Vireo Growth Inc 10-Q for FY2024 Q3

Vireo Growth Inc. (VREOF)

10-Q 2024-11-13 For: 2024-09-30

Added on April 10, 2026

About this 10-Q

Vireo Growth Inc filed this 10-Q on November 13, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).

Headline figures

Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $25.17M; up 2.0% from $24.68M a year earlier
Net loss: $4.93M; compared with a net loss of $5.23M a year earlier
Diluted EPS: -$0.02; compared with -$0.04 a year earlier

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British Columbia, Canada		82-3835655
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	None	None

Large accelerated filer	◻	Accelerated filer	◻
Non-accelerated filer	þ	Smaller reporting company	þ
		Emerging growth company	þ


PART I - FINANCIAL INFORMATION	4
ITEM 1 – FINANCIAL STATEMENTS	4
Consolidated Balance Sheets – September 30, 2024 (unaudited) and December 31, 2023	4
Consolidated Statements of Net Loss and Comprehensive Loss – Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)	5
Consolidated Statements of Changes in Stockholders’ Equity (Deficiency) - Three Months Ended September 30, 2024 and 2023 (unaudited)	6
Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2024 and 2023 (unaudited)	7
Notes to Unaudited Consolidated Financial Statements	8
ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	26
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	35
ITEM 4 - CONTROLS AND PROCEDURES	35
PART II – OTHER INFORMATION	35
ITEM 1 - LEGAL PROCEEDINGS	35
ITEM 1A – RISK FACTORS	36
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	36
ITEM 5 - OTHER INFORMATION	36
ITEM 6 - EXHIBITS	36
SIGNATURES	37


	September 30,		December 31,
	2024		2023
Assets
Current assets:
Cash	$	7,279,864	$	15,964,665
Accounts receivable, net of credit losses of $259,011 and $254,961, respectively		2,848,625		3,086,640
Income tax receivable		11,916,964		12,278,119
Inventory		19,845,927		19,285,870
Prepayments and other current assets		1,832,991		1,336,234
Notes receivable, current		—		3,750,000
Warrants held		5,221,971		1,937,352
Assets held for sale		95,017,740		91,213,271
Total current assets		143,964,082		148,852,151
Property and equipment, net		30,509,180		23,291,183
Operating lease, right-of-use asset		10,757,904		2,018,163
Intangible assets, net		8,104,140		8,718,577
Deposits		533,745		383,645
Total assets	$	193,869,051	$	183,263,719
Liabilities
Current liabilities
Accounts payable and accrued liabilities	$	9,168,748	$	7,674,389
Long-term debt, current portion		1,144,000		60,220,535
Right of use liability		1,254,672		890,013
Uncertain tax liability		28,766,000		22,356,000
Liabilities held for sale		88,437,021		88,326,323
Total current liabilities		128,770,441		179,467,260
Right-of-use liability		19,051,693		10,543,934
Other long-term liabilities		216,938		155,917
Convertible debt, net		—		9,140,257
Long-term debt, net		56,833,206		—
Total liabilities		204,872,278		199,307,368

Commitments and contingencies (refer to Note 17)

Stockholders’ deficiency
Subordinate Voting Shares ($- par value, unlimited shares authorized; 200,464,196 shares issued and outstanding at September 30, 2024 and 110,007,030 at December 31, 2023)		—		—
Multiple Voting Shares ($- par value, unlimited shares authorized; 298,314 shares issued and outstanding at September 30, 2024 and 331,193 at December 31, 2023)		—		—
Super Voting Shares ($- par value; unlimited shares authorized; 0 shares issued and outstanding at September 30, 2024 and December 31, 2023)		—		—
Additional paid in capital		204,731,053		187,384,403
Accumulated deficit		(215,734,280)		(203,428,052)
Total stockholders' deficiency	$	(11,003,227)	$	(16,043,649)
Total liabilities and stockholders' deficiency	$	193,869,051	$	183,263,719


☑		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	(612) 999-1606
	(Registrant’s telephone number, including area code)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Revenue	$	25,165,343	$	24,675,145	$	74,360,905	$	63,960,125
Cost of sales
Product costs		12,448,373		10,493,561		36,111,865		30,347,357
Inventory valuation adjustments		393,000		984,196		130,000		1,563,872
Gross profit		12,323,970		13,197,388		38,119,040		32,048,896
Operating expenses:
Selling, general and administrative		6,911,278		6,749,314		21,527,122		21,965,576
Stock-based compensation expenses		1,304,919		296,617		1,424,140		4,009,415
Depreciation		76,292		99,929		222,763		377,121
Amortization		180,034		180,034		540,101		498,828
Total operating expenses		8,472,523		7,325,894		23,714,126		26,850,940

Income from operations		3,851,447		5,871,494		14,404,914		5,197,956

Other income (expense):
Gain (loss) on disposal of assets		—		(50,686)		(218,327)		(2,798,567)
Interest expenses, net		(7,363,655)		(7,915,658)		(23,604,746)		(22,795,242)
Other income (expenses)		970,850		345,824		3,881,931		6,166,472
Other income (expenses), net		(6,392,805)		(7,620,520)		(19,941,142)		(19,427,337)

Loss before income taxes		(2,541,358)		(1,749,026)		(5,536,228)		(14,229,381)

Current income tax expenses		(2,385,000)		(3,980,000)		(6,770,000)		(7,357,871)
Deferred income tax recoveries		—		500,000		—		623,000
Net loss and comprehensive loss		(4,926,358)		(5,229,026)		(12,306,228)		(20,964,252)
Net loss per share - basic and diluted	$	(0.02)	$	(0.04)	$	(0.08)	$	(0.16)
Weighted average shares used in computation of net loss per share - basic and diluted		201,377,275		141,332,852		162,836,874		132,576,879


	Common Stock
	SVS			MVS			Super Voting Shares							Total
										Additional Paid-		Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		Shares	Amount		in Capital		Deficit		Equity (deficiency)
Balance, January 1, 2023	86,721,030	$	—	348,642	$	—	65,411	$	—	$	181,321,847	$	(177,880,963)	$	3,440,884
Conversion of MVS shares	70,200		—	(702)		—	—		—		—		—		—
Conversion of Super Voting Shares	6,541,100		—	—		—	(65,411)		—		—		—		—
Stock-based compensation	—		—	—		—	—		—		2,765,011		—		2,765,011
Warrants issued in financing activities	—		—	—		—	—		—		497,055		—		497,055
Shares issued in financing activities	15,000,000		—	—		—	—		—		1,407,903		—		1,407,903
Net Loss	—		—	—		—	—		—		—		(20,964,252)		(20,964,252)
Balance at September 30, 2023	108,332,330	$	—	347,940	$	—	—	$	—	$	185,991,816	$	(198,845,215)	$	(12,853,399)

Balance, January 1, 2024	110,007,030		—	331,193		—	—		—		187,384,403		(203,428,052)		(16,043,649)
Conversion of MVS shares	3,287,900		—	(32,879)		—	—		—		—		—		—
Stock-based compensation	—		—	—		—	—		—		1,424,140		—		1,424,140
Options exercised	50,000		—	—		—	—		—		16,500		—		16,500
Warrants exercised	303,127		—	—		—	—		—		43,953		—		43,953
Shares issued	13,800,078		—	—		—	—		—		6,087,500		—		6,087,500
Conversion of convertible debt	73,016,061		—	—		—	—		—		9,774,557		—		9,774,557
Net Loss	—		—	—		—	—		—		—		(12,306,228)		(12,306,228)
Balance at September 30, 2024	200,464,196	$	—	298,314	$	—	—	$	—	$	204,731,053	$	(215,734,280)	$	(11,003,227)

	Common Stock
	SVS			MVS			Super Voting Shares							Total
										Additional Paid-		Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		Shares	Amount		in Capital		Deficit		Equity (deficiency)
Balance, July 1, 2023	86,721,030	$	—	348,642	$	—	65,411	$	—	$	185,691,379	$	(193,616,189)	$	(7,924,810)
Conversion of MVS shares	70,200		—	(702)		—	—		—		—		—		—
Conversion of Super Voting Shares	6,541,100		—	—		—	(65,411)		—		—		—		—
Stock-based compensation	—		—	—		—	—		—		300,437		—		300,437
Shares issued in financing activities	15,000,000		—	—		—	—		—		—		—		—
Net Loss	—		—	—		—	—		—		—		(5,229,026)		(5,229,026)
Balance at September 30, 2023	108,332,330	$	—	347,940	$	—	—	$	—	$	185,991,816	$	(198,845,215)	$	(12,853,399)

Balance, July 1, 2024	114,605,008	$	—	300,714	$	—	—	$	—	$	188,249,124	$	(210,807,922)	$	(22,558,798)
Conversion of MVS shares	240,000		—	(2,400)		—	—		—		—		—		—
Stock-based compensation	—		—	—		—	—		—		1,304,919		—		1,304,919
Warrants exercised	103,127		—	—		—	—		—		14,953		—		14,953
Shares issued	12,500,000		—	—		—	—		—		5,387,500		—		5,387,500
Conversion of convertible debt	73,016,061		—	—		—	—		—		9,774,557		—		9,774,557
Net Loss	—		—	—		—	—		—		—		(4,926,358)		(4,926,358)
Balance at September 30, 2024	200,464,196	$	—	298,314	$	—	—	$	—	$	204,731,053	$	(215,734,280)	$	(11,003,227)


	For the Nine Months Ended September 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(12,306,228)	$	(20,964,252)
Adjustments to reconcile net loss to net cash used in operating activities:
Inventory valuation adjustments		130,000		1,563,872
Depreciation		222,763		377,121
Depreciation capitalized into inventory		1,678,434		1,846,418
Non-cash operating lease expense		323,309		423,821
Amortization of intangible assets		540,101		498,828
Amortization of intangible assets capitalized into inventory		74,336		24,779
Stock-based payments		1,424,140		4,009,415
Warrants receivable		—		(1,566,445)
Warrants held		(3,284,619)		—
Interest Expense		3,806,093		5,111,930
Bad debt expense		230,818		—
Deferred income tax		—		(623,000)
Accretion		168,464		800,392
Loss on disposal of Red Barn Growers		—		2,909,757
Loss (gain) on disposal of assets		120,856		(111,190)
Change in operating assets and liabilities:
Accounts Receivable		173,047		(902,709)
Prepaid expenses		(496,757)		684,987
Inventory		(482,192)		(1,932,554)
Income taxes		361,154		6,379,831
Uncertain tax position liabilities		6,410,000		—
Accounts payable and accrued liabilities		1,213,360		1,079,519
Changes in operating lease liabilities		(404,556)		—
Change in assets and liabilities held for sale		(3,693,771)		(116,882)
Net cash provided by (used in) operating activities		(3,791,248)		(506,362)

CASH FLOWS FROM INVESTING ACTIVITIES:
PP&E Additions		(8,974,901)		(2,630,724)
Proceeds from note receivable (Note 6)		3,600,000
Intangible license additions		—		(1,090,919)
Proceeds from sale of Red Barn Growers net of cash		—		439,186
Proceeds from sale of property, plant, and equipment		—		242,088
Deposits		(150,100)		(263,545)
Net cash provided by (used in) investing activities		(5,525,001)		(3,303,914)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt, net of issuance costs		1,131,400		—
Proceeds from convertible debt, net of issuance costs		—		5,348,140
Proceeds from issuance of shares		700,000		—
Proceeds from warrant exercises		43,953		—
Proceeds from option exercises		16,500		—
Debt principal payments		(1,098,000)		(1,976,362)
Lease principal payments		(162,405)		(1,414,698)
Net cash provided by (used in) financing activities		631,448		1,957,080

Net change in cash		(8,684,801)		(1,853,196)

Cash, beginning of period		15,964,665		15,149,333

Cash, end of period	$	7,279,864	$	13,296,137


Name of entity		Place of incorporation
EHF Cultivation Management, LLC		Arizona, USA
Elephant Head Farm, LLC		Arizona, USA
HiColor, LLC		Minnesota, USA
MaryMed, LLC		Maryland, USA
Mayflower Botanicals, Inc.		Massachusetts, USA
Minnesota Medical Solutions, LLC		Minnesota, USA
MJ Distributing C201, LLC		Nevada, USA
MJ Distributing P132, LLC		Nevada, USA
Resurgent Biosciences, Inc.		Delaware, USA
Retail Management Associates, LLC		Arizona, USA
Verdant Grove, Inc.		Massachusetts, USA
Vireo Health de Puerto Rico, Inc.		Puerto Rico
Vireo Health of Nevada 1, LLC		Nevada, USA
Vireo Health of New Mexico, LLC		Delaware, USA
Vireo Health of New York, LLC		New York, USA
Vireo Health of Puerto Rico, LLC		Delaware, USA
Vireo Health, Inc.		Delaware, USA
Vireo of Charm City, LLC		Maryland, USA
XAAS Agro, Inc.		Puerto Rico


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Retail	$	19,740,787	$	20,147,074	$	60,159,246	$	53,761,973
Wholesale		5,424,556		4,528,071		14,201,659		10,198,152
Total	$	25,165,343	$	24,675,145	$	74,360,905	$	63,960,125




Assets held for sale	September 30,		December 31,
	2024		2023
Property and equipment	$	88,793,895	$	86,864,965
Intangible assets		972,000		662,500
Operating lease, right-of-use asset		3,381,612		3,381,612
Deposits		1,870,233		304,194
Total assets held for sale	$	95,017,740	$	91,213,271

Liabilities held for sale
Right of Use Liability	$	88,437,021	$	88,326,323
Total liabilities held for sale	$	88,437,021	$	88,326,323


	September 30		December 31,
	2024		2023
Work-in-progress	$	13,118,519	$	13,058,348
Finished goods		5,805,958		5,278,331
Other		921,450		949,191
Total	$	19,845,927	$	19,285,870


	September 30,
	2024	2023
Stock options	31,440,328	29,633,217
Warrants	19,134,522	9,437,649
RSUs	4,107,749	2,714,491
Convertible debt	—	42,074,926
Total	54,682,599	83,860,283


	September 30		December 31,
	2024		2023
Land	$	863,105	$	863,105
Buildings and leasehold improvements		16,259,882		15,124,915
Furniture and equipment		7,240,644		7,807,250
Software		39,388		242,204
Vehicles		447,478		284,000
Construction-in-progress		7,770,507		128,220
Right of use asset under finance lease		7,572,566		7,938,138
		40,193,570		32,387,832
Less: accumulated depreciation		(9,684,390)		(9,096,649)
Total	$	30,509,180	$	23,291,183


	Operating Leases		Finance Leases
	September 30, 2024		September 30, 2024		Total
2024	$	560,981	$	3,416,902	$	3,977,883
2025		3,047,603		13,773,155		16,820,758
2026		2,727,346		14,183,661		16,911,007
2027		2,474,144		14,606,527		17,080,671
2028		2,254,049		15,042,128		17,296,177
Thereafter		7,824,515		218,572,918		226,397,433
Total minimum lease payments	$	18,888,638	$	279,595,291	$	298,483,929
Less discount to net present value		(4,111,939)		(185,628,604)		(189,740,543)
Less liabilities held for sale		(2,837,202)		(85,599,819)		(88,437,021)
Present value of lease liability	$	11,939,497	$	8,366,868	$	20,306,365


	September 30,
	2024		2023
Weighted-average remaining lease term (years) – operating leases	7.85		4.27
Weighted-average remaining lease term (years) – finance leases	16.34		17.14
Weighted-average discount rate – operating leases	8.16	%	15.00	%
Weighted-average discount rate – finance leases	16.20	%	15.31	%


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Work-in-progress	$	433,283	$	1,024,225	$	231,583	$	1,580,264
Finished goods		(40,283)		(40,029)		(101,583)		(16,392)
Total	$	393,000	$	984,196	$	130,000	$	1,563,872


	Licenses & Trademarks
Balance, December 31, 2022	$	8,776,946
Divestitures		(409,239)
Additions		1,090,919
Amortization		(728,419)
Write off		(11,630)
Balance, December 31, 2023	$	8,718,577
Amortization		(614,437)
Balance, September 30, 2024	$	8,104,140


	Par Value	Authorized	Voting Rights
Subordinate Voting Share (“SVS”)	—	Unlimited	1 vote for each share
Multiple Voting Share (“MVS”)	—	Unlimited	100 votes for each share
Super Voting Share	—	Unlimited	1,000 votes for each share


		Weighted Average		Weighted Avg.
	Number of Options	Exercise Price		Remaining Life
Balance, December 31, 2022	23,547,558	$	0.66	7.30
Forfeitures	(4,137,079)		0.82	—
Granted	10,558,845		0.25	6.42
Balance, December 31, 2023	29,969,324	$	0.50	6.18
Forfeitures	(952,835)		0.77	—
Exercised	(50,000)		0.33	—
Granted	2,473,839		0.49	—
Options Outstanding at September 30, 2024	31,440,328	$	0.49	5.72

Options Exercisable at September 30, 2024	26,718,615	$	0.42	5.29


	Number of	Weighted Average		Weighted Average
SVS Warrants	Warrants	Exercise Price		Remaining Life
Warrants outstanding at December 31, 2022	150,000	$	1.49	2.00
Granted	16,250,000		0.20	5.00
Warrants outstanding at December 31, 2023	16,400,000	$	0.21	4.57
Granted	—		—	—
Exercised	(303,127)		0.145	—
Warrants outstanding at September 30, 2024	16,096,873	$	0.21	3.82

Warrants exercisable at September 30, 2024	16,096,873	$	0.21	3.82


		Weighted Avg.
	Number of Shares	Fair Value
Balance, December 31, 2022	3,221,677	$	0.81
Forfeitures	(678,666)		0.54
Balance, December 31, 2023	2,543,011		0.88
Granted	1,728,458		0.50
Forfeitures	(163,720)		0.54
Balance, September 30, 2024	4,107,749		0.73

Vested at September 30, 2024	2,253,298	$	0.71


Exhibit No.		Description of Exhibit

3.1		Notice of Alteration, Notice of Articles and Certificate of Name Change dated June 25, 2024 (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed July 1, 2024)

3.2		Articles of Vireo Growth Inc. dated June 25, 2024 (incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed July 1, 2024)

10.78		Waiver and Ninth Amendment to Credit Agreement, dated as of July 31, 2024, by and among Vireo Growth Inc. and certain of its subsidiaries, the persons from time-to-time party thereto as guarnators, the lenders party thereto, and Chicago Atlantic Admin, LLC, as administrative agend and as collateral agent.

31.1		Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer

31.2		Rule 13a-14(a)/15d-14(a) certification of Interim Chief Financial Officer

32.1		Section 1350 certification, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101		Includes the following financial and related information from Vireo Growth’s Quarterly Report on Form 10-Q as of and for the quarter ended September 30, 2024, formatted in Inline Extensible Business Reporting Language (iXBRL): (1) the Consolidated Balance Sheets, (2) the Consolidated Statements of Income, (3) the Consolidated Statements of Comprehensive Income, (4) the Consolidated Statements of Changes in Stockholders’ Equity, (5) the Consolidated Statements of Cash Flows, and (6) Notes to Consolidated Financial Statements.

104		The cover page from this Quarterly Report on Form 10-Q, formatted in Inline XBRL.

	VIREO GROWTH INC. (Registrant)

Date: November 13, 2024	By:	/s/ Amber Shimpa
		Name:	Amber Shimpa
		Title:	Chief Executive Officer (principal executive officer)

Date: November 13, 2024	By:	/s/ Joseph Duxbury
		Name:	Joseph Duxbury
		Title:	Interim Chief Financial Officer (principal accounting and financial officer)

Applicable Fiscal Period Ending	Amount
April 30, 2023, through June 30, 2023	$1,000,000
July 31, 2023, through September 30, 2023	$1,500,000
October 31, 2023, through December 31, 2023	$2,000,000
January 31, 2024	$2,500,000
February 29, 2024, through May 31, 2024	$3,000,000
June 30, 2024, and the last day of each calendar month thereafter	$5,000,000

Applicable Fiscal Period Ending	Ratio
June 30, 2023, through December 31, 2023	0.50 to 1.00
January 31, 2024, through May 31, 2024	1.00 to 1.00
June 30, 2024, and the last day of each calendar month thereafter	1.50 to 1.00”