What changed in this filing

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Item 1. Financial Statements

2022-05-13 compared with 2021-11-12 · 171 added, 302 removed, 390 unchanged (55% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2021

March 31, 2022

December 31, 2021

2 unchanged sentences

Accounts receivable, net of allowance of $ 43,000 and $ 61,000 , respectively

Current portion of notes receivable, net of allowance of $ 2,000 and $ 125,000 , respectively

Current portion of notes receivable, net of allowance of nil and $ 43,108 , respectively

Inventories, net

Prepaid expenses and other current assets

Assets of discontinued operations - current portion

Total current assets

1 unchanged sentence

Property and equipment, net

Investment, held for sale

Intangible assets, net

Assets of discontinued operations

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable and accrued expenses

Interest payable

3 unchanged sentences

Notes payable - current

Liabilities of discontinued operations

Total current liabilities

7 unchanged sentences

5,000,000 shares authorized;

1,180 and nil issued and outstanding , respectively

1,180 issued and outstanding , respectively

Common stock, $ 0.001 par value;

11 unchanged sentences

Three months ended

Nine months ended

September 30,

Cultivation sales

8 unchanged sentences

Operating loss

( 1,365,842 )

( 2,625,897 )

( 4,951,244 )

Other expenses (income)

1 unchanged sentence

Interest expense

Loss on extinguishment of debt

(Gain) loss on derivative liability

( 1,076,264 )

( 2,447,343 )

Gain on sale of assets

Total other expenses (income), net

Loss on derivative liability

Other expenses, net

Total other expenses, net

Net loss from continuing operations before income taxes

( 2,345,616 )

( 4,685,782 )

( 4,110,325 )

Loss from discontinued operations

Loss from operations before income taxes

( 1,327,595 )

( 5,062,916 )

( 4,420,815 )

Provision for income taxes

( 1,327,595 )

( 5,062,916 )

( 4,529,546 )

Deemed dividend

Net loss attributable to common stockholders

( 1,327,595 )

Loss from continuing operations

( 2,345,616 )

Income (loss) from discontinued operations, net of tax

( 2,359,068 )

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended September 30,

Three months ended March 31,

Cash flows from operating activities

( 2,359,068 )

( 4,529,546 )

Adjustments to reconcile net loss to net cash used in operating activities:

1 unchanged sentence

Depreciation and amortization

Amortization of loan origination fees

Loss on extinguishment of debt

Non-cash lease expense

1 unchanged sentence

Loss on disposal of property and equipment

Loss (gain) on warrant derivative liability

( 2,447,343 )

Loss on warrant derivative liability

Stock-based compensation

Gain on sale of building

Changes in operating assets and liabilities, net of acquisitions

2 unchanged sentences

Accounts payable and accrued liabilities

Operating lease liabilities

Net cash used in operating activities:

( 1,034,883 )

Operating lease liabilities

Net cash provided by (used) in operating activities:

( 1,449,925 )

1 unchanged sentence

Purchase of property and equipment

Proceeds from sale of investment

Proceeds on notes receivable

Acquisition of Trees Colorado LLC

( 1,122,015 )

Net proceeds from sale of Next Big Crop

Proceeds from sale of building

Net cash (used in) provided by investing activities

Acquisition of TREES MLK

Proceeds from sale of investment

Net cash used in investing activities

Cash flows from financing activities

Proceeds from the sale of common stock and warrants - accrued stock payable

Proceeds from the exercise of warrants

Proceeds from exercise of stock options

Proceeds from preferred stock offering

Proceeds from notes payable

Payments on notes payable

Net cash provided by financing activities

Net increase in cash and cash equivalents

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

3 unchanged sentences

Non-cash investing & financing activities

Cashless warrant exercises

Beneficial conversion feature

10 % Warrants recorded as a debt discount and additional paid-in capital

Issuance of common stock to a consultant

Operating lease right-of-use asset/Operating lease liability

Deemed dividend from 8.5 % warrant repricing

15 % Warrants recorded as a debt discount and additional paid-in capital

Issuance of accrued stock

Cashless warrant exercise

Beneficial conversion feature

10 % Warrants recorded as a loss on extinguishment of debt and additional paid-in capital

Debt converted to equity

Issuance of common stock to an employee

Stock issued in connection with SevenFive Farm acquisition

Issuance of common stock to a consultant

See Notes to condensed consolidated financial statements.

2 unchanged sentences

IN STOCKHOLDERS’ EQUITY (DEFICIT)

For the three months ended September 30, 2021

Preferred Stock

Paid-in Capital

( 78,686,757 )

Common stock issued upon exercise of stock options

Common stock issued to a consultant

Common stock issued for acquisition of Trees Colorado LLC

Preferred shares issued

Warrants issued with preferred stock

Modification of Warrants

Modification of Options

Stock-based compensation

( 1,327,595 )

September 30, 2021

( 80,014,352 )

For the three months ended September 30, 2020

For the three months ended March 31, 2022

Preferred Stock

Paid-in Capital

( 71,226,830 )

January 1, 2022

( 83,820,815 )

Sale of common stock, net of issuance costs

Stock option granted to employees and consultants

September 30, 2020

Common stock issued for acquisition of Trees Waterfront LLC

Common stock issued for acquisition of Trees MLK LLC

Share-based compensation

March 31, 2022

( 84,681,871 )

For the nine months ended September 30, 2021

For the three months ended March 31, 2021

Preferred Stock

2 unchanged sentences

( 74,951,436 )

Common stock issued to consultants

Common stock issued to a consultant

Common stock issued upon exercise of stock options

Common stock issued for acquisition of Trees Colorado LLC

Warrants issued with 10 % Notes

1 unchanged sentence

Cashless exercise of warrants

Stock-based compensation

Preferred shares issued

Warrants issued with preferred stock

Modification of Warrants

Modification of Options

( 5,062,916 )

September 30, 2021

( 80,014,352 )

For the nine months ended September 30, 2020

Preferred Stock

Paid-in Capital

January 1, 2020

( 67,271,744 )

( 5,764,212 )

Sale of common stock, net of issuance costs

Common stock issued upon conversion of debt

Common stock issued for acquisition of SevenFive Farm

Stock options granted to employees and consultants

Beneficial conversion feature

Warrants exercised

Warrants issued with the 15 % Notes

Cashless exercise of warrants

Share-based compensation

( 2,359,068 )

September 30, 2020

March 31, 2021

( 77,310,504 )

6 unchanged sentences

We currently trade on the OTCQB® Market under the trading symbol CANN.

As of September 30, 2021, our operations are segregated into the following segments:

As of March 31, 2022, our operations are segregated into the following segments:

Retail (“Retail Segment”)

Through our acquisition of TDM, LLC (“TREES Englewood”) in September 2021, we operate a retail dispensary store in Englewood, Colorado.

Through our acquisition of TDM, LLC (“TREES Englewood”) in September 2021, our acquisition of Trees Portland, LLC, Trees Waterfront, LLC in December 2021 and our acquisition of Trees MLK, LLC in January 2022, we operate a retail dispensary store in Englewood, Colorado and three retail stores in Portland, Oregon.

The Trees MLK location, located in Portland, Oregon, is currently not in operation.

This location should be operational in the second quarter of 2022.

Cultivation (“Cultivation Segment”)

Through our acquisition of SevenFive Farm ("SevenFive") in May 2020, we operate a 17,000 square foot licensed light deprivation greenhouse cultivation facility.

During the three and nine months ended September 30, 2021, 24 % and 12 % of SevenFive’s revenue was with two and one customers, respectively.

During the three months ended March 31, 2022 and 2021, 45 % and 18 % of SevenFive’s revenue was with one customer, respectively.

Discontinued Operations - Operations Consulting and Products (“Operations Segment”)

3 unchanged sentences

NBC also provided operational support for our internal cultivation.

On July 16, 2021, we entered into an Asset Purchase Agreement with an individual to sell substantially all of the assets of NBC for a total of $ 150,000 and 10 % of profits generated by the buyer in the states of Michigan, Mississippi, and Massachusetts for a period of twelve months from the closing.

On July 16, 2021, we entered into an Asset Purchase Agreement with an individual to sell substantially all the assets of NBC for a total of $ 150,000 and 10 % of profits generated by the buyer in the states of Michigan, Mississippi, and Massachusetts for a period of twelve months from the closing.

On August 2, 2021, the sale of NBC was completed.

Pursuant to amendment, the buyer paid the additional $ 75,000 in March 2022, and the 10 % profit share described above was eliminated.

Basis of Presentation

5 unchanged sentences

The condensed consolidated balance sheet for the year ended December 31, 2021, was derived from audited financial statements but does not include all disclosures required by U.S.

The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto of the Company for the year ended December 31, 2020, which were included in the annual report on Form 10-K filed by the Company on April 1, 2021.

The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated

financial statements and notes thereto of the Company for the year ended December 31, 2021, which were included in the annual report on Form 10-K filed by the Company on March 25, 2022.

In the opinion of management, these condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and notes thereto of the Company and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of the Company's financial position and operating results.

The results for the three and nine months ended September 30, 2021 are not necessarily indicative of the operating results for the year ending December 31, 2021, or any other interim or future periods.

The results for the three months ended March 31, 2022, are not necessarily indicative of the operating results for the year ending December 31, 2022, or any other interim or future periods.

Since the date of the Annual Report, there have been no material changes to the Company’s significant accounting policies.

13 unchanged sentences

On August 2, 2021, the sale of NBC was completed.

Pursuant to amendment, the buyer paid the additional $ 75,000 in March 2022, and the 10 % profit share described above was eliminated.

On January 1, 2021, we discontinued our investments segment.

As this is not a materially significant segment, we have not shown the effects of the discontinued segment in the financial statements.

On December 26, 2019, the board of directors and management made the strategic decision to discontinue the operations for both the Security Segment and the Consumer Goods Segment.

The assets and liabilities classified as discontinued operations for the Security Segment and Consumer Goods Segment are presented separately in the balance sheet and the operating results.

The cash flows related to discontinued operations have not been segregated and are included in the consolidated statements of cash flows.

As of September 30, 2021, and December 31, 2020, there are $ 5,101 and $ 5,551 , respectively, of cash and cash equivalents included in assets of discontinued operations on the balance sheet.

Going Concern

The Company incurred net losses of $ 1.3 million and $ 5.1 million in three and nine months ended September 30, 2021, respectively, and $ 0.6 million and $ 4.5 million for the three and nine months ended September 30, 2020, respectively, and had an accumulated deficit of $ 80 million as of September 30, 2021.

The Company had cash and cash equivalents of $ 2.5 million and $ 0.8 million as of September 30, 2021 and December 31, 2020, respectively.

We incurred net losses of $ 861,056 and $ 2,359,068 during the three months ended March 31, 2022, and 2021, respectively, and had an accumulated deficit of $ 84,681,871 as of March 31, 2022.

We had cash and cash equivalents of $ 1,651,063 and $ 2,054,050 as of March 31, 2022, and December 31, 2021, respectively.

The accompanying consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets, and the satisfaction of liabilities and commitments in the ordinary course of business.

The Company has incurred recurring losses and negative cash flows from operations since inception and has primarily funded its operations with proceeds from the issuance of convertible debt.

The Company expects its operating losses to continue into the foreseeable future as it continues to execute its acquisition and growth strategy.

The Company believes that its cash and cash equivalents as of September 30, 2021 will be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the date of filing this Quarterly Report on Form 10-Q due to the receipt of an additional $ 2.3 million of cash in April 2021 from the issuance of a convertible note offering, the receipt of an additional $ 1.2 million of cash in September 2021 from the issuance of preferred stock and the pending acquisition of three dispensaries (See Note 13 for further information).

The Company may need additional funding to support its planned investing activities.

If the Company is unable to obtain additional funding, it would be forced to delay, reduce or eliminate some or all of its acquisition efforts, which could adversely affect its business prospects.

We have incurred recurring losses and negative cash flows from operations since inception and have primarily funded our

operations with proceeds from the issuance of convertible debt.

We expect our operating losses to continue into the foreseeable future as we continue to execute our acquisition and growth strategy.

We believe that our cash and cash equivalents as of March 31, 2022, will be sufficient to fund our operating expenses and capital expenditure requirements for at least twelve months from the date of filing this Quarterly Report on Form 10-Q due to the receipt of an additional $ 1.2 million of cash in September 2021 from the issuance of preferred stock and the acquisition of three dispensaries (See Note 2 for further information).

We may need additional funding to support our planned investing activities.

If we are unable to obtain additional funding, we would be forced to delay, reduce, or eliminate some or all of our acquisition efforts, which could adversely affect our growth plans.

Summary of Significant Accounting Policies

5 unchanged sentences

The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2021, although early adoption is permitted.

We are in the process of evaluating the impact of this new guidance on our consolidated financial statements.

We adopted this ASU in the first quarter of 2022.

This ASU did not have a material effect on our condensed consolidated financial statements.

FASB ASU 2019-12 – “Income Taxes (Topic 740)” – In December 2019, the FASB issued guidance which simplifies certain aspects of accounting for income taxes.

3 unchanged sentences

BUSINESS ACQUISITION

On May 13, 2020, we received approval of the transaction and transfer of the Dalton Adventures, LLC (“Seller”) license from the Colorado Marijuana Enforcement Division.

On May 25, 2020, we finalized the acquisition, pursuant to which we acquired the assets of the Seller that constitute the business of SevenFive Farm, a cultivation facility in Boulder, Colorado, whereby we acquired fixed assets, inventory, a cultivation license and the tradename.

The purchase price paid by the Company to the Seller was 8,859,117 shares of common stock.

The closing price of General Cannabis Corp’s common stock on May 13, 2020, the date of license transfer, was $ 0.38 per share, as such, fair value of consideration is $ 3,808,951 .

The purchase agreement had a provision whereby the Seller may require us to repurchase in cash 25 % of the shares issued to the owner of Dalton Adventures, LLC at a repurchase price equal to the same volume weighted average price used to determine the number of shares issued to the owner of Dalton Adventures, LLC at closing.

As a result, we recorded a liability using Black-Scholes in the amount of $ 442,487 and reduced additional paid-in capital.

In December 2020, the Seller waived his right to this provision in the purchase agreement and no longer has the possibility of the buyback of the shares.

Therefore, no stock put liability is recorded as of December 31, 2020 and the liability was reversed into equity.

We completed the allocation of the purchase price in the first quarter of 2021.

On September 2, 2021, we completed the acquisition of substantially all of the assets of TREES Englewood, representing a portion of the overall Trees transaction (“Trees Transaction”) previously disclosed pursuant to that certain First Amended and Restated Agreement and Plan of Reorganization and Liquidation dated May 28, 2021, by and among the Company, seller and certain other sellers party thereto, that consists of the assets relating to the Trees dispensary located in Englewood, Colorado (“Englewood Closing”).

We paid $ 1,155,256 in cash in connection with the Englewood Closing and stock consideration of 22,380,310 shares of our Common Stock.

The closing price of our common stock on September 2, 2021, the date of license transfer, was $ 0.47 per share, as such, fair value of consideration is $ 10,518,746 .

Further, cash equal to $ 1,732,884 will be paid to the seller in equal monthly installments over a period of 24 months from the Englewood Closing.

The table below reflects the Company’s estimates of the acquisition date fair values of the assets acquired:

The accompanying condensed consolidated financial statements include the results of SevenFive from the date of acquisition for financial reporting purposes, May 13, 2020.

The accompanying condensed consolidated financial statements include the results of Trees Englewood from the date of acquisition for financial reporting purposes, September 2, 2021.

The pro-forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2020, are as follows:

Three months ended

Nine months ended

September 30,

Total revenues

Net loss attributable to common stockholders

( 4,548,926 )

Net loss per common share:

Net income (loss) attributable to common stockholders

Net income (loss) per common share

Weighted average number of basic and diluted common shares outstanding

The unaudited proforma results of operations are presented for information purposes only.

The unaudited pro-forma results of operations are presented for information purposes only.

The unaudited pro-forma results are not intended to present actual results that would have been attained had the acquisition been completed as of January 1, 2020, or to project potential operating results as of any future date or for any future periods.

On September 2, 2021, General Cannabis Corp.

(the “Company”) completed the acquisition of substantially all of the assets of TREES Englewood, representing a portion of the overall Trees transaction (“Trees Transaction”) previously disclosed pursuant to that certain First Amended and Restated Agreement and Plan of Reorganization and Liquidation dated May 28, 2021 by and among the Company, seller and certain other sellers party thereto, that consists of the assets relating to the Trees dispensary located in Englewood, Colorado (“Englewood Closing”).

The cash paid by the Company in connection with the Englewood Closing consisted of $ 1,155,256.09 and stock consideration of 22,380,310 shares of the Company’s Common Stock.

Further, cash equal to $ 1,732,884.14 will be paid to the seller in equal monthly installments over a period of 24 months from the Englewood Closing.

On December 30, 2021, we completed the acquisition of substantially all the assets of Trees Portland, LLC and Trees Waterfront, LLC, representing a portion of the overall Trees Transaction, which consists of the assets relating to certain Trees dispensaries located in Portland, Oregon ("Oregon Closing”).

We paid cash in the amount of $ 331,581 in connection with the Oregon Closing and stock consideration of 6,423,575 shares of our Common Stock.

The closing price of our common stock on December 30, 2021, the date of license transfer, was $ 0.23 per share, as such, fair value of consideration is $ 1,477,422 .

Further, cash equal to $ 497,371 will be paid to the sellers in equal monthly installments over a period of 24 months from the Oregon Closing.

The table below reflects the Company’s estimates of the acquisition date fair values of the assets acquired:

The accompanying condensed consolidated financial statements include the results of Trees Englewood from the date of acquisition for financial reporting purposes, September 2, 2021.

The accompanying consolidated financial statements include the results of Trees Oregon from the date of acquisition for financial reporting purposes, December 30, 2021.

The pro-forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2020, are as follows:

Three months ended

Nine months ended

September 30,

Total revenues

2 unchanged sentences

Weighted average number of basic and diluted common shares outstanding

The unaudited proforma results of operations are presented for information purposes only.

The unaudited pro-forma results of operations are presented for information purposes only.

On January 5, 2022, we completed the acquisition of substantially all of the assets of Trees MLK Inc.

(“MLK”), representing the remaining Oregon dispensary in connection with the overall Trees transaction.

We paid cash in the amount of $ 256,582 and stock consideration of 4,970,654 shares of our Common Stock.

The closing price of our

common stock on January 5, 2022, the date of license transfer, was $ 0.27 per share, as such, fair value of consideration is $ 1,342,076 .

Further, cash equal to $ 384,873 will be paid to the sellers in equal monthly installments over a period of 24 months from the MLK closing.

The dispensary is a non-operating dispensary.

We will be opening the store in the second quarter of 2022.

The table below reflects the Company’s estimates of the acquisition date fair values of the assets acquired:

The accompanying consolidated financial statements include the results of Trees MLK from the date of acquisition for financial reporting purposes, January 5, 2022.

The pro-forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2021, are as follows:

Three months ended

Total revenues

Net income (loss) attributable to common stockholders

Net income (loss) per common share

Weighted average number of basic and diluted common shares outstanding

The unaudited pro-forma results of operations are presented for information purposes only.

The unaudited pro-forma results are not intended to present actual results that would have been attained had the acquisition been completed as of January 1, 2021, or to project potential operating results as of any future date or for any future periods.

We have not completed the allocation of the purchase price for the Trees acquisition.

As of March 31, 2022, the consolidated balance sheets include a preliminary allocation of fixed assets, inventory, intangible assets, and goodwill.

Management anticipates completing the purchase price allocation as soon as possible, but no later than one year from the acquisition dates.

DISCONTINUED OPERATIONS

1 unchanged sentence

On August 2, 2021, the sale of NBC was completed.

The condensed consolidated balance sheets include 2019 discontinued operations cash balances of $ 5,101 and $ 5,551 as of September 30, 2021 and December 31, 2020, respectively, and accounts payable balances of $ 53,128 and $ 54,641 as of September 30, 2021 and December 31, 2020, respectively.

The below table does not include the 2019 discontinued operations.

Pursuant to amendment, the buyer paid the additional $ 75,000 in March 2022, and the 10 % profit share described above was eliminated.

Assets and liabilities of discontinued operations for the Operations Segment included the following:

September 30,

Accounts receivable, net

7 unchanged sentences

A summary of the discontinued operations for the Operations Segment is presented as follows:

Three months ended

Nine months ended

September 30,

Three months ended March 31,

Product revenues

6 unchanged sentences

Total costs and expenses

Loss from discontinued operations

The condensed consolidated statement of operations include 2019 discontinued operations gain of $ 69,005 and loss of $ 78,620 for the three and nine months ended September 30, 2020, respectively, and are not reflected in the above table.

Income (loss) from discontinued operations

The cash flows related to discontinued operations have not been segregated and are included in the consolidated statements of cash flows.

The following table provides selected information on cash flows related to discontinued operations for the Operations Segment for the nine months ended September 30, 2021 and 2020.

Nine months ended

September 30,

The following table provides selected information on cash flows related to discontinued operations for the Operations Segment for the three months ended March 31, 2022 and 2021.

Three months ended

Accounts receivables

6 unchanged sentences

Our inventories consisted of the following:

September 30,

Raw materials

2 unchanged sentences

Inventories, net

On May 13, 2020, we entered into a commercial real estate lease with a related party (see Note 11) for 17,000 square feet of greenhouse space in Boulder, CO, with an initial term of five years and, at our option, two additional terms of five years each.

Rent is $ 30,900 per month with 1.5 % annual escalations.

We also pay our portion of real estate taxes.

In December 2020, we amended the lease to include a 3 % rent escalation in 2021 and 2022.

No other changes to the lease were made.

We accounted for the amendment as a lease modification and remeasured the lease with an incremental borrowing rate of 20 % which resulted in an increase of $ 246,250 to the right-of-use operating lease asset and lease liability from the initial lease valued on May 13, 2020 using an incremental borrowing rate of 22.8 %.

We determined the present value of the future lease payments using a discount rate of 20 % over a 15 year term, our incremental borrowing

rate based on outstanding debt, resulting in a right-of-use asset and lease liability of $ 1,877,423 which are being applied ratably over the term of the lease.

As of September 30, 2021, the balance of the right-of-use asset and lease liability was $ 1,806,784 and $ 1,872,659 , respectively.

On September 2, 2021, we entered into a commercial real estate lease with a related party (see Note 11) for retail space in Englewood, CO, with an initial term of five years and, at our option, two additional terms of three years each.

On September 2, 2021, we entered into a commercial real estate lease with a related party (see Note 11) for retail space for our dispensary in Englewood, CO, with an initial term of five years and, at our option, two additional terms of three years each.

Rent is $ 10,000 per month with 3 % annual escalations during the initial term and 4 % annual escalations during the option term.

1 unchanged sentence

We determined the present value of the future lease payments using a discount rate of 20 % over a 11 year term, resulting in a right-of-use asset and lease liability of $ 602,140 which are being applied ratably over the term of the lease.

As of September 30, 2021, the balance of the right-of-use asset and lease liability was $ 590,270 and $ 592,140 , respectively.

As of March 31, 2022, the balance of the right-of-use asset and lease liability was $ 578,227 and $ 591,321 , respectively.

Through the acquisition of Trees Englewood, we entered into a commercial real estate lease for office space in Denver, CO.

This office space is our new principal business office.

The lease has 15 months remaining.

This office space is our corporate office.

The lease expires in November 2022.

Rent is $ 7,150 per month with a 3 % escalation beginning in November 2021.

1 unchanged sentence

We determined the present value of the future lease payments using a discount rate of 20 % over a 15-month term, resulting in a right-of-use asset and lease liability of $ 98,211 which are being applied ratably over the term of the lease.

As of September 30, 2021, the balance of the right-of-use asset and lease liability was $ 90,876 and $ 91,061 , respectively.

As of March 31, 2022, the balance of the right-of-use asset and lease liability was $ 54,496 and $ 54,724 , respectively.

Through the acquisition of Trees Portland, we entered into a commercial real estate lease in Portland, OR.

The lease expires in April 2027.

Rent is $ 5,124 per month with a 5 % annual escalation beginning in May 2022.

The rent includes payment of property taxes.

We determined the present value of the future lease payments using a discount of 20 % over a 5.5 -year term, resulting in a right-of-use asset and lease liability of $ 229,501 .

As of March 31, 2022 , the balance of the right-of-use asset and lease liability was $ 219,275 and $ 221,586 , respectively.

Through the acquisition of Trees Waterfront, we entered into a commercial real estate lease in Portland, OR.

The lease has an initial term of 5 years and, at our option an additional term of 5 years .

The lease expires in March 2031.

Rent is $ 6,683 per month with a 3 % annual escalation.

The rent includes payment of property taxes.

We determined the present value of the future lease payments using a discount rate of 20 % over a 10-year term, resulting in a right-of-use asset and lease liability of $ 381,272 .

As of March 31, 2022 , the balance of the right-of-use asset and lease liability was $ 370,529 and $ 373,702 , respectively.

Through the acquisition of Trees MLK, we entered into a commercial real estate lease in Portland, OR.

The lease has an initial term of 3 years and at our option two additional terms of 3 years each.

The lease expires in July 2029.

Rent is $ 3,150 per month with a 5 % annual escalation.

The rent includes payment of property taxes.

We determined the present value of the future lease payments using a discount rate of 20 % over a 10-year term, resulting in a right-of-use asset and lease liability of $ 172,053 .

As of March 31, 2022 , the balance of the right-of-use asset and lease liability was $ 166,297 and $ 168,227 , respectively.

Future remaining minimum lease payments were as follows:

Year ending December 31,

2021 (remaining six months)

2022 (remaining nine months)

Present value adjustment

4 unchanged sentences

Balance as of December 31, 2020

Balance as of September 30, 2021

In December 2020, several warrant holders exercised their 2020 A warrants through cashless exercises, and we issued 282,213 shares of common stock.

259,415 of those shares issued had not been transferred to the warrant holders as of December 31, 2020 and were included in accrued stock.

During January 2021 all shares were issued.

See Note 8 for further details of the cashless exercises.

Trees Waterfront acquisition stock accrual

Balance as of December 31, 2021

( 1,669,537 )

Balance as of March 31, 2022

In December 2021, we completed the acquisition of Trees Waterfront.

As part of the transaction, we granted 1,669,537 shares of our common stock.

The stock was issued on January 6, 2022.

NOTES PAYABLE

Our notes payable consisted of the following:

September 30,

2020 10 % Notes

2019 15% Notes

Related party note payable

Trees Acquisition Note

Trees Acquisition Notes

Unamortized debt discount

( 1,697,166 )

( 1,911,447 )

Current portion

( 1,259,449 )

( 1,094,398 )

Long-term portion

3 unchanged sentences

The 10 % Notes bear interest at an annual rate of 10 % and will mature on December 23, 2023.

The 10 % Investors have the option at any time to convert up to 50 % of the outstanding unpaid principal and accrued interest of the 10 % Notes into Common Stock at a variable price of 80 % of the market price but no less than $ 0.65 per share and no more than $ 1.00 per share.

The 10 % Investors have the option at any time to convert up to 50 % of the outstanding unpaid principal and accrued interest of the

10 % Notes into Common Stock at a variable price of 80 % of the market price but no less than $ 0.65 per share and no more than $ 1.00 per share.

The 10 % Warrants are exercisable at an exercise price of $ 0.56 per warrant.

1 unchanged sentence

The relative fair value of the cancellation of the outstanding indebtedness was recorded as an extinguishment of debt and additional paid-in capital of $ 131,000 .

We recorded amortization of debt discount expense from the 10 % Notes of $ 21,868 and nil for the three months ended September 30, 2021 and 2020, respectively, and $ 64,891 and nil during the nine months ended September 30, 2021 and 2020, respectively.

We recorded amortization of debt discount expense from the 10 % Notes of $ 21,393 for the three months ended March 31, 2022 and 2021, respectively.

We determined there was no beneficial conversion feature on the 10 % Notes issued in December 2020.

12 unchanged sentences

The 10 % Notes bear interest at an annual rate of 10 % and will mature on February 8, 2024.

The 10 % Investor has the option to convert up to 50 % of the outstanding unpaid principal and accrued interest of the 10 % Notes into Common Stock at a

variable price of 80 % of the market price but no less than $ 0.65 per share and no more than $ 1.00 per share.

The 10 % Investor has the option to convert up to 50 % of the outstanding unpaid principal and accrued interest of the 10 % Notes into Common Stock at a variable price of 80 % of the market price but no less than $ 0.65 per share and no more than $ 1.00 per share.

The 10 % Warrants are exercisable at an exercise price of $ 0.56 per warrant.

3 unchanged sentences

We recorded $ 417,539 as additional paid in capital and a debt discount and included in our consolidated statement of operations.

We recorded amortization of debt discount expense from the 10 % Notes issued in February 2021 of $ 71,150 and nil for the three months ended September 30, 2021 and 2020, respectively, and $ 180,968 and nil during the nine months ended September 30, 2021 and 2020, respectively.

We recorded amortization of debt discount expense from the 10 % Notes issued in February 2021 of $ 69,603 and $ 28,531 for the three months ended March 31, 2022 and 2021, respectively.

The 10 % Notes are treated as conventional debt.

7 unchanged sentences

On April 20, 2021, we entered into a Securities Purchase Agreement with accredited 10 % Investors, pursuant to which we issued and sold 10 % Notes with an aggregate principal amount of $ 2,300,000 to such 10 % Investors.

The 10 % Notes are part of an over-allotment approved by the existing noteholders in connection with the original convertible note offering of $ 4,600,000 consummated on December 23, 2020 and February 8, 2021.

The 10 % Notes

are part of an over-allotment approved by the existing noteholders in connection with the original convertible note offering of $ 4,600,000 consummated on December 23, 2020, and February 8, 2021.

In connection with the issuance of the 10 % Notes, each holder received warrants to purchase shares of our common stock equal to 20 % coverage of the aggregate principal amount at $ 0.56 per share, except that the warrants coverage to one Investor acting as lead investor in the raise received approximately 35.5 % of the aggregate principal amount invested.

6 unchanged sentences

We recorded $ 692,500 as additional paid in capital and a debt discount and included in our consolidated statement of operations.

We recorded amortization of debt discount expense from the 10 % Notes issued in April 2021 of $ 126,025 and nil for the three months ended September 30, 2021 and 2020, respectively, and $ 224,446 and nil during the nine months ended September 30, 2021 and 2020, respectively.

We recorded amortization of debt discount expense from the 10 % Notes issued in April 2021 of $ 123,285 and nil for the three months ended March 31, 2022 and 2021, respectively.

The 10 % Notes are treated as conventional debt.

6 unchanged sentences

Expected volatility

In December 2019, we completed a private placement with certain accredited investors pursuant to an unsecured promissory note (the “ 15 % Notes”) with an aggregate principal amount of $ 300,000 .

In February and March 2020, we completed private placements with certain accredited investors, including some holders of our 2019 12 % Notes (as defined below), of 15 % Notes with an aggregate principal amount of $ 2,031,000 in exchange for $ 525,000 of new funding and the cancellation of $ 1,506,000 aggregate principal amount of the 2019 12 % Notes.

The 15 % Notes have an annual interest rate of 15 % and matured on January 31, 2021.

$ 1.0 million of the 15 % Notes were exchanged for the 10 % Notes (see above), $ 2.1 million was paid in full in December 2020 and the remaining $ 200,000 was paid in full in the first quarter 2021.

The 15 % Notes provide that they shall be repaid in full out of the proceeds of any new debt or equity capital raise with net proceeds of more than $ 5,000,000 .

In connection with the issuance of the 15 % Notes, each holder of 15 % Notes received three warrants (i.e., a 2020 A Warrant, a 2020 B Warrant and a 2020 C Warrant) to acquire shares of common stock at an exercise price equal to $ 0.45 per share, with the number of shares subject to each warrant equal to one share for each $ 1.00 of principal amount of 15 % Notes issued to the noteholder.

The 2020 A Warrants had an expiration date of December 31, 2020, the 2020 B Warrants have an expiration date of December 31, 2021, and the 2020 C Warrants have an expiration date of December 31, 2022 (collectively, the “ 15 % Warrants”).

By way of example, if an investor was issued a 15 % Note with a principal amount of $ 250,000 , such noteholder would receive a 2020 A Warrant to purchase 250,000 shares of common stock, a 2020 B Warrant to purchase 250,000 shares of common stock and a 2020 C Warrant to purchase 250,000 shares of common stock.

Accordingly, the Company issued 15 % Warrants to purchase a total of 6,993,000 shares of common stock to the holders of 15 % Notes.

The exercise price of these warrants is subject to adjustment as a result of certain future equity issuances of securities by the Company at a price below the then-effective exercise price of the 15 % Warrants.

As a result of such subsequent issuances of securities by the Company during the second quarter of 2020, the exercise price of the 15 % Warrants had decreased to $ 0.3983 per share.

As of September 30, 2021, the warrant holders exercised 1,131,000 of the 2020 A Warrants into 282,813 shares of our common stock through cashless exercise.

We received $ 300,000 of cash in December 2019 and an additional $ 525,000 of cash January 2020 through March 2020 for issuing the 15 % Notes.

The relative fair value of the new funding on the 15 % Warrants was recorded as a debt discount and additional paid-in capital of $ 333,056 .

The relative fair value of the cancellation of the outstanding indebtedness was recorded as an extinguishment of debt and additional paid-in capital of $ 668,335 .

We recorded amortization of debt discount expense from the 15 % Notes of nil and $ 61,002 for the three months ended September 30, 2021 and 2020, respectively, and nil and $ 199,839 during the nine months ended September 30, 2021 and 2020, respectively.

The 15 % Notes are otherwise treated as conventional debt.

For purposes of determining the debt discount, the underlying assumptions used in the binomial lattice model to determine the fair value of the 15 % Warrants as of March 2020 were:

Current stock price

Exercise price

Risk-free interest rate

0.68 - 1.62 %

Expected dividend yield

Expected term (in years)

Expected volatility

On September 17, 2021 we entered into warrant amendments with certain ‘A’ and ‘B’ warrant holders from the 15% Notes.

Pursuant to the warrant amendment the expiration date was extended until December 31, 2024 and the exercise price thereof was increased to $1.00 per warrant share.

Warrant amendments were entered into with warrant holders representing an aggregate of 400,000 A warrants and 1,211,000 B warrants.

We recognized an additional expense of $233,374 in loss on extinguishment of debt as a result of the modification.

WARRANT DERIVATIVE LIABILITY

1 unchanged sentence

The 2019 Warrants, issued with the 2019 Capital Raise, are accounted for as a derivative liability.

The 2019 Warrant agreements contain a cash settlement provision whereby the holders could settle the warrants for cash based on the Black-Scholes value, upon certain fundamental transactions, as defined in the 2019 Warrant agreement, that are considered outside of the control of management, such as a change of control.

The 2019 Warrant agreements contain a cash settlement provision whereby the holders could settle the warrants for cash based on the Black-Scholes value, upon certain fundamental transactions, as defined in the 2019 Warrant agreement, which are considered outside of the control of management, such as a change of control.

The original exercise price of the 2019 Warrants was $ 1.30 per share.

5 unchanged sentences

We booked an adjustment to the derivative liability of $ 1,523,117 as a result.

As of September 30, 2021, there were 322,807 of the 2019 Warrants outstanding.

As of March 31, 2022, there were 322,807 of the 2019 Warrants outstanding.

The following are the key assumptions that were used to determine the fair value of the 2019 Warrants

September 30,

Number of shares underlying the warrants

4 unchanged sentences

The following table sets forth a summary of the changes in the fair value of the warrant derivative liability, our Level 3 financial liabilities that are measured at fair value on a recurring basis:

Nine months ended September 30,

Three months ended March 31,

Beginning balance

2 unchanged sentences

Change in fair value of warrants derivative liability

( 1,375,619 )

Ending balance

COMMITMENTS AND CONTINGENCIES

In July 2021, the Company was served with a Complaint in the District Court, County of Denver, Colorado, by plaintiff 2353 SB, LLC (“Plaintiff”).

Plaintiff and the Company entered into a lease for the premises at 2353 South Broadway, Denver, CO with a term of three (3) years to commence on November 1, 2020.

In July 2021, we were served with a Complaint in the District Court, County of Denver, Colorado, by plaintiff 2353 SB, LLC (“Plaintiff”).

We entered into a lease with Plaintiff for the premises at 2353 South Broadway, Denver, CO with a term of three (3) years to commence on November 1, 2020.

Monthly lease payments were to be $ 12,866.66 .

In 2020, the Company made initial payments (first month’s rent and security deposit) of $ 39,633.32 ;

but subsequently did not take possession of the premises and has made no further payments in respect thereof, as a direct

result of the COVID-19 pandemic.

In 2020, we made initial payments (first month’s rent and security deposit) of $ 39,633.32 ;

but subsequently did not take possession of the premises and have made no further payments in respect thereof, as a direct result of the COVID-19 pandemic.

The lease contains a ‘force majeure’ clause which includes a provision that neither party is liable for failure to perform its obligations under the lease which have become practicably impossible because of circumstances beyond the reasonable control of the applicable party, including ‘pandemics or outbreak of communicable disease.’

The Company has taken the position that its failure to take possession and make any further payments under the lease is directly related to the COVID-19 pandemic.

The Company intends to vigorously defend this action and believes that the above-referenced force majeure clause presents a complete defense to Plaintiff’s claims.

We have taken the position that our failure to take possession and make any further payments under the lease is directly related to the COVID-19 pandemic.

We intend to vigorously defend this action and believe that the above-referenced force majeure clause presents a complete defense to Plaintiff’s claims.

Both parties have filed motions for summary judgment, and the parties are currently awaiting the decision of the court in respect thereof.

2 unchanged sentences

If it is ultimately determined that his resignation was, in fact, for "Good Reason", rather than a voluntary act absent "Good Reason", it could enable certain potential claims for benefits under his employment agreement, including potential claims for severance, for the vesting of his unvested options and/or for the extension of the term within which he can exercise his options in the future.

Having reviewed the matter, however, we do not believe that Mr.

We do not believe that Mr.

Feinsod's resignation was for "Good Reason."

Accordingly, we believe that Mr.

Feinsod's resignation was voluntary, and that any such potential claims, if asserted, would be without foundation.

Feinsod's resignation was voluntary, and that any such potential claims, if asserted, would be without substantial merit.

Although the outcome of legal proceedings is subject to uncertainty, the Company will vigorously defend any future claims made by Mr.

Feinsod alleging a "Good Reason"

From time to time, the Company is a party to various litigation matters incidental to the conduct of its business.

The Company is not presently a party to any legal proceedings that would have a material adverse effect on its business, operating results, financial condition or cash flows.

From time to time, we are a party to various litigation matters incidental to the conduct of its business.

We are not presently a party to any legal proceedings that would have a material adverse effect on our business, operating results, financial condition, or cash flows.

STOCKHOLDERS’ EQUITY

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The Preferred Warrants have a five-year term and an exercise price per Preferred Warrant share of $ 1.05 .

The warrants contain an anti-dilution provision pursuant to which upon we do a future capital raise at less than $ 1.00 per shares, each Preferred Investor will be granted additional Preferred Warrants on a ‘full-ratchet’ basis.

The warrants contain an anti-dilution provision pursuant to which upon we do a future capital raise at less than $ 1.00 per share, each Preferred Investor will be granted additional Preferred Warrants on a ‘full-ratchet’ basis.

The proceeds received in the sale of the Series A Preferred totaled $ 1,180,000 , for the issuance of 1,180 Series A Preferred, plus 354,000 warrants.

The warrants were valued using a Black Scholes model, at $ 117,131 and per the relative fair value allocation, $ 1,073,446 was allocated to the Series A proceeds.

2020 Capital Raise

On May 29, 2020, we entered into a subscription agreement, as amended with Hershey Strategic Capital, LP and Shore Ventures III, LP (collectively as the “Hershey Investor”) with respect to the sale of shares of common stock and warrants to purchase common stock (collectively, the “securities”).

The sales of the securities to the Hershey Investor consists of a minimum of $ 2,185,000 of securities and a maximum of $ 3,000,000 of securities, as described further below.

The purchase price of the securities at each closing is as follows:

(i) the purchase price of each share of common stock is $ 0.3983 per share, and (ii) for each one dollar invested by the Hershey Investor, the Hershey Investor receives a warrant to purchase a number of shares of common stock equal to 75 % of the number of shares of common stock purchased by the Hershey Investor at an exercise price per share equal to $ 0.5565 .

The warrants have a term of five years .

During the year ended December 31, 2020, we sold $ 3,000,000 of securities to the Hershey Investor, representing 7,532,010 shares of common stock and warrants to purchase 5,649,007 shares of common stock at an exercise price of $ 0.5565 per share.

The warrants were recorded as equity and equity issuance costs in the amount of $ 2,173,074 .

Notwithstanding the foregoing, none of the Hershey Investor warrants are exercisable if after giving effect to such exercise the Hershey Investor (together with affiliates) would own in excess of 9.99 % (“Beneficial Ownership Limitation”) of the shares of issued and outstanding Common Stock of the Company.

The Beneficial Ownership Limitation may be increased by the Hershey Investor upon not less than 61 days ’ prior notice.

The Hershey Subscription Agreement also provides the Hershey Investor with certain participation rights in future financings of the Company until the one-year anniversary of the second closing.

The Hershey Subscription Agreement further provides that the Company shall, during a negotiation period ending October 4, 2020, endeavor to cause the existing holders of the promissory notes of the Company having an outstanding balance in the amount of approximately $ 2,331,000 as of June 1, 2020 that are due on or about January 31, 2021, to extend the maturity date of such notes to a date that is not earlier than January 31, 2022.

As of October 4, 2020, $ 600,000 of the $ 2,331,000 outstanding notes had extended the maturity date.

If, at the end of the negotiation period per the contract, all of the existing notes have not been amended to extend the maturity dates thereof, then the Company shall issue to the Hershey Investor additional warrants to purchase shares of common stock.

Any such additional warrants will be for a number of shares of common stock based on the dollar amount of the outstanding balance of the existing notes that were not extended, with each one dollar of existing notes that were not extended representing one share subject to such additional warrant.

The exercise price of any such additional warrants will be equal to 100 % of the 30-day volume weighted average price of the Company’s common stock on the last day of the negotiation period, provided that such exercise price shall not be lower than $ 0.45 per share nor higher than $ 0.56 per share.

The Hershey Investor extended the negotiation period to December 11, 2020.

As of December 11, 2020, no existing holders had extended their promissory notes, therefore, we issued the Hershey Investor additional warrants in accordance with the agreement.

On December 14, 2020 we issued an additional 1,631,000 warrants to purchase common stock at an exercise price of $ 0.4917 to the Hershey Investor.

These warrants expire on December 11, 2025.

The warrants were recorded as a deemed dividend in the amount of $ 732,494 .

Stock-based compensation

We use the fair value method to account for stock-based compensation.

We recorded $ 131,836 and $ 420,990 in compensation expense for the three months ended September 30, 2021 and 2020, respectively, and $ 194,120 and $ 1,427,931 , for the nine months ended September 30, 2021 and 2020, respectively.

We recorded $ 76,117 and $ 103,932 in compensation expense for the three months ended March 31, 2022 and 2021, respectively.

This includes expense related to options issued in prior years for which the requisite service period for those options includes the current period as well as options issued in the current period.

2 unchanged sentences

On September 3, 2021, we modified two employees stock options in conjunction with revised employment agreements.

As a result of the modification, we recognized $21,525 in compensation expense for the three and nine months ended September 30, 2021 and 2020.

During the nine months ended September 30, 2021 we granted options to purchase 1,070,500 common shares to employees and directors.

As a result of the modification, we recognized an additional $ 21,525 in compensation expense during the third quarter of 2021.

During the three months ended March 31, 2022, we granted options to purchase 125,000 common shares to directors.

The options expire five years from the date of grant and vest over a period of one year .

6 unchanged sentences

Forfeited or expired

( 1,902,800 )

Outstanding as of September 30, 2021

Exercisable as of September 30, 2021

As of September 30, 2021, there was approximately $ 241,412 of total unrecognized compensation expense related to unvested employee awards, which is expected to be recognized over a weighted-average period of eleven months .

Outstanding as of March 31, 2022

Exercisable as of March 31, 2022

As of March 31, 2022, there was approximately $ 66,574 of total unrecognized compensation expense related to unvested employee awards, which is expected to be recognized over a weighted-average period of two months .

RELATED PARTY TRANSACTIONS

On June 3, 2020, the Company entered into a consulting agreement with Adam Hershey, Interim Chief Executive Officer, board member and investor, pursuant to which he would act as a strategic consultant for the Company, including providing assistance with the sourcing and evaluation of merger and acquisition deals, strategic capital and strategic partnerships or joint ventures.

On June 3, 2020, we entered into a consulting agreement with Adam Hershey, Interim Chief Executive Officer, board member and investor, pursuant to which he would act as a strategic consultant for the Company, including providing assistance with the sourcing and evaluation of merger and acquisition deals, strategic capital, and strategic partnerships or joint ventures.

Hershey is paid an initial monthly rate of $ 8,333 for the services, subject to certain adjustments.

We paid $ 24,999 for the three months ended September 30, 2021 and 2020, respectively, and $ 74,997 and $ 33,332 for the nine months ended September 30, 2021 and 2020, respectively.

We paid $ 24,999 for the three months ended March 31, 2022 and 2021, respectively.

We currently have a lease agreement with Dalton Adventures, LLC in which we rent 17,000 square feet of greenhouse space in Boulder, Colorado for $ 34,518 a month, of which $ 31,827 is base rent and $ 2,691 is property taxes.

The owner of Dalton Adventures, LLC is a principal shareholder and board member of the Company.

We incurred approximately $ 115,000 and $ 101,000 for the three months ended September 30, 2021 and 2020, respectively, and $ 344,000 and $ 182,000 for the nine months ended September 30, 2021 and 2020.

We incurred approximately $ 112,000 and $ 115,000 in rent expense for the three months ended March 31, 2022 and 2021, respectively.

In April 2022, we amended the lease agreement with Dalton Adventures, LLC.

See Note 13 for discussion.

We currently have a lease agreement with Bellewood Holdings, LLC in which we rent retail space for the Trees Englewood retail store in Englewood, Colorado for $ 10,000 per month.

The owner of Bellewood Holdings, LLC is a principal shareholder and board member of the Company.

We incurred approximately $ 11,871 of rent expense for the three and nine months ended September 30, 2021.

We incurred approximately $ 36,000 and nil of rent expense for the three months ended March 31, 2022 and 2021, respectively.

On December 23, 2020, four of our current board members purchased senior convertible promissory notes from the Company for an aggregate amount of $ 320,000 .

A board member who resigned in May 2021 purchased $ 30,000 of the senior convertible promissory notes from the Company.

These notes are included in the 10 % Notes discussed in Note 7.

Accrued interest earned and owed to the board members was $ 25,257 as of September 30, 2021.

Accrued interest earned and owed to the board members was $ 41,435 as of March 31, 2022.

SEGMENT INFORMATION

3 unchanged sentences

Segment information is presented in accordance with ASC 280, "Segments Reporting."

This standard is based on a management approach that requires segmentation based upon the Company’s internal organization and disclosure of revenue and certain expenses based upon internal accounting methods.

The Company’s financial reporting systems present various data for management to run the business, including internal profit and loss statements prepared on a basis not consistent with GAAP.

This standard is based on a management approach that requires segmentation based upon our internal organization and disclosure of revenue and certain expenses based upon internal accounting methods.

Our financial reporting systems present various data for management to run the business, including internal profit and loss statements prepared on a basis not consistent with GAAP.

The following information is presented net of discontinued operations.

Three months ended September 30

Three months ended March 31

Costs and expenses

( 2,593,269 )

Segment operating income

Corporate expenses

( 3,058,301 )

Net loss from continuing operations before income taxes

( 1,286,990 )

Costs and expenses

Segment operating income

Corporate expenses

Net loss from continuing operations before income taxes

Nine months ended September 30

Total revenues

Costs and expenses

( 1,381,345 )

( 3,206,121 )

Operating (loss) income

Corporate expenses

( 4,493,244 )

Net loss from continuing operations before income taxes

( 4,685,782 )

Total revenues

Costs and expenses

( 1,025,507 )

Operating income

Segment operating income

Corporate expenses

2 unchanged sentences

( 2,345,616 )

September 30,

Discontinued operations

Total assets - segments

2 unchanged sentences

SUBSEQUENT EVENTS

On November 1, 2021, we moved our principal corporate headquarters to the lease acquired through the Trees acquisition.

The new corporate address is 1901 S Navajo Street, Denver, Colorado, 80223.

(See Note 5 for information regarding the lease).

On April 5, 2022, we entered into an Amendment to Lease with Dalton Farms, LLC, the landlord of our grow facility.

Pursuant to the Lease Amendment, commencing April 1, 2022, base rent is decreased to $ 27,000 per month for the remainder of 2022.

Increase in base rent become effective January 1, 2023 and are as otherwise provided for in the original lease.

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-Q

Item 1. Financial Statements