14 unchanged sentences
Through our acquisition of SevenFive Farm in May 2020, we operate a 17,000 square foot licensed light deprivation greenhouse cultivation facility.
−Removed: During the three months ended June 30, 2022 and 2021, 78% and 11% of SevenFive’s revenue was with one customer, respectively.
−Removed: During the six months ended June 30, 2022 and 2021, 59% and 11% was with one customer, respectively.
−Removed: The customer is a related party dispensary and the revenues associated with this customer is eliminated in consolidation.
+Added: During the three months ended September 30, 2022 and 2021, 79% and 24% of SevenFive’s revenue was with one and two customers, respectively.
+Added: During the nine months ended September 30, 2022 and 2021, 66% and 12% was with one customer, respectively.
+Added: The customer in 2022 is a related party dispensary and the revenues associated with this customer is eliminated in consolidation.
Discontinued Operations - Operations Consulting and Products
8 unchanged sentences
The tables and the discussion below should be read in conjunction with the accompanying condensed consolidated financial statements and the notes thereto in this report.
−Removed: Three months ended June 30,
+Added: Three months ended September 30,
Costs and expenses
3 unchanged sentences
Loss from operations before income taxes
−Removed: Six months ended June 30,
+Added: Nine months ended September 30,
Costs and expenses
3 unchanged sentences
Loss from operations before income taxes
−Removed: The addition of our Retail segment contributed to the significant increase in revenues for the three and six months ended June 30, 2022.
+Added: The addition of our Retail segment contributed to the significant increase in revenues for the three and nine months ended September 30, 2022.
See Segment discussions below for further details.
Costs and expenses
−Removed: Three months ended June 30,
+Added: Three months ended September 30,
Cost of sales
3 unchanged sentences
Depreciation and amortization
−Removed: Six months ended June 30,
+Added: Nine months ended September 30,
Cost of sales
3 unchanged sentences
Depreciation and amortization
−Removed: Cost of sales increased for the three and six months ended June 30, 2022 due to the addition of the Retail Segment in the third and fourth quarters of 2021.
+Added: Cost of sales increased for the three and nine months ended September 30, 2022 due to the addition of the Retail Segment in the third and fourth quarters of 2021.
See Segment discussions below for further details.
−Removed: Selling, general and administrative expense increased for the three and six months ended June 30, 2022, as compared to June 30, 2021, due to the acquisition of three dispensaries in the third and fourth quarter of 2021 and one additional dispensary in the first quarter of 2022.
+Added: Selling, general and administrative expense increased for the three and nine months ended September 30, 2022, as compared to September 30, 2021, due to the acquisition of three dispensaries in the third and fourth quarter of 2021 and one additional dispensary in the first quarter of 2022.
This resulted in an increase in employees and an increase in rent expense.
−Removed: Professional fees consist primarily of accounting and legal expenses and decreased slightly for the three and six months ended June 30, 2022, as compared to the three and six months ended June 30, 2021, due to a concentrated effort on reduction of expenses.
+Added: Professional fees consist primarily of accounting and legal expenses.
+Added: Professional fees increased slightly for the three months ended September 30, 2022 as compared to September 30, 2021 due to the increased acquisition activity in the third quarter of 2022.
+Added: Professional fees decreased slightly for the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021, due to a concentrated effort on reduction of expenses.
Stock-based compensation included the following:
−Removed: Three months ended June 30,
+Added: Three months ended September 30,
Employee awards
−Removed: Six months ended June 30,
+Added: Nine months ended September 30,
Employee awards
1 unchanged sentence
Expense varies primarily due to the number of stock options granted and the share price on the date of grant.
−Removed: The increase in expense for the three and six months ended June 30, 2022, as compared to June 30, 2021, is due to the increase in forfeitures in 2021 due to the departure of our Chief Executive Officer in May 2021, and the departure of our Chief Financial Officer in September 2021.
+Added: The decrease in expense for the three and nine months ended September 30, 2022, as compared to September 30, 2021, is due to not issuing options in the third quarter of 2022.
Other Expense
−Removed: Three months ended June 30,
+Added: Three months ended September 30,
Amortization of debt discount
Interest expense
+Added: Loss on extinguishment of debt
(Gain) loss on derivative liability
Gain on sale of assets
−Removed: Six months ended June 30,
+Added: Nine months ended September 30,
Amortization of debt discount
Interest expense
+Added: Loss on extinguishment of debt
Loss (gain) on derivative liability
−Removed: (Gain) loss on sale of assets
−Removed: Amortization of debt discount increased during the three and six months ended June 30, 2022, as compared to June 30, 2021, due to the senior convertible promissory notes with warrants (“10% Notes”) issued in December 2020, February 2021, and April 2021.
−Removed: Interest expense increased during the three and six months ended June 30, 2022, as compared to June 30, 2021, due to the addition of the 10% Notes with an interest rate of 10%.
+Added: Gain on sale of assets
+Added: Amortization of debt discount and loss on extinguishment of debt increased during the three and nine months ended September 30, 2022, as compared to September 30, 2021, due to the senior convertible promissory notes with warrants (“12% Notes”) issued in September 2022 and the rollover and repayment of the 10% Notes.
+Added: Interest expense increased during the three and nine months ended September 30, 2022, as compared to September 30, 2021, due to the addition of the 10% Notes with an interest rate of 10% in 2021.
The gain on warrant derivative liability reflects the change in the fair value of the 2019 Warrants.
−Removed: Three months ended June 30,
+Added: Three months ended September 30,
Costs and expenses
−Removed: Six months ended June 30,
+Added: Nine months ended September 30,
Costs and expenses
2 unchanged sentences
The Retail Segment will provide consistent positive cash flows which will significantly contribute to our working capital position.
−Removed: Three months ended June 30,
+Added: Three months ended September 30,
Costs and expenses
−Removed: Six months ended June 30,
+Added: Nine months ended September 30,
Costs and expenses
−Removed: The decrease in revenues for the three and six months ended June 30, 2022, over prior year is due to the decrease in overall market price of flower.
+Added: The decrease in revenues for the three and nine months ended September 30, 2022, over prior year is due to the decrease in overall market price of flower.
The decrease in gross margin is due to overall increase in expenses due to inflation.
2 unchanged sentences
We anticipate our significant uses of resources will include funding operations and developing infrastructure.
+Added: In September 2022, we received $10,587,250 in cash, of which $4,037,500 is held in restricted cash for future acquisitions.
+Added: We received the cash in a private placement with certain accredited investors pursuant to the 12% Notes to be used for acquisition of dispensaries and operating capital.
In September 2021, we received $1,180,000 in cash in a private placement with certain accredited investors pursuant to the Series A Convertible Preferred Stock to be used for the acquisition of dispensaries and for operating capital.
3 unchanged sentences
Sources and uses of cash
−Removed: We had cash of $1,072,896 and $2,054,050 as of June 30, 2022, and December 31, 2021, respectively.
+Added: We had cash of $1,964,660 and $2,054,050 as of September 30, 2022, and December 31, 2021, respectively.
Our cash flows from operating, investing and financing activities were as follows:
−Removed: Six months ended June 30,
+Added: Nine months ended September 30,
Net cash used in operating activities
−Removed: Net cash provided by (used in) investing activities
−Removed: Net cash provided by (used in) financing activities
+Added: Net cash used in investing activities
+Added: Net cash provided by financing activities
Net cash used in operating activities decreased in 2022 due to the acquisition of TREES Englewood, Trees Portland, Trees Waterfront and Trees MLK which provides positive operating cash flows and adjustments relating to non-cash activities.
−Removed: Net cash provided by (used in) investing activities for the six months ended June 30, 2022, increased from June 30, 2021, due to the purchase of, Trees MLK, Inc and the purchase of property and equipment, offset by the receipt of notes receivable.
−Removed: Net cash provided by (used in) financing activities for the six months ended June 30, 2022, related to the payment on notes payable of $552,873.
+Added: Net cash used in investing activities for the nine months ended September 30, 2022, increased from September 30, 2021, due to the purchase of, Trees MLK, Inc and the purchase of property and equipment, offset by the receipt of notes receivable.
+Added: Net cash provided by financing activities for the nine months ended September 30, 2022, related to the cash proceeds of the new debt of $10,587,250, offset by payment on notes payable of $3,987,250.
Capital Resources
−Removed: We had no material commitments for capital expenditures as of June 30, 2022.
+Added: We had no material commitments for capital expenditures as of September 30, 2022.
Part of our growth strategy, however, is to acquire operating businesses.
10 unchanged sentences
The following table reconciles Adjusted EBITDA to the most directly comparable GAAP measure, which is net loss.
−Removed: Three months ended June 30,
−Removed: Six months ended June 30,
−Removed: Loss from operations before income taxes
+Added: Three months ended September 30,
+Added: Nine months ended September 30,
+Added: Net loss from continuing operations
Adjustment for loss from discontinued operations
−Removed: Net loss from continuing operations before income taxes
Stock-based compensation
1 unchanged sentence
Amortization of debt discount and equity issuance costs
+Added: Loss on extinguishment of debt
Interest expense
2 unchanged sentences
Acquisition related expenses
+Added: Provision for income taxes
Total adjustments
7 unchanged sentences
The estimates are based on historical experience and assumptions believed to be reasonable under current facts and circumstances.
−Removed: Actual amounts
−Removed: and results could differ from these estimates made by management.
+Added: Actual amounts and results could differ from these estimates made by management.
Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position are discussed in our Annual Report on Form 10-K for the year ended December 31, 2021, and Note 1 to the Unaudited Condensed Consolidated Financial Statements in this Form 10-Q.
2 unchanged sentences
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.