# RYTHM, Inc.: Form 10-Q for the period ended Mar 31, 2025

- Company: [RYTHM, Inc.](/companies/rym.md) (CIK 1800637)
- Form: 10-Q
- Filed: 2025-05-09
- Accepted by EDGAR: May 9, 2025, 06:15 ET
- Period: 2025-03-31
- Accession: 0001213900-25-041201
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1800637/000121390025041201/ea0239435-10q_agrify.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1800637/000121390025041201/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $538.0k | us-gaap:Revenues |
| Cost of revenue | 3 months, 2025-01-01 to 2025-03-31 | $448.0k | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2025-01-01 to 2025-03-31 | $90.0k | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2025-01-01 to 2025-03-31 | $3.8m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | −$3.7m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | −$1.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.83 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.83 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 1,952,022 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | −$6.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2025-03-31 | $24.4m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $27.2m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $45.6m | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $18.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $18.8m | us-gaap:Liabilities |
| Long-term debt | at 2025-03-31 | $10.6m | us-gaap:LongTermDebt |
| Current portion of debt | at 2025-03-31 | $615.0k | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2025-03-31 | $26.8m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 33,456 characters.

*The information contained in this Quarterly Report is intended to update the information contained in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities And Exchange Commission (the “SEC”) on March 21, 2025, as amended on March 28, 2025 (the “Form 10-K”) and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in the Form 10-K. The following discussion and analysis also should be read together with our financial statements and the notes to the financial statements included elsewhere in this Quarterly Report.*

*The following discussion contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Quarterly Report, including, without limitation, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this Quarterly Report. You should not put undue reliance on any forward-looking statements. We strongly encourage investors to carefully read the risk factors described in the Form 10-K in the section entitled “Risk Factors” for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this Quarterly Report. The following should also be read in conjunction with the unaudited financial statements and notes thereto that appear elsewhere in this Quarterly Report.*

*Except as otherwise indicated herein or as the context otherwise requires, references in this Quarterly Report to “we,” “us,” “our,” “Company,” and “Agrify” refer to Agrify Corporation, a Nevada corporation and its consolidated subsidiaries.*

### Overview

Agrify is a developer of branded innovative solutions for the cannabis and hemp industries. Our Señorita brand offers consumers hemp-derived tetrahydrocannabinol (“THC”) beverages that mirror well-known cocktails like a margarita – in three flavors – classic Lime Jalapeño Margarita, Mango Margarita, and Paloma. Known for its clean, fresh taste and commitment to high-quality, natural ingredients, Señorita offers a low-sugar, low-calorie alternative to alcoholic beverages and is available at top retailers including Total Wine, ABC Fine Wine & Spirits, and Binny’s in ten U.S. states and Canada, with plans for expansion and future availability in premier on-premises destinations.

In addition to beverages, Agrify has also historically been a leading provider of innovative cultivation and extraction solutions for the cannabis industry. Prior to the extraction business disposal on March 30, 2025, our comprehensive extraction product line, which includes hydrocarbon, alcohol, solventless, post-processing, and lab equipment, empowered producers to maximize the quantity and quality of extract required for premium concentrates. Additionally, prior to its sale on December 31, 2024, our proprietary micro-environment-controlled Agrify VFUs enabled cultivators to produce high quality products for the cannabis industry (the “Cultivation Business”).

The Company was formed in the State of Nevada on June 6, 2016 as Agrinamics, Inc.. On September 16, 2019, Agrinamics amended its articles of incorporation to reflect a name change to Agrify Corporation.

#### Reverse Stock Split

On July 5, 2023, we effected a 1-for-20 reverse stock split of our Common Stock. On October 8, 2024, we effected a 1-for-15 reverse stock split of our Common Stock. All share and per share information has been retroactively adjusted to give effect to the reverse stock splits for all periods presented unless otherwise indicated.

### Recent Developments

On March 19, 2025, our Board of Directors appointed Brad Asher to serve as our Chief Financial Officer and our principal financial and accounting officer effective March 24, 2025. Mr. Asher serves as our Chief Financial Officer pursuant to a Shared Services Agreement with Vision Management Services, LLC, a subsidiary of Green Thumb, and he will not receive any direct compensation from us.

### Lines of Business

#### Hemp-Derived Beverages

The Company acquired the Señorita brand of hemp-derived THC beverages in November 2024. Señorita was designed and formulated by world-class winemakers Charles Bieler and Joel Gott. Recognizing a growing generational demand for adult beverage alternatives, Bieler and Gott gave the classic margarita a modern twist—replacing alcohol with hemp-derived to create a delightful adult beverage alternative. Through the use of all-natural, premium ingredients like organic Mexican agave, fresh lime juice and sweet, tangy mango, Señorita quickly gained acclaim, taking home the top spot in The High Times Cannabis Cup just one year after inception. Gott and Bieler continue to collaborate on the brand with Mr. Kovler and the Agrify team.

Señorita currently offers three award-winning flavors – classic Lime Jalapeño Margarita, Paloma, and Mango Margarita. A fourth flavor, low-calorie Ranch Water, is expected to debut in 2025. Señorita’s hemp-derived beverages are currently available at top retailers including Total Wine, ABC Fine Wine & Spirits, and Binny’s in ten U.S. states and Canada. Products are also available for direct-to-consumer purchase where permissible under state law at senoritadrinks.com.

### Discontinued Operations

#### Cultivation Solutions

Prior to its sale on December 31, 2024, we sold proprietary cultivation solutions to independent licensed cultivators. The two primary products we sold were the VFUs and Agrify Insights™ software.

The proprietary VFU technology offered a modular, compartmentalized micro-climate growing system for indoor vertical farming. The VFU system was designed for craft farmers, single-state operators, and multi-state operators who were looking to consistently produce higher-quality crops at scale. The VFUs were designed to line up horizontally in rows, and could be stacked vertically up to three units tall.

The VFUs were designed to work in conjunction with the Agrify Insights™ software. Each VFU sold included a license for Agrify Insights™ and a monthly Software-as-a-Service (“SaaS”) subscription fee was charged per VFU. The VFU could not operate successfully without Agrify Insights™. Agrify Insights™ license agreements were generally for a multi-year term, with an annual auto-renewal.

#### Extraction Solutions

Prior to its discontinuation on March 30, 2025, our extraction equipment and business solutions can be used within indoor processing facilities by fully licensed cannabis and hemp cultivators and processors or in some cases, by individual processors for individual use in compliance with applicable law. We sell our proprietary extraction solutions to independent, licensed cultivators and processing labs.

We had strategically acquired four of the top brands in the extraction space in late 2021 and early 2022 in Precision Extraction, PurePressure, Lab Society, and Cascade Sciences. These brands encompassed hydrocarbon, alcohol, and solventless extraction and distillation and post-processing solutions. Our extraction brands provided equipment and solutions for extraction, post-processing, and testing for the cannabis and hemp industries.

### Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include assumptions about the valuation and recognition of stock-based compensation expense, valuation allowance for deferred tax assets, goodwill, impairment of long-lived assets, provision for litigation, inventory reserve, fair value measurements and useful life of fixed assets and intangible assets.

### Financial Overview

### Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial position and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, we evaluate estimates, which include estimates related to accruals, and stock-based compensation expense. We base our estimates on historical experience and other market-specific or other relevant assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from those estimates or assumptions.

### Warrants

We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Accounting Standards Codification (“ASC”) Topic 480, *Distinguishing Liabilities from Equity (“*ASC 480”) and ASC Topic 815, *Derivatives and Hedging (“*ASC 815”). Management’s assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether they meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the our own Common Stock among other conditions for equity classification.

For issued or modified warrants that meet all of the criteria for equity classification, they are recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that are precluded from equity classification, they are recorded as a liability at their initial fair value on the date of issuance and marked-to-market each reporting period with the changes in fair value of warrant liabilities recorded in other income (expense), net in the accompanying unaudited condensed consolidated statements of operations until the warrants are exercised. The fair value of the warrant liabilities are estimated using a Black-Scholes option-pricing model.

The estimated fair value of the warrant liabilities is determined using Level 3 inputs. Inherent in a Black-Scholes option-pricing model are assumptions used in calculating the estimated fair values that represent our best estimate. The volatility rate is determined utilizing our own share price and the share price of competitors over time.

### Revenue Recognition

### Overview

The Company generates revenue from continuing operations through the sale of hemp-derived beverages. In accordance with ASC Topic 606, Revenue Recognition (“ASC 606”), revenue is recognized through a five-step model, as outlined below:

- **Identify the customer contract**: A customer contract is identified when there is mutual approval and commitment between the Company and its customer, the rights and obligations are clear, payment terms are set, the contract has commercial substance, and collectability is probable. Written or electronic signatures on contracts and purchase orders are obtained if such orders are issued in the normal course of business by the customer.
- **Identify performance obligations that are distinct**: The Company identifies distinct performance obligations in each contract. A performance obligation is considered distinct if the customer can benefit from the good or service on its own or with readily available resources, and if it is separately identifiable from other promises in the contract. The Company’s revenue-generating activities typically have a single performance obligation.
- **Determine the transaction price**: The transaction price is the amount of consideration the Company expects to receive in exchange for the sale of the product. This amount is determined excluding sales taxes collected on behalf of government agencies and net of any sales discounts, incentives, and returns.
- **Allocate the transaction price to distinct performance obligations**: The transaction price is allocated to each distinct performance obligation based on the relative SSP of the goods or services provided. If a contract involves multiple performance obligations, each is accounted for separately if distinct, and the SSP reflects the price the Company would charge if the good or service were sold separately in similar circumstances and to similar customers.
- **Recognize revenue as the performance obligations are satisfied**: Revenue is recognized when control of the product transfers to the customer, typically upon delivery or shipment, as the customer assumes the risks and rewards of ownership. Payment terms vary by customer, but the time between revenue recognition and payment due is generally not significant. For products sold under consignment arrangements, revenue is recognized only when control is transferred to the end customer. The Company does not maintain a specific reserve for returns due to the limited circumstances under which returns are permitted in customer agreements. Payments for slotting, listing fees, or other marketing or promotional activities, where legally permitted, are recorded as a reduction in revenue unless a distinct good or service is received in exchange.

### Income Taxes

We account for income taxes pursuant to the provisions of ASC Topic 740, *Income Taxes, (“*ASC 740”) which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.

We follow the provisions of ASC 740-10-25-5, “Basic Recognition Threshold.” When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10-25-6, the benefit of a tax position is recognized in the unaudited condensed consolidated financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. We believe our tax positions are all highly certain of being upheld upon examination. As such, we have not recorded a liability for unrecognized tax benefits.

We recognize the benefit of a tax position when it is effectively settled. ASC 740-10-25-10, “Basic Recognition Threshold” provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. ASC 740-10-25-10 clarifies that a tax position can be effectively settled upon the completion of an examination by a taxing authority. For tax positions considered effectively settled, we recognize the full amount of the tax benefit.

### Accounting for Stock-Based Compensation

We follow the provisions of ASC Topic 718, *Compensation — Stock Compensation ,(“*ASC 718”) establishes standards surrounding the accounting for transactions in which an entity exchanges its equity instruments for goods or services. ASC Topic 718 focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions, such as options issued under our equity incentive plan.

The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model. This model incorporates certain assumptions for inputs including a risk-free market interest rate, expected dividend yield of the underlying Common Stock, expected option life, and expected volatility in the market value of the underlying Common Stock.

The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because our stock options and warrants have characteristics different from those of our traded stock, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of such stock options. The risk-free interest rate is based upon quoted market yields for United States Treasury debt securities with a term similar to the expected term. The expected dividend yield is based upon our history of having never issued a dividend and management’s current expectation of future action surrounding dividends. We calculate the expected volatility of the stock price based on the corresponding volatility of our peer group stock price for a period consistent with the underlying instrument’s expected term. The expected lives for such grants were based on the simplified method for employees and directors.

As permitted under ASC 718, the Company has made an accounting policy choice to account for forfeitures when they occur.

It is important that the discussion of our operating results that follows be read in conjunction with the critical accounting policies disclosed above.

### Results of Operations

### Comparison of the Three Months Ended March 31, 2025 and 2024

The following table summarizes our results of continuing operations for the three months ended March 31, 2025 and 2024:

|  | Three months ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Revenue | $538 | $— |
| Cost of goods sold | 448 | — |
| Gross profit | 90 | — |
| Selling, general and administrative | 3,791 | 1,552 |
| Research and development | — | 275 |
| Change in contingent consideration | — | (2,180) |
| Total operating expenses | 3,791 | (353) |
| **Operating (loss) income from continuing operations** | (3,701) | 353 |
| Interest income (expense), net | 1 | (100) |
| Change in fair value of warrant liabilities | 407 | 873 |
| Other income, net | 19 | — |
| Total other income, net | 427 | 773 |
| (Loss) income from continuing operations before income taxes | (3,274) | 1,126 |
| Income tax provision | — | — |
| (Loss) income from continuing operations, net of income taxes | (3,274) | 1,126 |
| (Loss) income from discontinued operations | (1,918) | 3,110 |
| Gain on disposal of Extraction business | 3,566 | — |
| Income tax effect on discontinued operations | — | — |
| Income from discontinued operations, net of income taxes | 1,648 | 3,110 |
| Net (loss) income | (1,626) | 4,236 |
| Income (loss) attributable to non-controlling interest | — | — |
| Net (loss) income attributable to Agrify Corporation | $(1,626) | $4,236 |
| Net (loss) income per share attributable to Common Stockholders – basic (1) | $(0.83) | $9.21 |
| Net (loss) income per share attributable to Common Stockholders – diluted (1) | $(0.83) | $3.78 |
| Weighted average common shares outstanding - basic (1) | 1,952,022 | 460,133 |
| Weighted average common shares outstanding - diluted (1) | 1,952,022 | 1,197,891 |

### Revenues

We generate revenue from sales of hemp-derived beverages.

Revenues, all of which related to hemp-derived beverages, increased by $538 thousand, for the three months ended March 31, 2025, as compared to the same period in 2024. The comparative increase in revenue was primarily driven by the acquisition of Señorita in December 2024 by all revenue from the Cultivation Business and Extraction Business for the three months ended March 31, 2024 being presented as part of discontinued operations.

### Cost of Goods Sold

Cost of goods sold represents costs associated with the hemp-derived beverage sales.

The following table provides a breakdown of our cost of goods sold from continuing operations for the three months ended March 31, 2025 and 2024:

*(In thousands)*

|  | Three months ended March 31, 2025 | 2024 | Change | % Change |
| --- | ---: | ---: | ---: | --- |
| Hemp-derived beverages | $448 | $— | $448 | N/A |
| Total cost of goods sold | $448 | $— | $448 | N/A |

Cost of goods sold increased by $448 thousand for the three months ended March 31, 2025 compared to the same period in 2024. The comparative increase in cost of goods sold is associated with acquisition of Señorita in December 2024, which aligns with the increase in revenue.

### Gross Profit

*(In thousands)*

|  | Three months ended March 31, 2025 | 2024 | Change | % Change |
| --- | ---: | ---: | ---: | --- |
| Gross profit | $90 | $— | $90 | N/A |

Gross profit totaled $90 thousand, or 16.7% of total revenue during the three months ended March 31, 2025.

### Selling, General and Administrative

*(In thousands)*

|  | Three months ended March 31, 2025 | 2024 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Selling, general and administrative | $3,791 | $1,552 | $2,239 | 144% |

Selling, general and administrative (“SG&A”) expenses consist principally of salaries and related costs for personnel, including stock-based compensation and travel expenses, associated with executive and other administrative functions. Other SG&A expenses include, but are not limited to, professional fees for legal, consulting, depreciation and amortization and accounting services, as well as facility-related costs.

SG&A expense increased by $2.2 million, or 144%, for the three months ended March 31, 2025, compared to the same period in 2024. The comparative change is primarily attributable to the acquisition of Señorita in December 2024 driving an increase in consulting and outsourced services of $0.9 million, $0.3 million increase of intangible asset amortization expense and $0.3 million increase in marketing expense.

### Research and Development

*(In thousands)*

|  | Three months ended March 31, 2025 | 2024 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Research and development | $— | $275 | $(275) | (100)% |

Research and development expense decreased by $275 thousand, or 100% for the three months ended March 31, 2025, compared to the same period in 2024. The decrease is attributable to the reduction in personnel resulting from the discontinuation of Extraction Business.

### Other Income, Net

*(In thousands)*

|  | Three months ended March 31, 2025 | 2024 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Interest income (expense), net | $1 | $(100) | $101 | (101)% |
| Change in fair value of warrant liabilities | 407 | 873 | (466) | (53)% |
| Other income, net | 19 | — | 19 | N/A |
| Total other income, net | $427 | $773 | $(346) | (45)% |

Interest income, net was $1 thousand for the three months ended March 31, 2025, compared to interest expense, net of $100 thousand for the three months ended March 31, 2024. The change is attributable mainly to the decrease in principal balance on outstanding loans as well as the increase in interest income from higher cash on hand.

The change in fair value of warrant liabilities decreased by $466 thousand, or 53% during the three months ended March 31, 2025, compared to the same period in 2024. The decrease is primarily related to the fair value remeasurement of warrants.

Other income, net was $19 thousand for the three months ended March 31, 2025, compared to none for the same period in 2024.

### Income Tax (Expense) Benefit

There was no income tax expense or benefit for the three months ended March 31, 2025 and March 31, 2024.

### Liquidity and Capital Resources

As of March 31, 2025, our principal sources of liquidity were cash and cash equivalents and marketable securities totaling $24.4 million. Our current working capital needs are to support revenue growth and manage inventory to meet demand forecasts and support operational growth. Our long-term financial needs primarily include working capital requirements. There are many factors that may negatively impact our available sources of funds in the future, including the ability to generate cash from operations, raise debt capital and raise cash from the issuance of our securities. The amount of cash generated from operations is dependent upon factors such as the successful execution of our business strategy and general economic conditions.

As part of our growth strategies, we may opportunistically raise debt capital and raise cash from the issuance of our securities, subject to market and other conditions. If additional financing is required from outside sources, we may not be able to raise such capital on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results and financial condition may be adversely affected.

### Indebtedness

#### Green Thumb Convertible Note

On November 5, 2024, we issued the Secured Convertible Note (“Green Thumb Note”) to the RSLGH, LLC, a subsidiary of Green Thumb. The Green Thumb Note is a secured obligation and ranks senior to all of our indebtedness. The Green Thumb Note will mature on November 5, 2025 and has a 10.0% annualized interest rate. The principal amount of the Green Thumb Note will be payable on its maturity date. The Green Thumb Note provides for advances of up to $20.0 million in the aggregate, of which $10.0 million was advanced upon issuance. If the Investor elects to convert the Green Thumb Note, the conversion price per share will be $3.158, subject to customary adjustments for certain corporate events. The conversion of the Green Thumb Note will be subject to certain customary conditions and the receipt of stockholder approval to the extent necessary under Nasdaq listing rules. The Green Thumb Note was amended on May 8, 2025 to issue pre-funded warrants in lieu of cash interest with 18,614 pre-funded warrants issued on May 8, 2025 and an additional 11,373 pre-funded warrants to be issued on September 1, 2025, replacing the previously defined cash interest payment dates. The number of pre-funded warrants is equal to the cash interest amount otherwise payable on The Green Thumb Note divided by the closing share price on May 8, 2025, which is the effective date of the amendment. No changes were made to the conversion price of the principal amount of the Green Thumb Note.

### Cash Flows

The following table presents the major components of net cash flows from and used in operating, investing, and financing activities for the three months ended March 31, 2025 and 2024:

*(In thousands)*

| Net cash (used in) provided by: | Three months ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Operating activities | $(6,720) | $(2,987) |
| Investing activities | — | 328 |
| Financing activities | (1) | 2,324 |
| Net decrease in cash and cash equivalents | $(6,721) | $(335) |

### Cash Flow from Operating Activities

For the three months ended March 31, 2025, our operating cash flows included a net loss of $1.6 million, which included $336 thousand related to depreciation and amortization, $589 thousand of stock-based compensation expense, $407 thousand gain related to the change in fair value of warrant liabilities, and $3.6 million gain on disposal of Extraction business. Net cash was decreased by changes in operating assets and liabilities of $2.3 million.

For the three months ended March 31, 2024, we incurred net income of $4.2 million, which included $406 thousand related to depreciation and amortization, $490 thousand of stock-based compensation expense, and $873 thousand gain related to the change in fair value of warrant liabilities. Net cash was reduced by changes in operating assets and liabilities of $970 thousand.

### Cash Flow from Investing Activities

For the three months ended March 31, 2025, there were no cash flows from investing activities.

For the three months ended March 31, 2024, net cash provided in investing activities was $328 thousand, which primarily resulted from $330 thousand in proceeds from the repayment of a loan receivable.

### Cash Flow from Financing Activities

For the three months ended March 31, 2025, net cash provided by financing activities was immaterial $1 thousand in repayments of notes payable.

For the three months ended March 31, 2024, net cash provided by financing activities was $2.3 million, primarily driven by proceeds from the issuance of common stock and warrants of $2.1 million.

### Off-Balance Sheet Arrangements

During the periods presented, we did not have, nor do we currently have, any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We are therefore not exposed to the financing, liquidity, market, or credit risk that could arise if we had engaged in those types of relationships.

### Critical Accounting Policies and Estimates

Part I, Item, 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” discusses our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates under different assumptions or conditions.

These estimates are based on our knowledge and understanding of current conditions and actions that we may take in the future. Changes in these estimates will occur as a result of the passage of time and the occurrence of future events. Subsequent changes in these estimates may have a significant impact on our financial condition and results of operations and are recorded in the period in which they become known. We have identified the following estimates that, in our opinion, are subjective in nature, require the exercise of judgment and involve complex analysis: the fair value of derivative assets and liabilities, goodwill impairment assessment, revenue recognition and cost of goods sold.

The significant accounting policies and estimates that have been adopted and followed in the preparation of our condensed consolidated financial statements are detailed in Note 1 - Overview, Basis of Presentation and Significant Accounting Policies included in the Form 10-K and Note 1 - Overview, Basis of Presentation and Significant Accounting Policies to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report. There have been no changes in these policies and estimates that had a significant impact on the financial condition and results of operations for the periods covered in this Quarterly Report.

### Recently Issued Accounting Pronouncements Adopted

For more information on recently issued accounting pronouncements are included within Note 1 - Overview, Basis of Presentation and Significant Accounting Policies, included elsewhere in the notes to unaudited condensed consolidated financial statements covered under Part I, Item 1 of this Quarterly Report.

### New Accounting Pronouncements Not Yet Adopted

For more information on new accounting pronouncements not yet adopted are included within Note 1 - Overview, Basis of Presentation and Significant Accounting Policies, included elsewhere in the notes to unaudited condensed consolidated financial statements covered under Part I, Item 1 in this Quarterly Report.

## Market risk

As filed, 140 characters.

As a “smaller reporting company” as defined by 17 C.F.R. § 229.10, the Company is not required to provide information required by this Item.

## Controls and procedures

As filed, 2,802 characters.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Interim Chief Executive Officer, to allow timely decisions regarding required disclosure.

### Evaluation of Disclosure Controls and Procedures

As required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act, our Interim Chief Executive Officer and our Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2025. Based on this evaluation, our Interim Chief Executive Officer and our Chief Financial Officer concluded that, due to the material weaknesses in our internal control over financial reporting previously identified in Item 9A, “Controls and Procedures” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and filed with the SEC on March 21, 2025, as amended on March 28, 2025, our disclosure controls and procedures were not effective at the reasonable assurance level as of March 31, 2025.

Management, with the oversight of the Audit Committee of our Board of Directors, continue to focus on remediating the material weaknesses identified in the design and operation of our internal control over financial reporting, including adding additional qualified personnel, further documentation and implementation of control procedures and the implementation of control monitoring. While we have begun the process of implementing measures which we believe will remediate the underlying cause of these material weaknesses, there can be no assurance as to when the remediation plan will be fully developed and implemented and whether such measures will be effective. Until our remediation plan is fully implemented and effective, we will continue to devote time, attention and financial resources to this effort.

### Changes in Internal Control Over Financial Reporting

Other than those measures intended to remediate the material weaknesses noted above, there have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 151 characters.

As of the date of this Quarterly Report, there are no material changes to our risk factors as previously disclosed in Part I, Item 1A of the Form 10-K.

Filed May 9, 2025.
Source: SEC EDGAR, the filing index for accession 0001213900-25-041201. Last ingested by Listed: Nov 4, 2026, 07:33 ET. No prices; not investment advice.