Vireo Growth Inc 10-Q for FY2021 Q3

Vireo Growth Inc. (VREOF)

10-Q 2021-11-10 For: 2021-09-30

Added on April 10, 2026

About this 10-Q

Vireo Growth Inc filed this 10-Q on November 10, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).

Headline figures

Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $13.37M; up 7.2% from $12.48M a year earlier
Net loss: $6.24M; compared with net income of $2.95M a year earlier
Diluted EPS: -$0.05; compared with $0.03 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


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	☑
		Emerging growth company	☑


	September 30,		December 31,
	2021		2020
Assets
Current assets:
Cash	$	11,779,295	$	25,513,180
Restricted cash		—		1,592,500
Accounts receivable, net of allowance for doubtful accounts of $189,467 and $132,490, respectively		975,205		696,994
Inventory		20,141,951		12,644,895
Prepayments and other current assets		3,145,490		1,552,278
Notes receivable		19,954		293,700
Deferred acquisition costs		—		28,136
Assets Held for Sale		8,692,419		4,596,445
Deferred financing costs		—		120,266
Total current assets		44,754,314		47,038,394
Property and equipment, net		99,954,310		30,566,259
Operating lease, right-of-use asset		8,417,965		8,163,844
Notes receivable, long-term		3,750,000		3,750,000
Intangible assets, net		5,421,895		8,409,419
Goodwill		183,836		3,132,491
Deposits		1,344,283		1,412,124
Deferred tax assets		337,000		157,000
Total assets	$	164,163,603	$	102,629,531
Liabilities
Current liabilities
Accounts Payable and Accrued liabilities		9,525,659		13,477,303
Right of use liability		1,403,465		857,294
Convertible notes, net of issuance costs		—		900,000
Long-Term debt, current portion		1,110,000		1,110,000
Liabilities held for sale		116,803		3,595,301
Warrant Liability		3,078,694		—
Total current liabilities		15,234,621		19,939,898
Right-of-use liability		78,606,734		20,343,063
Long-Term debt		19,411,212		—
Total liabilities	$	113,252,567	$	40,282,961

Commitments and contingencies (refer to Note 20)

Stockholders’ equity
Subordinate Voting Shares ($- par value, unlimited shares authorized; 79,538,377 shares issued and outstanding)		—		—
Multiple Voting Shares ($- par value, unlimited shares authorized; 402,720 shares issued and outstanding)		—		—
Super Voting Shares ($- par value; unlimited shares authorized; 65,411 shares issued and outstanding, respectively)		—		—
Additional Paid in Capital		171,354,487		164,079,614
Accumulated deficit		(120,443,451)		(101,733,044)
Total stockholders' equity	$	50,911,036	$	62,346,570
Total liabilities and stockholders' equity	$	164,163,603	$	102,629,531


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Revenue	$	13,369,432	$	12,475,782	$	40,790,221	$	36,809,714
Cost of sales
Product costs		7,903,444		7,360,671		22,682,503		24,492,831
Inventory valuation adjustments		351,000		151,328		464,000		484,570
Gross profit		5,114,988		4,963,783		17,643,718		11,832,313
Operating expenses:
Selling, general and administrative		8,106,187		6,517,464		24,441,860		19,677,932
Stock-based compensation expenses		835,122		524,052		4,557,777		12,245,412
Depreciation		98,098		38,097		515,907		260,725
Amortization		206,442		153,356		619,327		461,737
Total operating expenses		9,245,849		7,232,969		30,134,871		32,645,806

Loss from operations		(4,130,861)		(2,269,186)		(12,491,153)		(20,813,493)

Other income (expense):
Loss on sale of property and equipment		—		—		—		(13,800)
Gain on disposal of assets held for sale		—		16,884,173		437,107		16,884,173
Loss on assets held for sale		—		(446,544)		—		(446,544)
Derivative gain (loss)		627,165		(4,066,335)		2,317,065		(5,032,537)
Interest expenses, net		(2,254,553)		(1,255,656)		(6,037,057)		(4,249,090)
Other income (expenses)		75,018		108,552		33,631		(205,061)
Other income (expenses), net		(1,552,370)		11,224,190		(3,249,254)		6,937,141

Loss before income taxes		(5,683,231)		8,955,004		(15,740,407)		(13,876,352)

Current income tax expenses		(530,000)		(3,723,000)		(3,150,000)		(4,575,000)
Deferred income tax recoveries		(30,000)		(2,280,000)		180,000		(2,225,000)
Net income (loss) and comprehensive income (loss)		(6,243,231)		2,952,004		(18,710,407)		(20,676,352)
Net income (loss) per share - basic and diluted	$	(0.05)	$	0.03	$	(0.15)	$	(0.22)
Weighted average shares used in computation of net income (loss) per share - basic		126,363,104		98,871,038		122,704,872		95,433,233
Weighted average shares used in computation of net income (loss) per share - diluted		126,363,104		112,517,113		122,704,872		95,433,233


☑		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)


	Common Stock
	SVS			MVS			Super Voting Shares							Total
										Additional Paid-		Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		Shares	Amount		in Capital		Deficit		Equity
Balance, January 1, 2020	23,684,411	$	—	549,928	$	—	65,411		—	$	127,476,624	$	(78,790,850)	$	48,685,774
Shares issued in private placement	13,651,574		—	—		—	—		—		4,058,460		—		4,058,460
Stock-based compensation	—		—	—		—	—		—		12,245,412		—		12,245,412
Net loss	—		—	—		—	—		—		—		(20,676,352)		(20,676,352)
Balance at September 30, 2020	37,335,985	$	—	549,928	$	—	65,411	$	—	$	143,780,496	$	(99,467,202)	$	44,313,294

Balance, January 1, 2021	51,062,559		—	554,128		—	65,411		—	$	164,079,614	$	(101,733,044)	$	62,346,570
Conversion of MVS shares	15,140,700		—	(151,408)		—	—		—		—		—		—
Shares issued in Nevada acquisition	1,050,000		—	—		—	—		—		1,564,500		—		1,564,500
Shares issued	1,185,293		—	—		—	—		—		2,314,016		—		2,314,016
Options exercised	3,989,344		—	—		—	—		—		1,152,596		—		1,152,596
Warrants exercised	7,110,481		—	—		—	—		—		—		—		—
Stock-based compensation	—		—	—		—	—		—		2,243,761		—		2,243,761
Net Loss	—		—	—		—	—		—		—		(18,710,407)		(18,710,407)
Balance at September 30, 2021	79,538,377	$	—	402,720	$	—	65,411	$	—	$	171,354,487	$	(120,443,451)	$	50,911,036


	Nine Months Ended September 30,
	September 30,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(18,710,407)	$	(20,676,352)
Adjustments to reconcile net loss to net cash used in operating activities:
Inventory valuation adjustments		464,000		484,570
Depreciation		515,907		260,725
Depreciation capitalized into inventory		1,678,558		1,757,281
Non-cash operating lease expense		764,266		943,905
Amortization of intangible assets		619,327		461,737
Stock-based payments		4,557,777		12,245,412
Loss on assets held for sale		—		446,544
Interest Expense		1,764,711		—
Gain/loss		—		65,930
Deferred income tax		(180,000)		710,301
Gain on disposal of business		—		(16,884,173)
Accretion		310,704		573,573
Derivative (Gain) Loss		(2,317,065)		5,032,537
Gain on disposal of OMS		(437,107)		—
Change in operating assets and liabilities:
Accounts Receivable		18,384		(302)
Prepaid expenses		(1,573,909)		(239,174)
Inventory		(7,765,288)		(1,091,279)
Accounts payable and accrued liabilities		(2,555,634)		4,759,842
Held for sale assets and liabilities		8,575,615		153,146
Change in assets and liabilities held for sale		(8,450,772)		—
Net cash used in operating activities	$	(22,720,933)	$	(10,995,777)

CASH FLOWS FROM INVESTING ACTIVITIES:
PP&E Additions	$	(14,637,331)	$	(3,581,289)
Proceeds from sale of PAMS net of cash		—		16,637,489
Proceeds from sale of OMS net of cash		1,150,000		—
Deposits		67,841		282,943
Net cash provided by (used in) investing activities	$	(13,419,490)	$	13,339,143

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of shares	$	—	$	7,613,490
Deferred financing costs		(865,769)		—
Proceeds from long-term debt		24,028,295		—
Convertible debt payment		(900,000)		—
Proceeds from option exercises		1,152,596		—
Debt interest payments		—		(65,962)
Lease payments		(1,008,584)		(1,250,799)
Net cash provided by financing activities	$	22,406,538	$	6,296,729

Net change in cash and restricted cash	$	(13,733,885)	$	8,640,095

Cash and restricted cash, beginning of period	$	25,513,180	$	9,234,173

Cash and restricted cash, end of period	$	11,779,295	$	17,874,268


Name of entity		Place of incorporation
Goodness Growth Holdings, Inc.		British Columbia, CAN
Vireo Health, Inc.		Delaware, USA
Vireo Health of New York, LLC		New York, USA
Minnesota Medical Solutions, LLC		Minnesota, USA
Ohio Medical Solutions, Inc.		Delaware, USA
MaryMed, LLC		Maryland, USA
Vireo of Charm City, LLC		Maryland, USA
1776 Hemp, LLC		Delaware, USA
Vireo Health of Massachusetts, LLC		Delaware, USA
Mayflower Botanicals, Inc.		Massachusetts, USA
Elephant Head Farm, LLC		Arizona, USA
Retail Management Associates, LLC		Arizona, USA
Arizona Natural Remedies, Inc.		Arizona, USA
Vireo Health of New Mexico, LLC		Delaware, USA
Red Barn Growers, Inc.		New Mexico, USA
Resurgent Biosciences, Inc.		Delaware, USA
Vireo Health of Puerto Rico, LLC		Delaware, USA
Vireo Health de Puerto Rico, Inc.		Puerto Rico
XAAS Agro, Inc.		Puerto Rico
Vireo Health of Nevada 1, LLC		Nevada, USA
Verdant Grove, Inc.		Massachusetts, USA


Assets held for sale
Property and equipment	$	75,495
Operating lease, right-of-use-asset		114,936
Intangible assets, net		5,553,333
Goodwill		2,948,655
Total assets held for sale	$	8,692,419

Liabilities held for sale
Right of Use Liability		116,803
	$	116,803


	Quoted prices in		Other		Significant
	active markets for		observable		unobservable
	identical assets		inputs		inputs
	(Level 1)		(Level 2)		(Level 3)		Total
September 30, 2021
Cash	$	11,779,295	$	—	$	—	$	11,779,295
Restricted cash		—		—		—		—
Total assets	$	11,779,295	$	—	$	—	$	11,779,295

Warrant liability		—		—		3,078,694		3,078,694
Total liabilities	$	—	$	—	$	3,078,694	$	3,078,694

December 31, 2020
Cash		25,513,180		—		—		25,513,180
Restricted cash		1,592,500		—		—		1,592,500
Total assets	$	27,105,680	$	—	$	—	$	27,105,680


	Warrant Liability
Balance as of December 31, 2020		—
Issuance	$	5,395,759
Adjustments to estimated fair value		(2,317,065)
Balance as of September 30, 2021	$	3,078,694


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Work-in-progress	$	278,000	$	—	$	278,000	$	—
Finished goods		73,000		151,328		186,000		484,570
Non-cannabis inventory		—		—		—		—
Total	$	351,000	$	151,328	$	464,000	$	484,570


	September 30,
	2021	2020
Stock options	23,610,886	24,651,391
Warrants	4,395,949	30,817,992
Convertible notes	—	211,765
Total	28,006,835	55,681,148


Licenses		4-20 years


	September 30,		December 31,
	2021		2020
Land	$	1,366,650	$	1,309,949
Buildings and leasehold improvements		15,286,180		7,280,665
Furniture and equipment		7,700,007		4,635,602
Software		221,540		221,540
Vehicles		513,135		379,852
Construction-in-progress		11,159,996		9,276,852
Right of use asset under finance lease		70,713,084		12,351,838
		106,960,592		35,456,298
Less: accumulated depreciation		(7,006,282)		(4,890,039)
Total	$	99,954,310	$	30,566,259


	Operating Leases		Finance Leases
	September 30, 2021		September 30, 2021		Total
2021	$	612,193	$	1,023,262	$	1,635,455
2022		2,471,751		7,383,555		9,855,306
2023		2,372,611		10,419,836		12,792,447
2024		2,068,139		10,466,735		12,534,874
2025		1,830,420		10,710,227		12,540,647
Thereafter		3,995,745		216,469,417		220,465,162
Total minimum lease payments	$	13,350,859	$	256,473,032	$	269,823,891
Less discount to net present value						(189,813,692)
Present value of lease liability					$	80,010,199


	September 30,
	2021
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases	$	1,008,584
Non-cash additions to ROU assets		59,665,237
Amortization of operating leases		934,934


	September 30,
	2021
Weighted-average remaining lease term (years) – operating leases	5.85
Weighted-average remaining lease term (years) – finance leases	19.85
Weighted-average discount rate – operating leases	15.00	%
Weighted-average discount rate – finance leases	15.33	%


Goodwill - January 1, 2020	$	3,132,491
Transfer to held for sale		(2,948,655)
Goodwill - December 31, 2020 and September 30, 2021	$	183,836


	Licenses		Royalty Asset		Total
Balance, December 31, 2019	$	9,001,237	$	—	$	9,001,237
Additions (Note 3)		—		68,276		68,276
Dispostions		(45,000)		—		(45,000)
Amortization		(615,094)		—		(615,094)
Balance, December 31, 2020	$	8,341,143	$	68,276	$	8,409,419
Additions (Note 3)		3,185,136		—		3,185,136
Transfer to held for sale (Note 3)		(5,553,333)		—		(5,553,333)
Amortization		(619,327)		—		(619,327)
Balance, September 30, 2021	$	5,353,619	$	68,276	$	5,421,895


	September 30, 2021		December 31, 2020
5.00% convertible notes	$	—	$	900,000
Net carrying amount	$	—	$	900,000


	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 Shares	Exercise Price		Remaining Life
Balance, December 31, 2019	23,662,600	$	0.35	7.54
Forfeitures	(2,337,145)		0.65	—
Exercised	(495,067)		0.19	—
Granted	6,094,470		0.99	—
Balance, December 31, 2020	26,924,858	$	0.47	7.00
Forfeitures	(22,434)		0.97	—
Exercised	(3,989,344)		0.29	—
Granted	697,806		2.32	—
Options Outstanding at September 30, 2021	23,610,886	$	0.55	6.29

Options Exercisable at September 30, 2021	16,608,824	$	0.36	5.31


	September 30,		September 30,
SVS Warrants Denominated in C$	2021		2020
Risk-Free Interest Rate	0.98	%	0.16	%
Expected Life of Options (years)	4.48		2.69
Expected Annualized Volatility	100.00	%	90.00	%
Expected Forfeiture Rate	N/A		N/A
Expected Dividend Yield	N/A		N/A


	Number of	Weighted Average		Weighted Average
SVS Warrants	Warrants	Exercise Price		Remaining Life
Warrants outstanding at December 31, 2019	16,630,309	$	2.34	4.49
Expired	(867,198)		1.50	—
Warrants outstanding at December 31, 2020	15,763,111	$	2.39	0.42
Exercised	(7,110,481)		1.02	0.19
Expired	(763,111)		4.25	—
Forfeited	(7,889,519)		3.44	0.19
Warrants outstanding at September 30, 2021	—	$	—	—

Warrants exercisable at September 30, 2021	—	$	—	—

Exhibit No.		Description of Exhibit

10.1		Purchase and Sale Agreement and Joint Escrow Instructions, dated September 1, 2021, by and between Vireo Health of New York, LLC and IIP-NY 2 LLC

10.2		First Amendment to Purchase and Sale Agreement and Joint Escrow Instructions, dated September 24, 2021, by and between Vireo Health of New York, LLC and IIP-NY 2 LLC

10.3		Third Amendment to Lease Agreement, dated September 24, 2021, by and between IIP-NY 2 LLC and Vireo Health of New York, LLC

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 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 Goodness Growth’s Quarterly Report on Form 10-Q as of and for the quarter ended September 30, 2021, 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.

	GOODNESS GROWTH HOLDINGS, INC.

Date: November 10, 2021	By:	/s/ Kyle E. Kingsley
		Name:	Kyle E. Kingsley
		Title:	Chief Executive Officer

Date: November 10, 2021	By:	/s/ John A. Heller
		Name:	John A. Heller
		Title:	Chief Financial Officer