What changed in this filing

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Item 1. Financial Statements

2023-08-14 compared with 2023-05-22 · 165 added, 82 removed, 529 unchanged (32% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2023

June 30, 2023

December 31, 2022

2 unchanged sentences

Accounts receivable, net of allowance of $ 42,000 , respectively

Inventories, net

Prepaid expenses and other current assets

13 unchanged sentences

Warrant derivative liability

Accrued legal fees - current

Notes payable - current

2 unchanged sentences

Finance lease liability, non-current

Accrued legal fees, non-current

Notes payable - non-current (net of unamortized discount)

17 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended March 31,

Three months ended

Six months ended

Cultivation sales

7 unchanged sentences

Total costs and expenses

Operating loss

Operating (loss) income

( 1,470,733 )

( 2,641,850 )

Other expenses (income)

2 unchanged sentences

(Gain) loss on derivative liability

Loss (gain) on sale of assets

Other (income)

Total other expenses, net

1 unchanged sentence

( 2,036,155 )

( 3,836,953 )

( 1,049,287 )

Provision for income taxes

1 unchanged sentence

( 2,036,155 )

( 3,922,689 )

( 1,049,287 )

Income from discontinued operations, net of tax

( 2,036,155 )

( 3,922,689 )

( 1,044,004 )

Accrued preferred stock dividend

1 unchanged sentence

( 2,036,155 )

( 3,940,389 )

( 1,044,004 )

Per share data - basic and diluted

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended March 31,

Six months ended June 30,

Cash flows from operating activities

( 3,922,689 )

( 1,044,004 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

3 unchanged sentences

Bad debt expense

Loss (gain) on disposal of property and equipment

(Gain) loss on derivative liability

5 unchanged sentences

Operating lease liabilities

Net cash (used in) provided by operating activities

Net cash used in operating activities

Cash flows from investing activities

1 unchanged sentence

Acquisition of Station 2 assets

Proceeds for sale of equipment

Proceeds on notes receivable

12 unchanged sentences

Non-cash investing & financing activities

Operating lease right-of-use asset obtained in exchange for new operating lease liabilities

Non-cash debt issuance for acquisition of Station 2 assets

Issuance of accrued stock

Accrued dividends

See Notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

IN STOCKHOLDERS’ EQUITY

For the three months ended March 31, 2023

For the three months ended June 30, 2023

Preferred Stock

Paid-in Capital

April 1, 2023

( 95,288,616 )

Share-based compensation

( 2,036,155 )

June 30, 2023

( 97,324,771 )

For the three months ended June 30, 2022

Preferred Stock

Paid-in Capital

April 1, 2022

( 84,681,871 )

Share-based compensation

June 30, 2022

( 84,864,819 )

For the six months ended June 30, 2023

Preferred Stock

Paid-in Capital

January 1, 2023

4 unchanged sentences

( 3,922,689 )

March 31, 2023

June 30, 2023

( 97,324,771 )

For the three months ended March 31, 2022

For the six months ended June 30, 2022

Preferred Stock

2 unchanged sentences

( 83,820,815 )

Common stock issue for acquisition of Trees Waterfront LLC

Common stock issued for acquisition of Trees Waterfront LLC

Common stock issued for acquisition of Trees MLK LLC

Share-based compensation

March 31, 2022

( 1,044,004 )

June 30, 2022

( 84,864,819 )

See Notes to unaudited condensed consolidated financial statements.

18 unchanged sentences

7050 NE MLK, Portland, OR – Medical and Recreational licenses

We also operate five (5) cultivation facilities in Colorado as follows:

We also operate three (3) cultivation facilities in Colorado as follows:

SevenFive Farm – 3705 N.

75 th Street, Boulder – Retail cultivation license only

Foothills Highway D-300 (formerly Green Tree/Ancient Alternatives) – Medical and Retail cultivation licenses

Foothills Highway C-100 (formerly Green Tree/Mountainside Industries) – Medical and Retail cultivation licenses

Foothills Highway E-100 (formerly Green Tree/Hillside Enterprises) – Retail cultivation license only

18 unchanged sentences

In the opinion of management, these unaudited 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 months ended March 31, 2023, are not necessarily indicative of the operating results for the year ending December 31, 2023, or any other interim or future periods.

The results for the three and six months ended June 30, 2023, are not necessarily indicative of the operating results for the year ending December 31, 2023, 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.

7 unchanged sentences

Furthermore, when testing assets for impairment in future periods, if management uses different assumptions or if different conditions occur, impairment charges may result.

In particular, the COVID-19 pandemic has adversely impacted and is likely to further adversely impact the Company's business and markets.

The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company's business, results of operations, and financial condition, including revenues, expenses, reserves and allowances, fair value measurements and asset impairment charges, will depend on future developments that are highly uncertain and difficult to predict.

These developments include, but are not limited to, the duration and spread of the pandemic, its severity in our markets and elsewhere, governmental actions to contain the spread of the pandemic and respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume.

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consisted primarily of cash, accounts receivable and revenue.

Customer and Revenue Concentrations

During the three months ended March 31, 2023, 88 % of SevenFive’s revenue was with three customers.

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

The customers in both 2023 and 2022 are related party dispensaries and the revenues associated with these customers are eliminated in consolidation.

During the three months ended March 31, 2023, 88 % of Green Tree’s revenue was with three customers.

Financial instruments that potentially subject us to significant concentrations of credit risk consisted primarily of cash and accounts receivable.

Customer and Revenue Concentrations – Cultivation Segment

During the three months ended June 30, 2023 and 2022, 81 % of SevenFive’s revenue was with two customers and 78 % was with one customer, respectively.

During the six months ended June 30, 2023 and 2022, 77 % of SevenFive’s revenue was with two customers and 59 % was with one customer, respectively.

These customers are related party dispensaries and the revenues associated with these customers are eliminated in consolidation.

During the three months ended June 30, 2023, 90 % of Green Tree’s revenue was with four customers.

During the six months ended June 30, 2023, 83 % of Green Tree’s revenue was with three customers.

The customers in 2023 are related party dispensaries and the revenues associated with these customers are eliminated in consolidation.

Going Concern

We incurred net losses of $ 1,886,534 during the three months ended March 31, 2023, and $ 861,056 for the three months ended March 31, 2022, and had an accumulated deficit of $ 95,288,616 as of March 31, 2023.

We had cash and cash equivalents of $ 1,460,162 and $ 2,583,833 as of March 31, 2023, and December 31, 2022, respectively.

We incurred net losses of $ 2,036,155 and $ 3,922,689 during the three and six months ended June 30, 2023, respectively and $ 182,948 and $ 1,044,004 for the three and six months ended June 30, 2022, respectively, and had an accumulated deficit of $ 97,324,771 as of June 30, 2023.

We had cash and cash equivalents of $ 643,968 and $ 2,583,833 as of June 30, 2023, and December 31, 2022, respectively.

The accompanying unaudited condensed 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.

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 have incurred recurring losses and negative cash flows from operations since inception and have primarily funded our operations with proceeds from the issuance of debt.

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

22 unchanged sentences

We have not completed the allocation of the purchase price for the Green Tree Acquisition.

As of March 31, 2023, the consolidated balance sheet includes a preliminary allocation of fixed assets, inventory, intangible assets, and goodwill.

As of June 30, 2023, the consolidated balance sheet includes 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 date.

2 unchanged sentences

Three months ended

Six months ended

Total revenues

12 unchanged sentences

We have not completed the allocation of the purchase price for the Green Man Acquisition.

As of March 31, 2023, the consolidated balance sheet includes a preliminary allocation of fixed assets, inventory, intangible assets, and goodwill.

As of June 30, 2023, the consolidated balance sheet includes 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 date.

2 unchanged sentences

Three months ended

Six months ended

Total revenues

8 unchanged sentences

We also assumed responsibility of the operating lease for the dispensary and recorded the relating ROU asset which is disclosed separately on the accompanying consolidated balance sheets.

The consideration paid by the Company consists of cash at closing equal to $ 256,582 plus an additional $ 385,873 in twenty-four (24) equal monthly payments commencing May 2023.

The consideration paid by the Company consists of cash at closing equal to $ 256,582 plus an additional note equal to $ 384,873 .

As the dispensary was not in operation and there was no assembled workforce at the time of acquisition, the acquisition was accounted for as an asset acquisition of a license.

As of March 31, 2023, the balance of the license was $ 580,694 , which is recorded within Intangible assets, net in our condensed consolidated balance sheets.

As of June 30, 2023, the balance of the license was $ 565,931 , which is recorded within Intangible assets, net in our condensed consolidated balance sheets.

DISCONTINUED OPERATIONS

4 unchanged sentences

Three months ended

Six months ended

Product revenues

11 unchanged sentences

Work-in-progress and finished goods

Inventory reserves

Inventories, net

The Company’s leases consist primarily of real estate leases for retail, cultivation, and manufacturing facilities.

4 unchanged sentences

As the rate implicit in the Company’s leases is not readily determinable, we used an estimated incremental borrowing rate of 20 % in determining the present value of lease payments.

The operating lease expense for the three months ended March 31, 2023, and March 31, 2022, is as follows:

For the three months ended March 31,

The operating lease expense for the three and six months ended June 30, 2023, and June 30, 2022, is as follows:

For the three months ended June 30,

For the six months ended June 30,

Straight-line operating lease expense

1 unchanged sentence

Total operating lease expense

The finance lease expense for the three months ended March 31, 2023, and March 31, 2022, was approximately $ 50,000 and nil , respectively.

The finance lease expense for the three months ended June 30, 2023, and June 30, 2022, was approximately $ 41,823 and nil , respectively.

The finance lease expense for the six months ended June 30, 2023, and June 30, 2022, was approximately $ 83,647 and nil , respectively.

Related party lease s

As of March 31, 2023, three of the Company’s operating leases, one retail dispensary lease, one cultivation facility lease, and one lease that includes both cultivation and retail, are related party leases as the landlords are current, and former, board members, principal shareholders, or employees.

During the three months ended Mach 31, 2022, the related party operating leases consisted of one dispensary and one cultivation facility.

As of June 30, 2023, three of the Company’s operating leases, one retail dispensary lease, one cultivation facility lease, and one lease that includes both cultivation and retail, are related party leases as the landlords are current, and former, board members, principal shareholders, or employees.

During the six months ended June 30, 2022, the related party operating leases consisted of one dispensary and one cultivation facility.

During the three months ended June 30, 2022, the related party operating leases consisted of one dispensary and one cultivation facility.

The retail dispensary lease was with a related party through May 2022, when the building was sold to an unaffiliated third-party.

As of March 31, 2023, the ROU asset, operating lease liability, current, and operating lease liability, non-current for the related party leases were $ 1,002,335 , $ 529,299 , and $ 539,267 , respectively.

For the periods ended March 31, 2023 and 2022, the total lease expense for related party leases was $ 127,790 and $ 147,937 , respectively.

As of June 30, 2023, the ROU asset, operating lease liability, current, and operating lease liability, non-current for the related party leases were $ 925,826 , $ 532,221 , and $ 456,033 , respectively.

For the three months ended June 30, 2023 and 2022, the total lease expense for related party leases was $ 127,790 and $ 75,849 , respectively.

For the six months ended June 30, 2023 and 2022, the total lease expense for related party leases was $ 255,580 and $ 75,849 , respectively.

Lease Maturities

3 unchanged sentences

Finance lease

2023 (remaining nine months)

2023 (remaining six months)

Present value adjustment

2 unchanged sentences

Lease liability, current

( 1,238,647 )

Lease liability, non-current

1 unchanged sentence

The majority of this amount relates to the flagship Trees location in Englewood, Colorado and the retail and certain cultivation facilities that were acquired in the Green Tree Acquisition and are eligible for renewal in 2023.

As of March 31, 2023, the weighted average remaining term of the Company’s operating leases is 4.5 years, and the remaining term on the finance lease is 9.75 years.

As of June 30, 2023, the weighted average remaining term of the Company’s operating leases is 4.71 years, and the remaining term on the finance lease is 9.50 years.

None of the Company’s leases contain residual value guarantees or restrictive covenants.

Supplemental cash flow information

For the three months ended March 31,

For the six months ended June 30,

Supplemental cash flow information

8 unchanged sentences

Balance as of December 31, 2022

Balance as of March 31, 2023

Balance as of June 30, 2023

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

1 unchanged sentence

The stock was issued on January 6, 2022.

The outstanding balance of accrued stock payable as of March 31, 2023 relates to a February 18, 2020 grant of 100,000 fully vested shares for consulting services.

The outstanding balance of accrued stock payable as of June 30, 2023 relates to a February 18, 2020 grant of 100,000 fully vested shares for consulting services.

Based on a stock price of $ 0.61 on the date of grant, the consultant will receive $ 60,900 worth of our Common Stock.

As of March 31, 2023, none of the stock has been issued.

As of June 30, 2023, none of the stock has been issued.

NOTES PAYABLE

Our notes payable consisted of the following:

March 31, 2023

June 30, 2023

December 31, 2022

23 unchanged sentences

The relative fair value of this obligation resulted in a debt discount of $ 512,367 .

We recorded amortization of debt discount expense from this obligation of $ 61,016 and nil for the three months ended March 31, 2023 and March 31, 2022, respectively.

We recorded amortization of debt discount expense from this obligation of $ 184,902 and nil for the six months ended June 30, 2023 and June 30, 2022, respectively, and $ 93,831 and nil for the three months ended June 30, 2023 and June 30, 2022, respectively.

In December 2022, with the completion of the Green Man Acquisition, we are obligated to pay the Seller cash equal to $ 1,500,000 in equal month installments over a period of 18 months .

1 unchanged sentence

The relative fair value of this obligation resulted in a debt discount of $ 275,154 .

We recorded amortization of debt discount expense from this obligation of $ 37,250 and nil for the three months ended March 31, 2023 and March 31, 2022, respectively.

We recorded amortization of debt discount expense from this obligation of $ 75,629 and nil for the six months ended June 30, 2023 and June 30, 2022, respectively, and $ 38,379 and nil for the three months ended June 30, 2023 and June 30, 2022, respectively.

On September 15, 2022, we entered into a Securities Purchase Agreement with certain accredited investors (the “ 12 % Investors”), pursuant to which we agreed to issue and sell senior secured convertible notes (the “ 12 % Notes”) with an aggregate principal amount of $ 13,500,000 to such 12 % Investors, in exchange for payment by certain 12 % Investors of an aggregate amount of $ 10,587,250 in cash, as well as cancellation of outstanding indebtedness in the aggregate amount of $ 2,912,750 represented by the 10 % Notes discussed below.

7 unchanged sentences

The relative fair value of the cancellation of the outstanding indebtedness was recorded as an extinguishment of debt and additional paid-in capital of $ 103,577 .

We recorded amortization of debt discount expense from the 12 % Notes of $ 76,699 and nil for the three months ended March 31, 2023 and 2022, respectively.

We recorded amortization of debt discount expense from the 12 % Notes of $ 154,250 and nil for the six months ended June 30, 2023 and 2022, respectively, and $ 77,551 and nil for the three months ended June 30, 2023 and June 30, 2022, respectively.

We determined there was no beneficial conversion feature on the 12 % Notes issued.

7 unchanged sentences

Expected volatility

In connection with the acquisition of Station 2, LLC in February 2023, we agreed to issue and sell an additional 12 % Note with an aggregate principal amount of $ 385,873 , payable in twenty-four equal monthly payments commencing in May 2023.

In connection with the acquisition of Station 2, LLC in February 2023, we agreed to issue and sell an additional 12 % Note with an aggregate principal amount of $ 384,873 .

The relative fair value of this 12 % Note resulted in a debt discount of $ 50,918 .

We recorded amortization of debt discount expense from this Note of $ 6,712 for the three months ended March 31, 2023.

We recorded amortization of debt discount expense from this Note of $ 16,552 for the six months ended June 30, 2023, and $ 9,840 for the three months ended June 30, 2023.

This 12 % Note is treated as conventional debt.

7 unchanged sentences

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 nil and $ 21,393 for the three months ended March 31, 2023 and 2022.

We recorded amortization of debt discount expense from the 10 % Notes of nil and $ 43,023 for the six months ended June 30, 2023 and 2022, and nil and $ 2,630 for the three months ended June 30, 2023 and June 30, 2022, respectively.

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

18 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 February 2021 10 % Notes of nil and $ 69,603 for the three months ended March 31, 2023 and 2022, respectively.

We recorded amortization of debt discount expense from the February 2021 10 % Notes of nil and $ 139,980 for the six months ended June 30, 2023 and 2022, respectively, and nil and $ 70,377 for the three months ended June 30, 2023 and June 30, 2022, respectively.

The 10 % Notes are treated as conventional debt.

16 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 April 2021 10 % Notes of nil and $ 123,285 for the three months ended March 31, 2023 and 2022.

We recorded amortization of debt discount expense from the April 2021 10 % Notes of nil and $ 247,939 for the six months ended June 30, 2023 and 2022, respectively, and nil and $ 124,654 for the three months ended June 30, 2023 and 2022, respectively.

The 10 % Notes are treated as conventional debt.

19 unchanged sentences

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

During the three months ended March 31, 2023, and 2022, we recognized a $ 1,307 gain and $ 60,664 loss on the change in fair value of the derivative liability, respectively.

As of March 31, 2023, there were 322,807 of the 2019 Warrants outstanding.

During the six months ended June 30, 2023, and 2022, we recognized a $ 5,219 gain and $ 1,406 loss on the change in fair value of the derivative liability, respectively.

During the three months ended June 30, 2023, and 2022, we recognized a $ 3,912 gain and $ 59,258 gain on the change in fair value of the derivative liability, respectively.

As of June 30, 2023, 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:

5 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:

Three months ended June 30,

Six months ended June 30,

Beginning balance

10 unchanged sentences

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.

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

We filed a motion to dismiss or a motion for summary judgment in the alternative.

Plaintiff filed a response and cross-motion for summary judgment thereafter.

In October 2022, the court denied the motion to dismiss on the basis that Plaintiff sufficiently pled facts that raise a plausible claim for relief, notwithstanding our possible defenses, but has not specifically made any rulings on either party’s motion for summary judgment.

On November 14, 2022, we timely filed a formal answer to the complaint, denying each of Plaintiff’s substantive claims.

We also asserted appropriate affirmative defenses, including the force majeure clause of the lease, which provides that we are not liable under the lease in the event of a variety of events outside our control, including “pandemics.” In addition, we have asserted a counterclaim against the Plaintiff for breach of contract to recover the initial payments made under the lease as well as attorneys’ fees and costs.

The trial is currently scheduled for September 2023.

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

In June 2023, via mediation conducted through the Judicial Arbiter Group and a duly executed settlement agreement, we settled this litigation.

As part of the settlement, Plaintiff agreed to waive and release the Company et.

al from all claims relating to the litigation;

and in exchange, the Company has agreed to pay to Plaintiff an aggregate amount of $ 150,000 , payable as follows:

(i) one initial installment payment of $ 30,000 payable on August 1, 2023;

and (ii) twenty (20) subsequent monthly payments of $ 6,000 each.

In the event of default under the settlement agreement, the non-defaulting party must provide written notice and the defaulting party has a 7-day right of cure.

The settlement agreement also provides for a ‘paper judgment’ in the event of an uncured default by the Company;

in which event the full amount of $ 345,000 becomes due and payable.

The parties will file a stipulated motion to administratively close the case and request that the court retain jurisdiction until completion of the settlement payments.

STOCKHOLDERS’ EQUITY

18 unchanged sentences

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.

As of March 31, 2023 we have recorded accrued dividends of $ 106,200 .

As of June 30, 2023 we have recorded accrued dividends of $ 106,200 .

Stock-based compensation

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

We recorded $ 27,396 and $ 76,117 in compensation expense for the three months ended March 31, 2023 and 2022, respectively.

We recorded $ 18,054 and $ 28,886 in compensation expense for the three months ended June 30, 2023 and 2022, respectively and $ 45,450 and $ 105,001 for the six months ended June 30, 2023 and 2022, 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.

10 unchanged sentences

Forfeited or expired

Outstanding as of March 31, 2023

Exercisable as of March 31, 2023

As of March 31, 2023, there was approximately $ 722 of total unrecognized compensation expense related to unvested employee awards, which is expected to be recognized over a weighted-average period of fourteen months .

Outstanding as of June 30, 2023

Exercisable as of June 30, 2023

As of June 30, 2023, there was no unrecognized compensation expense related to unvested employee awards.

On April 1, 2022 we entered into a Restricted Stock Unit Agreement with four participants.

9 unchanged sentences

As these RSU’s do not have a service period, we used the requisite service period derived from the valuation of 10 years .

We recorded $ 13,894 and nil in compensation expense for the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, none of the RSU’s have vested.

We recorded $ 26,799 and $ 13,500 in compensation expense for the six months ended June 30, 2023 and 2022, respectively, and $ 12,905 and $ 13,500 for the three months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, none of the RSU’s have vested.

RELATED PARTY TRANSACTIONS

5 unchanged sentences

The exercise price and all other terms and conditions of such warrants remain unchanged.

We paid $ 50,000 and $ 24,999 for the three months ended March 31, 2023 and 2022, respectively.

We paid $ 50,000 and $ 24,999 for the three months ended June 30, 2023 and 2022, respectively, and $ 100,000 and $ 49,998 for the six months ended June 30, 2023 and 2022, respectively.

In February 2023, the Company completed the acquisition of Station 2, LLC’s assets.

4 unchanged sentences

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

We have incurred $ 75,848 and $ 112,325 in related party lease expense for the three months ended March 31, 2023 and 2022, respectively.

We have incurred $ 75,849 in related party lease expense for the three months ended June 30, 2023 and 2022, respectively, and $ 151,698 and $ 75,849 for the six months ended June 30, 2023 and 2022, respectively.

See Note 6 for further discussion of the Company’s obligations associated with related party leases.

The Company currently has a lease agreement with JLA Enterprises, LLC in which the Company leases a retail dispensary in Longmont, Colorado.

A board member and an executive level employee of the Company are owners of

JLA Enterprises, LLC.

A board member and an executive level employee of the Company are owners of JLA Enterprises, LLC.

The Company also has a lease agreement with ALJ 1090, LLC in which the Company leases a building that has a retail dispensary and cultivation facility in Berthoud, Colorado.

1 unchanged sentence

These leases were assumed as part of the Green Tree Acquisition on December 12, 2022.

We have incurred $ 51,942 and nil in related party lease expense for the three months ended March 31, 2023 and 2022, respectively.

We have incurred $ 51,942 and nil in related party lease expense for the three months ended June 30, 2023 and 2022, respectively, and $ 103,883 and nil for the six months ended June 30, 2023 and 2022, respectively.

See Note 6 for further discussion of the Company’s obligations associated with related party leases.

2 unchanged sentences

In June 2022, the building was sold to an unrelated party.

We incurred nil and $ 35,612 of related party lease expense for the three months ended March 31, 2023 and 2022, respectively.

We incurred nil and $ 22,574 of related party lease expense for the three months ended June 30, 2023 and 2022, respectively, and nil and $ 52,287 for the six months ended June 30, 2023 and 2022, respectively.

See Note 6 for further discussion of the Company’s obligations associated with related-party leases.

6 unchanged sentences

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.

Three months ended March 31,

Three months ended June 30,

Costs and expenses

2 unchanged sentences

( 5,467,142 )

Segment operating income

Segment operating loss

Corporate expenses

5 unchanged sentences

( 2,305,430 )

Segment operating income

Segment operating income (loss)

Corporate expenses

1 unchanged sentence

Net loss from continuing operations before income taxes

Six months ended June 30,

Total revenues

( 1,610,417 )

Costs and expenses

( 9,882,836 )

( 2,185,847 )

( 10,458,266 )

Segment operating income (loss)

Corporate expenses

( 3,587,300 )

Net loss from continuing operations before income taxes

( 3,836,953 )

Total revenues

Costs and expenses

( 4,755,913 )

( 1,122,281 )

( 5,363,732 )

Segment operating income (loss)

Corporate expenses

( 2,494,590 )

Net loss from continuing operations before income taxes

( 1,049,287 )

Total assets - segments

2 unchanged sentences

SUBSEQUENT EVENTS

The Company evaluated subsequent events through the date that the accompanying financial statements were issued and has determined that subsequent to March 31, 2023, the Company issued 201,250 restricted stock units.

Each restricted stock unit will vest for a period of seven years from the respective grant date and upon vesting will convert into one share of common stock.

The Company evaluated subsequent events through the date that the accompanying financial statements were issued and has determined that the events below occurred subsequent to June 30, 2023.

On July 1, 2023, the Company and its subsidiaries Green Tree Colorado, LLC, Green Tree Cultivation LLC, GT Retail LLC, and Green Tree MIP LLC, each a Colorado limited liability company, entered into a settlement agreement (“Settlement Agreement”) with Allyson Feiler Downing (“Downing”) and Loree Schwartz (“Schwartz” and together with Downing, “Green Tree Parties”), pursuant to which the Company and the Green Tree Parties agreed to transfer and assign to new entities controlled by the Green Tree Parties, cannabis licenses and related assets owned by (i) GT Retail relating to a cultivation facility and a retail dispensary located in Berthoud, Colorado;

(ii) GT MIP relating to a ‘marijuana infused product’ dispensary located in Boulder County, Colorado;

and (iii) certain intellectual property in respect thereof (collectively, the “Transferred Assets”).

The Company retained accounts payable and certain cannabis inventory in respect of the Transferred Assets.

Closing of the transaction is subject to approval of the license transfers by the Colorado Marijuana Enforcement Division as well as local regulatory authorities.

In exchange for the transfer to the Green Tree Parties of the Transferred Assets, the Company and the Green Tree Parties agreed that upon closing, the Green Tree Parties shall transfer and assign to the Company, and the Company shall redeem, 9,917,574 shares of the Company’s Common Stock owned by the Green Tree Parties and originally issued to the Green Tree Parties in the acquisition consummated in December 2022 pursuant to that certain Asset Purchase Agreement dated September 13, 2022, as amended, by and among the Company, Downing, Schwartz and various other parties thereto (the “APA”).

Further, other than payments due Michael Abrams, no further payments shall be due either of the Green Tree Parties or any affiliate thereof under the APA or otherwise.

On July 1, 2023, the Company terminated the employment of each of Downing and Schwartz and each of Downing and Schwartz entered into a Termination of Employment Agreement and Mutual General Release with the Company (“Termination Agreements”).

The Termination Agreements provide for the termination of employment by the Company of each of Downing and Schwartz, including a termination of their respective Employment Agreements with the Company dated December 12, 2022, mutual releases, and a waiver of the non-compete and non-solicitation agreements contained in the APA.

The parties also executed a separate waiver in respect thereof (“Waiver”).

Furthermore, also on July 1, 2023, the Company and a newly-formed entity controlled by the Green Tree Parties entered into a consulting agreement pursuant to which such entity together with Downing agreed to pay consulting fees to the Company in an aggregate amount equal to $ 289,452 , subject to and conditioned upon the Company’s completion of payments under the APA to Michael Abrams of $ 562,381 (“Consulting Agreement”).

On July 1, 2023, the parties also entered into a Transition Services Agreement pursuant to which the Green Tree Parties will provide certain administrative and management services on a transition basis to the Company in respect of the Transferred Assets in exchange for retaining all revenue generated from the businesses relating to the Transferred Assets;

until such time as the transfer under the Settlement Agreement is consummated.

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