On June 19, 2025, the Company issued a promissory note with an aggregate principal amount of $3.0 million in connection with the disposition of the Cannabis Subsidiaries to MJ Reg. The note is payable in five installments as follows:

The promissory note accrues interest at the lower of 3% per annum and the lowest amount permitted by law; provided, however, if MJ Reg satisfies its obligations under the promissory note, in full, pursuant to the terms thereof, any interest accrued pursuant to the promissory note shall be waived. Notwithstanding the foregoing, upon the occurrence of an Event of Default (as defined in the promissory note), the outstanding principal amount of the promissory note together with any accrued and unpaid interest thereon shall accrue interest at a rate of 10% per annum. The promissory note shall mature upon the earlier of (i) June 19, 2028 and (ii) in the event of prepayment of the promissory note, the date that the principal amount of the promissory note together with the interest accrued thereon is paid in full by MJ Reg.

In accordance with ASC 820, the Company applied its weighted average cost of capital of 11.6% to discount the future cash flows associated with the note and determined the initial fair value to be $2.59 million. The resulting discount is being amortized over the term of the note using the effective interest method.

On January 16, 2026, the Company entered into an Assignment and Assumption of Debt Agreement with Two Shores Capital Corp. (“Two Shores”) and MJ Reg. Pursuant to the agreement, the Company assigned to Two Shores all of its rights, title, and interest in the promissory note with an outstanding principal balance of $2.0 million.

As consideration for the assignment, the Company received cash proceeds of $1.4 million. Upon execution of the agreement, the Company transferred to Two Shores all rights and obligations associated with the promissory note, including the right to receive all future payments. MJ Reg. consented to the assignment and confirmed that the outstanding principal amount of the promissory note was $2.0 million as of January 16, 2026.

In connection with the transaction, the Company issued to Two Shores 550,000 common stock warrants. Each warrant is exercisable for 1one share of the Company’s common stock at an exercise price of $0.40 per share and expires on January 16, 2029.

The valuation of the warrants was performed using the Black-Scholes option pricing model, applying the following weighted-average assumptions:

 Schedule of Weighted Average Assumptions in Valuation of Warrants   

The fair value of $0.1 million was recognized in finance costs for the six months ended June 30, 2026.