What changed in this filing

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Item 1A. Risk Factors

2022-03-25 compared with 2021-04-01 · 43 added, 58 removed, 308 unchanged (25% of the section changed)

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Furthermore, our operations continue to evolve under our business plan as we continually assess new strategic opportunities for our business within our industry.

Assessing the future prospects of our business is challenging in light of both known and unknown risks and difficulties we may encounter.

Assessing the future prospects of our business is challenging considering both known and unknown risks and difficulties we may encounter.

Growth prospects in our industry can be affected by a wide variety of factors including:

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● Changes in underlying consumer behavior, which may affect the business of our customers;

● Our ability to access adequate financing on reasonable terms and our ability to raise additional capital in order to fund our operations;

● Our ability to access adequate financing on reasonable terms and our ability to raise additional capital to fund our operations;

● Challenges with new products, services, and markets;

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As of December 31, 2021, we had an accumulated deficit of approximately $83.8 million.

We will need to generate and sustain increased revenues in future periods in order to become profitable, and, even if we do, we may not be able to maintain or increase any such level of profitability.

We will need to generate and sustain increased revenues in future periods to become profitable, and, even if we do, we may not be able to maintain or increase any such level of profitability.

As we grow, we expect to continue to expend substantial financial and other resources on:

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Our efforts to grow our business may also be more costly than we expect, and we may not be able to increase our revenues enough to offset our higher operating expenses.

We may incur losses in the future for a number of reasons, including the other risks described in this Report, unforeseen expenses, difficulties, complications and delays and other unknown events.

We may incur losses in the future for several reasons, including the other risks described in this Report, unforeseen expenses, difficulties, complications and delays, and other unknown events.

If we are unable to achieve and sustain profitability, the market price of our common stock may significantly decrease.

Cannabis remains illegal under federal law, and any change in the enforcement priorities of the federal government could render our current and planned future operations unprofitable or even prohibit such operations.

The cultivation, manufacture, distribution, and possession of marijuana is illegal under U.S.

The cultivation, manufacture, distribution, and possession of marijuana continues to be illegal under U.S.

The Supremacy Clause of the United States Constitution establishes that the US Constitution and federal laws made pursuant to it are paramount and, in case of conflict between federal and state law, the federal law must be applied.

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territories have legalized cannabis for medical and/or recreational adult use.

Such state and territorial laws are in conflict with the federal CSA, which makes cannabis use and possession illegal at the federal level.

Because cannabis is a Schedule I controlled substance, however, the development of a legal cannabis industry under the laws of these states is in conflict with the CSA, which makes cannabis use and possession illegal on a national level.

Such state and territorial laws conflict with the federal CSA, which makes cannabis use and possession illegal at the federal level.

Because cannabis is a Schedule I controlled substance, however, the development of a legal cannabis industry under the laws of these states conflicts with the CSA, which makes cannabis use and possession illegal on a national level.

The United States Supreme Court has confirmed that the federal government has the right to regulate and criminalize cannabis, including for medical purposes, and that federal law criminalizing the use of cannabis preempts state laws that legalize its use.

We would likely be unable to execute our business plan if the federal government were to strictly enforce federal law regarding cannabis.

In light of such conflict between federal laws and state laws regarding cannabis, the administration under President Obama had effectively stated that it was not an efficient use of resources to direct law federal law enforcement agencies to prosecute those lawfully abiding by state-designated laws allowing the use and distribution of medical cannabis.

Considering such conflict between federal laws and state laws regarding cannabis, the administration under President Obama had effectively stated that it was not an efficient use of resources to direct law federal law enforcement agencies to prosecute those lawfully abiding by state-designated laws allowing the use and distribution of medical cannabis.

For example, the DOJ Deputy Attorney General of the Obama administration, James M.

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Congress previously enacted an omnibus spending bill that included a provision (the “Rohrabacher-Blumenauer Amendment”) prohibiting the DOJ from using funds to prevent states with medical cannabis laws from implementing such laws.

This provision is renewed annually by Congress, and is current through September 30, 2021.

This provision is renewed annually by Congress and is current through March 11, 2022.

In August 2016, a Ninth Circuit federal appeals court ruled in United States v.

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House of Representatives, which proposes to exclude persons who produce, possess, distribute, dispense, administer, or deliver marijuana in compliance with state laws from the regulatory controls and administrative, civil, and criminal penalties of the CSA.

These developments previously were met with a certain amount of optimism in the cannabis industry, but (i) neither the CARERS Act nor the Respect State Marijuana Laws Act of 2017 have yet been adopted, (ii) the Rohrabacher-Blumenauer Amendment, being an amendment to an appropriations bill that must be renewed annually, has not currently been renewed beyond September 30, 2021, and (iii) the ruling in United States v.

These developments previously were met with a certain amount of optimism in the cannabis industry, but (i) neither the CARERS Act nor the Respect State Marijuana Laws Act of 2017 have yet been adopted, (ii) the Rohrabacher-Blumenauer Amendment, being an amendment to an appropriations bill that must be renewed annually, has not currently been renewed beyond March 11, 2022, and (iii) the ruling in United States v.

McIntosh is only applicable precedent in the Ninth Circuit, which does not include Colorado, the state where we currently primarily operate.

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Attorney Bob Troy for the District of Colorado, the state in which our principal business operations are presently located, issued a statement on January 4, 2018, stating that the United States Attorney’s Office in Colorado is already guided by the well-established principles referenced in the Sessions Memo, “focusing in particular on identifying and prosecuting those who create the greatest safety threats to our communities around the state.

We will, consistent with the Attorney General’s latest guidance, continue to take this approach in all of our work with our law enforcement partners throughout Colorado.”

It is unclear at this time whether the Sessions Memo will be rescinded by the Biden administration;

We will, consistent with the Attorney General’s latest guidance, continue to take this approach in all our work with our law enforcement partners throughout Colorado.”

It is unclear at this time whether the Sessions Memo will be rescinded by the Biden administration, and/or the Cole Memo reinstated;

nor is it clear whether the Biden administration will strongly enforce the federal laws applicable to cannabis or what types of activities will be targeted for enforcement.

However, a significant change in the federal government’s enforcement policy with respect to current federal laws applicable to cannabis could cause significant financial damage to us.

US Attorney General Merrick Garland has indicated his desire to reinstitute a version of the Cole Memo;

however, this has not yet occurred.

Any significant change in the federal government’s enforcement policy with respect to current federal laws applicable to cannabis could cause significant financial damage to us.

We may be irreparably harmed by a change in enforcement policies of the federal government depending on the nature of such change.

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It is also possible that the FDA would require that facilities where medical-use cannabis is grown register with the FDA and comply with certain federally prescribed regulations.

In the event that some or all of these regulations are imposed, the impact they would have on the cannabis industry is unknown, including what costs, requirements and possible prohibitions may be enforced.

unable to comply with the regulations or registration as prescribed by the FDA it may have an adverse effect on our business, operating results and financial condition.

If some or all of these regulations are imposed, the impact they would have on the cannabis industry is unknown, including what costs, requirements and possible prohibitions may be enforced.

If we are unable to

comply with the regulations or registration as prescribed by the FDA it may have an adverse effect on our business, operating results, and financial condition.

Any potential growth in the cannabis industry continues to be subject to new and changing state and local laws and regulations.

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Violations of applicable laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our operations.

We cannot predict the nature of any future laws, regulations, interpretations or applications, and it is possible that regulations may be enacted in the future that will be materially adverse to our business.

Our business, results of operations and financial condition may be adversely affected by pandemic infectious diseases, particularly the recent novel coronavirus strain known as COVID-19.

Pandemic infectious diseases, such as the current COVID-19 strain, may adversely impact our business, consolidated results of operations and financial condition.

We cannot predict the nature of any future laws, regulations, interpretations, or applications, and it is possible that regulations may be enacted in the future that will have be material adverse effects on our business.

Our business, results of operations and financial condition may be adversely affected by pandemic infectious diseases, particularly COVID-19.

Pandemic infectious diseases, such as COVID-19 and its variants, such as Omicron, may adversely impact our business, consolidated results of operations and financial condition.

The global spread of COVID-19 has created significant volatility and uncertainty and economic disruption.

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COVID-19, as well as measures taken by governmental authorities to limit the spread of this virus, may interfere with the ability of our employees, suppliers, and other business providers to carry out their assigned tasks or supply materials or services at ordinary levels of performance relative to the requirements of our business, which may cause us to materially curtail certain of our business operations.

We require additional funding and such funding may not be available to us as a result of contracting capital markets resulting from the COVID-19 pandemic.

We require additional funding and such funding, may not be available to us because of contracting capital markets resulting from the COVID-19 pandemic.

Any of these events could materially adversely affect our business, financial condition, results of operations and/or stock price.

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Dependence upon consumer perceptions means that adverse scientific research reports, findings, regulatory proceedings, litigation, media

attention or other publicity, whether or not accurate or with merit, could have a material adverse effect on our business and results of operations.

attention or other publicity, regardless of accuracy or merit, could have a material adverse effect on our business and results of operations.

Further, adverse publicity reports or other media attention regarding the safety, efficacy, and quality of recreational cannabis in general, or our products specifically, or associating the consumption of recreational cannabis with illness or other negative effects or events, could have such a material adverse effect.

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Many of our current and potential competitors have longer operating histories, significantly greater financial, marketing and other resources, and larger client bases than us, and there can be no assurance that we will be able to successfully compete against these or other competitors.

Given the rapid changes affecting the global, national, and regional economies generally and the medical marijuana and recreational marijuana industries, in particular, we may not be able to create and maintain a competitive advantage in the marketplace.

Given the rapid changes affecting the global, national, and regional economies generally and the medical marijuana and recreational marijuana industries, specifically, we may not be able to create and maintain a competitive advantage in the marketplace.

Our success will depend on our ability to keep pace with any changes in our markets, particularly, legal, and regulatory changes.

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We may be unable to obtain capital to execute our business plan.

In order to execute on our business plan, we will need additional capital.

To execute on our business plan, we will need additional capital.

However, there can be no assurance that we will be able to obtain financing on agreeable terms, if at all, and any future sale of our equity securities will dilute the ownership of our existing stockholders and could be at prices substantially below the price of the shares of common stock sold in the past.

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Our business is sensitive to general economic conditions.

We believe that the state of global economic conditions is particularly uncertain due to recent and expected shifts in political, legislative and regulatory conditions concerning, among other matters, international trade and taxation, and the impact of recent or future natural disasters and/or health and safety epidemics, including the outbreak of the COVID-19 virus in the first quarter of 2020.

We believe that the state of global economic conditions is particularly uncertain due to recent and expected shifts in political, legislative, and regulatory conditions concerning, among other matters, international trade and taxation, and the impact of recent or future natural disasters and/or health and safety epidemics, including the outbreak of COVID-19.

An uneven recovery or a renewed global downturn may put pressure on our sales due to reductions in customer demand as well as customers deferring purchases.

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Our future success depends largely upon the experience, skill, and contacts of our key personnel, officers and directors, and the loss of the services of these key personnel, officers, or directors, particularly our chief executive officer and chairman of our board of directors, may have a material adverse effect upon our business.

Additionally, our revenues are largely driven by several employees with particular expertise in cannabis-related security, apparel and operations.

Additionally, our revenues are largely driven by several employees with particular expertise in cannabis retail and operations.

If one of these key employees were to leave, it would negatively impact our short and long-term results from operations.

Shortages in qualified personnel could also limit our ability to successfully implement our growth plan.

As we grow, we will need to attract and retain highly skilled experts in the cannabis industry, as well as managerial, sales and marketing, security and finance personnel.

As we grow, we will need to attract and retain highly skilled experts in the cannabis industry, as well as managerial, sales and marketing, and finance personnel.

There can be no assurance, however, that we will be able to attract and retain such personnel.

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These suppliers could fail to produce products to our specifications or quality standards and may not deliver units on a timely basis.

Any changes in our suppliers to resolve production issues could disrupt our ability to fulfill orders.

Any changes in our suppliers to resolve production issues could disrupt our ability to

fulfill orders.

Any changes in our suppliers to resolve production issues could also disrupt our business due to delays in finding new suppliers.

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There are no guarantees that we will be able to find such insurance in the future, or that the cost will be affordable to us.

If we are forced to go without such insurance, it may prevent us from entering into certain business sectors, may inhibit our growth, and may expose us to additional risk and financial liabilities.

If we are forced to go without such insurance, it may prevent us from entering certain business sectors, may inhibit our growth, and may expose us to additional risk and financial liabilities.

Moreover, insurance against risks such as environmental pollution or other hazards encountered in our operations is not generally available on acceptable terms.

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Such uses give rise to cybersecurity risks, including the risk of security breaches, espionage, system disruption, theft, and inadvertent release of information.

Our business involves the storage and transmission of numerous classes of sensitive and/or confidential information and intellectual property, including

employees’, customers’, tenants’ and suppliers’ personally identifiable information and financial and strategic information about us.

Our business involves the storage and transmission of numerous classes of sensitive and/or confidential information and intellectual property, including employees’, customers’, tenants’ and suppliers’ personally identifiable information and financial and strategic information about us.

If we fail to adequately assess and identify cybersecurity risks associated with our business operations, we may become increasingly vulnerable to such risks.

Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected.

Even the most well protected information, networks, systems, and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not

recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected.

Accordingly, we, our customers and our suppliers may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us, our customers, and our suppliers to entirely mitigate this risk.

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This means that certain broker-dealers cannot accept for deposit or settle transactions in the securities of cannabis related businesses.

Further, stock exchanges in the United States, including Nasdaq and the New York Stock Exchange, have historically refused to list certain cannabis related businesses, including cannabis retailers, that operate primarily in the United States.

Further, national securities exchanges in the United States, including Nasdaq and the New York Stock Exchange, have historically refused to list cannabis related businesses, including cannabis retailers, that operate primarily in the United States;

there is no indication that this proscription will change any time soon.

Our existing operations, and any future operations or investments, may become the subject of heightened scrutiny by clearing houses and stock exchanges, in addition to regulators and other authorities in the United States.

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For transactions covered by the rule, brokers/dealers must make a special written determination that the penny stock is a suitable investment for purchasers of the securities and receive the purchaser’s written agreement to the transaction prior to sale.

The penny stock rules also require a broker/dealer, prior to effecting a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the SEC that provides information about

penny stocks and the nature and level of risks in the penny stock market.

A broker/dealer also must provide the customer with current bid and offer quotations for the relevant penny stock and information on the compensation of the broker/dealer and its salesperson in the transaction.

A broker/dealer must also provide monthly account statements showing the market value of each penny stock held in a customer’s account.

The bid and offer quotations, and the broker/dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation.

The bid and offer quotations, and the

broker/dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation.

Our securities have in the past constituted “penny stock” within the meaning of the rules.

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We may also grant options to purchase shares of our common stock to our directors, employees, and consultants, the exercise of which would also result in dilution to our stockholders.

We may face continuing challenges in complying with the Sarbanes-Oxley Act, and any failure to comply or any adverse result from management’s evaluation of our internal control over financial reporting may have an adverse effect on our stock price.

As a smaller reporting company as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, we are required to evaluate our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”).

Section 404 requires us to include an internal control report with our Annual Report on Form 10-K.

The report must include management’s assessment of the effectiveness of our internal control over financial reporting as of the end of the fiscal year.

This report must also include disclosure of any material weaknesses in internal control over financial reporting that we have identified.

Failure to comply, or any adverse results from such evaluation, could result in a loss of investor confidence in our financial reports and have an adverse effect on the trading price of our equity securities.

Achieving continued compliance with Section 404 may require us to incur significant costs and expend significant time and management resources.

We cannot assure you that we will be able to fully comply with Section 404 or that we will be able to conclude that our internal control over financial reporting is effective at fiscal year-end.

As a result, investors could lose confidence in our reported financial information, which could have an adverse effect on the trading price of our securities, as well as subject us to civil or criminal investigations and penalties.

In addition, our independent registered public accounting firm may not agree with our management’s assessment or conclude that our internal control over financial reporting is operating effectively.

We have incurred and will continue to incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.

We have incurred and will continue to incur increased costs due to operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.

As a public company we have incurred, and particularly after we are no longer a smaller reporting company, we will continue to incur significant legal, accounting, and other expenses that we did not incur as a private company.

companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.

The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the OTCQB Market and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.

Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives.

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Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404.

If we identify one or more material weaknesses in our internal control over financial reporting, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

If we identify one or more material weaknesses in our internal control over financial reporting,

it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

UNRESOLVED STAFF COMMENTS.

The Company’s corporate headquarters are located in Denver, Colorado and our Cultivation facility is located in Boulder Colorado.

Both locations are leased by the Company.

For additional information regarding the lease terms and provisions, see Note 10.

“Leases” in our consolidated financial statements included in Item 8.

“Financial Statements and Supplementary Data.”

LEGAL PROCEEDINGS

From time to time, we may be involved in various claims and legal actions in the ordinary course of business.

We are not currently involved in any material legal proceedings outside the ordinary course of our business.

MINE SAFETY DISCLOSURES

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors