What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-03-23 compared with 2020-04-01 · 37 added, 512 removed, 28 unchanged (95% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Company’s common stock currently trades on the OTCQX market under the MRMD ticker symbol.

Any over-the-counter market

quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual

transactions.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Company’s common stock currently trades on the OTCQX market under the MRMD ticker symbol.

Any over-the-counter market quotations

reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

of March 23, 2021, the Company had 724 stockholders of record and 319,133,727 outstanding shares of common stock.

Company has never declared or paid a dividend on its

common stock, and it does not anticipate paying cash or other dividends in the foreseeable future.

Company has never declared or paid a dividend on its common stock, and it does not anticipate paying cash or other dividends in

the foreseeable future.

Sales of Unregistered Securities

October 2019, the Company issued 1,000,000 shares of common stock representing the purchase price of the acquisition of the KPG’s

and the minority interests of Mari-IL

November 2019, the Company sold 215,000 shares of common stock at a price of $0.70 per share, resulting in total proceeds of $150,000.

Also during this month, the Company issued 172,663 shares of common stock to settle an outstanding obligation that approximated

the period October 2019 to November 2019, the Company issued three-year and four-year warrants to purchase 510,000 shares of common

stock at exercise prices ranging from $0.75 to $1.37 per share.

December 2019, the holder of Company-issued debentures converted $1,100,000 of principal and approximately $17,000 of accrued

interest into subscriptions on 3,004,131 shares of common stock at a conversion price of $0.37 per share.

Such common shares were

issued in January 2020.

October 2020, the Company issued 33,319 shares of common stock associated with previously issued subscriptions on common stock

with a value of approximately $5,000.

the period October 2020 to January 2021, the holder of Company-issued debentures converted $4.2 million of principal and approximately

$66,000 of accrued interest into 28,233,972 shares of common stock at a conversion prices ranging from $0.11 to $0.29 per share.

December 2020, the Company issued 1,739,759 shares of common stock to retire a promissory note with a principal balance of $500,000

and accrued interest of $97,100.

December 2019, the Company’s CEO and an independent board member exercised stock options to purchase 200,000 and 132,499

shares of common stock, respectively, at weighted average exercise prices of $0.11 and $0.08 and $0.14 per share, respectively.

December 2019, the Company granted 32,726 shares of common stock to employees at an aggregate value of approximately $29,000.

These granted shares were issued in January 2020.

the period October 2019 to December 2019, the Company granted options to purchase 1,665,000 shares of common stock at exercise

prices of $0.42 to $1.00 per share.

Also during this period, options to purchase 856,251 shares of common stock were forfeited.

securities described above were issued to accredited investors in private transactions not involving a public offering or the

payment of commissions and were deemed to be exempt from registration under the Securities Act of 1933, as amended (the “Securities

Act”), in reliance upon Sections 4(a)(2) and/or 4(a)(5) of the Securities Act and Regulation D promulgated thereunder.

legend restricting the sale, transfer, or other disposition of these securities other than in compliance with the Securities Act

was placed on the securities issued in the foregoing transactions.

and accrued interest of approximately $62,000.

November and December 2020, the Company’s CEO, CFO, and an independent board member exercised stock options to purchase

an aggregate of 550,000 shares of common stock, at exercise prices of $0.13 and $0.14 per share.

December 2020, the Company granted 11,413 shares of common stock to an employee in exchange for services rendered during 2020

at a value of approximately $5,000.

These granted shares were issued in February 2021.

the period of October 2020 to January 2021, the Company granted five-year options to employees and consultants to purchase up

to 4,405,000 shares of common stock at exercise prices ranging from $0.14 to $0.90 per share.

February 2021, the Company issued three-year warrants to purchase up to 100,000 shares of common stock at an exercise price of

$0.82 per share.

Also during this month, warrants to purchase 50,000 shares of common stock were exercised at a price of $0.15

issuance of the shares of common stock described above were deemed to be exempt from registration under the Securities Act in

reliance upon Sections 4(a)(2) and/or 4(a)(5) of the Securities Act.

A legend restricting the sale, transfer, or other disposition

of these securities other than in compliance with the Securities Act was placed on the securities issued in the foregoing transactions.

Equity Compensation Plans

following table sets forth information as of December 31, 2019 with respect to compensation plans (including individual

compensation arrangements) under which equity securities of the Company are authorized for issuance.

following table sets forth information as of December 31, 2020 with respect to compensation plans (including individual compensation

arrangements) under which equity securities of the Company are authorized for issuance.

Plan Category

securities to be

6 unchanged sentences

compensation plans approved by stockholders (1)

compensation plans not approved by stockholders

of options exercisable for (i) 250,000 shares granted under the Company’s the 2011 Stock Option and Restricted Stock

Equity compensation plans not approved by stockholders

of options exercisable for (i) 50,000 shares granted under the Company’s the 2011 Stock Option and Restricted Stock

and (ii) 9,755,750 shares granted under the Incentive Plan (hereinafter defined) of which 3,881,250 shares continue

to be subject to the terms of the Company’s 2018 Stock Award and Incentive Plan.

August 2019, the Company’s board of directors approved the Amended and Restated 2018 Stock Award and Incentive Plan (the

“Incentive Plan”), based on the board’s belief that awards authorized under the Incentive Plan provide incentives

to be subject to the terms of the Company’s 2018 Stock Award and Incentive Plan.

August 2019, the Company’s board of directors approved the Amended and Restated 2018 Stock Award and Incentive Plan (the

“Incentive Plan”), based on the board’s belief that awards authorized under the Incentive Plan provide incentives

for the achievement of important performance objectives and promote the long-term success of the Company.

In September 2019, the

Incentive Plan was approved by the stockholders at the Company’s annual stock-holders meeting.

Incentive Plan is an omnibus plan, authorizing a variety of equity award types as well as cash and long-term incentive awards.

3 unchanged sentences

without delivery of shares or is settled in cash.

Each award under the Incentive Plan is subject to the Company’s claw back

policy in effect at the time of grant of the award.

1 unchanged sentence

without stockholder approval, except as required by law or regulation or under rules of the stock exchange, if any, on which the

Company’s stock may then be listed.

Unless earlier terminated, grants under the Incentive Plan will terminate ten years

2 unchanged sentences

SELECTED FINANCIAL DATA

Company is a “smaller reporting company”

as defined by Regulations S-K and as such, is not required to provide the

information contained in this item pursuant to Regulation S-K.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Looking Statements

used in this form 10-K and in future filings by the Company with the Commission, words or phrases such as “anticipate,”

“believe,”

“could,”

“would,”

“should,”

“estimate,”

“expect,”

“intend,”

“may,”

“plan,”

“predict,”

“project,”

“will”

or similar expressions are intended to identify “forward-looking statements”

within the meaning of the Private Securities

Litigation Reform Act of 1995.

Readers are cautioned not to place undue reliance on any such forward looking statements, each

of which speak only as of the date made.

Such statements are subject to certain risks and uncertainties that could cause actual

results to differ materially from historical earnings and those presently anticipated or projected.

The Company has no obligation

to publicly release the result of any revisions which may be made to any forward-looking statements to reflect anticipated or

unanticipated events or circumstances occurring after the date of such statements.

forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be

materially different.

These factors include, but are not limited to, changes that may occur to general economic and business conditions;

changes in current pricing levels that we can charge for our services and products or which we pay to our suppliers and business

changes in political, social and economic conditions in the jurisdictions in which we operate;

changes to regulations

that pertain to our operations;

changes in technology that render our technology relatively inferior, obsolete or more expensive

compared to others;

changes in the business prospects of our business partners and customers;

increased competition, including

from our business partners;

and enforcement of federal cannabis related laws.

following discussion should be read in conjunction with the financial statements and related notes which are included in this

report under Item 8.

do not undertake to update our forward-looking statements or risk factors to reflect future events or circumstances.

(the “Company”) is a leader in the emerging cannabis industry.

The Company is an expert in the development, operation,

management and optimization of facilities for the cultivation, production and dispensing of medicinal and recreational cannabis

and cannabis infused products.

To date, the Company has developed in excess of 300,000 square feet of state-of-the-art, regulatory-compliant

facilities in five states –

Delaware, Illinois, Maryland, Massachusetts, and Nevada.

the outset of the Company’s entrance into the cannabis industry, the Company provided advisory services and assistance to

its clients in the procurement of state-issued cannabis licenses, leased its aforementioned cannabis facilities to these newly-licensed

clients, and provided industry-leading expertise and oversight in all aspects of their cannabis operations, as well as ongoing

regulatory, accounting, human resources, and administrative services.

During this time, the Company successfully secured, on behalf

of its clients, 13 cannabis licenses across six states –

two in Delaware, three in Illinois, one in Nevada, one in Rhode

Island, three in Maryland, and three in Massachusetts.

entering the cannabis industry, the Company has demonstrated an excellent track record developing and operating licensed cannabis

facilities, implementing its proprietary operating procedures, and industry best practices.

In 2018, the Company commenced a strategic

plan to transition from an advisory firm that provides cannabis licensing, operational consulting and real estate services, to

a direct owner of cannabis licenses and operator of seed-to-sale operations, dedicated to the improvement of health and wellness

through the use of cannabinoids and cannabis products.

Company’s strategic plan consists of the acquisition of its cannabis-licensed clients who currently lease the Company’s

facilities, and the consolidation of these entities under the MariMed banner.

The Company has played a key role in the successes

of these entities, from the securing of their cannabis licenses, to the development of facilities that are models of excellence,

to providing operational and corporate guidance.

Accordingly, the Company believes it is well suited to own these facilities and

manage the continuing growth of their operations.

goal in completing this transition is to present a simpler, more transparent financial picture to the investor community.

the consolidation is complete, the Company’s financial statements will provide a clearer representation of the revenues,

earnings, and other financial metrics that the Company is generating, rather than a fee-for-service revenue model that reports

only consulting and management fees, and does not reflect the full breadth of the Company’s overall business.

date, acquisitions of the licensed businesses in Massachusetts and Illinois have been state-approved and completed, with the remaining

entities located in Maryland, Nevada, and Rhode Island at various stages of completion and state approvals as further discussed

When implemented, all of the Company’s cannabis-licensed clients will be fully consolidated into the Company, establishing

it as a fully integrated seed-to-sale multistate operator of licensed cannabis businesses.

of the remaining potential acquisitions is subject to the respective state’s approval under its laws governing the ownership

and transfer of cannabis licenses.

The completion of the entire plan requires a modification of current cannabis license ownership

laws in in Delaware and Rhode Island, and therefore there is no assurance that the Company will be successful in fully implementing

However, the Company continues to develop additional revenue and business in the states in which it operates and plans

to leverage its success in these markets to expand into other states where cannabis is and becomes legal.

Company has also created its own brands of precision-dosed, cannabis-infused products designed to treat specific health conditions,

alleviate medical symptoms, or achieve a certain effect.

These products are developed by the Company in cooperation with state-licensed

facilities and operators who meet the Company’s strict standards, including all natural—not artificial or synthetic—ingredients.

The Company licenses its product formulations only to knowledgeable manufacturing professionals who agree to adhere to the Company’s

precise scientific formulations using its trademarked product recipes.

Company’s branded products are licensed under brand names including Kalm Fusion™, Nature’s Heritage™,

and Betty’s Eddies™, and are distributed in the form of dissolvable strips, tablets, powders, microwaveable popcorn,

fruit chews, and with more varieties in development.

The Company also has exclusive sublicensing rights in certain states to distribute

DabTabs™

vaporization tablets infused with cannabis concentrates, the Binske®

line of cannabis products made from premium

artisan ingredients, and the clinically tested medicinal cannabis strains developed in Israel by Tikun Olam™.

intends to continue licensing and distributing its brands as well as other top brands in the Company’s current markets and

in partnerships in other states markets across the country where product sale is legal.

anticipation of the growing demand for hemp-derived cannabidiol (“CBD”), in 2018, the Company invested $30.0 million

in GenCanna Global Inc.

(“GenCanna”), a Kentucky-based cultivator, producer, and distributor of hemp and GMP-quality

CBD oils and isolates.

Concurrent with this investment, the Company acquired MediTaurus LLC (“MediTaurus”), a company

operating in the United States and Europe that has developed proprietary CBD formulations under its Florance™

transactions with GenCanna and MediTaurus, along with the Company’s cannabis platform and product experience, enabled the

Company to expand into the emerging global CBD market just as the U.S Farm Bill was adopted in late 2018 which descheduled industrial

hemp and hemp-derived CBD as controlled substances and classified them as agricultural commodities.

This new law enabled

a new emerging industry of CBD oils, isolates, and infused products within the United States.

In early 2019, the Company established

a wholly owned subsidiary, MariMed Hemp Inc.

(“MariMed Hemp”) to market and distribute hemp-derived CBD products across

several vertical markets.

the Company’s short history operating in the cannabis industry, it has fostered an excellent reputation for strong management,

with clients that have thrived in their respective markets.

The Company’s goal is to continue this success as it transitions

from a manager and advisor to an owner and operator of cannabis businesses.

Transactions in the Current Period

2019, the Company, through its MariMed Hemp subsidiary, entered into several hemp seed sale transactions with GenCanna whereby

the Company acquired large quantities of top-grade feminized hemp seeds with proven genetics at volume discounts that it sold

to GenCanna at market rates.

The seeds met the U.S.

government’s definition of federally legal industrial hemp, which was

descheduled as a controlled substance and classified as an agricultural commodity upon the signing of the 2018 U.S.

Company purchased $20.75 million of hemp seed inventory which it sold and delivered to GenCanna for $33.2 million.

provided GenCanna with extended payment terms through December 2019, to coincide with the completion of the seeds’

although the payment by GenCanna was not contingent upon the success of such harvest or its yield.

To partially fund the seed

purchases, the Company raised $17.0 million in debt financings.

the end of 2019, GenCanna had not paid the amount it owed the Company for its seed purchases due to several challenges it faced

late in the year, including a fire at its main processing and lab facility, the domestic decline of CBD selling prices, and the

contraction of the cannabis capital markets.

In February 2020, GenCanna filed for voluntary reorganization under Chapter 11 with

Bankruptcy Court in the Eastern District of Kentucky.

The filing is intended to permit GenCanna to operate its business

while working through a reorganization plan that could include refinancing of its existing indebtedness, or an alternative restructuring

transaction such as a sale.

required by the relevant accounting guidance, the Company initially recorded the $33.2 million due from GenCanna as a related

party receivable, with approximately $29.0 million recognized as related party revenue, and approximately $4.2 million classified

as unearned revenue (such amount representing the Company’s 33.5% ownership portion of the profit on these transactions,

which was to have been recognized as revenue upon payment by GenCanna).

As a result of GenCanna’s Chapter 11 filing, the

Company wrote off the unearned revenue balance of approximately $4.2 million and receivable balance of approximately $29.0 million.

Additionally, the Company recorded a charge to net income of approximately $30.2 million, which reduced to zero the carrying value

of the Company’s investment in GenCanna.

recently announced the completion of the largest recorded hemp harvest in Kentucky, which exceeded 6,000 acres.

The Company’s

management believes that GenCanna’s Chapter 11 filing and ensuing restructuring will facilitate GenCanna’s ability

to refinance its senior debt and arrange for the orderly payment of amounts due to its creditors, including the $33.2 million

owed to the Company;

however, there are no assurances that it will achieve this outcome or that the amount owed to the Company

will be paid.

addition to the foregoing adjustments, the Company recorded bad debt reserves in 2019 against receivable and working capital balances

due from (i) Kind of approximately $11.2 million in the aggregate, in light of the ongoing litigation between the Company and

Kind, and (ii) Harvest of approximately $2.2 million in the aggregate, due to the anticipated effect on Harvest’s operations

from a weakened local economy due to the coronavirus pandemic.

These charges are further described in the footnotes accompanying

the Company’s audited financial statements included in this report.

Company expects the coronavirus pandemic to likewise have a negative impact on the operations of certain entities in which the

Company has invested and to whom the Company has extended loans.

For that reason, the Company wrote off (i) three notes receivable

balances of approximately $1.6 million in the aggregate, (ii) goodwill of approximately $2.7 million associated with the Company’s

acquisition of MediTaurus, and (iii) the carrying value of a $500,000 investment.

These items are further described in the footnotes

accompanying the Company’s audited financial statements included in this report.

Company’s revenues are currently comprised of the following

primary categories:

Estate –

The Company’s state-of-the-art, regulatory-compliant cannabis facilities are leased to its cannabis-licensed

clients over 20-year lease terms.

The Company generates rental income from occupancy, tenant improvements, equipment rentals,

and additional rental income based on the success of the cannabis licensees.

–The Company receives fees for providing comprehensive oversight of its clients’

entire cannabis cultivation,

production, and dispensary operations.

Along with this oversight, the Company provides human resources, regulatory,

accounting, sales, marketing, and reporting services.

The Company derives licensing revenue from the sale of its branded precision-dosed cannabis-infused products,

such as Kalm Fusion™

and Betty’s Eddies™, to regulated dispensaries throughout the country.

The Company assists third parties in securing cannabis licenses, and provides advisory services in the areas

of facility design and development, and cultivation and dispensing best practices.

Procurement –

The Company maintains large volume discounts with top national vendors of cultivation and production

supplies and equipment, which the Company acquires and resells at competitive prices to its cannabis-licensed

clients or third parties.

Sales –

The Company’s direct sales of cannabis, hemp, and products derived from these plants are classified

under this revenue category.

In 2019, the Company commenced the direct sale of acquired hemp seed inventory.

As the Company

continues to explore opportunities to continue such sales, significant product sales are expected to be generated from (i) the

distribution of the Company’s acquired and developing hemp-derived CBD product lines, (ii) the dispensary and wholesale

operations of ARL in Massachusetts and the KPGs in Illinois, and (iii) the Company’s planned cannabis-licensee acquisitions

in Maryland and Nevada.

Company classifies its expenses into three broad categories:

of revenues, which includes the direct costs associated with the generation of the

Company’s revenues;

expenses, which include the sub-categories of personnel, marketing and promotion, general

and administrative, bad debts, and goodwill write-downs;

non-operating

income and expenses, which include the sub-categories of interest expense, interest income,

losses on debt settlements, losses on equity investments, changes in the fair

value of non-consolidated investments, and other one-time gains or losses.

and Capital Resources

of December 31, 2019, the Company reported cash and cash equivalents of approximately $739,000 and negative working capital of

approximately $29.3 million, compared to cash and cash equivalents of approximately $4.1 million and working capital of approximately

$5.8 million as of December 31, 2018.

The decline in working capital from year-to-year was primarily the result of (i) the issuance

of $17.0 million of promissory notes to fund the purchase of large quantities of top-grade hemp seeds at volume discounts which

then were sold to GenCanna, a related party, at market rates (the “Seed Transactions”), (ii) the write off of the

receivable balance due from GenCanna of approximately $29.0 million following GenCanna’s Chapter 11 filing, (iii) the recording

in 2019 of a bad debt reserve against the receivable and working capital balances due from Kind of approximately $11.2 million

in the aggregate in light of the current litigation between the Company and Kind, and (iv) the recording in 2019 of a bad debt

reserve against the receivable and working capital balances due from Harvest of approximately $2.2 million in the aggregate due

to the anticipated effect on Harvest’s operations from a weakened local economy due to the coronavirus pandemic.

refer to the footnote disclosures accompanying the Company’s audited consolidated financial statements for the years ended

December 31, 2019 and 2018, included in Part I of this report, for further discussion of the Seed Transactions and the receivable

the bankruptcy of GenCanna, previously discussed in Part I of this report, has had a significant impact on the Company’s

short-term capital resources, the Company successfully completed several financing transactions subsequent to December 31, 2019

to generate liquidity and working capital.

As further disclosed in Note 21 –

Subsequent Events of the Company’s

audited financial statements, the Company raised approximately $4.4 million as part of an exchange agreement with two institutional

stockholders, and $935,000 from the issuance of convertible debentures.

Additionally, the Company has extended the maturity dates

of approximately $19.4 million of promissory notes, and is in the process of finalizing the documentation to extend another $3.0

million of promissory notes.

as of the filing date of this report, the Company has obtained a commitment from an accredited investor for a $12.0 million loan,

secured by the Company’s real estate, at a rate of 10% per annum with a one-year term, and an option to extend for an additional

This transactions is expected to close upon the lender’s completion of its due diligence, which is in its final stages,

although there is no assurance that it will close in the foreseeable future or at all.

Also as of the filing date of this report,

the Company is in discussions with financial institutions to consider generating liquidity from the Company’s unencumbered

real property through mortgage-backed financings, the refinancing of certain outstanding mortgage loans, the sales-leaseback of

certain properties, and/or a combination thereof.

Based on preliminary discussions, such financings could potentially generate

upwards of $17.0 million from such transactions, however the Company has not signed any commitments it has received to date and

there are no assurances that it will.

addition to the aforementioned financing transactions that have been consummated and that are in progress, the operations of the

Company’s recently acquired entities in Illinois and Massachusetts are expected to generate considerable liquidity and working

capital for the Company.

Since their acquisition, the KPGs in Illinois have generated approximately $1.0 million of pretax income

for the Company, which has exceeded forecasts.

The cultivation and production facility acquired in Massachusetts will soon complete

its first harvest and commence full scale selling operations in this robust market.

connection with the preparation of its financial statements for the year ended December 31, 2019, the Company’s management

evaluated the Company’s ability to continue as a going concern in accordance with the ASU 2014-15, Presentation of Financial

Statements–Going Concern (Subtopic 205-40) , which requires an assessment of relevant conditions or events, considered

in the aggregate, that are known or reasonably knowable by management on the issuance dates of the financial statements which

indicated the probable likelihood that the Company will be unable to meet its obligations as they become due within one year after

the issuance date of the financial statements.

part of its evaluation, management assessed known events, trends, commitments, and uncertainties, which at the time included the

status of its consolidation plan, the GenCanna bankruptcy, the amount of capital raised by the Company during the past two calendar

years, the recent level of cannabis industry investment activity, the stock price movement of public cannabis companies, the actions

and/or results of certain bellwether cannabis companies, the measure of cannabis investor confidence, and the changes to state

laws with respect to adult-use recreational and medical cannabis use.

Company believes that it will close incremental debt financings in the foreseeable future, and it projects that its operating

profit will organically support its day-to-day operations by the latter part of 2020.

However, since there are no assurances that

another financing transaction will be consummated, or that the Company will meet or exceed its projections in light of the unknown

current state of the global economy, there are similarly no assurances that the Company will be able to meet all of its obligations

as they become due within one year after the issuance date of the financial statements.

the year ended December 31, 2019, net cash used in operating activities approximated $24.1 million, compared to approximately

$2.9 million for the same period in 2018.

The rise of cash used in operations was primarily due to (i) the purchases of hemp seed

inventory of approximately $20.75 million as part of the Seed Transactions, from which the Company generated zero income as the

related amounts due from GenCanna were entirely written off, and (ii) cash outflows of approximately $2.0 million for the payment

of interest on promissory notes and the purchase of inventory for the Company’s two locations in the state of Massachusetts

that commenced operations in late 2019 and early 2020.

cash used in investing activities for the year ended December 31, 2019 was approximately $12.5 million, compared to approximately

$40.1 million for the same period in 2018.

The decrease was principally caused by the Company’s $30.0 million investment

in GenCanna in 2018, offset by increases to loans to third-parties from $550,000 in 2018 to $2.43 million in 2019.

cash used in financing activities for the year ended December 31, 2019 was approximately $33.3 million, compared to approximately

$45.8 million for the same period in 2018.

In 2019, the Company raised approximately $19.

8 million from the issuance of promissory

notes, $9.6 million from the issuance of convertible debentures, and $2.75 million from the sale of common stock.

2018, the Company raised approximately $31.8 million from the sale of common stock, $10.0 million from the issuance of convertible

debentures, and approximately $3.2 million from the issuance of a promissory note.

In addition, capital of $2.0 million was extended

to the Company for building improvements on its New Bedford, MA property by the mortgagee.

funds were used to execute on the Company’s strategy to become a fully integrated multistate operator of seed-to-sale cannabis

operations, to continue the development of its regulated facilities, to grow its hemp operations, to expand its branded licensing

business, and for working capital purposes.

of Operations

ended December 31, 2019 compared to year ended December 31, 2018

revenues for the year ended December 31, 2019 increased to approximately $45.6 million from approximately $11.9 million for the

same period in 2018.

The year-over-year increase of approximately $33.8 million was primarily due to the Seed Transactions of

approximately $29.0 million, the receipt of which has been written off as explained above.

Excluding the Seed Transaction, revenues

for the year ended December 31, 2019 increased to approximately $16.6 million, a 40.0% increase from approximately $11.9 million

for the same period in 2018.This significant increase was primarily due to (i) cannabis sales of the KPGs in Illinois acquired

by the Company in October 2019, (ii) management and additional rental fees from the Company’s cannabis-licensed clients

in Delaware and Maryland, such fees earned based on a percentage of the increasing revenue generated by these clients, and (iii)

new distribution channels secured for the Company’s Betty’s Eddies™

and Kalm Fusion™

branded product lines .

of revenues increased to approximately $26.9 million for the year ended December 31, 2019 from to approximately $4.0 million for

the year ended December 31, 2018.

The year-over-year increase of approximately $22.9 million was also due to the Seed Transactions,

which comprised $20.75 million of the increase.

Excluding the Seed Transactions, cost of revenues for the year ended December

31, 2019 increased to approximately $6.2 million from approximately $4.0 million for the same period in 2018.

As a percentage

of revenue, these costs increased from 37.1% in 2019 to 34.1% in 2018 due to the fact that the Company’s cultivation and

production facility in Massachusetts was in the midst of its first harvest and was ramping up its manufacturing operations at

year end in order for full scale selling operations to start in 2020.

a result of the foregoing, gross profit increased to approximately $18.7 million for the year ended December 31, 2019 from approximately

$7.8 million for the same period a year ago, an increase of 139.4%.

Excluding the Seed Transactions, gross profit increased to

approximately $10.4 million for the year ended December 31, 2019 from approximately $7.8 million for the same period a year ago,

an increase of 33.4%.

expenses increased to approximately $3.8 million for the year ended December 31, 2019 from approximately $1.4 million for the

same period a year ago.

The increase was primarily due to the hiring of additional staff to support (i) higher levels of revenue

and (ii) the Company’s expansion into a direct owner and operator and operator of seed-to-sale cannabis and hemp operations.

and promotion costs increased to approximately $370,000 for the year ended December 31, 2019 from approximately $292,000 for the

same period a year ago.

As a percentage of revenues excluding the Seed Transactions, however, these costs fell slightly to 2.2%

from 2.5% of revenues.

and administrative costs decreased to approximately $8.9 million for the year ended December 31, 2019 from approximately $10.1

million for the same period a year ago.

This decrease is primarily due to an approximate $3.9 million reduction of amortization

expense on stock option and stand-alone warrant issuances based on fewer issuances and a lower Company stock price in 2019 compared

to 2018, offset by increases in (i) rent and utilities in of a property lease in Milford, DE that commenced in 2019 and which

the Company is developing into an additional cultivation and production facility for its client in that state, and (ii) professional

debts increased to approximately $44.5 million for the year ended December 31, 2019 from $150,000 for the same period a year ago

as a result of the aforementioned write-off of the GenCanna receivable ($29.0 million) following GenCanna’s Chapter 11 filing,

and reserves recorded against balances due from Kind ($11.2 million) given the current litigation between the Company and Kind,

and Harvest ($2.2 million) due to the anticipated effect on Harvest’s operations from a weakened local economy due to the

coronavirus pandemic.

write-downs, were approximately $2.7 million for the year ended December 31, 2019 and approximately $1.3 million for the same

period a year ago.

The 2019 expense was due to the write off of intangible assets associated with the Company’s acquisition

of MediTaurus.

The 2018 expense related to the excess consideration paid for the acquisitions of ARL and iRollie.

to Note 3 –

Acquisitions of the Company’s audited financial statements where these acquisitions are described

in further detail.

a result of the above, the Company incurred an operating loss of approximately $41.6 million for the year ended December 31, 2019,

compared to approximately $5.4 million for the same period in 2018.

Excluding the aforementioned one-time receivable and goodwill

write-downs and reserves, operating income increased to approximately $7.5 million for the year ended December 31, 2019 from approximately

$1.9 million for the same period a year ago.

non-operating expenses increased to approximately $40.3 million for the year ended December 31, 2019 from approximately $8.0 million

for the same period a year ago.

The increase is primarily due to (i) the approximate $30.2 million write-down of the Company’s

investment in and previously realized equity in earnings of GenCanna, an equity method investment, (ii) an approximate $5.0 million

increase in discounts and beneficial conversion features on Company-issued debt (recorded under Interest Expense on the

statement of operations), and (iii) an increase in interest expense paid and accrued of approximately $3.3 million due to higher

levels of debt carried in 2019, offset by (a) an approximate $4.1 million decrease in the loss associated with the settlement

of debt, and (b) the net settlement proceeds received in 2019 of $2.9 million from the AgriMed matter.

a result of the foregoing, the Company incurred a net loss of approximately $81.9 million in 2019 and approximately $13.3 million

2020, the Company intends (subject to state and regulatory approvals) to complete the consolidation of its cannabis- licensed

clients as previously discussed in the section Consolidation Plans within ITEM 1.

BUSINESS above.

When completed,

the Company will operate as a fully integrated seed-to-sale multistate cannabis operator.

addition to completing the consolidation, the Company’s 2020 focus will be on the following key areas:

the operations of the Company’s recently opened dispensary in Middleboro, MA and

cultivation and production facility in New Bedford, MA, and develop two additional dispensaries

in this state.

the Company’s Nature Heritage™

branded flower and popular infused-product brands such as Betty’s Eddies™

and Kalm Fusion™

into the robust Massachusetts medical and adult-use marketplace.

the profitability of the dispensaries in Anna and Harrisburg in Illinois—which

legalized recreational adult-use of cannabis at the start of 2020, in addition to its

continuing medical use cannabis program—and develop two additional dispensaries

in this state

operations in Maryland and Delaware by adding over 100,000 square feet of new cannabis cultivation and processing facilities.

licensing fees through the sale of branded products at the Company’s owned and

managed facilities and with strategic partners into additional markets.

to build brands and distribution of CBD-infused products through the Company’s

MariMed Hemp subsidiary, and continue to work to reorganize and reset the Company’s

efforts with GenCanna to create value.

assurances can be given that any of these plans will come to fruition or that if implemented will necessarily yield positive results.

following transactions have occurred in early 2020:

Bankruptcy Filing

February 2020, GenCanna filed for voluntary reorganization under Chapter 11 of the Bankruptcy Code with the U.S.

Bankruptcy Court

in the Eastern District of Kentucky.

The filing is intended to permit GenCanna to operate its business while working through a

reorganization plan that could include refinancing of its existing indebtedness, or an alternative restructuring transaction such

Consequently,

as of December 31, 2019, the Company wrote off the outstanding receivable balance from GenCanna of approximately $29.0 million

and the related balance of unearned revenue of approximately $4.2 million as previously discussed in Item 1.

Additionally,

the Company recorded a charge to net income of approximately $30.2 million, classified under Loss on Equity Investments on

the statement of operations for the year ended December 31, 2019, which reduced to zero the carrying value of the Company’s

previous investment in GenCanna as previously discussed in Item 1.

recently announced the completion of the largest recorded hemp harvest in Kentucky, which exceeded 6,000 acres.

The Company’s

management believes that GenCanna’s Chapter 11 filing and ensuing restructuring will facilitate GenCanna’s ability

to refinance its senior debt and arrange for the orderly payment of amounts due to its creditors, including the $33.2 million

owed to the Company;

however, there are no assurances that it will achieve this outcome.

February 2020, the Company entered into an exchange agreement with two institutional stockholders (the “TIS”) whereby

the TIS loaned the Company an aggregate of $4,417,500.

In return for the loans, and the Company (i) issued promissory notes to

the TIS for the aggregate amount, bearing interest at 16.5% per annum and maturing in August 2021, with a right to extend the

maturity date through February 2022 upon payment of an extension fee.

and (ii) exchanged 4,903,333 shares of the Company’s

common stock previously acquired by the TIS, for an equal number of shares of newly designated Series B convertible preferred

connection with the exchange agreement, the Company filed (i) a certificate of designation to designate the rights and preferences

of the Series B convertible preferred stock, and (ii) a certificate of elimination to return all shares of the Series A convertible

preferred stock, of which no shares were issued or outstanding at the time of filing, to the status of authorized and unissued

shares of undesignated preferred stock.

of Additional Debenture

February 2020, the Company sold to the holder of the $20,000,000 convertible debentures previously issued by the Company (the

“$20M Debentures”) an additional convertible debenture in the principal amount of $1,000,000 bearing interest at a

rate of 6.5% per annum that matures one year from issuance, with a 6.5% issuance discount, resulting in net proceeds to the Company

of $935,000 (the “$1M Debenture”).

terms of the $1M Debenture are substantially consistent with the terms of the $20M Debentures.

The SPA, registration rights agreement,

and addendum to the SPA were all amended and restated to incorporate the $1M Debenture.

As part of issuance of the $1M Debenture,

the Company issued three-year warrants to the Holder to purchase 180,000 shares of common stock at an exercise prices of $0.75

Note Extensions

February 2020, the Company and MariMed Hemp issued an $11.5 million promissory note (the $11.5M Note”) which amended

and restated their previously issued $10.0 million secured promissory note to an unaffiliated party.

The $11.5M Note bears

interest at a rate of 15% per annum and matures on June 15, 2020, with monthly interest payments and minimum amortization

payments of $3.0 million in the aggregate due on or before April 30, 2020, of which the Company has already paid $2.3

The $11.5M Note is secured by a first priority security interest in the assets of certain of the Company’s

subsidiaries and brands, and a pledge of the Company’s ownership interest in certain of its subsidiaries.

Note imposes certain covenants on the borrowers effective on the date of the amendment agreement.

Company also extended the maturity dates of another $9.4 million of promissory notes, and is in the process of finalizing the

documentation to extend an additional $3.0 million of promissory notes.

February, the Company received a commitment from an accredited investor for a $12.0 million loan, secured by the Company’s

real estate, at a rate of 10% per annum with a one-year term, and an option to extend for an additional year.

The loan contains

an origination fee of four points and a prepayment penalty of two months interest.

This transactions is expected to close upon

the lender’s completion of its due diligence, which is in its final stages, although there is no assurance that it will

close in the foreseeable future or at all.

of Debentures Payable

January 2020, the holder of the $20M Debentures converted $1,000,000 of principal and approximately $205,000 of accrued interest

into 3,555,859 shares of common stock at a conversion price of $0.34 per share.

February, the Company paid cash to retire a promissory note in the principal amount of $100,000 which matured during that month.

the first quarter of 2020, the Company issued 3,236,857 shares of common stock associated with the subscriptions on common stock

outstanding at December 31, 2019 and previously disclosed in Note 13 –

These subscriptions were comprised

of (i) 32,726 shares in connection with common stock granted in 2019;

(ii) 3,004,131 shares with respect to the December 2019

conversion of a portion of the $20M Debentures, and (iii) 200,000 shares associated with exercise of stock options by the Company’s

Sheet Arrangements

Company has no off-balance sheet arrangements that have or are

reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues,

or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

the opinion of management, inflation has not had a material effect on the Company’s financial condition or results of its

the opinion of management, the Company’s financial condition and results of its operations are not materially impacted by

seasonal sales.

Accounting Pronouncements

January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) which simplifies goodwill impairment

testing by requiring that such periodic testing be performed by comparing the fair value of a reporting unit with its carrying

amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair

The Company is currently evaluating the impact of Topic 350 on its consolidated financial statements and related disclosures,

which is effective for fiscal years, including interim periods, beginning after December 15, 2019.

addition to the above, the Company has reviewed all other recently issued, but not yet effective, accounting pronouncements, and

does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the

results of its operations.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Company is a “smaller reporting company”

as defined by Regulation S-K and, as such, is not required to provide the

Company is a “smaller reporting company” as defined by Regulations S-K and as such, is not required to provide the

information contained in this item pursuant to Regulation S-K.

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

What changed 10-K

Item 5. Market for Registrant’s Common Equity