortized, but instead will be tested for impairment at least annually or more frequently if certain indicators are present. In the event that the value of goodwill or other intangible assets become impaired in the future, an accounting charge for impairment would be recognized during the period in which the determination was made.

The purchase price has been allocated to the net tangible and identifiable intangible assets and liabilities based on the respective estimated fair values and will be finalized upon the closing of the Proper Merger. The excess of the purchase price over the net tangible and identifiable intangible assets has been recorded as goodwill. Goodwill represents potential operational synergies, various expense synergies, and opportunities to enter new markets, and is assigned to the Company’s cultivation, production, and sale of cannabis business segment.

Note 5.Net Loss per Share

Net loss per share was calculated using the historical weighted average shares outstanding and the issuance of additional shares in connection with the Proper Merger, assuming the shares were outstanding since January 1, 2025. As the Proper Merger is being reflected as if it had occurred at the beginning of the period presented, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares issuable relating to the Proper Merger have been outstanding for the entirety of the period presented.


	For the Three Months
	Ended March 31, 2025⁽¹⁾

Numerator:
Pro forma net loss	$	(9,888,598)
Denominator:
Weighted average shares outstanding - basic and diluted⁽²⁾		563,012,442
Net loss per share:
Basic and diluted	$	(0.02)
Excluded securities⁽²⁾
Options		30,731,300
Restricted stock units		71,156,247
Warrants		18,541,586
Shares issuable to convertible debt holders		16,000,000
Proper EBITDA Earn-Out Shares⁽³⁾		3,866,797
Proper E-Commerce Earn-Out Shares⁽⁴⁾		258,170

(1) Pro forma net loss per share includes the related pro forma adjustments as referred to within the section “Unaudited Pro Forma Condensed Combined Financial Information.”

(2) The potentially dilutive outstanding securities were excluded from the computation of pro forma net loss per share, diluted, because their effect would have been anti-dilutive.

(3) Represents shares that may potentially be issued to the Proper Share Recipients under the earn-out provisions within Section 2.19 of the Proper Merger Agreement.

(4) Represents shares that may potentially be issued to the Proper Share Recipients under the e-commerce earn-out provisions within Section 2.20 of the Proper Merger Agreement.

Exhibit 99.4

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On June 6, 2025, Vireo Growth Inc. (the “Company” or “Vireo”) completed its previously announced acquisition of Deep Roots Holdings, Inc. (“Deep Roots”), where pursuant to the Agreement and Plan of Merger (“Deep Roots Merger Agreement”), Vireo acquired all of the issued and outstanding shares of Deep Roots (the “Deep Roots Merger”) in exchange for the issuance of 251,210,053 subordinate voting shares (the “Subordinate Voting Shares”) of Vireo (subject to the clawback provisions of the Deep Roots Forfeiture Amount and Deep Roots New Retail Forfeiture Amount, as defined below), representing a value of $100,169,437 (the “Merger Consideration”), including the potential Deep Roots Earn-Out Shares, as defined below. The number of Subordinate Voting Shares issued at the closing date of the Deep Roots Merger (the “Deep Roots Closing Date”) was calculated by dividing the Merger Consideration as of the date the Deep Roots Merger Agreement was entered into by a share price reference of $0.52 for Vireo’s Subordinate Voting Shares. In general, the Merger Consideration is based upon a multiple of a $31,000,000 earnings before interest, taxes, depreciation, and amortization (“EBITDA”), adjusted for certain items as described in the definition of Merger Consideration in the Deep Roots Merger Agreement, including cash, indebtedness, transaction expenses, working capital, and tax items.

At the Deep Roots Closing Date, each share of the common stock, par value $0.001 per share, of Deep Roots (the “Deep Roots Common Stock”) was converted into, in accordance with the terms of the Deep Roots Merger Agreement, the applicable portion of the Merger Consideration, subject to a post-closing purchase price adjustment mechanism, which Merger Consideration was paid via newly issued shares of the Company’s Subordinate Voting Shares, which had a fair value of $0.39 per share. The holders of Deep Roots Common Stock are also eligible to receive additional Subordinate Voting Shares through an earn-out mechanism based upon the EBITDA performance of Deep Roots and its subsidiaries during 2026 (the “Deep Roots Earn-Out Shares”).

The Deep Roots Merger was accounted for as a business combination in accordance with U.S. GAAP, with management concluding Vireo is the accounting acquirer.

The following unaudited pro forma condensed combined financial information presents the combination of the financial information of Vireo and Deep Roots adjusted to give effect to the Deep Roots Merger and related transactions. The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.”

The following unaudited pro forma condensed combined financial information is based on the historical financial statements of Vireo and Deep Roots, both of which have December 31 fiscal year ends, as adjusted to give effect to the Deep Roots Merger. The unaudited pro forma condensed combined balance sheet as of March 31, 2025 gives effect to the Deep Roots Merger as if it had occurred on March 31, 2025. The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2025 gives effect to the Deep Roots Merger as if it had occurred on January 1, 2025.

The pro forma adjustments are based on available information and assumptions that management believes are reasonable. Included in the unaudited pro forma condensed combined financial information is an estimate of the consideration exchanged for Deep Roots, which is based on a purchase price allocation, which includes known information and preliminary estimates of fair value for certain equity instruments and contingent consideration. While this is management’s best estimate at this time, the valuation of these equity instruments and contingent consideration is still in process and subject to change. All estimates and assumptions included in the unaudited pro forma condensed combined financial information could change significantly as management finalizes its assessment of the allocation and fair value of the net tangible and intangible assets acquired, most of which are dependent on the completion of valuations that will be performed by independent valuation specialists. The unaudited pro forma condensed combined financial information does not include adjustments to reflect any synergies or dis-synergies, any future operating efficiencies, associated costs savings or any possible integration costs that may occur related to the Deep Roots Merger. Actual results may be materially different from the unaudited pro forma condensed combined financial information presented herein.

The unaudited pro forma condensed combined financial information does not necessarily reflect what the combined company’s financial condition or results of operations would have been had the Deep Roots Merger occurred on the dates indicated. The unaudited pro forma condensed combined financial information also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial condition and results of operations of the combined company may differ significantly from the pro forma amounts reflected herein due to a variety of factors, including differences in accounting policies, elections, and estimates, which while accounted for to the extent known, are still in process of being determined.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF MARCH 31, 2025


					Transaction
					Accounting			Pro Forma
	Vireo		Deep Roots		Adjustments			Combined
ASSETS
Current assets
Cash	$	86,260,997	$	19,506,626	$	(4,259,333)	A	$	101,508,290
Accounts receivable, net		3,983,466		206,247		—			4,189,713
Income tax receivable		11,367,067		8,295,721		—			19,662,788
Inventory		23,343,300		13,582,368		—			36,925,668
Prepayments and other current assets		1,785,664		2,148,335		—			3,933,999
Warrants held		1,751,906		—		—			1,751,906
Assets held for sale		99,941,960		—		—			99,941,960
Total current assets		228,434,360		43,739,297		(4,259,333)			267,914,324
Property and equipment, net		32,836,175		32,480,491		—			65,316,666
Operating lease, right-of-use asset		7,660,568		15,748,110		—			23,408,678
Intangible assets, net		7,694,517		19,943,709		18,567,241	B1		46,205,467
Deposits		421,244		—		—			421,244
Goodwill		—		6,252,267		(6,252,267)	B1		18,374,007
						15,748,580	B1
						2,625,427	E
Investments		—		13,100,000		—			13,100,000
Deferred tax asset		—		17,640		—			17,640
Total assets	$	277,046,864	$	131,281,514	$	26,429,648		$	434,758,026
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	$	12,197,467	$	12,868,206	$	(933,681)	A	$	24,131,992
Long-term debt, current portion		—		1,617,257		—			1,617,257
Right-of-use liability		1,148,991		2,563,887		—			3,712,878
Uncertain tax position liability		34,959,000		14,202,308		—			49,161,308
Liabilities held for sale		89,351,157		—		—			89,351,157
Total current liabilities		137,656,615		31,251,658		(933,681)			167,974,592
Right-of-use liability, net of current portion		16,437,288		13,576,849		—			30,014,137
Long-term debt, net of current portion		62,603,583		16,972,551		—			79,576,134
Convertible debt		9,874,521		—		—			9,874,521
Other long-term liabilities		37,278		—		—			37,278
Contingent consideration liabilities		—		—		2,625,427	E		2,625,427
Total liabilities		226,609,285		61,801,058		1,691,746			290,102,089

STOCKHOLDERS' EQUITY
Subordinate voting shares ($- par value, unlimited shares authorized; 339,475,288 shares issued and outstanding at March 31, 2025)		—		—		—			—
Multiple voting shares ($- par value, unlimited shares authorized; 278,170 shares issued and outstanding at March 31, 2025)		—		—		—			—
Common stock		—		100,000		(100,000)	B2		—
Additional paid-in capital		288,381,930		16,908,335		(6,252,267)	B1		385,925,940
						34,315,821	B1
						52,572,121	B2
(Accumulated deficit) / retained earnings		(237,944,351)		52,472,121		(3,325,652)	A		(241,270,003)
						(52,472,121)	B2
Total stockholders' equity		50,437,579		69,480,456		24,737,902			144,655,937
Total liabilities and stockholders' equity	$	277,046,864	$	131,281,514	$	26,429,648		$	434,758,026

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2025


					Transaction
					Accounting			Pro Forma
	Vireo		Deep Roots		Adjustments			Combined
Revenue	$	24,540,641	$	23,681,612	$	—		$	48,222,253
Cost of sales
Product costs		11,695,329		11,822,904		—			23,518,233
Inventory valuation adjustments		433,000		—		—			433,000
Gross profit		12,412,312		11,858,708		—			24,271,020
Operating expenses:
Selling, general and administrative expenses		7,473,943		7,292,183		—			14,766,126
Stock-based compensation expenses		1,460,850		828,425		—			2,289,275
Transaction related expenses		1,244,696		63,040		3,325,652	AA		4,633,388
Depreciation		77,102		—		—			77,102
Amortization		180,032		342,353		299,496	BB		821,881
Total operating expenses		10,436,623		8,526,001		3,625,148			22,587,772

Income from operations		1,975,689		3,332,707		(3,625,148)			1,683,248

Other income (expense):
Interest income (expense), net		(7,599,517)		(483,388)		—			(8,082,905)
Loss on disposal of assets		—		(27,396)		—			(27,396)
Other income (expense), net		790,038		—		—			790,038
Other income (expense), net		(6,809,479)		(510,784)		—			(7,320,263)

(Loss) income before income taxes		(4,833,790)		2,821,923		(3,625,148)			(5,637,015)

Income tax expense		(1,675,000)		(2,687,774)		—			(4,362,774)
Net (loss) income and comprehensive (loss) income	$	(6,508,790)	$	134,149	$	(3,625,148)		$	(9,999,789)
Net loss per share - basic and diluted	$	(0.02)						$	(0.02)
Weighted average shares used in computation of net loss per share - basic and diluted		366,800,177							618,010,230

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED AND CONSOLIDATED FINANCIAL INFORMATION

Note 1.Basis of Presentation

The unaudited pro forma condensed combined financial information represents the combined companies’ (Vireo and Deep Roots) unaudited pro forma condensed combined balance sheet as of March 31, 2025 and unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2025. The unaudited pro forma condensed combined financial information is based on the historical financial statements of Vireo and Deep Roots, adjusted to give effect to the Deep Roots Merger, and should be read in conjunction with the historical financial statements from which they are derived.

The unaudited pro forma condensed combined financial information is presented in United States dollars.

The unaudited pro forma condensed combined balance sheet gives effect to the Deep Roots Merger as if it had occurred on March 31, 2025. The unaudited pro forma condensed combined statement of operations gives effect to the Deep Roots Merger as if it had occurred on January 1, 2025.

In preparing the unaudited pro forma condensed combined balance sheet and unaudited pro forma condensed combined statement of operations, the following historical information was used:

Vireo’s unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2025, as filed with the SEC on May 9, 2025; and

Deep Roots’ unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2025.

The unaudited pro forma condensed combined information has been prepared for illustrative purposes only and may not be indicative of the operating results or financial condition that would have been achieved if the Deep Roots Merger had been completed on the dates or for the period presented, nor does it purport to project the results of operations or financial position for any future period or as of any future date. The actual financial position and results of operations may differ materially from the pro forma amounts reflected herein due to a variety of factors.

The unaudited pro forma condensed combined financial information does not reflect operational and administrative cost savings that may be achieved as a result of the Deep Roots Merger.

Note 2.Accounting Policies and Reclassifications

Subsequent to the consummation of the Deep Roots Merger, management has commenced a comprehensive review of the two entities’ accounting policies. As a result of the review, management may identify differences between the accounting policies of the two entities which, when conformed, could have a material impact on the financial statements of the post-combination company. Based on its initial analysis, management did not identify any differences that would have a material impact on the unaudited pro forma condensed combined financial information. As a result, the unaudited pro forma condensed combined financial information does not assume any differences in accounting policies.

As part of the preparation of the unaudited pro forma condensed combined financial information, certain reclassifications were made to align Deep Roots’ financial statement presentation with that of Vireo.

Note 3.Adjustments to Unaudited Pro Forma Condensed Combined Financial Information

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Deep Roots Merger and related transactions and has been prepared for informational purposes only.

The pro forma basic and diluted net loss per share amount presented in the unaudited pro forma condensed combined statement of operations is based upon the pro forma number of shares of Vireo stock outstanding, assuming the Deep Roots Merger and related transactions occurred on January 1, 2025.

Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet

The pro forma adjustments included in the unaudited pro forma condensed combined balance sheet as of March 31, 2025 are as follows:

Represents Vireo’s and Deep Roots’ total estimated transactions costs of $6,541,391, which include advisory, banking, legal and due diligence fees that will be expensed as part of the Deep Roots Merger. Of the total estimated transaction costs, $2,737,800 were incurred and reflected in Vireo and Deep Roots’ December 31, 2024 historical financial statements and an additional $477,939 have been incurred and are reflected within Vireo and Deep Roots’ March 31, 2025 historical financial statements. As of March 31, 2025, $933,681 was recorded in ‘Accounts payable and accrued liabilities’ and $2,282,058 had been paid in cash through March 31, 2025. The remaining $3,325,652 of estimated transaction costs are expected to be incurred after March 31, 2025 (refer to adjustment AA for the impact of these additional estimated transaction costs). The remaining unpaid amount of $4,259,333 (consisting of the $933,681 of transaction costs accrued as of March 31, 2025 and $3,325,652 expected to be incurred after March 31, 2025) will be paid in cash at the close of the Deep Roots Merger.

Represents the following preliminary adjustments related to applying the acquisition method of accounting given the Deep Roots Merger is being accounted for as a business combination under Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”):

Represents adjustments related to: (1) the elimination of the historical Deep Roots goodwill balance of $6,252,267 given it is not an identifiable asset under ASC 805; (2) the estimated preliminary purchase price allocation for the Deep Roots Merger, including the issuance of Vireo’s Subordinate Voting Shares to legacy Deep Roots shareholders as consideration transferred; (3) the step up to fair value for acquired historical intangible assets of $18,567,241; and (4) the recognition of goodwill of $15,748,580. An additional $2,625,427 of goodwill was recognized associated with the Earn-out liability. Refer to Note E below. Refer to the table in Note 4 below for additional information related to these adjustments.

Represents the elimination of Deep Roots’’ historical equity as a result of the business combination by: (1) reclassifying Deep Roots’ ‘Retained earnings’ balance of $52,472,121 to Additional paid-in capital; and (2) reclassifying Deep Roots’ Common stock’ balance of $100,000 to Additional paid-in capital.

Not used.

Represents the net fair value of to the contingent consideration for the Earnout and Forfeiture Shares related to the Deep Roots Merger. Refer to Note 4 for additional information related to the Deep Roots Earnout and Forfeiture Shares,

Adjustments to Unaudited Pro Forma Condensed Combined Statement of Operations

The pro forma adjustments included in the unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2025 are as follows:

Represents estimated remaining transaction costs not already reflected in the March 31, 2025 or December 31, 2024 historical financial statements of Vireo and Deep Roots of $3,325,652 as if incurred on January 1, 2025, the date the Deep Roots Merger occurred for the purposes of the unaudited pro forma condensed combined statement of operations.

Represents adjustment to record Deep Roots’ additional amortization of $299,496 associated with the stepped up fair value of intangible assets.

Note 4.Estimated Purchase Price Consideration

The estimated preliminary purchase price allocation for the Deep Roots Merger and the corresponding aggregate Merger Consideration is presented in the table below as if the Deep Roots Merger closed on March 31, 2025. Following the close of the Deep Roots Merger on June 6, 2025, the purchase price allocation for the Deep Roots Merger has been prepared and is preliminary and subject to revision and as additional information about the fair value of the assets acquired and liabilities assumed becomes available. In general, due to the nature of certain assets acquired and liabilities assumed, the Company has preliminarily determined that the carrying value of those assets and liabilities as of March 31, 2025 approximate their fair value. Management has not finalized the purchase price allocation. Accordingly, the unaudited pro forma condensed combined financial information includes a preliminary allocation of the purchase price based on assumptions and estimates that, while considered reasonable under the circumstances, are subject to changes, and such changes may be material. Management will continue to refine its identification and valuation of assets acquired and liabilities assumed as further information becomes available. The final allocation is expected to be completed within twelve months of the Deep Roots Closing Date and could differ materially from the preliminary allocation used in the transaction accounting adjustments. The final allocation may include (1) changes in fair values of inventory and property and equipment; (2) changes in allocations to intangible assets, such as trade names, licenses, and customer relationships, as well as goodwill; and (3) other changes to assets and liabilities.


Components of total estimated purchase price consideration:		Fair Value
Merger consideration - Subordinate Voting Shares	$	97,544,010
Contingent consideration - Deep Roots Earn-Out Shares		12,429,910
Contingent consideration - Deep Roots Forfeiture Amount		(9,804,483)
Contingent consideration - New Retail Forfeiture Amount		—
Total consideration	$	100,169,437

Assets acquired:
Cash	$	19,506,626
Accounts receivable		206,247
Income tax receivable		8,295,721
Inventory		13,582,368
Prepayments and other current assets		2,148,335
Property and equipment		32,480,491
Operating lease, right-of-use asset		15,748,110
Investments		13,100,000
Deferred tax asset		17,640
Total tangible assets		105,085,538
Intangible assets		38,510,950
Goodwill		18,374,007
Total assets		161,970,495
Accounts payable and accrued liabilities		(12,868,206)
Long-term debt		(18,589,808)
Right-of-use liability		(16,140,736)
Uncertain tax position liability		(14,202,308)
Total liabilities assumed		(61,801,058)
Net assets acquired	$	100,169,437

Total estimated purchase price consideration

The estimated fair values of the components included in the purchase price consideration are preliminary and may materially vary from final results. The Company is still finalizing its conclusions on the accounting treatment associated with the components of the purchase consideration, along with the valuations and necessary calculations related to these components, as described in further detail below. For purposes of preparing the unaudited pro forma condensed combined financial information, the Company has included an estimated amount for the ‘Contingent consideration - Deep Roots Earn-Out Shares’, ‘Contingent consideration - Deep Roots Forfeiture Amount’, and the ‘Contingent consideration - New Retail Forfeiture Amount’ components. The final conclusions surrounding the accounting treatment, valuations, and necessary calculations for each of the components will be finalized within twelve months of the Deep Roots Closing Date.

Merger Consideration: Estimated Merger Consideration of $100,169,437 is based on the Company’s closing share price of $0.39 on June 6, 2025 multiplied by the number of Vireo Subordinate Voting Shares issued of 251,210,053 (of which up to 50% of such shares are subject to the clawback provisions of the Deep Roots Forfeiture Amount, as defined below, and is included as contingent consideration in the table above), in exchange for acquiring all of the issued and outstanding shares of Deep Roots. Included in the 251,210,053 Subordinate Voting Shares issued was a pre-closing compensatory award from Deep Roots to the holders of its incentive common stock in the amount of $6,205,000 (the “Compensatory Award”). In respect of the Compensatory Award, the Company issued a number of its Subordinate Voting Shares (the “Parent Shares”) to the former holders of Deep Roots’ incentive common stock equal to the Compensatory Award divided by $0.52 for an aggregate of 11,932,692 Parent Shares, less the number of Parent Shares withheld to satisfy applicable income, payroll, and employment taxes. The Parent Shares were issued to the former holders of Deep Roots’ incentive common stock in consideration for a corresponding decrease in the Merger Consideration under the Deep Roots Merger Agreement in an amount equal to the Compensatory Award, and no portion of the Merger Consideration was paid by the Company in respect of Deep Roots’ incentive common stock (which was cancelled as part of the Deep Roots Merger). Further, the Parent Shares issued in respect of the Compensatory Award will not be eligible to receive any portion of the earn-out payments, or be subject to the clawback provisions, that are applicable to the Deep Roots stockholders under the Deep Roots Merger Agreement.

On the Deep Roots Closing Date, 10% of the Subordinate Voting Shares (the “Deep Roots Escrow Shares”) were delivered to an escrow agent (the “Deep Roots Escrow Agent”) under an escrow agreement (the “Deep Roots Escrow Agreement”). The Deep Roots Escrow Shares will be held by the Deep Roots Escrow Agent pursuant to the Deep Roots Escrow Agreement as a recourse of the Company in support of the purchase price adjustment mechanisms stated in the Deep Roots Merger Agreement. The Deep Roots Escrow Shares that are not otherwise subject to any indemnification claims of the Company indemnified parties will be released to the Deep Roots stockholders following the date that is twenty-four months after the Deep Roots Closing Date.

Contingent consideration:

Deep Roots Earn-Out Shares: Pursuant to the Deep Roots Merger Agreement, the Deep Roots stockholders will be eligible to receive a potential earn-out amount (the “Deep Roots Earn-Out Amount”) subject to the satisfaction of certain EBITDA performance thresholds during the period beginning on the Deep Roots Closing Date and ending on December 31, 2026 (the “Deep Roots Earn-Out Period”). The Deep Roots Earn-Out Amount will be calculated as an amount equal to (i) the product of four multiplied by the following (which may be a positive or negative number):

(a) the greater of (1) the trailing twelve month adjusted EBITDA of Deep Roots and its subsidiaries for the twelve calendar months ending December 31, 2026 and (2) the trailing nine month adjusted EBITDA of Deep Roots and its subsidiaries for the last nine months of calendar year 2026, with such amount annualized to reflect a full 12-month period, in each case excluding gains or losses on certain existing investments of Deep Roots and its subsidiaries, minus

(b) the sum of (1) the closing EBITDA of $30,000,000 plus (2) an amount of $1,000,000 in respect of EBTIDA generated by a new retail store if such new retail store is operational as of April 1, 2025, and if such new retail store is not operational by April 1, 2025, $0, in each case as calculated and finally determined in connection with the final actual amount of the Merger Consideration (the “Deep Roots Actual Closing Merger Consideration”), minus (3) if applicable and to the extent not included as an adjustment to the Deep Roots Actual Closing Merger Consideration, $1,000,000 imputed as EBITDA generated by a specified new retail store if such new retail store is not operational by April 1, 2025, plus and minus (as applicable) (ii) (a) plus, seventy-five percent (75%) of the aggregate amount, if any, of any gains on certain existing investments of Deep Roots and its subsidiaries during the Deep Roots Earn-Out Period, and (b) minus, seventy-five percent (75%) of the aggregate amount, if any, of any losses on certain existing investments of Deep Roots and its subsidiaries during the Deep Roots Earn-Out Period, minus (iii) the aggregate amount of any indebtedness for borrowed money incurred by Deep Roots or its subsidiaries after the Deep Roots Closing Date, plus (iv) the amount of any cash remaining in a stockholder representative expense fund (the “Deep Roots Stockholder Representative Expense Fund”), plus (v) certain tax refund amounts held for the benefit of the Deep Roots stockholders pursuant to the Deep Roots Merger Agreement.

The Deep Roots Earn-Out Amount shall be paid by the Company through the issuance of newly issued Subordinate Voting Shares at a share price of the greater of $1.05 and the 20-day volume weighted average price of such Subordinate Voting Shares immediately prior to the end of the Deep Roots Earn-Out Period.

Deep Roots Forfeiture Amount: The stockholders of Deep Roots will be required to forfeit a portion of the Subordinate Voting Shares received by such stockholders as Deep Roots Actual Closing Merger Consideration in the event that (i) (a) the higher of (I) the consolidated trailing twelve month adjusted EBITDA of Deep Roots and its subsidiaries for the twelve full calendar months ending December 31, 2026, and (II) the consolidated trailing nine month adjusted EBITDA of Deep Roots and its subsidiaries for the last nine months of calendar year 2026, such amount annualized to reflect a full 12-month period, is less than (b) ninety-six and one-half percent (96.5%) of the sum of (I) the closing EBITDA of $30,000,000 plus (II) an amount of $1,000,000 in respect of EBTIDA generated by a new retail store if such new retail store is operational as of April 1, 2025, and if such new retail store is not operational by April 1, 2025, $0, in each case as calculated and finally determined in connection with the Deep Roots Actual Closing Merger Consideration, minus, (III) if applicable and to the extent not included as an adjustment to the Deep Roots Actual Closing Merger Consideration, $1,000,000 imputed as EBITDA generated by a specified new retail store if such new retail store is not operational by April 1, 2025 or already deducted pursuant to subsection (II) above (the absolute value of the amount of the deficiency (a) to the amount calculated in (b) if any, the “Deep Roots EBITDA Deficiency”); and (ii) (a) consolidated market share in Nevada of Deep Roots and its subsidiaries for the year ending December 31, 2026 is less than consolidated market share in Nevada of Deep Roots and its subsidiaries for the year ended December 31, 2024, or (b) the consolidated EBITDA margin of Deep Roots and its subsidiaries for the year ending December 31, 2026, is less than the consolidated EBITDA margin of Deep Roots and its subsidiaries for the year ended December 31, 2024; and (iii) the 20-day volume weighted average price of such Subordinate Voting Shares immediately prior to the end of the Deep Roots Earn-Out Period is greater than $1.05 per Subordinate Voting Share.

In the event that the foregoing occurs, the Deep Roots stockholders will be required to forfeit an aggregate number of Subordinate Voting Shares to the Company equal to the Deep Roots Forfeiture Amount (as defined below) divided by the closing share price of $0.52, with such forfeited shares capped at fifty percent (50%) of the total Subordinate Voting Shares issued as Deep Roots Actual Closing Merger Consideration (the “Deep Roots Forfeiture Shares”). The Deep Roots Forfeiture Amount will be calculated as an amount equal to the sum of (i) the product of the Deep Roots acquisition multiple multiplied by the Deep Roots EBITDA Deficiency, minus (ii) the product of (a) 0.75 multiplied by (b) any gains on certain existing investments of Deep Roots and its subsidiaries, plus (iii) the product of (a) 0.75 multiplied by (b) any losses on certain existing investments of Deep Roots and its subsidiaries, plus (iv) the aggregate amount of any indebtedness for borrowed money incurred by Deep Roots or its subsidiaries after the Deep Roots Closing Date, minus (v) the amount of any cash remaining in the Deep Roots Stockholder Representative Expense Fund, and minus (vi) certain tax refund amounts held for the benefit of the Deep Roots stockholders pursuant to the Deep Roots Merger Agreement.

Deep Roots New Retail Forfeiture Amount: The following contingency has been resolved as all retail stores were operational by April 1, 2025. In the event that a specified new retail store had not been operational by April 1, 2025, and only to the extent that such amount was not previously taken into account in the determination of the Deep Roots Closing Merger Consideration described above, the Company would have been entitled to a payment equal to $1,000,000 imputed as EBITDA generated by a specified new retail store if such new retail store was not operational by April 1, 2025 (the “Deep Roots New Retail Forfeiture Amount”). If such $1,000,000 payment became owed to the Company, the stockholder representative for Deep Roots could have elected to direct (i) the release to the Company of an amount from the Deep Roots Stockholder Representative Expense Fund, (ii) the Deep Roots stockholders to pay to the Company $1,000,000 in cash, or (iii) the Escrow Agent to release to the Company an aggregate number of Deep Roots Escrow Shares (rounded up to the nearest whole number) equal to $1,000,000 divided by the closing share price of $0.52, or any combination of the foregoing.

The accounting treatment of the Deep Roots Earn-Out Shares and potential forfeitures related to the Deep Roots Forfeiture Shares are expected to be recognized at fair value upon the closing of the Deep Roots Merger. The Company has determined that the earnout features are liability classified. As the Deep Root Earn-Out Shares and potential forfeitures related to the Deep Roots Forfeiture Shares were determined to be classified as a liability on the balance sheet, Vireo will recognize subsequent changes in the fair value of such items as a gain or loss at each reporting period during the Deep Roots Earn-Out Period, pursuant to the provisions of ASC Topic 815, Derivatives and Hedging.

Identifiable Net Assets Acquired

In connection with the Deep Roots Merger, the Company will recognize $38,510,950 of identifiable intangible assets pertaining to certain cannabis licenses being acquired in the acquisition of Deep Roots and $18,374,007 of goodwill. Goodwill represents the excess purchase price over fair value of identifiable net assets acquired, pursuant to the preliminary purchase price allocation. Goodwill will be tested for impairment at least annually or more frequently if certain indicators are present. In the event that the value of goodwill or other intangible assets become impaired in the future, an accounting charge for impairment would be recognized during the period in which the determination was made.

The purchase price has been allocated to the tangible and identifiable intangible assets and liabilities based on the respective estimated fair values and will be finalized upon the closing of the Deep Roots Merger. The excess of the purchase price over the net tangible and identifiable intangible assets has been recorded as goodwill. Goodwill represents potential revenue synergies related to new product development, various expense synergies and opportunities to enter new markets, and is assigned to the Company’s cultivation, production, and sale of cannabis business segment.

Note 5.Net Loss per Share

Net loss per share was calculated using the historical weighted average shares outstanding and the issuance of additional shares in connection with the Deep Roots Merger, assuming the shares were outstanding since January 1, 2025. As the Deep Roots Merger is being reflected as if it had occurred at the beginning of the period presented, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares issuable relating to the Deep Roots Merger have been outstanding for the entirety of the period presented.


	For the Three Months
	Ended March 31, 2025⁽¹⁾

Numerator:
Pro forma net loss	$	(9,999,789)
Denominator:
Weighted average shares outstanding - basic and diluted		618,010,230
Net loss per share:
Basic and diluted	$	(0.02)
Excluded securities⁽²⁾:
Options		30,731,300
Restricted stock units		71,156,247
Warrants		18,541,586
Shares issuable to convertible debt holders		16,000,000
Deep Roots Earn-Out Shares⁽³⁾		4,847,665

(1) Pro forma net loss per share includes the related pro forma adjustments as referred to within the section “Unaudited Pro Forma Condensed Combined Financial Information.”

(2) The potentially dilutive outstanding securities were excluded from the computation of pro forma net loss per share, diluted, because their effect would have been anti-dilutive.

(3) Represents shares that may potentially be issued to Deep Roots shareholders under the earn-out provisions within Section 2.19 of the Deep Roots Merger Agreement.


000-56225		82-3835655
(Commission File Number)		(IRS Employer Identification No.)

207 South 9th Street Minneapolis, Minnesota		55402
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

Exhibit No.		Description
99.1		Unaudited financial statements of Proper Holdings, LLC as of and for the three months ended March 31, 2025 and 2024.
99.2		Unaudited financial statements of Deep Roots Holdings, Inc. as of and for the three months ended March 31, 2025 and 2024.
99.3		Unaudited pro forma condensed combined financial statements of Vireo Growth Inc. and Proper Holdings, LLC as of March 31, 2025 and for the three months ended March 31, 2025.
99.4		Unaudited pro forma condensed combined financial statements of Vireo Growth Inc. and Deep Roots Holdings, Inc. as of March 31, 2025 and for the three months ended March 31, 2025.
104		Cover Page Interactive Data File (embedded within Inline XBRL document)


VIREO GROWTH INC. (Registrant)

By:	/s/ Tyson Macdonald
	Tyson Macdonald
	Chief Financial Officer

Note Receivable - Nirvana Investments, LLC Members, dated July 6, 2023 and amended on October 24, 2024. The Note shall be due and payable with interest at annual interest rate of 5% on the earlier of the first anniversary date hereof or deemed a credit against the Holder’s Purchaser Price to Borrower at the Closing of the Membership Interest Purchase Agreement (“Maturity Date”), provided, Holder shall have the right to extend the Maturity Date for one additional 12-month period if the Closing of the Membership Interest Purchase Agreement has not Closed by the one year anniversary of this Note. If the Membership Interest Purchase Agreement is terminated for any reason prior to the Closing, then the Loan and any other amounts outstanding under this Note shall be due and payable on the date that is thirty (30) days from the termination of the Membership Interest Purchase Agreement. Any accrued interest will not be due on the execution of the Membership Interest Purchase Agreement. See: Note 18 - “Commitments”.

Note Receivable - Occidental Group, Inc. dated February 14, 2024. The Note shall be due and payable on the earlier of the first anniversary date hereof or deemed a credit against the Holder’s Purchase Price to Borrower at the Closing of the Asset Purchase Agreement (“Maturity Date”). Additionally, Holder shall extend the Maturity Date for one additional 12-month period if the Closing of the Asset Purchase Agreement has not occurred by the one-year anniversary of this Note. Notwithstanding the foregoing, if the Asset Purchase Agreement is terminated prior to the Closing by the Holder pursuant to the Asset Purchase Agreement, then the Loan and any other amounts outstanding under this Note shall be due and payable on the date that is sixty (60) days from the termination of the Asset Purchase Agreement. Any accrued interest will not be due on the execution of the Asset Purchase Agreement. See: Note 18 - “Commitments ”.

9,365,858

9,365,858