VidaCann Acquisition

On August 28, 2023, the Company entered into a Membership Interest Purchase Agreement (“Purchase Agreement”) with VidaCann, LLC (“VidaCann”), Loop’s Dispensaries, LLC (“Dispensaries”), Ray of Hope 4 Florida, LLC (“Ray of Hope”) and Loops Nursery & Greenhouses, Inc. (“Nursery” and together with Dispensaries and Ray of Hope, the (“Sellers”), David Loop (“Loop”) and Mark Ascik and Loop, solely in his capacity as Seller Representative, pursuant to which, upon the terms and subject to the conditions set forth therein, the Company acquired from the Sellers all of the membership interests in VidaCann (the “Transaction”).

On   May 9, 2024, the Company acquired 100% ownership interest of VidaCann, and accounted for the Transaction as a business combination acquisition pursuant to ASC 805.

Pursuant to the Purchase Agreement, the Company acquired VidaCann from the Sellers for agreed consideration at closing of the Transaction (the “Closing”) equal to the sum of: (i) 80,564,554 shares of common stock of the Company (the “Base Share Consideration”), plus 1,307,698 shares with a fair value of $750,000 that were issued to VidaCann’s industry advisor as acquisition-related costs; (ii) a cash payment of $4,000,000 (the “Closing Cash Payment”); and (iii) promissory notes issued by the Company to the Sellers in the aggregate principal amount of $5,000,000, with each of the above components subject to adjustments as set out in the Purchase Agreement. Based on the closing price of the Company’s common stock of (CAD$0.9100) $0.6647 on May 9, 2024 on the Canadian Securities Exchange (the “CSE”) (based on the Bank of Canada CAD to USD exchange rate on May 9, 2024 of CAD$1.00=$0.7304), the total consideration was valued at $50,755,443. As contemplated by the Purchase Agreement, VidaCann continued to have $3 million of bank indebtedness and $1.5 million of related party notes to former VidaCann managers at the time of closing, which were assumed by the Company. The Seller of the majority interest in VidaCann also had the right to nominate a director to the Company’s board of directors effective the next business day following the Company’s 2024 annual meeting of stockholders and selected David Loop, the former Chief Executive Officer of VidaCann, as its board nominee.

The VidaCann acquisition was deemed to be a business combination under ASC 805. The following table summarizes the allocation of consideration exchanged to the estimated fair value of the tangible and intangible assets acquired:

The purchase price allocations for the VidaCann transaction reflect various fair value estimates and analyses relating to the determination of fair value of certain tangible and intangible assets acquired and residual goodwill. The Company determined the estimated fair value of the acquired working capital, and identifiable intangible assets and goodwill after review and consideration of relevant information including market data and management’s estimates. The estimated fair value of acquired working capital was determined to approximate carrying value.

The goodwill arising from the VidaCann transaction consists of expected synergies from combining operations of the Company and VidaCann, and intangible assets not qualifying for separate recognition such as formulations, proprietary technologies and acquired know-how. None of the goodwill is deductible for tax purposes. VidaCann’s state cannabis license represented an identifiable intangible asset acquired in the amount of $9,000,000. The VidaCann cannabis license acquired has an indefinite life and as such will not be subject to amortization.

In connection with the VidaCann transaction, the Company expensed $0 of acquisition-related costs, which have been included in general and administrative expenses on the Company’s consolidated statement of operations and comprehensive loss for the period ended  March 31, 2025, and $41,832 for the period ended March 31, 2024.

VidaCann contributed $9,389,471 in Net Revenue, $4,377,513 in Gross Profit, and a net loss of $1,450,580 in Consolidated Comprehensive Net Loss in the three-month period ended March 31, 2025.

The following table reflects the revenue, gross profit and comprehensive loss that would have been reported if the acquisition had occurred at the beginning of the period indicated:

Florida License

On  January 22, 2024, the Company entered into a definitive agreement to sell its Planet 13 Florida, Inc. entity for $9,000,000 which, at the time of sale held no assets other than a Florida medical marijuana treatment center license (the “MMTC license”). The value of the MMTC license at December 31, 2023 was less than the carrying amount of the license. Consequently, the Company recorded an impairment charge of $46,846,866 against the carrying value of the MMTC license. The impairment loss is reflected in the statement of operations and comprehensive loss of the year ended December 31, 2023 under the caption “Impairment Loss”. During the fourth quarter of 2023, the Company committed to a plan to sell its Florida license. Accordingly, the license held by the Company's Florida subsidiary was presented as an asset held for sale on the consolidated balance sheet as of   December 31, 2023. The sale of Planet 13 Florida, Inc. was completed on May 6, 2024. Transaction costs incurred for the sale of the license equaled $762,091.