What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-03-23 compared with 2020-04-01 · 1569 added, 1376 removed, 434 unchanged (87% of the section changed)

FINANCIAL STATEMENTS.

of Independent Registered Public Accounting Firm

Balance Sheets

Statements of Operations

Statements of Stockholders’

Statements of Cash Flows

To Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes To Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and

Stockholders of MariMed, Inc.

on the Financial Statements

of MariMed Inc.

on the Consolidated Financial Statements

have audited the accompanying consolidated balance sheets of MariMed Inc.

(the Company) as of December 31, 2020 and 2019, and

the related consolidated statements of operations, stockholders’

equity, and cash flows for each of the years in the two-year

the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year

period ended December 31, 2020, and the related notes (collectively referred to as the financial statements).

3 unchanged sentences

2020, in conformity with accounting principles generally accepted in the United States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on

the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company

7 unchanged sentences

As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but

not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

6 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

in Note 2 to the financial statements, the Company has suffered recurring net losses from operations and has a net capital deficiency,

which raises substantial doubt about its ability to continue as a going concern.

Management’s plans regarding those matters

are discussed in Note 2.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

have served as the Company’s auditor since 2018.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the financial statements that were

communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material

to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of

critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by

communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or

disclosures to which they relate.

discussed in Note 2 to the financial statements, when another party is involved in providing goods or services to the Company’s

clients, a determination is made as to who is acting in the capacity as the principal in the sales transaction.

management’s evaluation of agreements with customers involves significant judgment, given the fact that some agreements

require management’s evaluation of principal versus agent.

evaluate the appropriateness and accuracy of the assessment by management, we evaluated management’s assessment in relationship

to the relevant agreements.

discussed in Notes 2 & 8, the Company allocates a certain percentage of overhead cost to its manufactured inventory.

management’s allocation of overhead involves significant judgements and estimates to determine the proper allocation.

evaluate the appropriateness of the allocation of overhead to inventory, we evaluated management’s significant judgments

and estimates in what parts of overhead should be included and the allocation of these costs.

Payable & Long-term Debt

discussed in Notes 11 & 12, the Company borrows funds through the use of convertible notes payable that contain a conversion

price and contained warrants.

management’s valuation of debt involves significant judgements and estimates given the terms of the notes include attached

evaluate the valuation of the attached warrants, we evaluated management’s significant judgments and estimates.

judgement and estimates related to the valuation of the debt discounts include fair valuing of warrants which involve significant

estimates of volatility, grant terms, risk-free rates and the use of historical trading data.

We evaluated management’s

conclusions regarding their fair values and reviewed support for the significant inputs used in the valuation model, as well as

assessing the model for reasonableness.

In addition, we evaluated the Company’s disclosure in relation to this matter included

in Notes 11 & 12 to the financial statements.

discussed in Note 13, the Company has issued and outstanding Series B Convertible Preferred Shares that contain redemption rights,

cumulative fixed rate interest, voting rights and conversion rights.

management’s evaluation of the preferred shares involves significant judgements and estimates in determining the proper

classification of the preferred shares that include both debt and equity qualities.

evaluate the appropriateness and accuracy of the classification of the preferred shares, we evaluated management’s assessment

of the debt and equity like characteristics.

have served as the Company’s auditor since 2018.

Balance Sheets

and cash equivalents

receivable, net

rents receivable

from third parties, net

receivable, current portion

Current assets:

current assets

and equipment, net

receivable, less current portion

assets under operating leases

assets under finance leases

from related parties

and stockholders’

rents payable

payable, current portion

lease liabilities, current portion

to related parties

current liabilities

Cash and cash equivalents

Accounts receivable, net

Deferred rents receivable

Note receivable, current portion

Other current assets

Total current assets

Property and equipment, net

Intangibles, net

Note receivable, less current portion

Right-of-use assets under operating leases

Right-of-use assets under finance leases

Liabilities, mezzanine equity, and stockholders’ equity

Current liabilities:

payable, less current portion

lease liabilities, less current portion

Stockholders’

A convertible preferred stock, $0.001 par value;

50,000,000 shares authorized at December 31, 2019 and 2018;

no shares issued

or outstanding at December 31, 2019 and 2018

stock, $0.001 par value;

500,000,000 shares authorized at December 31, 2019 and 2018;

228,408,024 and 211,013,043 shares issued

and outstanding at December 31, 2019 and 2018, respectively

stock subscribed but not issued;

3,236,857 and 97,136 shares at December 31, 2019 and 2018, respectively

paid-in capital

Accounts payable

Accrued expenses

Notes payable, net

Mortgages payable

Debentures payable, net

Operating lease liabilities

Finance lease liabilities

Due to related parties

Other current liabilities

Total current liabilities

Notes payable, less current portion, net

Mortgages payable, less current portion

Debentures payable, less current portion, net

Operating lease liabilities, less current portion

Finance lease liabilities, less current portion

Other liabilities

Total liabilities

Mezzanine equity:

Series B convertible preferred stock, $ 0.001 par value;

4,908,333 and zero

shares authorized, issued and outstanding at December 31, 2020 and 2019, respectively

Stockholders’ equity:

Series A convertible preferred stock, $ 0.001 par value;

50,000,000 shares

authorized at December 31, 2020 and 2019;

zero shares issued or outstanding at December 31, 2020 and 2019

No designation preferred stock, $ 0.001 par value;

45,091,667 and zero shares

authorized at December 31, 2020 and 2019, respectively;

zero shares issued and outstanding at December 31, 2020 and 2019

Common stock, $ 0.001 par value;

500,000,000 shares authorized at December

31, 2020 and 2019;

314,418,812 and 228,408,024 shares issued and outstanding at December 31, 2020 and 2019, respectively

Common stock subscribed but not issued;

11,413 and 3,236,857 shares at December

31, 2020 and 2019, respectively

Additional paid-in capital

Accumulated deficit

( 104,616,538 )

( 106,760,527 )

Noncontrolling

stockholders’

liabilities and stockholders’

Noncontrolling interests

Total stockholders’ equity

Total liabilities, mezzanine equity, and stockholders’ equity

accompanying notes to consolidated financial statements.

5 unchanged sentences

operating expenses

(41,598,149 )

income (loss)

Non-operating

income (expenses):

(12,718,952 )

on debt settlements, net

on equity investments

(30,334,503 )

on debt settlements

(losses) of equity investments

in fair value of investments

non-operating expenses, net

(40,282,776 )

Income (loss) before income taxes

Provision for income taxes

income (loss)

$ (81,880,925 )

(13,308,673 )

income (loss) attributable to noncontrolling interests

income (loss) attributable to MariMed Inc.

$ (81,184,719 )

$ (13,604,068 )

income (loss) per share

1 unchanged sentence

accompanying notes to consolidated financial statements.

Statements of Stockholders’

A Convertible Preferred Stock Subscribed But Not Issued

Stock Subscribed

Non-Controlling

Stockholders’

Statements of Stockholders’ Equity

Common Stock Subscribed

But Not Issued

Total Stockholders’

Balances at December 31, 2018

Conversion of Series A preferred stock

$ ( 25,575,808 )

$ ( 220,032 )

Sales of common stock

Common stock issued for acquisitions

Common stock issued for investments

Common stock issued to settle obligations

Equity issued for services

Issuance of subscribed common shares

Equity conversion

Issuance of subscribed shares

Amortization of stock option grants

Amortization of stand-alone warrant issuances

Exercise of stock options

Exercise of options

Exercise of warrants

1 unchanged sentence

Discount on promissory notes

Beneficial conversion feature on debentures

Conversions of debentures payable

Conversions of promissory notes

Beneficial conversion feature on debentures payable

Conversion of debentures payable

Settlement of promissory notes

Distributions

Conversion of common stock to preferred stock

Amortization of option grants

Issuance of stand-alone warrants

Issuance of warrants attached to debt

of promissory note

Extinguishment

of promissory note

Net income (loss)

December 31, 2018

Sales of common stock

Common stock issued for acquisitions

Common stock issued for investments

Common stock issued to settle obligations

( 81,184,719 )

( 81,880,925 )

Balances at December 31, 2019

$ 112,245,730

$ ( 106,760,527 )

$ ( 553,465 )

Balances at December 31, 2019

$ 112,245,730

$ ( 106,760,527 )

$ ( 553,465 )

Issuance of subscribed shares

Amortization of stock option grants

Amortization of stand-alone warrant issuances

( 3,236,857 )

( 1,168,074 )

Stock forfeitures

( 1,297,447 )

Exercise of stock options

Exercise of warrants

Amortization of option grants

Issuance of stand-alone warrants

Issuance of warrants attached to debt

Discount on debentures payable

Discount on promissory notes

Beneficial conversion feature on debentures

Beneficial conversion feature on debentures payable

Conversion of debentures payable

Settlement of promissory notes

Conversion of common stock to preferred stock

( 4,908,333 )

( 14,720,092 )

( 14,725,000 )

Conversion of promissory notes

Extinguishment of promissory notes

Common stock issued to settle obligations

Distributions

Net income (loss)

December 31, 2019

above statements do not show a column for Series A convertible stock as the balances are zero and there is no

in the periods presented.

Balances at December 31, 2020

$ 112,974,329

$ ( 104,616,538 )

$ ( 577,139 )

above statements do not show columns for Series A Convertible Preferred Stock and

Designation Preferred Stock as the balances are zero and there is no activity in the periods presented.

accompanying notes to consolidated financial statements.

Statements of Cash Flows

Ended December 31,

Year Ended December 31,

Cash flows from operating activities:

Net income (loss) attributable

to MariMed Inc.

Net income (loss) attributable to noncontrolling

Adjustments to reconcile net income (loss)

to net cash used in operating activities:

Amortization of

option grants

Amortization of

stand-alone warrant issuances

Amortization of

warrants attached to debt

Amortization of

beneficial conversion feature

Amortization of

original issue discount

Net income (loss) attributable to MariMed Inc.

$ ( 81,184,719 )

Net income (loss) attributable to noncontrolling interests

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

Asset writeoff

Amortization of intangibles

Amortization of stock grants

Amortization of option grants

Amortization of stand-alone warrant issuances

Amortization of warrants attached to debt

Amortization of beneficial conversion feature

Amortization of original issue discount

Goodwill write-downs

Loss on sale of

Equity issued

to settle obligations

Loss on preferred

stock conversions

Loss on debt settlements

Loss on equity

Change in fair

value of investments

Bad debt expense

Loss on equity issued to settle obligations

Loss (earnings) on equity investments

Change in fair value of investments

Changes in operating assets and liabilities:

Accounts receivable

Deferred rents

Due from third

Other current

( 5,988,861 )

( 37,701,009 )

Deferred rents receivable

Due from third parties

( 5,611,142 )

Other current assets

Accounts payable

Accrued expenses

Deferred rents

Operating lease

Finance lease

interest payments

Unearned revenue

Other current

Net cash used

in operating activities

Deferred rents payable

Operating lease payments

Finance lease interest payments

Other current liabilities

Other liabilities

Net cash provided by (used in) operating activities

( 24,138,317 )

Cash flows from investing activities:

Purchase of property and equipment

( 4,687,795 )

( 9,668,521 )

Purchase of cannabis licenses

Investment in third party companies

Investment in convertible debentures

Investment in notes receivable

Interest on notes receivable

Proceeds from notes receivable

Proceeds from sale of equipment

Due from related

Net cash used

in investing activities

( 2,680,000 )

Receipts on notes receivable

Due from related parties

Net cash used in investing activities

( 4,463,165 )

( 12,537,389 )

Cash flows from financing activities:

Issuance of common stock

Issuance of common stock subscriptions

Issuance of interest in subsidiary

Issuance of promissory notes

Payments on promissory notes

( 12,371,149 )

Proceeds from issuance of debentures

1 unchanged sentence

Payments on mortgages

( 5,102,862 )

Exercise of stock options

3 unchanged sentences

Distributions

Net cash provided

by financing activities

Net cash provided by financing activities

Net change to cash and cash equivalents

Cash and cash

equivalents at beginning of period

Cash and cash

equivalents at end of period

( 3,365,627 )

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Supplemental disclosure of cash flow information:

Cash paid for

Cash paid for interest

Cash paid for income taxes

Non-cash activities:

of debentures receivable

Operating lease

right-of-use assets and liabilities

Finance lease

right-of-use assets and liabilities

of debentures payable

conversion feature on debentures payable

debentures payable

promissory notes

issued to settle debt

issued to settle obligations

issued for acquisitions

issued for investments

Conversion of debentures receivable

Exchange of common stock to preferred stock

Conversion of accrued interest to promissory notes

of common stock associated with subscriptions

stock issued to settle debt

stock issued to settle obligations

Conversions of promissory note

Discount on promissory notes

Beneficial conversion feature on debentures payable

Discount on debentures payable

Operating lease right-of-use assets and liabilities

Finance lease right-of-use assets and liabilities

Conversions of debentures payable

Common stock issued for acquisitions

Common stock issued for investments

Harvest payment

of notes receivable to investment

common stock associated with subscriptions

of advances to notes receivable

options via the reduction of obligation

Cashless exercise

of stock options

accrued interest from notes payable

accrued interest from debentures payable

of promissory notes

Conversion of notes receivable to investment

Conversion of advances to notes receivable

Exercise of options via the reduction of obligation

Cashless exercise of stock options

Reclass of accrued interest from notes payable

Reclass of accrued interest from debentures payable

accompanying notes to consolidated financial statements.

1 unchanged sentence

1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

(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”) is a multi-state operator in the United States cannabis industry.

The Company develops,

operates, manages, and optimizes over 300,000

square feet of state-of-the-art, regulatory-compliant

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

The Company also licenses its

proprietary brands of cannabis and hemp-infused products, along with other top brands, in several domestic markets and overseas.

its entry into the cannabis industry in 2014, the Company was an advisory firm that procured state-issued cannabis licenses on

behalf of its clients, developed cannabis facilities which it leased to these newly-licensed companies, and provided

industry-leading expertise and oversight in all aspects of their cannabis operations.

The Company also provided its clients with

as ongoing regulatory, accounting, real estate, human resources, and administrative services.

2018, the Company made the strategic decision to transition from a consulting business to a direct owner of cannabis licenses

and operator of seed-to-sale operations (hereinafter referred to as the “Consolidation Plan”).

The Consolidation

Plan calls for the acquisition of its cannabis-licensed clients located in Delaware, Illinois, Maryland, Massachusetts, and

In addition, the Consolidation Plan includes the potential acquisition of a Rhode Island asset.

All of these acquisition

are subject to state approval, and once consolidated, the entities will operate under the MariMed banner.

To date, acquisitions of the licensed businesses

in Massachusetts and Illinois have been completed and establish the Company as a fully integrated seed-to-sale multi-state operator,

The acquisitions of the remaining entities located in Maryland, Nevada, and Delaware are at various stages of completion and subject

to each state’s laws governing the ownership transfer of cannabis licenses, which in the case of Delaware requires a modification

of current cannabis ownership laws to permit for-profit ownership.

Meanwhile, the Company continues to expand these businesses

and maximize the Company’s revenue from rental income, management fees, and licensing royalties.

A goal in completing this transition from

a consulting business to a direct owner of cannabis licenses and operator of seed-to-sale operations is to present a simpler,

more transparent financial picture of the full breadth of the Company’s efforts, with a clearer representation of the revenues,

earnings, and other financial metrics the Company has generated for its clients.

The Company has played a key role in the successes

3 unchanged sentences

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.

Company’s stock is quoted on the OTCQX market under the ticker symbol MRMD.

Company was incorporated in Delaware in January 2011 under the name Worlds Online Inc.

Initially, the Company developed

and managed online virtual worlds.

By early 2014, this line of business effectively ceased operating and the Company pivoted into

the legal cannabis industry.

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.

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

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

fund the seed purchases, the Company raised $17.0 million in debt financings which is reflected in Notes Payable on the

balance sheet and further discussed in Note 11 –

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 receivable balance of approximately $29.0 million and the entire unearned revenue balance of approximately

$4.2 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.

addition to the foregoing adjustments, the Company recorded bad debt reserves in 2019 against the 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 Note 6 –

Third Parties and Note 17 –

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 also 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 Note 3

Acquisitions , Note 4 –

Investments , and Note 7 –

Notes Receivable .

The Company has also created its own brands

of cannabis flower, concentrates, and precision-dosed products utilizing proprietary strains and formulations.

These products

are developed by the Company in cooperation with state-licensed operators who meet the Company’s strict standards, including

all natural—not artificial or synthetic—ingredients.

The Company licenses its brands and product formulations

only to certified manufacturing professionals who follow state cannabis laws and adhere to the Company’s precise scientific

formulations and trademarked product recipes.

The Company’s proprietary cannabis

genetics produce flowers and concentrates under the brand name Nature’s Heritage™, and cannabis-infused products under

the brand names Kalm Fusion®, in the form of chewable tablets and drink powder mixes, and the award-winning 1 Betty’s

Eddies® brand of all natural fruit chews.

Both cannabis-infused brands are top selling products in Maryland and Massachusetts 2

and the Company intends to introduce additional products under these brands in 2021.

The Company’s brand of hemp-infused

cannabidiol (“CBD”) products, Florance™, is distributed in the US and abroad.

The Company also has exclusive sublicensing

rights in certain states to distribute the Binske® line of cannabis products crafted from premium artisan ingredients, the

Healer™ line of medical full-spectrum cannabis tinctures, and the clinically tested medicinal cannabis strains developed

in Israel by global medical cannabis research pioneer Tikun Olam™.

The Company intends to continue licensing and distributing

its brands as well as other top brands in the Company’s current markets and in additional legal markets worldwide.

In March 2020, the

World Health Organization declared the outbreak of COVID-19 a global pandemic.

The spread of the virus in the United States and

the measures implemented to contain it—including business shutdowns, indoor capacity restrictions, social distancing, and

diminished travel—have negatively impacted the economy and have created significant volatility and disruption in financial

Consequently, the Company’s implementation of its aforementioned Consolidation Plan has been delayed.

Additionally,

while the cannabis industry has been deemed an essential business, and is not expected to suffer severe declines in revenue, the

Company’s business, operations, financial condition, and liquidity have been impacted, as further discussed in this report.

The Company’s stock is quoted on the

OTCQX market under the ticker symbol MRMD.

The Company was incorporated in Delaware in

January 2011 under the name Worlds Online Inc.

Initially, the Company developed and managed online virtual worlds.

By early 2014,

this line of business effectively ceased operating, and the Company pivoted into the legal cannabis industry.

1 Awards won by the

Company’s Betty’s Eddies® brand include LeafLink 2020 Industry Innovator, Explore Maryland Cannabis 2020 Edible

of the Year, and LeafLink 2019 Best Selling Medical Product.

LeafLink Insights

2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1 unchanged sentence

accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United

States of America (“GAAP”).

reclassifications have been made to prior periods’

data to conform to the current period presentation.

States of America (“GAAP”).

reclassifications have been made to prior periods’ data to conform to the current period presentation.

These reclassifications

had no effect on reported income (losses) or cash flows.

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.

December 31, 2019, the Company had negative working capital of approximately $31.0 million, and for the year then ended, incurred

negative cash flow from operations of approximately $24.8 million.

For further discussion on these metrics and the Company’s

liquidity and capital resources, please refer to Item 7.

Management’s Discussion and Analysis of Financial Condition

and Results of Operations of the Company’s Form 10-K for the fiscal year ended December 31, 2019.

early 2020, 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

These transactions are further disclosed in Note 21 –

Subsequent Events .

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.

The state of Illinois legalized adult-use cannabis in January 2020, which was added to the Company’s

two existing cannabis licenses, thereby increasing the Company’s operations in this state to service both medical and recreational

cannabis consumers.

In Massachusetts, the cultivation and production facility acquired by the Company will soon complete its first

harvest and commence full scale selling operations in this state’s robust cannabis market.

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 these financial statements

of Consolidation

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subsidiaries:

Advisors Inc.

Development LLC

Holdings IL LLC

Holdings MD LLC

Holdings NV LLC

Realty Holdings LLC

Healthcare Inc.

of Harrisburg LLC

SCHEDULE OF MAJORITY OWNED SUBSIDIARIES

MariMed Advisors Inc.

Mia Development LLC

Mari Holdings IL LLC

Mari Holdings MD LLC

Mari Holdings NV LLC

Hartwell Realty Holdings LLC

ARL Healthcare Inc.

KPG of Anna LLC

KPG of Harrisburg LLC

MariMed Hemp Inc.

MediTaurus LLC

accounts and transactions have been eliminated.

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values of these investments approximate their carrying values.

Company’s cash and cash equivalents are maintained with recognized financial institutions located in the United States.

In the normal course of business, the Company may carry balances with certain financial institutions that exceed federally insured

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Such evaluations include the review

of a client’s outstanding balances with consideration towards such client’s historical collection experience, as well

as prevailing economic and market conditions and other factors.

Based on such evaluations, the Company maintained a reserve

of approximately $10.7 million and $150,000 at December 31, 2019 and 2018, respectively.

The 2019 reserve primarily

consisted of reserves against the accounts receivable balances of Kind of approximately $9.7 million and Harvest of approximately

$239,000, as further disclosed in Note 17 –

Based on such evaluations, the Company maintained a reserve of

approximately $ 40.0 million and $ 39.7 million at December 31, 2020 and 2019, respectively.

Please refer to Note 16 – Bad

Debts for further discussion on receivable reserves.

is carried at the lower of cost or net realizable value, with the cost being determined on a first-in, first-out (FIFO) basis.

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footage and other industry-standard criteria.

The Company reviews physical inventory for obsolescence and/or excess

and will record a reserve if necessary.

The Company reviews physical inventory for obsolescence and/or excess and will record

a reserve if necessary.

As of the date of this report, no reserve was deemed necessary.

are comprised of equity holding of private companies.

These investments are recorded at fair value on the Company’s consolidated

balance sheet, with changes to fair value included in income.

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down if such impairments are deemed to have occurred.

January 1, 2018, the Company adopted the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”)

606, Revenue from Contract with Customers, as amended by subsequently issued Accounting Standards Updates.

standard requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects

the consideration that it expects to be entitled to in exchange for those goods or services.

The recognition of revenue is determined

by performing the following consecutive steps:

Company recognizes revenue in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification

(“ASC”) 606, Revenue from Contract with Customers, as amended by subsequently issued Accounting Standards Updates.

This revenue standard requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount

that reflects the consideration that it expects to be entitled to in exchange for those goods or services.

The recognition of

revenue is determined by performing the following consecutive steps:

the contract(s) with a customer;

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Additionally,

when another party is involved in providing goods or services to the Company’s clients, a determination is made as to who—the

Company or the other party—is acting in the capacity as the principal in the sale transaction, and who is merely the agent

when another party is involved in providing goods or services to the Company’s clients, a determination is made as to who—the

Company or the other party—is acting in the capacity as the principal in the sale transaction, and who is merely the agent

arranging for goods or services to be provided by the other party.

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would not recognize revenue for the performance obligations it does not satisfy.

adoption of this standard did not have a significant impact on the Company’s consolidated operating results, and accordingly

no restatement has been made to prior period reported amounts.

Company’s main sources of revenue are comprised of the following:

Estate –

rental income and additional rental fees from leasing of the Company’s regulatory-compliant cannabis

facilities to its clients, which are cannabis-licensed operating companies.

Rental income is generally a fixed amount per

month that escalates over the respective lease terms, while additional rental fees are based on a percentage of tenant revenues

that exceed a specified amount.

fees for providing the Company’s cannabis clients with corporate services and operational oversight of their

cannabis cultivation, production, and dispensary operations.

These fees are based on a percentage of such clients’

and are recognized after services have been performed.

Procurement –

the Company maintains volume discounts with top national vendors of cultivation and production resources,

Company’s main sources of revenue are comprised of the following:

Sales – direct sales of cannabis and cannabis-infused products by the Company’s dispensary and wholesale operations

in Massachusetts and Illinois, and sales of hemp and hemp-infused products by the Company’s hemp division.

this division participated in one-time sales of acquired hemp seed inventory, as further explained in Note 17 – Related

Party Transactions .

Future product sales are expected to include the Company’s planned cannabis-licensee acquisitions

in Maryland, Nevada, and Delaware (upon this state’s amendment to permit for-profit ownership of cannabis entities).

This revenue is recognized when products are delivered or at retail points-of-sale.

Estate – rental income and additional rental fees generated from leasing of the Company’s state-of-the-art, regulatory-compliant

cannabis facilities to its cannabis-licensed clients.

Rental income is generally a fixed amount per month that escalates over

the respective lease terms, while additional rental fees are based on a percentage of tenant revenues that exceed specified

– fees for providing the Company’s cannabis clients with comprehensive oversight of their cannabis cultivation,

production, and dispensary operations.

These fees are based on a percentage of such clients’ revenue, and are recognized

after services have been performed.

Procurement – the Company maintains volume discounts with top national vendors of cultivation and production resources,

supplies, and equipment, which the Company acquires and resells to its clients or third parties within the cannabis industry.

The Company recognizes this revenue after the delivery and acceptance of goods by the purchaser.

revenue from the sale of precision-dosed, cannabis-infused products, such as Kalm Fusion™

and Betty’s

Eddies™, to legal dispensaries throughout the United States.

The recognition of this revenue occurs when the products

are delivered.

fees from third-parties where the Company provides assistance in securing cannabis licenses, and advisory services

in the areas of facility design and development, and cultivation and dispensing best practices.

These fees are recognized

as the services are performed.

Sales –

direct sales of cannabis, hemp, and products derived from these plants.

During 2019, such revenue was generated

from (i) the post-acquisition dispensary operations of both ARL in Massachusetts and the KPGs in Illinois, and (ii) the sales

of hemp and CBD products by MariMed Hemp and MediTaurus.

This revenue is recognized when products are delivered

or at retail points-of-sale.

– revenue from the sale of precision-dosed, cannabis-infused products—such as Kalm Fusion®, Nature’s

Heritage™, and Betty’s Eddies®—to regulated dispensaries throughout the United States and Puerto Rico.

The recognition of this revenue occurs when the products are delivered.

and Development Costs

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estimated useful lives of property and equipment are generally as follows:

buildings and building improvements, seven to thirty-nine

buildings and building improvements, forty

tenant improvements, the remaining duration of the related lease ;

furniture and fixtures, seven years;

machinery and equipment,

five to ten years.

furniture and fixtures, seven to ten years;

and equipment, ten years.

Land is not depreciated.

Company’s property and equipment are individually reviewed for impairment whenever events or changes in circumstances indicate

that the carrying amount of an asset may not be recoverable from the undiscounted future cash flows of such asset over the anticipated

holding period.

An impairment loss is measured by the excess of the asset’s carrying amount over its estimated fair value.

analyses are based on management’s current plans, asset holding periods, and currently available market information.

these criteria change, the Company’s evaluation of impairment losses may be different and could have a material impact to

An impairment loss is measured by the excess of the asset’s carrying amount over its estimated fair value.

analyses are based on management’s current plans, asset holding periods, and currently available market information.

these criteria change, the Company’s evaluation of impairment losses may be different and could have a material impact to

the consolidated financial statements.

the years ended December 31, 2019 and 2018, based on the results of management’s impairment analyses, there were

no impairment losses.

consolidated financial statements reflect the Company’s adoption of ASC 842, Leases , as amended by subsequent accounting

standards updates, utilizing the modified retrospective transition approach which calls for applying the new standard to all of

the Company’s leases effective January 1, 2019, which is the effective date of adoption.

the years ended December 31, 2020 and 2019, based on the results of management’s impairment analyses, there were no impairment

consolidated financial statements reflect the Company’s adoption of ASC 842, Leases , as amended by subsequent accounting

standards updates, utilizing the modified retrospective transition approach which was applied to all of the Company’s leases

on the effective date of January 1, 2019.

842 is intended to improve financial reporting of leasing transactions.

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Company determines if an arrangement is a lease at inception.

Right-of-use assets represent the Company’s right to use an

underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising

Right-of-use assets represent the Company’s right to use an

underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising

from the lease.

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Right-of-use assets and obligations

are recognized at the commencement date based on the present value of lease payments over the lease term, utilizing the Company’s

incremental borrowing rate.

The Company’s lease terms may include options to extend or terminate the lease when it is reasonably

certain that the Company will exercise that option.

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inputs that are generally observable inputs and not corroborated by market data.

carrying amounts of the Company’s financial assets and liabilities, such as cash and accounts payable approximate their

fair values due to the short maturity of these instruments.

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as the expected life of instrument, the exercise price, the expected risk-free interest rate, the expected dividend yield, the

value of the Company’s common stock on issuance date, and the expected volatility of such common stock.

The following table

summarizes the range of inputs used by the Company during the prior two fiscal years:

SCHEDULE OF ASSUMPTIONS USED

Life of instrument

interest rates

Volatility factors

Risk-free interest rates

Dividend yield

expected life of an instrument is calculated using the simplified method pursuant to Staff Accounting Bulletin Topic 14, Share-Based

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The volatility factors are based

on the historical two-year movement of the Company’s common stock prior to an instrument’s issuance date.

The risk-free

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the conditions for extinguishment are met, the liabilities are written down to zero and a gain or loss is recognized.

Company accounts for stock-based compensation using the fair value method as set forth in ASC 718, Compensation—Stock

Compensation, which requires a public entity to measure the cost of employee services received in exchange for an equity award

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cost is recognized for equity awards for which employees do not render the requisite service.

Company accounts for income taxes in accordance with ASC 740, Income Taxes .

Deferred income tax assets and liabilities

are determined based upon differences between the financial reporting and tax basis of assets and liabilities, and are measured

using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

Deferred tax assets

are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements

of operations in the period that includes the enactment date.

Company uses the asset and liability method to account for income taxes in accordance with ASC 740, Income Taxes .

Under this method, deferred income tax assets and liabilities are recorded for the future tax consequences of differences

between the tax basis and financial reporting basis of assets and liabilities, measured using enacted tax rates and laws

that will be in effect when the differences are expected to reverse.

Deferred tax assets are reduced by a valuation allowance

to the extent management concludes it is more likely than not that the assets will not be realized.

The effect on deferred tax

assets and liabilities of a change in tax rates is recognized in the consolidated statements of operations in the period that

includes the enactment date.

740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements

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party transactions.

accordance with ASC 850, the Company’s financial statements include disclosures of material related party transactions,

other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business, as well

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average number of potentially dilutive securities during the period.

of December 31, 2019 and 2018, there were 18,051,357 and 18,916,211, respectively, of potentially dilutive

securities in the form of outstanding options and warrants.

Also as of such dates, there were (i) $10.0 million

and $8.6 million, respectively, of outstanding convertible debentures payable, and (ii) $350,000 of outstanding

convertible promissory notes in both years, that were potentially dilutive, whose conversion into common stock is based on

a discount to the market value of common stock on or about the future conversion date.

the years ended December 31, 2019 and 2018, all potentially dilutive securities had an anti-dilutive effect on earnings

per share, and in accordance with ASC 260, were excluded from the diluted net income per share calculations, resulting in identical

basic and fully diluted net income per share for these periods.

The potentially dilutive securities may dilute earnings per share

in the future.

of December 31, 2020 and 2019, there were 26,722,918 and 18,051,357 , respectively, of potentially dilutive securities in the form

of outstanding options and warrants.

Also as of such dates, there were (i) $ 1.3 million and $ 10.0 million, respectively, of outstanding

convertible debentures payable, and (ii) $ 350,000 of outstanding convertible promissory notes in both years.

All of these potentially

dilutive securities are convertible into common stock is based on either (i) a predetermined price, subject to adjustment, or

(ii) the market value of common stock on or about the future conversion date.

the year ended December 31, 2020, all such potentially dilutive securities were convertible into approximately 57.2 million

net shares of common stock, which were included in the number of weighted average common shares outstanding on a diluted basis,

and in the calculation of diluted net income per share for this period as shown in the statement of operations.

For the year ended

December 31, 2019, the potentially dilutive securities had an anti-dilutive effect on earnings per share, and in accordance with

ASC 260, were excluded from the diluted net income per share calculations, resulting in identical basic and fully diluted net

income per share for this period.

and Contingencies

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the assessment of a contingency indicates that it is probable that a material loss will be incurred and the amount of the liability

can be estimated, then the estimated liability would be accrued in the Company’s financial statements.

If the assessment

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not assured, management does not believe, based upon information available at this time, that a loss contingency will have material

adverse effect on the Company’s financial position, results of operations or cash flows.

Conversion Features on Convertible Debt

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an embedded beneficial conversion feature at inception, or may become beneficial in the future due to potential adjustments.

beneficial conversion feature is a nondetachable conversion feature that is “in-the-money”

at the commitment date.

beneficial conversion feature is a nondetachable conversion feature that is “in-the-money” at the commitment date.

The in-the-money portion, also known as the intrinsic value of the option, is recorded in equity, with an offsetting discount

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Noncontrolling

interests represent third-party minority ownership of the Company’s consolidated subsidiaries.

Net income attributable to

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Company does not have any off-balance sheet arrangements.

connection with the preparation of its financial statements for the years ended December 31, 2020 and 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 included the profitability

of the Company and the cash flow generated by its operations, the amount of capital recently and/or in the process of being raised,

the current level of investment within the cannabis industry, the stock price movement of public cannabis companies, the actions

and/or financial 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.

the year ended December 31, 2020, operating income increased to approximately $ 14.5 million

compared to an operating loss of approximately $ 41.5 million

In addition, working capital at December 31, 2020 improved by approximately $ 27.2 million

from the previous year.

to December 31, 2020, the Company consummated a financing transaction for up to $ 46.0 million of proceeds in exchange for newly-designated

Series C convertible preferred stock of the Company and warrants to purchase the Company’s common stock.

Initial proceeds

of $ 23.0 million received in March 2021 were used to pay down debt, and will be used to upgrade certain of the Company’s

owned and managed facilities.

The balance of the available proceeds will fund the completion of the Company’s Consolidation

This transaction is further discussed in Note 22 – Subsequent Events .

on its evaluation, coupled with the aforementioned operating results and financing transaction, management believes that it has

completely mitigated the circumstance that led to a doubt with respect to the Company’s ability to continue as a going concern

which existed at the time of the filing of the Company’s prior year’s report.

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 this ASU 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.

Healthcare Inc.

October 2018, the Company’s cannabis-licensed client in Massachusetts, ARL Healthcare Inc.

(“ARL”), filed a

plan of entity conversion with the state to convert from a non-profit entity to a for-profit corporation, with the Company as

the sole shareholder of the for-profit corporation.

ARL holds three cannabis licenses from the state of Massachusetts for the

cultivation, production and dispensing of cannabis.

November 30, 2018, the conversion plan was approved by the Massachusetts Secretary of State, and effective December 1, 2018, ARL

was consolidated into the Company as a wholly-owned subsidiary.

acquisition was accounted for in accordance with ASC 805, Business Combinations .

The following table summarizes the

allocation of the purchase price to the fair value of the assets acquired and liabilities assumed on the acquisition date:

to related parties

identifiable net assets

fair value of consideration

total consideration paid by the Company was equal to the forgiveness of amounts owed to the Company by ARL.

Accordingly, the transaction

gave rise to goodwill of approximately $732,000, which the Company wrote off in 2018.

The balance of acquired cannabis

licenses was included in Intangibles within the asset section of the Company’s balance sheet at December 31, 2018.

This intangible asset was fully amortized by December 2019.

2019, the Company paid for the annual renewal ARL’s cannabis license.

At December 31, 2019, the carrying value less amortization

was approximately $138,000.

Company has reviewed all 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.

3 – ACQUISITIONS

of Anna LLC and KPG of Harrisburg LLC

October 2018, the Company entered into a purchase agreement to acquire 100% of the ownership interests of KPG of Anna LLC and

KPG of Harrisburg LLC, the Company’s two cannabis-licensed clients that operate medical marijuana dispensaries in the state

of Illinois (both entities collectively, the “KPGs”), from the current ownership group of the KPGs (the “Sellers”).

As part of this transaction, the Company also acquired the Sellers’

ownership interests of Mari Holdings IL LLC, the Company’s

subsidiary which owns the real estate in which the KPGs’

dispensaries are located (“Mari-IL”).

October 2019, the transaction was approved by the Illinois Department of Financial & Professional Regulation, and 1,000,000

shares of the Company’s common stock, representing the entire purchase price, were issued to the Sellers.

Effective October

1, 2019, the KPGs and Mari-IL became wholly-owned subsidiaries of the Company with 100% of the operations of these entities

consolidated into the Company’s financial statements as of that date.

The KPGs contributed revenues of approximately

$1.3 million and pretax income of approximately $79,000 since the date of acquisition.

October 1, 2019, the Illinois Department of Financial and Professional Regulation approved the Company’s acquisition of

(i) 100 % of the ownership interests of KPG of Anna LLC and KPG of Harrisburg LLC, the Company’s two cannabis-licensed clients

that operate medical marijuana dispensaries in the state of Illinois (both entities collectively, the “KPGs”), and

(ii) the 40 % ownership interests not already owned by the Company of Mari Holdings IL LLC, the Company’s subsidiary that

owns the real estate in which the KPGs’ dispensaries are located (“Mari-IL”).

On such date, 1,000,000 shares

of the Company’s common stock, representing the entire purchase price, were issued to the sellers of the KPGs and Mari-IL,

and these entities became wholly-owned subsidiaries of the Company.

acquisition was accounted for in accordance with ASC 805.

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to the fair value of the assets acquired and liabilities assumed on the acquisition date:

and cash equivalents

SCHEDULE OF FAIR VALUE OF ASSETS ACQUIRED ON ACQUISITION

Cash and cash equivalents

Minority interests

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Accrued expenses

to third parties

fair value of consideration

unaudited pro forma results of operations for the Company are presented below assuming this 2019 acquisition had occurred at January

1, 2018, the beginning of the reporting period of these financial statements.

Ended December 31,

Due to third parties

( 1,020,850 )

Total fair value of consideration

the date of acquisition, the KPGs have contributed approximately $ 30.7 million of revenue and $ 6.8 million of pretax income.

unaudited pro forma results of operations for the Company are presented below for the year ended December 31, 2019 assuming this

October 2019 acquisition had occurred at January 1, 2019, the beginning of the reporting period of these financial statements.

Consolidated results are unchanged for the year ended December 31, 2020.

SCHEDULE OF UNAUDITED PRO FORMA RESULTS OF OPERATIONS

Total revenues

Net income (loss)

forma financial information is not necessarily indicative of the Company’s actual results if the transaction had been completed

$ ( 81,705,403 )

Net income (loss) per share

forma financial information is not necessarily indicative of the Company’s actual results if the transaction had been completed

during the periods reflected above, nor is it necessarily an indication of future operating results.

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Harvest Foundation LLC

November 2018, the Company issued a letter of intent to acquire 100% of the ownership interests of The Harvest Foundation LLC

(“Harvest”), the Company’s cannabis-licensed client in the state of Nevada.

In August 2019, the parties

entered into a purchase agreement governing the transaction.

The acquisition is conditioned upon legislative approval of the transaction,

which is expected to occur by the end of 2020.

Upon consummation, the operations of Harvest will be consolidated into the

Company’s financial statements.

purchase price is comprised of the issuance of (i) 1,000,000 shares of the Company’s common stock, in the aggregate, to

two owners of Harvest, which as a good faith deposit, were issued upon execution of the purchase agreement, (ii)

$1.2 million of the Company’s common stock at closing, based on the closing price of the common stock on the day prior to

legislative approval of the transaction, and (iii) warrants to purchase 400,000 shares of the Company’s common stock at

an exercise price equal to the closing price of the Company’s common stock on the day prior to legislative approval of the

These shares are restricted and will be returned to the Company in the event the transaction does not close by a

date certain.

As the transaction has not been consummated, the issued shares were recorded at par value within the Stockholders’

Equity section of the balance sheet at December 31, 2019.

August 2019, the Company entered into a purchase agreement to acquire 100 % of the ownership interests of The Harvest Foundation

LLC (“Harvest”), the Company’s cannabis-licensed client in the state of Nevada.

The acquisition is conditioned

upon legislative approval of the transaction.

At this time, the state has paused the processing of cannabis license transfers,

without indicating when it will resume.

Upon the resumption of these activities and the ensuing approval by the state, the Company

expects to consummate this transaction whereby the operations of Harvest will be consolidated into the Company’s financial

purchase price is comprised of the issuance of (i) 1,000,000

shares of the Company’s common stock,

in the aggregate, to two owners of Harvest, which as a good faith deposit, were issued upon execution of the purchase agreement,

million of the Company’s common

stock at closing, based on the closing price of the common stock on the day prior to legislative approval of the transaction,

and (iii) warrants to purchase 400,000

shares of the Company’s common stock

at an exercise price equal to the closing price of the Company’s common stock on the day prior to legislative approval of

the transaction.

The issued shares were recorded at par value.

Such shares are restricted and will be returned to the Company

in the event the transaction does not close by a date certain.

Therapeutics USA Inc.

December 2018, the Company entered into a memorandum of understanding (“MOU”) to acquire Kind Therapeutics USA Inc.

(“Kind”), its client in Maryland that holds licenses for the cultivation, production, and dispensing of medical cannabis.

The MOU provides for a total purchase price of $6.3 million in cash, 2,500,000 shares of the Company’s common stock, and

other consideration.

The acquisition is subject to the approval by the Maryland Medical Cannabis Commission, which approval is

not expected prior to October 2020.

in December 2018, MariMed Advisors Inc, the Company’s wholly owned subsidiary, and Kind entered into a management agreement

pursuant to which the Company provides comprehensive management services in connection with the business and operations of Kind,

and Mari Holdings MD LLC, the Company’s majority-owned subsidiary, entered into a 20-year lease with Kind for its utilization

of the Company’s 180,000 square foot cultivation and production facility in Hagerstown, MD.

Additionally, in October 2019,

Mari Holdings MD LLC purchased a 9,000 square foot building in Anne Arundel County, MD for the development of a dispensary

which would be leased to Kind.

the sellers of Kind have attempted to renegotiate the terms of the MOU.

Even though the MOU contains all the definitive material

terms with respect to the acquisition transaction and confirms the management and lease agreements, the selling parties now allege

that the MOU is not an enforceable agreement.

The Company engaged with the sellers in good faith in an attempt to reach updated

terms acceptable to both parties, however the sellers failed to reciprocate in good faith, resulting in an impasse, resulting

in both parties commencing legal proceedings.

For further information, see Part II, Item 1.

Legal Proceedings in this

May 2019, the Company entered into a purchase agreement to acquire MediTaurus LLC (“MediTaurus”), a company formed

In the fall of 2016, the members of

Kind Therapeutics USA Inc., the Company’s cannabis-licensed client in Maryland that holds licenses for the cultivation,

production, and dispensing of medical cannabis (“Kind”), and the Company agreed to a partnership/joint venture whereby

Kind would be owned 70 % by the Company and 30 % by the members of Kind, subject to approval by the Maryland Medical Cannabis Commission

Prior to finalizing the documents confirming the partnership/joint venture, in December 2018, the Company

and the members of Kind negotiated and entered into a memorandum of understanding (“MOU”) for the Company

to acquire 100 %

of the membership interests of Kind.

The MOU provides for a total purchase price of $ 6.3

million in cash, 2,500,000

shares of the Company’s common stock,

and other consideration.

The acquisition is subject to approval by the MMCC, which will be applied for following the resolution

of the litigation with Kind discussed below.

in December 2018, (i) MariMed Advisors Inc., the Company’s wholly owned subsidiary, and Kind entered into a management services

agreement to provide Kind with comprehensive management services in connection with the business and operations of Kind

(“the MSA”), and (ii) Mari Holdings MD LLC, the Company’s majority-owned subsidiary, entered into a 20-year

lease with Kind for Kind’s

utilization of the Company’s 180,000

square foot cultivation and production

facility in Hagerstown, MD (“the Lease”), which the Company purchased, designed, and developed for occupancy

and use by Kind commencing in late 2017.

Additionally, in October 2019, Mari Holdings MD LLC purchased a 9,000

square foot building in Anne Arundel County,

MD, which is currently under constructions, for the development of a dispensary which would be leased to Kind.

In 2019, the members of Kind sought to

renegotiate the terms of the MOU and has subsequently sought to renege on both the original partnership/joint venture and the

The Company engaged with Kind in good faith in an attempt to reach updated terms acceptable to both parties, however

Kind failed to reciprocate in good faith, resulting in an impasse.

Incrementally, both parties through counsel further sought

to resolve the impasse, however such initiative resulted in both parties commencing legal proceedings.

As a result, the

consummation of this acquisition has been delayed and may not ultimately be completed.

The litigation is further discussed in

Note 21 – Commitments and Contingencies .

May 2019, the Company entered into a purchase agreement to acquire MediTaurus LLC (“MediTaurus”), a company formed

and owned by Jokubas Ziburkas PhD, a neuroscientist and leading authority on CBD and its interactions with the brain and endocannabinoid

MediTaurus currently operates in the United States and Europe and has developed proprietary CBD formulations sold under

its Florance™

to the purchase agreement, the Company acquired 70% of MediTaurus on June 1, 2019, and will acquire the remaining 30% of MediTaurus

on June 1, 2020.

The purchase price for the initial 70% was $2.8 million, comprised of cash payments totaling $720,000 and 520,000

shares of the Company’s common stock valued at $2,080,000.

The purchase price of the remaining 30%, payable in cash

or stock at the Company’s option, shall be equal to a defined percentage of the Company’s receipts from the licensing

of certain MediTaurus technology and products that existed on June 1, 2019 (all such technology and products, the “MT

Property”).

For a period of ten years following June 1, 2020, certain former members of MediTaurus shall be paid a royalty

on the Company’s receipts from the licensing of MT Property, with the royalty percentage commencing at 10% and decreasing

to 2% over time.

its Florance™ brand.

to the purchase agreement, the Company acquired 70 % of MediTaurus on June 1, 2019.

The purchase price was $ 2.8 million, comprised

of cash payments totaling $ 720,000 and 520,000 shares of the Company’s common stock valued at $ 2,080,000 .

The Company expects

to complete the acquisition of the remining 30 % of MediTaurus in April 2021.

acquisition was accounted for in accordance with ASC 10.

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2019, of the purchase price to the fair value of the assets acquired and liabilities assumed on the acquisition date:

and cash equivalents

value of MediTaurus

Noncontrolling

interests in MediTaurus

fair value of consideration

on a valuation of MediTaurus in late 2019, the goodwill on the transaction was adjusted to approximately $2.7 million, which was

written off in expectation of the impact of the coronavirus pandemic on MediTaurus’

part of the transaction, the Company hired Dr.

Ziburkas as the Company’s Chief Innovation Officer, as well as other members

of the MediTaurus executive team.

April 2018, the Company entered into a purchase agreement whereby 264,317 shares of the Company’s common stock were exchanged

for 100% of the ownership interests of iRollie LLC (“iRollie”), a manufacturer of branded cannabis products and accessories

for consumers, and custom product and packaging for companies in the cannabis industry.

The Company acquired, among other assets,

iRollie’s entire product line, service offerings, client list, and intellectual property, and hired its two co-founders.

acquisition was accounted for in accordance with ASC 10.

The shares of Company common stock, valued at approximately $280,000,

were issued to iRollie’s former owners in December 2018, at which time the Company adjusted the total goodwill generated

by the transaction.

The following table summarizes the allocation of the purchase price to the fair value of the assets acquired:

and cash equivalents

fair value of consideration

to the acquisition, iRollie had not been generating positive cash flow as a stand-alone entity, and in conformity with relevant

accounting guidance, the goodwill was written off.

SCHEDULE OF FAIR VALUE OF ASSETS ACQUIRED ON ACQUISITION

Cash and cash equivalents

Accounts receivable

Accounts payable

Total value of MediTaurus

Noncontrolling interests in MediTaurus

Total fair value of consideration

on a valuation of MediTaurus in late 2019, the goodwill recorded in connection with the transaction was written off.

Industries of PA LLC

July 2018, the Company entered into a purchase agreement to acquire 100 % of the ownership interests of AgriMed Industries of PA

LLC (“AgriMed”), an entity that holds a license from the state of Pennsylvania for the cultivation of cannabis.

purchase price was comprised of $ 8 million, payable in stock and cash, and the assumption of certain liabilities of AgriMed.

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The net amount of approximately $ 2,949,000 , representing the cash payment less legal fees and write-offs

of assets and supplies, was recorded in Other Non-Operating Income in the Company’s consolidated statement of

operations for the year ended December 31, 2019.

December 31, 2019 and 2018, the Company’s investments were comprised of the following:

of assets and supplies, was recorded in Other Non-Operating Income in the Company’s consolidated statement of operations

for the year ended December 31, 2019.

4 – INVESTMENTS

December 31, 2020 and 2019, the Company’s investments were comprised of the following:

SCHEDULE OF INVESTMENTS

Current investments:

Worldwide LLC

Ventures Inc.

(formerly Terrace Inc.)

Total current investments

Non-current investments:

MembersRSVP LLC

Total non-current investments

Total investments

(formerly Terrace Inc.)

May 2019, the Company issued 500,000 shares of its common stock, valued at $ 1.59 million on the date of issuance, to purchase

an 8.95 % interest in Terrace Inc.

(“Terrace”), a Canadian entity that develops and acquires international cannabis

The Company has no board representation, nor does it have the ability to exert operational or financial control over the

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In accordance with

ASC 321, Investments –

Equity Securities , this investment is carried at fair value, with changes to fair value recognized

ASC 321, Investments – Equity Securities , this investment is carried at fair value, with changes to fair value recognized

in net income.

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investment without a readily determinable fair value.

December 31, 2019, the carrying amount of this investment declined to approximately $1.45 million, based on its fair value on

such date, and the Company recorded a charge to net income of approximately $141,000.

2018, in a series of transactions, the Company purchased $30 million of subordinated secured convertible debentures (the “GC

Debentures”) of GenCanna.

In February 2019, the Company converted the GC Debentures, plus unpaid accrued interest of approximately

$229,000 through the conversion date, into common stock of GenCanna equal to a 33.5% ownership interest in GenCanna on a fully

diluted basis.

Concurrent with the conversion, Company’s CEO was appointed to GenCanna’s board and the Company

was granted certain rights, including the rights of inspection, financial information, and participation in future security offerings

the conversion date, this investment had been accounted for under the equity method.

However, as previously discussed in Note

Organization and Description of Business , GenCanna filed for voluntary reorganization under Chapter 11 in February

2020 with the U.S.

Bankruptcy Court in the Eastern District of Kentucky.

As a result, the Company recorded a charge to net income

of approximately $30.23 million, classified under Loss on Equity Investments on the statement of operations for the year

ended December 31, 2019, which reduced the carrying value of this investment to zero.

Worldwide LLC

August 2018, the Company invested $300,000, of a total contracted cash investment of $500,000, and issued 378,259 shares of its

common stock, valued at approximately $915,000, in exchange for a 23% ownership in CVP Worldwide LLC (“CVP”).

has developed a customer relationship management and marketing platform, branded under the name Sprout, which is specifically

designed for companies in the cannabis industry.

Company shall assist in the ongoing development and design of Sprout, and in marketing Sprout to companies within the cannabis

The Company shall earn a percentage share of Sprout’s revenues generated from sales (i) to the Company’s

clients, and (ii) by the Company to third parties.

As of December 31, 2019, no revenue was earned by the Company.

investment is accounted under the equity method.

In 2018, the Company recorded a charge to net income of approximately

$43,000 based on its equity in CVP’s net loss during the period of the Company’s ownership.

Such amount reduced the

carrying value of the investment to approximately $1,172,000 at December 31, 2018.

In 2019, the Company recorded a charge

of approximately $105,000 representing the Company’s equity in CVP’s net loss during year, further reducing

the carrying value of the investment to approximately $1,067,000 at December 31, 2019.

December 2020, Flowr Corp.

FLWPF), a Toronto-headquartered cannabis company with operations in Canada, Europe,

and Australia (“Flowr”), acquired Terrace.

Under the terms of the deal, each shareholder of Terrace received 0.4973

of a share in Flowr for each Terrace share held.

the years ended December 31, 2020 and 2019, the decrease in fair value of this investment of approximately $ 92,000 and $ 141,000 ,

respectively, was included in Change In Fair Value Of Investments on the statement of operations.

August 2018, the Company invested $ 300,000 and issued 378,259 shares of its common stock, valued at approximately $ 915,000 , in

exchange for a 23 % ownership in MembersRSVP LLC (“MRSVP”), an entity that has developed cannabis-specific customer

relationship management software, branded under the name Sprout.

the years ended December 31, 2020 and 2019, the investment was accounted for under the equity method.

Accordingly, the Company

recorded earnings of approximately $ 99,000 in 2020, and a charge of approximately $ 105,000 in 2019, based on the Company’s

equity in MRSVP’s net income and losses during such periods.

Since the Company’s initial investment in 2018 of approximately

$ 1,215,000 , the Company had recorded cumulative equity in net losses of approximately $ 49,000 , reducing the carrying value of

the investment to approximately $ 1,166,000 at December 31, 2020.

January 2021, the Company and MRSVP entered into an agreement whereby the Company assigned and transferred membership interests

comprising an 11 % ownership in MRSVP in exchange for a release from all further obligation by the Company to make future investments

or payments and certain other non-monetary consideration.

Following the interest transfer, the Company’s ownership interest

in MRSVP was reduced to 12 % on a fully diluted basis.

part of the agreement, the Company relinquished its right to appoint a member to the board of MRSVP.

In light of the Company no

longer having the ability to exercise significant influence over MRSVP, the investment shall no longer be accounted for under

the equity method—the Company’s share of MRSVP’s future earnings or losses shall not be recorded, and the earnings

and losses previously recorded will remain part of the carrying amount of the investment.

January 2019, the entire principal and accrued interest balance of a note receivable of approximately $ 258,000 from Chooze Corp.,

a private company operating in the cannabis industry (“Chooze”), was converted into a 2.7 % equity interest in Chooze.

In accordance with ASC 321, the Company elected the measurement alternative to value this equity investment without a readily

determinable fair value.

Accordingly, the investment was carried at its cost until June 2020 when the investment was fully reserved

due to the Company’s determination that the investment was impaired.

This reserve in 2020 of approximately $ 258,000 was

included in Change In Fair Value Of Investments on the statement of operations.

February 2019, the Company converted $ 30.0 million of convertible debentures purchased from GenCanna Global Inc., a Kentucky-based

cultivator, producer, and distributor of hemp and CBD (“GenCanna”), plus unpaid accrued interest through the conversion

date of approximately $ 229,000 , into common stock of GenCanna equal to a 33.5 % ownership interest in GenCanna on a fully diluted

late January 2020, an involuntary bankruptcy proceeding under Chapter 11 was filed against GenCanna USA, GenCanna’s wholly-owned

operating subsidiary, with the U.S.

Bankruptcy Court in the Eastern District of Kentucky (the “Bankruptcy Court”).

In February 2020, GenCanna USA, under pressure from certain of its creditors including MGG Investment Group LP, GenCanna’s

senior lender (“MGG”), agreed to convert the involuntary bankruptcy proceeding into a voluntary Chapter 11 proceeding.

In addition, GenCanna and GenCanna USA’s subsidiary, Hemp Kentucky LLC (collectively with GenCanna and GenCanna USA, the

“GenCanna Debtors”), filed voluntary petitions under Chapter 11 in the Bankruptcy Court.

the aforementioned proceedings had occurred prior to the Company’s filing of its financial statements for the year ended

December 31, 2019, the Company recorded a charge to net income of approximately $ 30.2 million in December 2019, reflected in Earnings

(Losses) on Equity Investments on the statement of operations, which reduced the carrying value of this investment to zero.

Please refer to Note 21 – Commitments and Contingencies for additional discussion of GenCanna’s bankruptcy

Ventures Inc.

December 2018, the Company purchased 2,500,000 shares of common stock of Iconic Ventures Inc.

(“Iconic”) for an aggregate

cash payment of $500,000.

Iconic has developed DabTabs™, a unique solution for cannabinoid vaporization via a convenient

portable tablet that provides precisely measured dosing and acts as a storage system for full spectrum extracts, concentrates

and distillates.

Company’s investment equates to a current ownership interest in Iconic of approximately 10%.

The Company has no board

representation, nor does it have the ability to exert operational or financial control over the entity.

In accordance with

ASC 321, the Company elected the measurement alternative to value this equity investment without a readily determinable fair value.

Under this alternative measurement election, the investment is recorded at its cost minus impairment, if any, plus or minus

changes resulting from observable price changes in orderly transactions for the identical or a similar investment in Iconic.

2019, the Company wrote off the investment after an impairment review that considered the viability of the entity in light of

the current economic climate.

Accordingly, this investment

was carried at zero and $500,000 on December 31, 2019 and 2018, respectively.

January 2019, the entire principal and accrued interest balance of a note receivable from Chooze Corp.

of approximately $258,000

was converted into a 2.7% equity interest in Chooze.

In accordance with ASC 321, the Company elected the measurement alternative

to value this equity investment without a readily determinable fair value.

Following the Company’s purchase, there has been

no impairment to this investment, nor any observable price changes to investments in the entity.

Accordingly, this investment

was carried at approximately $258,000 at December 31, 2019.

Company will continue to apply the alternative measurement guidance until this investment does not qualify to be so measured.

The Company may subsequently elect to measure this investment at fair value, and if so, shall measure all identical or similar

investments in Chooze at fair value.

Any subsequent changes in fair value shall be recognized in net income.

December 2018, the Company purchased a 10 % ownership interest in Iconic Ventures Inc., a private company that had created unique

solution for cannabinoid vaporization (“Iconic”), for an aggregate cash payment of $ 500,000 .

The Company was not given

any board representation, nor did it have the ability to exert operational or financial control over the entity.

2019, the Company wrote off the investment after an impairment review.

The charge of $ 500,000 was included in Change In Fair

Value Of Investments on the statement of operations.

July 2019, the Company entered into a licensing agreement for the exclusive manufacturing and distribution in seven eastern U.S.

states of the Binske ®

portfolio of products, a brand known for utilizing best-in-class proprietary strains and

states of the Binske ® portfolio of products, a brand known for utilizing best-in-class proprietary strains and

craft ingredients in its edibles, concentrates, vaporizers, and topicals.

In consideration for the license and other rights, the

Company agreed to pay a royalty of 10.0% to 12.5% of gross revenue, as defined, derived from the sale of Binske ®

Company agreed to pay a royalty of 10.0 % to 12.5 % of gross revenue, as defined, derived from the sale of Binske ® products,

subject to an annual minimum royalty.

No gross revenue was generated as of December 31, 2019.

August 2019, the Company terminated the license agreement it had entered into in August 2018 for the use of a patented technology

to produce and distribute cannabis products with precise dosing and at increased economies (“Vitiprints”).

The licensing

agreement had an initial term of five years, and required the Company to make a non-refundable payment of $250,000 which the Company

charged to Cost of Revenues in August 2018.

No gross revenue was generated as of December 31, 2020 and 2019.

5 – DEFERRED RENTS RECEIVABLE

5 unchanged sentences

between amounts received and amounts recognized are recorded under Deferred Rents Receivable on the balance sheet.

rentals are recognized only after tenants’

revenues are finalized and if such revenues exceed certain minimum levels.

rentals are recognized only after tenants’ revenues are finalized and if such revenues exceed certain minimum levels.

Company leases the following owned properties:

– a 45,000 square foot facility purchased in September 2016 and developed into a cannabis cultivation, processing, and

dispensary facility which is leased to a cannabis-licensed client occupying 100% of the space under a triple net lease that

commenced in 2017 and expires in 2035.

dispensary facility which is leased to a cannabis-licensed client under a triple net lease that commenced in 2017 and expires

– a 180,000 square foot former manufacturing facility purchased in January 2017 and developed by the Company into a

6 unchanged sentences

each under a 20 -year lease that commenced in 2018 .

With the acquisition of the KPGs as disclosed in Note 3 –

Acquisitions ,

With the acquisition of the KPGs as disclosed in Note 3 – Acquisitions ,

this lease was eliminated upon the consolidation of the KPGs in October 2019.

3 unchanged sentences

– 4,000 square feet of retail space in a multi-use building space which the Company developed into a cannabis dispensary

which is subleased to its cannabis-licensed client under a under a triple net lease expiring in 2021 with a five-year option

of December 31, 2019 and 2018, cumulative fixed rental receipts under such leases approximated $9.5 million and

$5.4 million, respectively, compared to revenue recognized on a straight-line basis of approximately $11.3 million and

$7.5 million.

Accordingly, the deferred rents receivable balances at December 31, 2019 and 2018 approximated $1.8

million and $2.1 million, respectively.

and is subleased to its cannabis-licensed client under a under a triple net lease expiring in 2021 with a five-year option

of December 31, 2020 and 2019, cumulative fixed rental receipts under such leases approximated $ 13.9

million and $ 9.5

million, respectively, compared to revenue

recognized on a straight-line basis of approximately $ 15.8

million and $ 11.3

Accordingly, the deferred rents

receivable balances at December 31, 2020 and 2019 approximated $ 1.9

million and $ 1.8

million, respectively.

minimum rental receipts for non-cancelable leases and subleases as of December 31, 2020 were:

DUE FROM THIRD PARTIES

December 31, 2019 and 2018, the following table reflects amounts that were advanced by the Company to its cannabis-licensed

clients primarily for working capital purposes, and the carrying amount of such advances after write-offs:

Therapeutics USA Inc.

(Maryland licensee)

Foundation LLC (Nevada licensee)

of Anna LLC (Illinois licensee acquired Oct.

of Harrisburg LLC (Illinois licensee acquired Oct.

working capital advances to third parties

against working capital advances

from third parties, net

a client is able to organically fund its ongoing operations, such client will issue a promissory note to the Company for the cumulative

advances made up to that point, which will then be paid down monthly over a specified period of time.

The Company has successfully

employed this strategy in the past, and accordingly, in January 2019, KPG of Anna LLC and KPG of Harrisburg LLC issued promissory

notes to the Company as further described in Note 7 –

Notes Receivable .

December 2019, the Company recorded bad debt reserves against the working capital advance balances due from (i) Kind of approximately

$1.5 million in light of the ongoing litigation between the Company and Kind, and (ii) Harvest of approximately $1.9 million because

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

SCHEDULE OF FUTURE MINIMUM RENTAL RECEIPTS FOR NON-CANCELABLE LEASES AND SUBLEASES

February 2021, the Company entered into a five -year

lease agreement for a 12,000

square foot premises located in Wilmington,

DE which the Company intends to develop into a cannabis production facility with offices, and sublease to its cannabis-licensed

client in this state.

The lease contains an option to negotiate an extension at the end of the lease term.

7 – NOTES RECEIVABLE

December 31, 2020 and 2019, notes receivable were comprised of the following:

State Compassion Center

Holdings Inc.

Health & Wellness Center Inc.

Fidelity Inc.

notes receivable

receivable, current portion

receivable, less current portion

Company loaned approximately $700,000 to First State Compassion Center, its Delaware cannabis-licensee client, during the period

from October 2015 to April 2016.

In May 2016, this client issued a 10-year promissory note, as subsequently amended, to the Company

bearing interest at a rate of 12.5% per annum.

The monthly payments of approximately $10,100 will continue through April 2026,

at which time the note will become due.

At December 31, 2019 and 2018, the current portion of this note was approximately

$58,000 and $51,000, respectively, and is included in Notes Receivable, Current Portion on the respective balance

2018, the Company loaned an aggregate of $300,000 to

Healer LLC (“Healer”), an entity that provides cannabis education, dosage programs, and products developed by Dr.

Dustin Sulak, an integrative medicine physician and nationally renowned cannabis practitioner.

In 2019, the Company loaned Healer

an additional aggregate amount of $500,000.

The loans bear interest at 6% per annum, with principal and interest payable

on the maturity dates which are three years from the respective loan dates.

2019, the Company extended loans aggregating $980,000 to Atalo Holdings Inc.

(“Atalo”), an agriculture and

biotechnology firm specializing in research, development, and production of industrial hemp and hemp-based CBD products.

bear interest at 6% per annum, with principal and interest payable on the earlier of April 3, 2020 or the date on which the Company

acquires at least 25% of Atalo’s outstanding capital stock, in which case the principal and interest due shall be credited

toward Company’s purchase price for such capital stock.

In December 2019, the Company wrote off the entire carrying value

of the Atalo note receivable balance based on the expectation that the operations of Atalo would be negatively impacted by the

coronavirus pandemic.

January 2019, the Company entered into an agreement with Maryland Health & Wellness Center Inc.

(“MHWC”), an entity

that has been pre-approved by the state of Maryland for a cannabis dispensing license, to provide MHWC with a $300,000 construction

loan in connection with the buildout of MHWC’s proposed dispensary.

The Company also entered into a consulting services

agreement to provide MHWC with advisory and oversight services over a three-year period relating to the development, administration,

operation, and management of MHWC’s proposed dispensary in Maryland.

The construction loan bears interest at 8% per annum,

with principal and interest payable in May 2022, the two-year anniversary of final state approval of MHWC’s dispensing

license, provided however, that the Company shall have the right, that extends through such two-year anniversary and

which is subject to state approval, to convert the promissory note underlying the construction loan into a 20% ownership interest

This conversion right of the Company shall terminate if the consulting services agreement is terminated.

August 2019, the Company loaned $250,000 to High Fidelity Inc., a company that owns and operates two seed-to sale medical

marijuana facilities in the state of Vermont and produces its own line of CBD products.

The loan bears interest at a rate of 10%

per annum, with interest-only monthly payments through its extended maturity in August 2020.

the period from May to October 2018, the Company loaned $250,000 to Chooze Corp.

bearing interest at 8% per annum and maturing

In January 2019, the entire principal and accrued interest balance of approximately $258,000 was converted into a 2.7%

ownership interest in Chooze, as previously discussed in Note 4 –

Investments .

January 2019, KPG of Anna LLC and KPG of Harrisburg LLC each issued a promissory note to the Company in the approximate amount

of $451,000 and $405,000, respectively, representing the advances made by the Company to these entities through December 31, 2018.

The notes bore interest at 12% per annum, with monthly principal and interest payments due through December 2038.

With the acquisition

of the KPGs as disclosed in Note 3 –

Acquisitions , these notes were eliminated upon the consolidation of the KPGs

in October 2019.

2019, the Company purchased $21.6 million of hemp seeds

for its wholesale hemp distribution business and to develop hemp-derived CBD products.

The seeds meet 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.

As previously disclosed in Note 1 –

Organization and Description

of Business , the Company sold a majority of these seeds to GenCanna, generating a related party receivable of

$33.2 million which was written off as of December 31, 2019.

December 31, 2019, inventory was comprised of approximately $226,000 of CBD isolate and hemp extract;

approximately

$476,000 of work-in-process;

and approximately $518,000 of finished cannabis and CBD products.

At December 31, 2018, inventory

was comprised of product packaging and other collateral.

DEBENTURES RECEIVABLE

detailed in Note 4 –

Investments , the Company converted the GC Debentures into a 33.5% ownership interest in GenCanna

in February 2019.

Prior to conversion, the GC Debentures bore interest at a rate of 9% per annum and had an original maturity

date of three years from issuance.

For the year ended December 31, 2018, the Company earned and received interest income of approximately

$502,000 on the GC Debentures.

SCHEDULE OF NOTES RECEIVABLE

First State Compassion Center

High Fidelity Inc.

Maryland Health & Wellness Center Inc.

Total notes receivable

Notes receivable, current portion

Notes receivable, less current portion

Company’s cannabis-licensed client in Delaware, First State Compassion Center, issued a 10 -year promissory note to the Company

in May 2016 in the amount of $ 700,000 bearing interest at a rate of 12.5 % per annum, as amended.

The monthly payments of approximately

$ 10,000 will continue through April 2026, at which time the note will be fully paid down.

At December 31, 2020 and 2019, the current

portion of this note was approximately $ 66,000 and $ 58,000 , respectively, and was included in Notes Receivable, Current Portion

on the respective balance sheets.

August 2018 to June 2019, the Company loaned an aggregate of $ 800,000

to Healer LLC (“Healer”),

an entity that provides cannabis education, dosage programs, and products developed by Dr.

Dustin Sulak, an integrative medicine

physician and nationally renowned cannabis practitioner.

Healer issued promissory notes to the Company for the aggregate amount

loaned that bear interest at 6 %

per annum, with principal

and interest payable on maturity dates three years from the respective loan dates.

December 30, 2020, the current portion of this loan approximated $ 337,000 .

portion was current at December 31, 2019.

In March 2021, the Company was issued a revised promissory note from Healer replacing the previous promissory notes on these

loans as discussed in Note 22 – Subsequent Events .

August 2019, the Company loaned $ 250,000 to High Fidelity Inc., a company that owns and operates two seed-to sale medical marijuana

facilities in the state of Vermont and produces its own line of CBD products.

The note bears interest at a rate of 10.0 % per annum,

with interest-only month payments through its extended maturity in June 2021.

January 2019, the Company provided Maryland Health & Wellness Center Inc.

(“MHWC”), an entity that has been pre-approved

by the state of Maryland for a cannabis dispensing license, with a $ 300,000 construction loan bearing interest at a rate of 8 %

In June 2020, MHWC repaid the principal and accrued interest thereon, at which time the parties agreed to terminate

their business relationship and release each other from all other previously executed agreements.

8 – INVENTORY

December 31, 2020 and 2019, inventory was comprised of the following:

SCHEDULE OF INVENTORY

Ingredients and other raw materials

Work-in-process

Finished goods

Total inventory

The anticipated year-over-year increase

of inventory is based on the Company’s implementation of its aforementioned Consolidation Plan whereby it is transitioning

from a management and advisory firm in the cannabis space, to a cannabis licensee and direct owner of cannabis cultivation, manufacturing,

and dispensary operations.

9 – PROPERTY AND EQUIPMENT

December 31, 2020 and 2019, property and equipment consisted of the following:

and building improvements

and equipment

SCHEDULE OF PROPERTY AND EQUIPMENT

Buildings and building improvements

Tenant improvements

Furniture and fixtures

Machinery and equipment

Construction in progress

accumulated depreciation

and equipment, net

the years ended December 31, 2019 and 2018, additions to property and equipment were approximately $9.7 million

and $8.9 million, respectively.

2018 additions were primarily comprised of (i) the buildout of properties in Hagerstown, MD, New Bedford, MA, and Middleborough,

MA, and (ii) improvements to the Wilmington, DE facility.

2019 additions consisted primarily of (i) the commencement of construction in Milford, DE and Annapolis, MD, (ii) the continued

buildout of properties in Hagerstown, MD, New Bedford, MA, and Middleborough, MA, and (ii) improvements to the Wilmington, DE

and Las Vegas, NV properties.

2018 construction in progress balance of approximately $12.2 million was primarily comprised of (i) New Bedford, MA building,

improvements and machinery of approximately $9.8 million and (ii) Middleborough, MA building, improvements and fixtures of approximately

$2.4 million.

All of this construction in progress was placed into service in 2019.

2019 construction in progress balance of approximately $2.8 million consisted of the commencement of construction

of properties in Milford, DE and Annapolis, MD.

expense for the year ended December 31, 2019 and 2018 was approximately $999,000 and $658,000, respectively.

( 4,888,722 )

( 3,135,843 )

Property and equipment, net

the years ended December 31, 2020 and 2019, additions to property and equipment approximated $ 4.7

million and $ 9.7

million, respectively.

2020 additions were primarily comprised of (i) construction in Mt.

Vernon, IL, and (ii)

machinery and equipment purchases for facilities in Massachusetts, Maryland, Illinois, and Delaware.

The 2019 additions consisted

primarily of (i) the commencement of construction in Milford, DE and Annapolis, MD, (ii) the continued buildout of properties

in Hagerstown, MD, New Bedford, MA, and Middleborough, MA, and (ii) improvements to the Wilmington, DE and Las Vegas, NV properties.

2020, the Company disposed of an asset with a cost of approximately $ 91,000 and accumulated depreciation through the disposal

date of approximately $ 6,000 .

The loss on disposal of approximately $ 85,000 is reflected in Other Non-Operating Expenses

in the statement of operations at September 30, 2020.

There were no disposals in 2019.

2020 and 2019 construction in progress balances of approximately $ 3.1

million and $ 2.8

million, respectively,

consisted of the commencement of construction of properties in Milford, DE and Annapolis, MD.

expense for the year ended December 31, 2020 and 2019 approximated $ 1.8 million and $ 1.0 million, respectively.

10 – INTANGIBLES

December 31, 2020 and 2019, intangible assets were comprised of (i) the carrying value of cannabis license fees, and (i) goodwill

arising from the Company’s acquisition of the KPGs and Mari-IL as discussed in Note 3 – Acquisitions .

Company’s cannabis licenses are issued from the states of Illinois and Massachusetts and require the payment of annual fees.

These fees, comprised of a fixed component and a variable component based on the level of operations, are capitalized and amortized

over the respective twelve-month periods.

At December 31, 2020 and 2019, the carrying value of these cannabis licenses approximated

$ 161,000 and $ 296,000 , respectively.

goodwill associated with the acquisition of the KPGs and Mari-IL is reviewed on a quarterly basis for impairment.

Since the date

of acquisition, the KPGs have contributed approximately $ 30.7 million of revenue and $ 6.8 million of pretax income.

Based on this

and other factors, the goodwill of approximately $ 2.1 million at December 31, 2020 and 2019 was deemed to be unimpaired.

December 31, 2020 and 2019, mortgage balances, including accrued but unpaid interest, were comprised of the following:

of New England –

Massachusetts property

of New England –

Delaware property

State Bank –

Illinois properties

mortgages payable

payable, current portion

payable, less current portion

November 2017, the Company entered into a 10-year mortgage agreement with Bank of New England for the purchase of a 138,000 square

foot industrial property in New Bedford, Massachusetts, within which the Company has built a 70,000 square foot cannabis cultivation

and processing facility.

This mortgage was personally guaranteed by the Company’s CEO and CFO.

From the mortgage date through

May 2019, the Company was required to make monthly payments of interest-only at a rate equal to the prime rate plus 2%, with a

floor of 6.25% per annum.

From May 2019 to May 2024, the Company is required to make principal and interest payments at a rate

equal to the prime rate on May 2, 2019 plus 2%, with a floor of 6.25% per annum.

Principal and interest payments shall continue

from May 2024 through the end of the lease at a rate equal to the prime rate on May 2, 2024 plus 2%, with a floor of 6.25% per

The outstanding principal balance on this mortgage was approximately $4,825,000 and $4,895,000 on December 31, 2019

and 2018, respectively, of which approximately $94,000 and $63,000, respectively, was current.

Company maintains a second mortgage with Bank of New England, also personally guaranteed by the Company’s CEO and CFO, for

the 2016 purchase of a 45,070 square foot building in Wilmington, Delaware which was developed into a cannabis seed-to-sale facility

and is currently leased to the Company’s cannabis-licensed client in that state.

The mortgage matures in 2031 with monthly

principal and interest payments at a rate of 5.25% per annum through September 2021, and thereafter the rate adjusting every five

years to the then prime rate plus 1.5% with a floor of 5.25% per annum.

At December 31, 2019 and 2018, the outstanding

principal balance on this mortgage was approximately $1,682,000 and $1,792,000, respectively, of which approximately $105,000

and $102,000, respectively, was current.

May 2016, the Company entered into a mortgage agreement with DuQuoin State Bank (“DSB”) for the purchase of two properties

SCHEDULE OF MORTGAGES PAYABLE

Bank of New England – Massachusetts properties

Bank of New England – Delaware property

DuQuoin State Bank – Illinois properties

South Porte Bank – Illinois property

Total mortgages payable

Mortgages payable, current portion

( 1,387,014 )

Mortgages payable, less current portion

November 2017, the Company entered into a 10 -year mortgage agreement with Bank of New England in the amount of $ 4,895,000 (the

“Initial Mortgage”) for the purchase of a 138,000 square foot industrial property in New Bedford, Massachusetts, within

which the Company has built a 70,000 square foot cannabis cultivation and processing facility.

Pursuant to the Initial Mortgage,

the Company made monthly payments of (i) interest-only from the mortgage date through May 2019 at a rate equal to the prime rate

plus 2 % , with a floor of 6.25 % per annum, and (ii) principal and interest payments from May 2019 to July 2020 at a rate equal

to the prime rate on May 2, 2019 plus 2 % , with a floor of 6.25 % per annum.

In July 2020, at which time the Initial Mortgage had

a remaining principal balance of approximately $ 4.8 million, the parties consummated an amended and restated mortgage agreement,

secured by the Company’s properties in New Bedford and Middleboro in the amount of $ 13.0 million bearing interest at a rate

of 6.5 % per annum that matures in August 2025 (the “Refinanced Mortgage”).

Proceeds from the Refinanced Mortgage were

used to pay down the Initial Mortgage and approximately $ 7.2 million of promissory notes as further described below.

The outstanding

principal balance of the Refinanced Mortgage approximated $ 12.8 million on December 31, 2020, of which approximately $ 335,000

The outstanding principal balance of the Initial Mortgage approximated $ 4.8 million at December 31, 2019, of which

approximately $ 94,000 was current.

Company maintains another mortgage with Bank of New England for the 2016 purchase of a 45,070 square foot building in Wilmington,

Delaware which was developed into a cannabis seed-to-sale facility and is currently leased to the Company’s cannabis-licensed

client in that state.

The mortgage matures in 2031 with monthly principal and interest payments at a rate of 5.25 % per annum through

September 2021, and thereafter the rate adjusting every five years to the then prime rate plus 1.5 % with a floor of 5.25 % per

At December 31, 2020 and 2019, the outstanding principal balance on this mortgage was approximately $ 1,576,000 and $ 1,682,000 ,

respectively, of which approximately $ 114,000 and $ 105,000 , respectively, was current.

May 2016, the Company entered into a mortgage agreement with DuQuoin State Bank (“DSB”) for the purchase of two properties

which the Company developed into two 3,400 square foot free-standing retail dispensaries in Illinois.

of each year, this mortgage is due to be repaid unless it is renewed for another year at a rate determined at the discretion

of DSB’s executive committee.

On May 5 th of

each year, this mortgage is due to be repaid unless it is renewed for another year at a rate determined by DSB’s executive

The mortgage was renewed in May 2020 at a rate of 6.75 % per annum.

At December 31, 2019

and 2018, the outstanding principal balance on this mortgage was approximately $829,000 and $850,000, respectively,

of which approximately $24,000 and $23,000, respectively, was current.

June 2019, the Company and MariMed Hemp, its wholly-owned subsidiary, issued a secured promissory note in the

principal amount of $10 million to an unaffiliated party (the “$10M Note”).

The proceeds from the $10M Note

were used to finance a portion of the purchases of hemp seed inventory previously discussed in Note 1 –

and Description of Business .

The $10M Note provided for the repayment of principal plus a payment of $1.5 million on January

At December 31, 2019, the pro-rata portion of such payment, based on the term of the $10M Note, approximated $1,307,000

and was charged to interest expense.

The $10M Note imposes certain covenants on the borrowers, all of which were complied with

as of December 31, 2019.

February 2020, the Company entered into an amendment agreement with the holder of the $10M Note, whereby the Company and MariMed

Hemp issued an amended and restated promissory note in the principal amount of $11,500,000 (the “$11.5M Note”), bearing

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

of $3,000,000 in the aggregate due on or before April 30, 2020, of which the Company has already paid $2,300,000.

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.

The $11.5M Note imposes certain covenants on

the borrowers effective on the date of the amendment agreement.

At December 31, 2020 and 2019, the outstanding principal

balance on this mortgage was approximately $ 815,000 and $ 829,000 respectively, of which approximately $ 31,000 and $ 24,000 , respectively,

February 2020, the Company entered into a mortgage agreement with South Porte Bank for the purchase and development of a property

Pursuant to two amendments to the mortgage agreement, the Company is making interest-only monthly payments

at a rate of 5.5 % per annum through amended maturity date of March 31, 2021 .

February 2020, pursuant to an exchange agreement as further described in Note 13 – Mezzanine Equity , the Company

issued two promissory notes in the aggregate principal amount of approximately $ 4.4 million, bearing interest at 16.5 % per annum

and maturing in August 2021 (the “$4.4M Notes”), in exchange for a loan in the same amount.

The Company has the right

to extend the maturity date through February 2022 upon payment of an extension fee equal to 2.5% of the principal amount of the

As of December 31, 2020, no principal payments were made on the $4.4M Notes and unpaid accrued interest through such date

approximated $ 186,000 .

June 2019, the Company and MariMed Hemp, its wholly-owned subsidiary, issued a secured promissory note in the principal amount

of $ 10.0 million (the “$10M Note”) to an unaffiliated party (the “Noteholder”).

The proceeds from the

$10M Note were used to finance a portion of the purchases of hemp seed inventory that was sold to GenCanna (the “Seed Transactions”)

as further discussed in Note 20 – Related Party Transactions .

The $10M Note provided for the repayment of principal

plus a payment of $ 1.5 million (the “$1.5M Payment”) on the maturity date of January 31, 2020 .

Such payment was charged

to interest expense over the life of the $10M Note.

part of the $10M Note transaction, the Company issued three-year warrants to purchase 375,000 shares of common stock at an exercise

price of $4.50 per share to the holder of the $10M Note.

The fair value of these warrants on the issuance date of approximately

$601,000 was recorded as a discount to the $10M Note.

Approximately $523,000 of the warrant discount was amortized to interest

expense in 2019.

price of $ 4.50 per share to the Noteholder.

The fair value of these warrants on the issuance date of approximately $ 601,000 was

recorded as a discount to the $10M Note.

Approximately $ 523,000 of the warrant discount was amortized to interest expense in 2019,

with the remainder in January 2020.

Accordingly, the carrying value of the $10M Note approximated $ 9.9 million at December 31,

April 2019, MariMed Hemp issued a secured promissory note in the principal amount of $1,000,000 to an unaffiliated party.

The proceeds of the note were used to finance a portion of the purchases of hemp seed inventory previously discussed in Note

Organization and Description of Business .

The note is secured by the collateral assignment of certain receivables

from GenCanna (the “Secured Receivables”) and certain obligations of GenCanna to MariMed Hemp.

The principal balance

plus a payment of $180,000, initially due on December 31, 2019, was extended to March 31, 2020 in accordance with the

terms of the note, requiring an additional payment of $30,000 payable on the extended due date.

MariMed Hemp can elect to

repay the note in whole or in part without penalty, provided the noteholder is given proper notice and MariMed Hemp is not in

default of the note agreement.

Upon such election, the entire payment of $180,000 and additional payment of $30,000 shall

be deemed earned by and due to the noteholder.

March 2019, the Company raised $6 million through the issuance of a secured promissory note to an unaffiliated party bearing interest

at a rate of 13% per annum and a service fee of $900,000 (the “$6M Note”).

The proceeds of the note were used to finance

a portion of the purchases of hemp seed inventory previously discussed in Note 1 –

Organization and Description of Business .

The note is secured by the collateral assignment of certain receivables from and obligations of GenCanna to MariMed Hemp.

note’s initial maturity date of December 31, 2019 was extended to April 30, 2020 in accordance with the terms of

the note, with the Company paying an extension fee in December 2019 of $300,000 which was charged to interest expense.

31, 2019, accrued interest payable on the note approximated $635,000.

September 2018, the Company raised $3 million from the issuance of a secured promissory note to the same unaffiliated party of

the $6M Note, bearing interest at a rate of 10% per annum, with interest payable monthly through an initial maturity date

of March 31, 2020 (the “$3M Note”).

The Company may elect to prepay the $3M Note in whole or part at any time after

December 17, 2018 without premium or penalty provided the noteholder is given proper notice and the Company is not in default

of the note agreement.

The $3M Note was extended for an additional six months in accordance with its terms, with

the interest rate increasing to 12% per annum during the extension period.

The $3M Note is secured by the Company’s property

part of $3M Note transaction, the Company issued three-year

warrants to the lender’s designees to purchase 750,000 shares of the Company’s common stock at an exercise price of

$1.80 per share.

The Company recorded a discount on the $3M Note of approximately $1,511,000 from the allocation of note

proceeds to the warrants based on the fair value of such warrants on the issuance date.

Approximately $882,000 of the warrant

discount was amortized to interest expense during 2018, and the remaining $629,000 was amortized during 2019.

At December 31,

2019 and 2018, the carrying value of the $3M Note was $3 million and approximately $2.37 million (principal less

the remaining warrant discount of $629,000), respectively.

addition to the above transactions, the Company raised $2,760,000 in 2019 from the issuance of promissory notes to individuals

and accredited investors bearing interest at rates of 10% to 18% per annum, and maturing in 2020 and 2021.

No additional promissory

notes were issued in 2018 than those previously described above.

2018, holders of previously issued promissory notes with principal balances of $1,075,000 converted such promissory notes into

1,568,375 shares of common stock at conversion prices ranging from $0.65 to $0.90 per share.

The conversions resulted in the

recording of non-cash losses of approximately $829,000 in the aggregate based on the fair value of the common stock on the dates

of conversion.

No conversions of promissory notes occurred during 2019.

2019 and 2018, the Company issued 2,435,116 shares and 3,827,373 shares of its common stock, respectively,

and subscriptions on zero and 79,136 shares of its common stock, respectively to retire promissory notes (principal

and accrued interest) of approximately $1,047,000 and $7,590,000, respectively.

The Company recorded non-cash losses

of approximately $2.5 million in 2018 based on the fair value of the common stock on the retirement dates.

No such losses

were incurred in 2019.

2018, the Company repaid $700,000 of promissory notes.

No repayments of promissory notes occurred during 2019.

of December 31, 2019, the aggregate scheduled maturities of

the Company’s total debt outstanding, inclusive of the promissory notes and mortgages described within this Note 11 –

Debt , and the convertible debentures described in the following Note 12 –

Debentures Payable, were:

DEBENTURES PAYABLE

October and November 2018, pursuant to a securities purchase agreement (the “SPA”), the Company sold an aggregate

of $10,000,000 of convertible debentures to an accredited investor bearing interest at the rate of 6% per annum that mature

two years from issuance, with a 1% issuance discount, resulting in net proceeds to the Company of $9,900,000 (the “$10M

Debentures”).

holder of the $10M Debentures (the “Holder”) has the right at any time to convert all or a portion of the $10M Debenture,

along with accrued and unpaid interest, into the Company’s common stock at conversion prices equal to 80% of a calculated

Company entered into an amendment agreement with the Noteholder in February 2020, whereby the Company and MariMed Hemp issued

an amended and restated promissory note maturing in June 2020 in the principal amount of $ 11,500,000 (the “$11.5M Note”),

comprised of the principal amount of the $10M Note and the $1.5M Payment.

The $11.5M Note bore interest at a rate of 15 % per annum,

requiring periodic interest payments and minimum amortization payments of $ 3,000,000 in the aggregate, which the Company made

in the first half of 2020.

Company entered into a second amendment agreement with the Noteholder in June 2020, whereby (i) $ 352,000

of outstanding principal of the $11.5M

Note was converted into 1,900,000

shares of the Company’s common stock

(which did not result in a material extinguishment gain or loss as the conversion price was near the price

of the Company’s common stock on the agreement date), and (ii) the Company and MariMed Hemp issued a second amended

and restated promissory note in the principal amount of approximately $ 8.8

million (the “$8.8M Note”),

comprised of the outstanding principal and unpaid interest balances of the $11.5M Note, plus an extension fee of approximately

In addition, the Company issued three-year

warrants to the Noteholder to purchase

shares of common stock at an exercise

price of $ 0.50

The fair value of these warrants

on the issuance date of approximately $ 66,000

was recorded as a discount to the $8.8M

Note, to be amortized to interest expense over the life of the $8.8M Note.

$8.8M Note bears interest at a rate of 15 % per annum, matures in June 2022 , and required a minimum amortization payment of $ 4,000,000

in July 2020, which the Company paid with a portion of proceeds of the Refinanced Mortgage discussed earlier in this footnote.

The Company can prepay all, or a portion, of the outstanding principal and unpaid interest of the $8.8M Note, however if any prepayment

is made prior to December 25, 2021, the Company shall be required to pay a prepayment premium equal to 10 % of the principal amount

being prepaid.

The Noteholder has the right to require the redemption of up to $ 250,000 of principal and unpaid interest thereon

per calendar month (the “Discretionary Monthly Redemptions”), which shall be paid in common stock if certain defined

conditions of the $8.8M Note and of the Company’s common stock are met, or else in cash.

As of December 31, 2020, the Company

paid Discretionary Monthly Redemptions of $ 600,000 in the aggregate, and accrued interest through such date of approximately $ 405,000 ,

Accordingly, the carrying value of the $8.8M Note was approximately $ 4.2 million at December 31, 2020.

$8.8M 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.

The Noteholder has the option to convert

the $8.8M Note, in whole or in part, into shares of the Company’s common stock at a conversion price of $ 0.30 ,

subject to certain conversion limitations.

This non-detachable conversion feature of the $8.8M Note had no intrinsic value

on the agreement date, and therefore no beneficial conversion feature arose.

The $8.8M Note imposes certain covenants on the

borrowers, all of which were complied with as of December 31, 2020.

April 2019, MariMed Hemp issued a secured promissory note in the principal amount of $ 1,000,000 (the “$1M Note”) to

an unaffiliated party.

The proceeds of the $1M Note were used to finance a portion of the Seed Transactions as further discussed

in Note 20 – Related Party Transactions .

The $1M Note is secured by the collateral assignment of certain receivables

from GenCanna and certain obligations of GenCanna to MariMed Hemp.

The principal balance plus a payment of $ 180,000 , initially

due in December 2019, was extended to March 2020 in accordance with the terms of the $1M Note, requiring an additional payment

of $ 30,000 (the “$30,000 Fee”).

Prior to the extended due date, the parties agreed that the $1M Note would continue

on a month-to-month basis bearing interest at a rate of 15 % per annum.

In September 2020, the Company paid down $ 500,000 of principal

on the $1M Note.

At December 31, 2020, the outstanding balance consisted of $ 500,000 of principal and approximately $ 467,000 of

unpaid accrued interest which included the $ 30,000 Fee.

March 2019, the Company raised $ 6.0 million through the issuance of a secured promissory note (the “$6M Note”) to

an unaffiliated party (the “Holding Party”) bearing interest at a rate of 13 % per annum and a service fee of $ 900,000

(the “Service Fee”).

The proceeds of the note were used to finance a portion of the Seed Transactions as further discussed

in Note 20 – Related Party Transactions .

The $6M Note is secured by the collateral assignment of certain receivables

from and obligations of GenCanna to MariMed Hemp.

The $6M Note’s initial maturity date of December 31, 2019 was extended

to April 2020 in accordance with its terms, with the Company paying a $ 300,000 extension fee in December 2019 which was charged

to interest expense.

Company and the Holding Party entered into a note extension agreement in April 2020 (the “Initial Extension Agreement”)

pursuant to which (i) the $6M Note’s due date was extended to September 2020, and the $6M Note was modified to include unpaid

accrued interest of $ 845,000 through the modification date and interest at a rate of 10 % per annum (the “$6.8M Note”),

and (iii) a new convertible note in the amount of $ 900,000 (the “$900k Note”) was issued evidencing the Service Fee,

bearing interest at a rate of 12 % per annum.

The Company satisfied the $ 900 k Note and accrued interest of $ 20,100 in full as of

the June 2020 maturity date by the payment in July 2020 of $ 460,050 in cash, representing one-half of the principal and accrued

interest, and the issuance in June 2020 of 2,525,596 shares of the Company’s common stock, representing the other half of

the principal and accrued interest.

September 2018, the Company raised $ 3.0 million from the issuance of a secured promissory note to the Holding Party, bearing interest

at a rate of 10 % per annum (the “$3M Note”, and together with the $6M Note, the “Initial Notes”).

maturity date of the $3M Note, initially in March 2020 , was extended for an additional six months in accordance with its terms,

with the interest rate increasing to 12% per annum during the extension period.

Pursuant to the Initial Extension Agreement, the

maturity date of the $3M Note was extended to December 2020.

The Company may elect to prepay the $3M Note in whole or part without

premium or penalty provided the Holding Party is given proper notice and the Company is not in default of the note agreement.

consideration of the Initial Extension Agreement, the Company (i) paid the Holding Party a fee of $ 50,000 , (ii) extended the security

interest in the Company’s properties in Maryland to secure each note held by the Holding Party, and (iii) granted the Holding

Party certain security interests in equity interests held by the Company.

Each of the notes held by the Holding Party provides

for cross-default and imposes certain covenants on the Company, all of which were complied with as of December 31, 2020.

part of the $3M Note transaction, the Company issued three-year warrants to the Holding Party’s designees to purchase 750,000

shares of the Company’s common stock at an exercise price of $ 1.80 per share.

The Company recorded a discount on the $3M

Note of approximately $ 1,511,000 from the allocation of note proceeds to the warrants based on the fair value of such warrants

on the issuance date.

Approximately $ 882,000 of the warrant discount was amortized to interest expense during 2018, and the remaining

$ 629,000 was amortized during 2019.

Accordingly, the carrying value of the Initial Notes was $ 9 million and unpaid accrued interest

was approximately $ 1.5 million at December 31, 2019.

October 2020, the Company and the Holding Party entered into a second note extension agreement (the “Second Extension Agreement”)

whereby the Company (i) paid $ 1 million of principal and all outstanding accrued interest of approximately $ 333,000 on the $6.8M

(ii) issued an amended and restated senior secured promissory note in the principal amount of $ 5,845,000 (the “$5.8M

Note”) to replace the $6.8M Note;

and (iii) amended and restated the $3M Note (the “New $3M Note”, and together

with the $5.8M Note, the “Amended Notes”).

Amended Notes bear interest at a rate of 12 % per annum and mature in September 2022 .

If all principal and accrued interest on

either or both of the Amended Notes are not paid on or prior to their respective maturity dates, the Holding Party shall have

the right, exercisable in its sole discretion at any time from September 2022 through March 2023, to convert all or a portion

of the principal and interest owed into shares of the Company’s common stock at a conversion price equal to the average

closing price for the 20 consecutive trading days prior to the date of conversion.

The $5.8M Note requires mandatory principal

payments of $ 400,000 in February 2021, and $500,000 per quarter during the period from May 2021 to August 2022 (such quarterly

payments amounting to $ 3.0 million in the aggregate).

The $5.8M Note can be prepaid in whole or in part at any time without penalty.

The New $3M Note can be prepaid in whole or in part without penalty only after the $5.8M Note has been fully repaid.

consideration of the Second Extension Agreement, the Company (i) issued four-year warrants to the Holding Party’s designees

to purchase up to 5,000,000 shares of the Company’s common stock at an exercise price of $ 0.25 per share;

(ii) paid the

Holding Party a fee of $ 100,000 ;

and (iii) extended the security interest in certain Company properties and the pledge of certain

equity interests to secure the Amended Notes.

The Company recorded a discount on the Amended Notes of approximately $ 573,000 based

on the fair value of such warrants on the issuance date, of which approximately $ 75,000 was amortized as of the end of 2020, and

the remainder to be amortized over the life of the Amended Notes.

Accordingly, the carrying value of the Amended Notes approximated

$ 8.3 million at December 31, 2020, of which $ 1.9 million was current.

addition to the above transactions, the Company (i) was carrying $ 1,380,000

of principal on

promissory notes at the start of the reporting period (the “Existing Notes”), and (ii) raised $ 2,100,000

and $ 2,760,000

during the year ended December 31,

2020 and 2019, respectively, from the issuance of promissory notes to accredited investors bearing interest at rates ranging from

per annum, and maturing

in 2021 (the “Third Party Notes”).

During 2019, $ 950,000

of the Existing Notes was retired

by the Company through the issuance of common stock at a conversion price equal to the market price of the Company’s

common stock on the conversion date of $ 0.43

Existing Notes were retired in 2020.

the Third Party Notes, in 2020, $ 2,800,000

was repaid and $ 500,000

was retired through the issuance

of common stock at a conversion price equal to the market price of the Company’s common stock on the conversion date of

Third Party Notes were retired

Accordingly, at December 31, 2020 and 2019, $ 430,000

of the Existing Notes were outstanding

in both years, and $ 1,560,000

and $ 2,760,000,

respectively, of the Third Party

Notes were outstanding.

March 2021 the Company paid down the $ 4.4 M Notes, the $ 1 M Note, the New $ 3 M Note, the $ 5.8 M Note, the Existing Notes, and a portion

of the Third Party Notes from the proceeds of the financing transaction further discussed in Note 22 – Subsequent Events .

of December 31, 2020, the aggregate scheduled maturities of the Company’s total debt outstanding, inclusive of the promissory

notes and mortgages described within this Note 11 – Debt , and the convertible debentures described in the following

Note 12 – Debentures Payable, were:

SCHEDULE OF AGGREGATE MATURITIES OF DEBT OUTSTANDING

Less discounts

NOTE 12 – DEBENTURES PAYABLE

In a series of transactions from the period October 2018 through February 2020, the Company sold an aggregate of $ 21.0 million of

convertible debentures (the “$21M Debentures”) to an accredited investor pursuant to an amended securities purchase

agreement (the “SPA”).

The following table as of December 31, 2020 summarizes the purchase dates and selected terms

of each debenture transaction that comprises the $21M Debentures:

SCHEDULE OF DEBENTURE TRANSACTION

Converted To Common

holder of the $21M Debentures (the “Holder”) has the right at any time to convert all or a portion of the $21M Debentures,

along with accrued and unpaid interest, into the Company’s common stock at conversion prices equal to 80 % of a calculated

average, as determined in accordance with the terms of the $21M Debentures, of the daily volume-weighted price during the ten

consecutive trading days preceding the date of conversion.

Notwithstanding this conversion right, the Holder shall limit conversions

in any given month to certain agreed-upon amounts based on the conversion price, and the Holder shall also be limited from

beneficially owning more than 4.99% of the Company’s outstanding common stock (potentially further limiting the Holder’s

conversion right).

Company shall have the right to redeem all or a portion of the $10M Debentures, along with accrued and unpaid interest, at a 10%

premium, provided that the Company first deliver advance written notice to the Holder of its intention to make a redemption,

with the Holder allowed to effect certain conversions of the $10M Debentures during such notice period.

a change in control transaction, as defined in the $10M Debentures, the Holder may require the Company to redeem all or a portion

of the $10M Debentures at a price equal to 110% of the outstanding principal amount of the $10M Debentures, plus all accrued and

unpaid interest thereon.

So long as the $10M Debentures are outstanding, in the event the Company enters into a Variable Rate

Transaction (“VRT”), as defined in the SPA, the Holder may cause the Company to revise the terms of the $10M Debentures

to match the terms of the convertible security issued in such VRT.

conjunction with the issuance of the $10M Debentures, the Company issued two warrants to the Holder to purchase 142,857 and 181,818

shares of the Company’s common stock at exercise prices of $3.50 and $5.50 per share, respectively, and expiring three years

from issuance (the “Initial Warrants”).

The fair value of the Initial Warrants of approximately $1,058,000

was recorded as a discount to the carrying amount of the $10M Debentures.

to the terms of a registration rights agreement with the Holder, entered into concurrently with the SPA and the $10M Debentures,

the Company agreed to provide the Holder with certain registration rights with respect to any potential shares issued pursuant

to the terms of the SPA, the $10M Debentures, and the Initial Warrants.

to entering into the SPA and related agreements, the Company and the Holder executed an addendum to the SPA whereby the Holder

agreed to that it would not undertake a conversion of all or a portion of the $10M Debentures that would require the Company to

issue more shares than the amount of available authorized shares at the time of conversion, which amount of authorized shares

shall not be less than the current authorized number of 500 million shares of common stock.

Such addendum eliminated the requirement

to bifurcate and account for the conversion feature of the $10M Debentures as a derivative.

on the conversion prices of the $10M Debentures in relation to the market value of the Company’s common stock, the $10M

consecutive trading days preceding the date of conversion, subject to a cap in certain conversions.

Notwithstanding this conversion

right, the Holder shall limit conversions in any given month to certain agreed-upon amounts based on the conversion price, and

the Holder shall also be limited from beneficially owning more than 4.99 % of the Company’s outstanding common stock (potentially

further limiting the Holder’s conversion right).

Company has the right to redeem all or a portion of the $21M Debentures, along with accrued and unpaid interest, at a 10 % premium,

provided that the Company first delivers advance written notice to the Holder of its intention to make a redemption, with the

Holder allowed to effect certain conversions of the $21M Debentures during such notice period.

a change in control transaction, as defined, the Holder may require the Company to redeem all or a portion of the $21M Debentures

at a price equal to 110 % of the outstanding principal amount of the $21M Debentures, plus all accrued and unpaid interest thereon.

So long as the $21M Debentures are outstanding, in the event the Company enters into a Variable Rate Transaction (“VRT”),

as defined in the SPA, the Holder may cause the Company to revise the terms of the $21M Debentures to match the terms of the convertible

security issued in such VRT.

conjunction with the issuance of the $21M Debentures, the Company issued the Holder three-year warrants to purchase an aggregate

of 1,354,67 5 shares of the Company’s common stock at exercise prices ranging from $ 0.75 to $ 5.50 per share, of which warrants

to purchase 180,000 shares of common stock at an exercise price of $ 0.75 were issued in 2020.

The fair value of the warrants of

approximately $ 2.2 million was recorded as a discount to the carrying amount of the $21M Debentures and are amortized to interest

expense over the respective term of the individual debentures comprising the $21M Debentures.

on the conversion prices of the $21M Debentures in relation to the market value of the Company’s common stock, the $21M

Debentures provided the Holder with a beneficial conversion feature, as the embedded conversion option was in-the-money on the

commitment date.

The intrinsic value of the beneficial conversion feature of approximately $5,570,000 was recorded as a discount

to the carrying amount of the $10M Debentures, with an offset to additional paid-in-capital.

May 2019, the Company sold to the Holder an additional $5,000,000 convertible debenture bearing interest at the rate of 6% per

annum that matures two years from issuance, with a 1% issuance discount, resulting in net proceeds to the Company

of $4,950,000 (the “$5M Debentures”).

In each of June and August 2019, the Company sold to the Holder an additional

$2,500,000 of convertible debentures, totaling $5,000,000, that mature two years from issuance, with a 7% issuance discount,

resulting in aggregate net proceeds to the Company of $4,650,000 (the “Two $2.5M Debentures,”

and together with the

$5M Debentures, the “Additional $10M Debentures”).

terms of the Additional $10M Debentures are consistent with the terms of the $10M Debentures, except that (i) no interest shall

accrue on the Two $2.5M Debentures, (ii) the issuance discount on the Two $2.5M Debentures is 7%, compared to 1% on the

$10M Debentures and the $5M Debentures, and (iii) other small variations, most notably a cap on the conversion price.

registration rights agreement, and addendum to the SPA were all amended and restated to incorporate the Additional $10M Debentures.

part of issuance of the Additional $10M Debentures, the Company issued three-year warrants to the Holder to purchase 550,000 and

300,000 shares of common stock at exercise prices of $3.00 and $5.00 per share, respectively (the “Additional Warrants”).

The fair value of the Additional Warrants of approximately $1,148,000 was recorded as a discount to the carrying amount of the

Additional $10M Debentures.

on the conversion prices of the Additional $10M Debentures in relation to the market value of the Company’s common stock,

the Additional $10M Debentures provided the Holder with a beneficial conversion feature, as the embedded conversion option was

in-the-money on the commitment date.

The aggregate intrinsic value of the beneficial conversion feature of approximately $4,235,000

was recorded as a discount to the carrying amount of the Additional $10M Debentures, with an offset to additional paid-in-capital.

November and December 2018, the Holder converted, in two separate transactions, an aggregate of $1,400,000 of principal and approximately

$36,000 of accrued interest into 524,360 shares of common stock at conversion prices of $2.23 and $3.04 per share.

January 2019, the Holder converted, in three separate transactions, an aggregate of $600,000 of principal and approximately $97,000

of accrued interest into 233,194 shares of common stock at conversion prices ranging from $2.90 to $3.06 per share.

June 2019, the Holder converted, in four separate transactions, an aggregate of $1,750,000 of principal and approximately $181,000

of accrued interest into 923,185 shares of common stock at conversion prices ranging from $1.74 to $2.74 per share.

Holder converted, in two separate transactions, an aggregate of $2,750,000 of principal and approximately $17,000 of accrued interest

into 2,435,144 shares of common stock at conversion prices of $1.08 and $1.70 per share.

In September 2019, the Holder converted

$2,400,000 of principal and approximately $64,000 of accrued interest into 3,206,816 shares of common stock at a conversion price

of $0.77 per share.

In December 2019, the Holder 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.

of the aforementioned conversions were performed in accordance with the terms of their respective convertible debenture agreements,

The aggregate intrinsic value of the beneficial conversion feature of approximately $ 10.2 million was recorded

as a discount to the carrying amount of the $21M Debentures, with an offset to additional paid-in-capital.

The beneficial conversion

feature is amortized to interest expense over the respective term of the individual debentures comprising the $21M Debentures.

to the terms of a registration rights agreement with the Holder, entered into concurrently with the SPA, the Company agreed to

provide the Holder with certain registration rights with respect to any potential shares issued pursuant to the terms of the SPA

and the $21M Debentures.

An addendum to the SPA stipulates that the Holder has agreed not to undertake a conversion of all or

a portion of the $21M Debentures that would require the Company to issue more shares than the amount of available authorized shares

at the time of conversion, which amount of authorized shares shall not be less than the current authorized number of 500 million

shares of common stock , thereby eliminating the requirement to bifurcate and account for the conversion feature of the $21M Debentures

as a derivative.

Holder converted, in several transactions from November 2018 through December 2020, an aggregate of $ 19.7 million of principal

and approximately $ 777,000 of accrued interest into 88,093,390 shares of common stock at conversion prices ranging from $ 0.11

to $ 3.06 per share.

Of these conversions, (i) during 2020 an aggregate of $ 9.7 million of principal and approximately $ 365,000

of accrued interest was converted into 77,766,559 shares of common stock at exercise prices ranging from $ 0.11 and $ 0.34 per share,

and (ii) during 2019, an aggregate of $ 8.6 million of principal and approximately $ 376,000 of accrued interest was converted into

6,798,339 shares of common stock and subscriptions on 3,004,131 shares of common stock at exercise prices ranging from $ 0.37 and

$ 3.06 per share during 2019.

of the aforementioned conversions were effected in accordance with the terms of the respective convertible debenture agreement,

and therefore the Company was not required to record a gain or loss on such conversions.

2019 and 2018, amortization of the beneficial conversion features, after adjustment for the conversions, approximated $5,242,000

the year ended December 31, 2020 and 2019, amortization of the beneficial conversion features, after adjustment for the aforementioned

conversions, approximated $ 3.2 million and $ 5.2 million, respectively;

amortization of the warrant discounts approximated $ 805,000

and $ 1.3 million respectively;

and the amortization of original issue discounts approximated $ 321,000 and $ 184,000 , respectively.

Additionally, accrued interest expense for such periods approximated $ 224,000 and $ 513,000 , respectively.

December 31, 2020, the aggregate outstanding principal balance of the $21M Debentures was $ 1.3 million.

Also on such date, the

unamortized balances of the beneficial conversion features, the warrant discounts, and original issue discounts were approximately

$ 177,000 , $ 39,000 , and $ 52,000 , respectively.

amortization of the discounts from the Initial Warrants and Additional Warrants (together, the

“Total Warrants”) approximated $1,298,000 and $91,000 respectively;

and the amortization of original issue

discounts approximated $107,000 and $9,000, respectively.

This amortization was charged to interest expense.

Additionally,

accrued interest expense for such periods approximated $513,000 in 2019 and $98,000 in 2018.

December 31, 2019, the aggregate outstanding principal balance on the $10M Debentures and the Additional $10M Debentures

(together, the “$20M Debentures”) was $10,000,000.

Also on such date, the unamortized balances of the beneficial

conversion feature, the Total Warrants discount, and original issue discounts were approximately $3,041,000, $817,000, and

$307,000, respectively.

Accordingly, at December 31, 2019, the carrying value of the $20M Debentures was approximately

December 31, 2018, the outstanding principal balance on the $10M Debentures was $8,600,000.

Also on such date, the unamortized

balances of the beneficial conversion feature, Initial Warrants discount, and original issue discounts were approximately $4,048,000,

$966,000, and $91,000, respectively, and accrued and unpaid interest was approximately $62,000.

Accordingly, at December 31, 2018,

the carrying value of the $10M Debentures was approximately $3,557,000.

January 2018, all 500,000 shares of subscribed Series A convertible preferred stock then outstanding were converted into 970,988

shares of common stock at a conversion price of $0.55 per share.

The Company recorded a non-cash loss on conversion of approximately

$34,000 based on the market value of the common stock on the conversion date.

At December 31, 2019 and 2018, no shares of Series

A convertible preferred stock were issued or outstanding.

Accordingly, at December 31, 2020, the carrying value of the $21M Debentures approximated

$ 1.0 million, all of which was current.

December 31, 2019, the aggregate outstanding principal balance on the $21M Debentures was $ 10.0 million.

Also on such date, the

unamortized balances of the beneficial conversion features, the warrant discounts, and original issue discounts were approximately

$ 3.0 million, $ 817,000 , and $ 307,000 , respectively.

Accordingly, at December 31, 2019, the carrying value of the $21M Debentures

approximated $ 5.8 million, all of which was long term.

13 – MEZZANINE EQUITY

February 2020, the Company entered into an exchange agreement with two institutional shareholders (the “TIS Exchange Agreement”)

whereby the Company (i) exchanged 4,908,333 shares of the Company’s common stock previously acquired by the two institutional

shareholders for an equal number of shares of newly designated Series B convertible preferred stock, and (ii) issued the $4.4M

Notes previously discussed in Note 11 – Debt .

connection with the TIS Exchange Agreement, the Company filed (i) a certificate of designation with respect to 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.

holders of Series B convertible preferred stock (the “Series B Holders”) are entitled to cast the number of votes

equal to the number of shares of common stock into which the shares of Series B convertible preferred stock are convertible, together

with the holders of common stock as a single class, on most matters.

However, the affirmative vote or consent of the Series B

Holders voting separately as a class is required for certain acts taken by the Company, including the amendment or repeal of certain

charter provisions, liquidation or winding up of the Company, creation of stock senior to the Series B convertible preferred stock,

and/or other acts defined in the certificate of designation.

Series B convertible preferred stock shall, with respect to dividend rights and rights on liquidation, winding up and dissolution,

rank senior to the Company’s common stock.

The Company shall not declare, pay, or set aside any dividends on shares of any

other class or series of capital stock of the Company unless the Series B Holders then outstanding shall first receive, or simultaneously

receive, a dividend on each outstanding share of Series B convertible preferred stock in an amount calculated pursuant to the

certificate of designation.

the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the Series B Holders then outstanding

shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders before any payment

shall be made to the holders of common stock by reason of their ownership thereof, an amount per share equal to $ 3.00 , plus any

dividends declared but unpaid thereon, with any remaining assets distributed pro-rata among the holders of the shares of Series

B convertible preferred stock and common stock, based on the number of shares held by each such holder, treating for this purpose

all such securities as if they had been converted to common stock.

any time on or prior to the six-year anniversary of the issuance date of the Series B convertible preferred stock, (i) the Series

B Holders have the option to convert their shares of Series B convertible preferred stock into common stock at a conversion price

of $ 3.00 per share, without the payment of additional consideration, and (ii) the Company has the option to convert all, but not

less than all, shares of Series B convertible preferred stock into common stock at a conversion price of $ 3.00 if the daily volume

weighted average price of common stock (the “VWAP”) exceeds $ 4.00 per share for at least twenty consecutive trading

days prior to the date on which the Company gives notice of such conversion to the Series B Holders.

the day following the six-year anniversary of the issuance of the Series B convertible preferred stock, all outstanding shares

of Series B convertible preferred stock shall automatically convert into common stock as follows:

the sixty-day VWAP is less than or equal to $0.50 per share, the Company shall have the option to (i) convert all shares of Series

B convertible preferred stock into common stock at a conversion price of $1.00 per share, and pay cash to the Series B Holders

equal to the difference between the 60-day VWAP and $3.00 per share, or (ii) pay cash to the Series B Holders equal to $3.00 per

the sixty-day VWAP is greater than $0.50 per share, the Company shall have the option to (i) convert all shares of Series B convertible

preferred stock into common stock at a conversion price per share equal to the quotient of $ 3.00 per share divided by the sixty-day

VWAP, or (ii) pay cash to the Series B Holders equal to $3.00 per share, or (iii) convert all shares of Series B convertible preferred

stock into common stock at a conversion price per share equal to the sixty-day VWAP per share and pay cash to the Series B Holders

at the difference between $3.00 per share and the sixty-day VWAP per share.

Company shall at all times when the Series B convertible preferred stock is outstanding, reserve and keep available out of its

authorized but unissued capital stock, for the purpose of effecting the conversion of the Series B convertible preferred stock,

such number of its duly authorized shares of common stock as shall from time to time be sufficient to effect the conversion of

all outstanding Series B convertible preferred stock.

14 – STOCKHOLDERS’ EQUITY

February 2020, the Company filed a certificate of elimination to return all shares of the Series A convertible preferred stock

2 unchanged sentences

filed a certificate of designation to designate the rights and preferences of newly authorized Series B convertible preferred

stock, shares of which were issued in February 2020 as further discussed in Note 21 –

Subsequent Events .

2019, the Company sold 1,014,995 shares of common stock at prices of $0.70 and $3.25 per share, resulting

in total proceeds of $2,750,000.

During 2018, the Company sold 10,111,578 shares of common stock, at prices ranging from

$0.50 to $1.30 per share, resulting in total proceeds of approximately $8.5 million.

2019 and 2018, the Company issued 97,136 and 1,000,000 common shares, respectively, associated with previously issued subscriptions

on common stock with a value of approximately $169,000 and $370,000, respectively.

2019 and 2018, the Company issued 172,663 and 3,420,526 common shares, respectively, in exchange for services rendered by third-parties

or to otherwise settle outstanding obligations.

Based on the market value of the common stock on the dates of issuance, the Company

recorded non-cash losses on these settlements of approximately $5,000 in 2019 and $1,024,000 in 2018.

2019, the Company granted 141,546 shares of common stock to employees at an aggregate value of approximately $223,000.

Of these granted shares, 32,726 were not issued as of December 31, 2019 and were reflected in Common Stock Subscribed But Not

Issued on the balance sheet.

No common stock was granted in 2018.

previously disclosed in Note 3 –

Acquisitions , the Company issued (i) 264,317 shares of common stock in connection

with the acquisition of iRollie in 2018, (ii) 1,000,000 shares of common stock in connection with the acquisition of the

KPGs and Mari-IL in 2019, (iii) 1,000,000 shares of stock as a good faith deposit in 2019 on the Harvest acquisition, and

(iv) 520,000 shares of commons stock in connection with the acquisition of MediTaurus in 2019.

previously disclosed in Note 4 –

Investments , the Company issued 500,000 shares of common stock in 2019 to

purchase a minority interest in Terrace in 2019, and 378,259 shares of its common stock in 2018 to purchase a minority interest

previously disclosed in Note 11 –

Debt , the Company issued (i) 1,568,375 shares of common stock in 2018 to former

noteholders who converted promissory notes with principal balances of $1,075,000, and (ii) 2,435,116 shares in 2019 and 3,827,373

shares in 2018 of common stock to retire promissory notes (principal and accrued interest) of approximately $1,047,000 in 2019

and $7,590,000 in 2018.

previously disclosed in Note 12 –

Debentures Payable , the holder of the $20M Debentures converted (i) in 2018,

approximately $1,436,000 of principal and interest into 524,360 shares of common stock, and (ii) in

2019, approximately $8,976,000 of principal and interest into 6,798,339 shares of common stock and subscriptions on 3,004,131

shares of common stock.

further disclosed in Note 14 –

Stock Options , during 2019 and 2018, 3,261,808 and 760,000 shares of

common stock, respectively, were issued in connection with the exercise of stock options.

further disclosed in Note 15 –

Warrants , during 2019 and 2018, warrants to purchase 686,104 and 2,300,237

shares of common stock, respectively, were exercised.

stock, shares of which were issued in February 2020 as discussed in Note 13 – Mezzanine Equity .

March 2021, upon the closing of the financing transaction discussed in Note 22 – Subsequent Events , the Company filed

a certificate of designation with respect to the rights and preferences of newly-issued Series C convertible preferred stock.

Such stock is zero coupon, non-voting, and has a liquidation preference equal to its investment amount plus declared but unpaid

Holders of Series C convertible preferred stock are entitled to receive dividends on an as-converted basis.

February 2020, pursuant to the TIS Exchange Agreement, the 4,908,333 shares of common stock exchanged for shares of Series B convertible

preferred stock were treated as an increase to treasury stock of $ 14,725,000 ($ 3.00 per share), and then immediately cancelled,

thereby reducing treasury stock to zero, with corresponding reductions to common stock of approximately $ 5,000 (the par value

of the exchanged common shares) and additional paid-in capital of approximately $ 14,720,000 .

2019, the Company sold 1,014,995 shares of common stock at prices of $ 0.70 and $ 3.25 per share, resulting in total proceeds of

$ 2,750,000 .

No common stock was sold in 2020.

2020 and 2019, the Company issued 4,400,000 and 172,663 shares of common stock, respectively, to settle obligations of approximately

$ 699,000 and $ 121,000 , respectively.

Based on the price of the Company’s common stock on the dates of issuance, the Company

incurred non-cash losses on these settlements of approximately $ 45,000 in 2020 and $ 5,000 in 2019 which were reflected under Loss

On Debt Settlements on the statement of operations.

2020, the Company granted 109,210

shares of common stock to a current employee.

The fair value of the shares of approximately $ 21,000

was charged to employee compensation during

Of these granted shares, 11,413

were yet to be issued at December 31,

2020 and were reflected in Common Stock Subscribed But Not Issued on the balance sheet.

In 2019, the Company granted

shares of common stock to employees.

fair value of these shares of approximately $ 223,000

was charged to employee compensation during

Of these granted shares, 32,726

were yet to be issued at December 31,

2019 and were included in Common Stock Subscribed But Not Issued on the balance sheet.

2020 and 2019, the Company issued 3,236,857 and 97,136 shares of common stock, respectively, associated with previously issued

subscriptions on common stock with a value of approximately $ 1,168,000 and $ 169,000 , respectively.

2020, (i) 90,000

shares of common stock granted to employees,

and (ii) 1,297,447

shares of common stock issued from

the exercise of stock options by a related party, were forfeited by the holders of such common stock.

The Company recorded these

returned shares at par value.

common stock forfeitures occurred in 2019.

previously disclosed in Note 3 – Acquisitions , the Company issued in 2019 (i) 1,000,000 shares of common stock in

connection with the acquisition of the KPGs and Mari-IL, (ii) 1,000,000 shares of common stock as a good faith deposit on the

Harvest acquisition, and (iii) 520,000 shares of common stock in connection with the acquisition of MediTaurus.

previously disclosed in Note 4 – Investments , the Company issued 500,000 shares of common stock in 2019 to purchase

a minority interest in Terrace.

previously disclosed in Note 11 – Debt , in 2020 and 2019, the Company issued 6,165,355 and 2,435,116 shares of common

stock, respectively, to retire approximately $ 1.4 million and $ 1,0 million of promissory notes (principal and accrued interest).

previously disclosed in Note 12 – Debentures Payable , the holder of the $21M Debentures converted (i) in 2020, approximately

$ 10.1 million of principal and interest into 77,766,559 and shares of common stock, and (ii) in 2019, approximately $ 9.0 million

of principal and interest into 6,798,339 shares of common stock and subscriptions on 3,004,131 shares of common stock.

further disclosed in Note 15 – Stock Options , in 2020 and 2019, 550,000 and 3,261,808 shares of common stock, respectively,

were issued in connection with the exercise of stock options.

further disclosed in Note 16 – Warrants , warrants to purchase 686,104 shares of common stock were exercised in 2019.

No warrants were exercised in 2020.

Stock Issuance Obligations

December 31, 2019, the Company was obligated to issue (i) 32,726 shares of common stock, valued at approximately

$29,000, in connection with the stock grants disclosed earlier in this Note 13 –

Equity , (ii) 3,004,131

shares of common stock, valued at approximately $1,117,000, with respect to the December 2019 conversion of

a portion of the $20M Debentures as previously disclosed in Note 12 –

Debentures Payable, and (iii) 200,000

shares of common stock associated with exercise of stock options by the Company’s CEO as further disclosed in Note 19 –

Related Party Transactions.

These shares were issued in the first quarter of 2020.

December 31, 2018, the Company was obligated to issue:

(a) 79,136 shares of common stock, valued at approximately $95,000, related

to the settlement of a previously issued promissory note with a principal balance of $50,000 and accrued interest of $1,454;

(b) 18,000 shares of common stock, valued at approximately $74,000, for the payment of rent for a leased property in Massachusetts

for the months of September 2018 through January 2019.

Such shares were subsequently issued in the first quarter of 2019.

August 2018, an individual member of Mari Holdings MD LLC, a majority owned subsidiary of the Company (“Mari-MD”),

exchanged his 0.5% membership interest in such subsidiary for 222,222 shares of the Company’s common stock.

2018, a subscriptions receivable balance of $25,000 related to a member’s interest in a majority-owned subsidiary was written

off, with a corresponding reduction of such member’s capital contribution account.

December 31, 2020, the Company was obligated to issue 11,413 shares of common stock, valued at approximately $ 5,000 , in connection

with a stock grant to a current employee.

These shares were issued in February 2021.

December 31, 2019, the Company was obligated to issue (i) 32,726 shares of common stock, valued at approximately $ 29,000 , in connection

with the stock grants disclosed earlier in this Note 14 – Stockholders’ Equity , (ii) 3,004,131 shares of common

stock, valued at approximately $ 1,117,000 , with respect to the December 2019 conversion of a portion of the $21M Debentures as

previously disclosed in Note 12 – Debentures Payable, and (iii) 200,000 shares of common stock associated with exercise

of stock options by the Company’s CEO as further disclosed in Note 20 – Related Party Transactions.

were issued in the first quarter of 2020.

and Restated 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

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

The Incentive Plan amends and restates the Company’s 2018 Stock Award and Incentive Plan (the “Previous

Plan”), which was approved by the board of directors in July 2018 but never presented to stockholders for approval.

Any grants made under the Previous Plan prior to the approval date of the Incentive Plan shall continue to be governed

by the terms of the Previous Plan.

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.

The Incentive Plan amends and restates the Company’s 2018 Stock Award and Incentive Plan (the “Previous Plan”),

which was approved by the board of directors in July 2018 but never presented to stockholders for approval.

Any grants made under

the Previous Plan prior to the approval date of the Incentive Plan shall continue to be governed by the terms of the Previous

Incentive Plan authorizes a broad range of awards, including stock options, stock appreciation rights, restricted stock, deferred

8 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

15 – STOCK OPTIONS

2019, the Company granted options to purchase 2,565,000 shares of common stock, expiring four and five years from their

grant dates, at exercise prices ranging from $0.42 to $1.95 per share.

The fair value of these option grants

of approximately $1,502,000 is being amortized over their respective vesting periods, of which approximately $544,000 was amortized

2018, the Company granted options to purchase 4,720,000 shares of common stock, expiring four and five years from their

grant dates, at exercise prices ranging from $0.14 to $3.72 per share.

The fair value of these option grants of

approximately $5,897,000 is being amortized over their respective vesting periods, of which approximately $3,339,000 and $1,534,000

was amortized in 2019 and 2018, respectively.

2019, options to purchase 3,667,499 shares of common stock were exercised at prices ranging from $0.08 to $0.77 per share.

Of these exercised options, 2,167,499 were exercised on a cashless basis with the exercise prices paid via the surrender

of 405,691 shares of common stock.

2018, options to purchase 760,000 shares of common stock were exercised at prices ranging from $0.08 to $0.63 per share.

Of these exercised options exercised in 2018, 460,000 were exercised on a cashless basis with the exercise price

paid via the surrender of 105,398 shares of common stock.

2019, options to purchase 117,501 shares of common stock expired, and options to purchase 818,750 shares of common stock were

forfeited, resulting in an aggregate reduction of amortization expense of approximately $432,000 in 2019.

During 2018, options

to purchase 200,000 shares of common stock expired, and options to purchase 250,000 shares of common stock were forfeited,

resulting in an aggregate reduction of amortization expense of approximately $71,000 in 2018.

options outstanding and exercisable as of December 31, 2019 were:

conjunction with the issuance of the $20M Debentures

previously disclosed in Note 12 –

Debentures Payable , in 2019 and 2018, the Company issued three-year warrants

to purchase 850,000 and 324,675 shares of its common stock, respectively, at exercise prices of $3.00 to

$5.00 per share and $3.50 to $5.50 per share, respectively.

The fair value of these warrants at issuance approximated

$1,148,000 in 2019 and $1,058,000 in 2018, with approximately $1,298,000 amortized to interest expense in 2019,

approximately $91,000 in 2018, and the balance to be amortized over the remaining durations of the $20M

part of the $10M Note transaction previously disclosed in Note 11 –

Debt , in 2019,

the Company issued three-year warrants to purchase 375,000 shares of common stock at an exercise price of $4.50 per share.

fair value of these warrants at issuance approximated $601,000, with approximately $523,000 of this amount amortized to

interest expense during the year, and the balance to be amortized by the initial January 2020 maturity date

of the $10M Note.

connection with $3M Note transaction previously disclosed in Note 11 –

Debt , in 2018, the Company issued three-year

warrants to purchase 750,000 shares of the Company’s common stock at an exercise price of $1.80 per share.

The fair value

of these warrants at issuance approximated $1,511,000, with approximately $882,000 amortized to interest expense during 2018,

and the remaining $629,000 amortized during 2019.

addition to the above warrants issued with the $20M Debentures, $10M Note, and $3M Note, in connection with promissory notes issued

to individuals in 2019 and 2018, the Company issued warrants to purchase 10,000 and 237,500 shares of common stock, respectively,

at an exercise price of $0.75 and $0.55 per share, respectively, expiring four years and three years, respectively, from issuance.

The fair value of these warrants at issuance of approximately $5,000 in 2019 and $198,000 in 2018 were fully amortized to interest

expense in the year of issuance.

2018, alongside the sale of common stock, the Company issued three-year and five-year warrants to purchase 6,098,962 shares of

common stock at exercise prices ranging from $1.75 to 4.30 per share.

The fair value of these warrants at issuance of approximately

$11,146,000 was treated as a reduction to the value of the common stock and charged to Additional Paid-In Capital on the

balance sheet.

No warrants were issued alongside sales of common stock in 2019.

2019 and 2018, the Company issued stand-alone warrants to purchase 1,250,000 and 625,000 shares of common stock, respectively,

at exercise prices of $0.80 to 1.71 per share in 2019, and $0.20 to $2.45 per share in 2018.

The 2019 warrants expire three years

from issuance and the 2018 options expire three and five years from issuance.

The fair value of the warrant issuances of approximately

$392,000 in 2019 and $1,815,000 in 2018 were charged to expense in the year of issuance.

2019 and 2018, warrants to purchase 686,104 and 2,300,237 shares of common stock, respectively, were exercised at exercise

prices ranging from $0.12 to $1.75 per share in 2019 and $0.10 to $0.75 per share in 2018.

December 31, 2019 and 2018, warrants to purchase 11,780,107 and 10,606,211 shares of common stock, respectively,

were outstanding with exercise prices ranging from $0.15 to $5.50 per share in 2019 and $0.12 to $5.50 per share

the years ended December 31, 2019 and 2018, the Company’s revenues were comprised of the following major categories:

sales to related party

the year ended December 31, 2019, revenue from three clients represented 92% of total revenues.

One of these clients

was GenCanna, a related party, with whom the Company conducted the seed sale transactions previously disclosed in Note 1 –

Organization and Description of Business .

The total revenue from these transactions with GenCanna are reflected under

Product Sales To Related Party in the table above.

the revenues from GenCanna, two clients represented 78% and 73% of revenues for the years ended December 31, 2019 and

2018, respectively.

the years ended December 31, 2019 and 2018, the Company recorded bad debt expense of approximately $44.5 million and $150,000,

respectively.

amount recorded in 2019 included (i) the write off of the accounts receivable balance due from GenCanna

of approximately $29.0 million following GenCanna’s Chapter 11 filing, and (ii) the recording of bad debt reserves against

the accounts receivable and working capital balances due from Kind of approximately $9.7 million and approximately $1.5 million,

respectively, in light of the current litigation between the Company and Kind.

2020, the Company granted five-year

options to purchase up to 4,494,500

shares of common stock at exercise prices

ranging from $ 0.14

The fair values of these options

of approximately $ 501,000

in the aggregate are being amortized to

compensation expense over their vesting periods, of which approximately $ 282,000

was amortized in 2020.

Additionally,

2019 bad debt expense included the following amounts that were based on the Company’s expectation of the negative impact

of the coronavirus pandemic on the operations of certain of the Company’s debtors, and therefore the collectibility thereof:

(i) the recording of bad debt reserves against the accounts receivable and working capital balances due from Harvest of approximately

$239,000 and $1.9 million, respectively, and (ii) the write off of notes receivable and accrued interest balances due from Atalo

of approximately $1.0 million and two other entities of approximately $650,000 in the aggregate.

the years ended December 31, 2019 and 2018, the Company’s cumulative net operating losses were approximately $26.3 million

and $11.6 million, respectively, and accordingly a tax provision was not required for the years then ended.

reconciliations between the Company’s effective tax rates and the statutory tax rate for the years ended December 31, 2019

compensation expense in 2020 for options issued in previous years, and continuing to be amortized over their respective vesting

periods, approximated $ 801,000 .

2019, the Company granted options to purchase up to 2,565,000

shares of common stock, expiring four

and five years from their grant dates, at exercise prices ranging from $ 0.42

The fair values of these options

of approximately $ 1,502,000

in the aggregate are being amortized to

compensation expense over their vesting periods, of which approximately $ 544,000

was amortized in 2019.

Additionally,

compensation expense in 2019 for options issued in previous years, and continuing to

be amortized over their respective

vesting periods, approximated $ 144,000 .

2020, options to purchase 550,000 shares of common stock were exercised at prices of $ 0.13 to $ 0.14 per share.

In 2019, options

to purchase 3,667,499 shares of common stock were exercised at prices ranging from $ 0.08 to $ 0.77 per share.

Of these exercised

options, 2,167,499 were exercised on a cashless basis with the exercise prices paid via the surrender of 405,691 shares of common

2020 and 2019, options to purchase 200,000

shares of common stock, respectively,

were forfeited or expired, resulting in an aggregate reduction of amortized compensation expense of approximately $ 113,000

and $ 527,000 ,

respectively.

options outstanding and exercisable as of December 31, 2020 were:

SCHEDULE OF STOCK OPTIONS OUTSTANDING AND EXERCISABLE

Shares Under Option

Exercise Price

Remaining Life

16 – WARRANTS

2020, in conjunction with the $ 21 M Debentures previously disclosed in Note 12 – Debentures Payable , the Company issued

three-year warrants to purchase up to 180,000 shares of common stock at an exercise price of $ 0.75 per share.

The fair value of

these warrants on the issuance date approximated $ 1,148,000 , of which approximately $ 24,000 was amortized to interest expense

in 2020 and the remainder to be amortized over the term of the respective debenture.

during 2020, as previously disclosed in Note 11 – Debt, (i) as part of the $ 8.8 M Note transaction, the Company issued

three-year warrants to purchase up to 750,000 shares of common stock at an exercise price of $ 0.50 per share, and (ii) in consideration

of the Second Extension Agreement, the Company issued four-year warrants to purchase up to 5,000,000 shares of the Company’s

common stock at an exercise price of $ 0.25 per share.

The fair value of these warrants on their issuance dates approximated $ 639,000 ,

with approximately $ 90,000 of this amount amortized to interest expense in 2020 and the remainder to be amortized by the maturity

dates of the respective promissory notes.

2019, also in conjunction with the $ 21 M Debentures, the Company issued three-year warrants to purchase up to 850,000 shares of

common stock at exercise prices of $ 3.00 and $ 5.00 per share.

The fair value of these warrants on the issuance dates approximated

$ 1,148,000 , of which approximately $ 576,000 and $ 331,000 was amortized to interest expense in 2020 and 2019, respectively, and

the remainder to be amortized over the term of the respective debentures.

during 2019, as part of the $ 10 M Note transaction previously disclosed in Note 11 – Debt , the Company issued three-year

warrants to purchase up to 375,000 shares of common stock at an exercise price of $ 4.50 per share.

The fair value of these warrants

at issuance approximated $ 601,000 , with approximately $ 523,000 of this amount amortized to interest expense during 2019, and the

balance amortized in 2020.

Also during 2019, the Company issued four-year warrants to purchase up to 10,000 shares of common stock

in conjunction with the issuance of $ 100,000 of the Third Party Notes discussed in Note 11 – Debt .

These warrants

are exercisable at a price of $ 0.75 per share.

The fair value of these warrants at issuance of approximately $ 5,000 was amortized

to interest expense during 2019.

Company also issued, in 2020 and 2019, stand-alone warrants, expiring three years from issuance, to purchase up to 25,000 and

625,000 shares of common stock, respectively.

at an exercise price of $ 0.50 in 2020, and exercise prices ranging from $ 0.80 to

$ 1.71 per share in 2019.

The aggregate fair values of these warrants of approximately $ 2,000 in 2020 and $ 392,000 in 2019 were

charged to compensation expense in the year of issuance.

November 2020, in accordance with the terms of the warrant agreement, the Company adjusted the exercise price from $ 1.80 per share

to $ 0.11 per share of warrants to purchase up to 750,000 share of common stock previously issued in September 2018 as part of

the $ 3 M Note discussed in Note 11 – Debt .

No other change was made to terms of these warrants.

The Company recorded

a charge of approximately $ 69,000 in 2020 representing the fair value of these warrants on the adjustment date.

No other warrant

adjustments were made by the Company.

2019, warrants to purchase 686,104 shares of common stock were exercised at exercise prices ranging from $ 0.12 to $ 1.75 per share,

resulting in aggregate proceeds to the Company of approximately $ 612,000 .

No warrants were exercised during 2020.

2020, warrants to purchase 817,939 shares of common stock with exercise prices ranging from $ 0.40 to $ 2.25 per share were forfeited.

No warrants were forfeited in 2019.

December 31, 2020 and 2019, warrants to purchase up to 16,917,168 and 11,780,107 shares of common stock, respectively, were outstanding

at exercise prices ranging from $ 0.15 to $ 5.50 per share in both years.

17 – REVENUES

the years ended December 31, 2020 and 2019, the Company’s revenues were comprised of the following major categories:

SCHEDULE OF REVENUES COMPRISED OF MAJOR CATEGORIES

Product sales

Product sales from related party

Supply procurement

Total revenues

amount under Product Sales From Related Party shown in the table above represents the one-time revenues from the seed transactions

with GenCanna, which is further disclosed in Note 20 – Related Party Transactions .

Excluding these revenues, in 2020

and 2019, revenue from two clients represented 20 % and 78 %, respectively, of total revenues.

18 – BAD DEBTS

Company maintains two types of reserves to deal with uncertain collections of amounts due—an allowance against trade accounts

receivable, and a reserve against cash advanced by the Company to

its cannabis-licensed clients for working capital purposes (such advances, net of any collections,

are referred to as working capital balances).

2019, the Company (i) increased the allowance against trade accounts receivable (the “AR

Allowance”) by approximately $ 39.5 million, (ii) increased the reserve against

working capital balances (the “WC Reserve”) by approximately $ 3.4 million, and (iii) wrote off approximately

$ 1.6 million of notes receivable.

The aggregate of these three amounts of approximately $ 44.5 million was charged to Bad Debts

on the statement of operations for the year ended December 31, 2019.

2019 increase in the AR Allowance was comprised of a general allowance of $ 600,000 against receivable balances as they age, and

specific allowances against the receivable balances due from (i) GenCanna of approximately $ 29.0 million following GenCanna’s

Chapter 11 filing as discussed in Note 20 – Related Party Transactions , (ii) Kind of approximately $ 9.7 million,

in light of the current litigation between the Company and Kind as further discussed in Note 21 – Commitments and Contingencies ,

and (iii) Harvest of approximately $ 239,000 based on the expected impact of the COVID-19 pandemic on Harvest’s local economy.

2019 increase in the WC Reserve was comprised of specific reserves against the working capital balances of Kind of approximately

$ 1.5 million and Harvest of approximately $ 1.9 million.

2020, the Company increased the AR Allowance by approximately $ 500,000 ,

and the WC Reserve by approximately $ 482,000 .

The aggregate of these two amounts of approximately $ 982,000

was charged to Bad Debts on the

statement of operations for the year ended December 31, 2020.

2020 increase in the AR Allowance was comprised of increases to the specific allowances against the Kind and Harvest receivable

balances of approximately $ 790,000 and $ 76,000 , respectively, offset by a reduction to the general allowance of approximately

The 2020 increase in the WC Reserve was comprised of an increase to the reserves against the working capital balances

of Harvest of approximately $ 482,000 .

19 – INCOME TAXES

At December 31, 2020 and 2019,

the Company’s cumulative net operating losses were approximately $ 10.6

million and $ 26.3

million, respectively.

At December 31, 2020 and 2019, the Company recorded a provision for state taxes of approximately $ 2.1

million and approximately $ 67,000 , respectively.

federal provision was required at December 31, 2020 and 2019.

reconciliations between the Company’s effective tax rates and the statutory tax rate for the years ended December 31, 2020

and 2019 were as follows:

Federal taxes at the statutory rate

taxes net of federal benefit

approximate income tax effect of each type of temporary difference and carryforward as of December 31, 2019 and 2018 is as

operating loss carryforwards

tax liabilities:

SCHEDULE OF RECONCILIATION OF INCOME TAXES

U.S federal taxes at the statutory rate

State taxes net of federal benefit

Valuation allowance

approximate income tax effect of the Company’s loss carryforwards and temporary differences at December 31,

2020 and 2019 were as follows:

SCHEDULE OF DEFERRED TAX ASSET

Deferred tax asset:

Net operating loss carryforwards

Allowance for doubtful accounts

Stock compensation

Loss on equity investments

Goodwill writeoffs

Change in fair value of investments

Lease payments

Deferred tax liabilities:

( 8,375,569 )

Company uses the asset and liability method to account for income taxes in accordance with ASC 740, Income Taxes .

this method, deferred income taxes are recognized for the future tax consequences of differences between the tax and financial

accounting bases of assets and liabilities at each reporting period.

Deferred income taxes are based on enacted tax laws and statutory

tax rates applicable to the period in which these differences are expected to affect taxable income.

A valuation allowance is

established when necessary to reduce deferred tax assets to the amounts expected to be realized.

Tax Cuts and Jobs Act (the “TCJA”) was enacted on December 22, 2017.

Among other things, the TCJA reduces the U.S.

federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign

subsidiaries that were previously tax deferred, and creates new taxes on certain foreign sourced earnings.

one-time transition tax is based on the Company’s total post-1986 earnings and profits (“E&P”) for which

the Company has previously deferred from U.S.

income taxes.

As of December 31, 2018, the Company has completed its calculation

of the total post-1986 foreign E&P for these foreign subsidiaries.

The Company has not recognized any adjustments in its income

tax expense for its one-time transition tax liability.

Company has provided a valuation allowance against its net deferred tax assets at December 31, 2019 and 2018.

Based upon the level

of historical U.S.

earnings and future projections over the period in which the net deferred tax assets are deductible, at this

time, management believes it is more likely than not that the Company will not realize the benefits of these deductible differences.

federal net operating losses carryforward indefinitely, subject to an annual limitation of 80% of taxable income.

The state net

operating losses expire at various dates beginning in 2031.

These tax attributes are subject to an annual limitation from equity

shifts, which constitute and change of ownership as defined under IRC Section 382, which will limit their utilization.

has not completed a study through December 31, 2019 to assess whether an ownership change under Section of 382 of the Code has

occurred during 2019, due to the costs and complexities associated with such a study.

The Company may have experienced various

ownership changes, as defined by the code, as a result of financing transactions.

Accordingly, the Company’s ability to

utilize the aforementioned carryforwards may be limited.

assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use

the existing deferred tax assets.

A significant piece of objective negative evidence evaluated was the cumulative losses incurred

through the period ended December 31, 2019.

Such objective evidence limits the ability to consider the subjective evidence, such

as the Company’s projections for future growth.

On the basis of this evaluation, as of December 31, 2019, a valuation allowance

has been recorded against all net deferred tax assets as these assets are more likely than not to be unrealized.

The amount of

the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward

period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional

weight may be given to the subjective evidence such as the Company’s projections for growth.

( 3,941,315 )

estate revenue

Net deferred tax asset

Valuation allowance

( 68,886,458 )

Federal net operating losses carryforward

indefinitely, subject to an annual limitation of 80 % of taxable income, while state net operating losses expire at various dates

beginning in 2031 .

These tax attributes are subject to an annual limitation from equity shifts, which constitute a change of

ownership as defined under IRC Section 382.

The Company recorded a valuation allowance against its net deferred tax assets at

December 31, 2020 and 2019 due to the uncertainty regarding the realization of such assets.

The Company’s assessment of the

realization of its deferred tax assets of future periods may differ in light of changing circumstances.

For the years ended December 31, 2020 and

2019, the Company’s wholly-owned subsidiaries in Illinois and Massachusetts that cultivated and manufactured cannabis and

cannabis-infused products were subject to the limitations of Section 280E of the Internal Revenue Code (“Section 280E”).

Section 280E denies all deductions from gross income in computing taxable income of these subsidiaries, but allows for cost of

goods sold to be taken into account in the calculation of gross income.

As the Company files consolidated income tax returns,

the taxable income generated from these subsidiaries subject to Section 280E was offset by loss carryforwards generated by the

Company’s subsidiaries not subject to Section 280E.

Company previously adopted the provision for uncertain tax positions under ASC 740.

The adoption did not have an impact on the

Company’s retained earnings balance.

At December 31, 2019 and 2018, the Company had no recorded liabilities for uncertain

tax positions and had no accrued interest or penalties related to uncertain tax positions.

Company’s retained earnings balance.

At December 31, 2020 and 2019, the Company had no

recorded liabilities for uncertain tax

positions and had no

accrued interest or penalties related

to uncertain tax positions.

Company files income tax returns in the U.S.

3 unchanged sentences

ended 2017 through 2020.

Since the Company is in a U.S.

loss carryforward position, carryforward tax attributes generated in prior

years may still be adjusted upon future examination if they have or will be used in a future period.

20 – RELATED PARTY TRANSACTIONS

2019, the Company entered into several hemp seed sale transactions with GenCanna, a related party, whereby the Company acquired

large quantities of top-grade feminized hemp seeds at volume discounts that it sold to GenCanna at market rates as previously

disclosed in Note 1 –

Organization and Description of Business.

disclosed in Note 11 –

Debt , the Company’s two mortgages with Bank of New England are personally guaranteed

by the Company’s CEO and CFO.

2019, the Company granted five-year options to purchase 100,000 shares of common stock to each of the Company’s three independent

with the conversion of the subordinated secured convertible debentures of GenCanna disclosed in Note 4 – Investments ,

the Company’s CEO was appointed to GenCanna’s board of directors.

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

the Company acquired $ 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’ harvest,

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 which is included in Notes Payable on the balance sheet

and previously discussed in Note 11 – Debt .

the end of 2019, GenCanna had not paid the amount it owed the Company for its seed purchases and in February 2020, as previously

discussed in Note 4 – Investments , under pressure from certain of its creditors, the GenCanna Debtors agreed to convert

a previously-filed involuntary bankruptcy proceeding into a voluntary Chapter 11 proceeding, and filed voluntary petitions under

Chapter 11 in the Bankruptcy Court.

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 proceedings,

the Company fully reserved the receivable balance of approximately $ 29.0 million and wrote off the entire unearned revenue balance

of approximately $ 4.2 million.

Please refer to Note 21 – Commitments and Contingencies for additional discussion

of GenCanna’s bankruptcy proceedings.

2019, the Company granted five-year options to purchase 100,000 shares of common stock to each of the Company’s three independent

board members at an exercise price of $ 0.99 .

The aggregate fair value of these options of approximately $191,000 is being amortized

over the vesting period, of which approximately $189,000 was amortized at December 31, 2019.

Company granted options to purchase 1.45 million shares of common stock to the Company’s board members at exercise prices

ranging from $0.14 to $0.77 and expiring between December 2020 and December 2022.

The aggregate fair value of these options of

approximately $480,000 was fully amortized by June 30, 2018.

2019, options to purchase 200,000

and 132,499 shares of common stock were exercised by the Company’s CEO and an independent board member, respectively,

at weighted average exercise prices of $0.11 and $0.08 per share, respectively.

The independent board member’s options were

exercised on a cashless basis with the exercise prices paid via the surrender of 3,108 shares of common stock.

At December 31, 2019, the shares of common stock associated with the exercise by the Company’s CEO were not issued and

reflected in Common Stock Subscribed But Not Issued on the balance sheet.

In 2018, options to purchase 400,000 shares of

common stock were exercised by an independent board member at exercise prices of $0.08 to $0.63 per share on a cashless basis

with the exercise prices paid via the surrender of 98,000 shares of common stock.

2019 and 2018, options to purchase 117,501 and 200,000 shares of common stock, respectively, were forfeited

by board members.

Company’s current corporate offices are leased from a company owned by a related party under a 10-year lease that commenced

August 2018 and contains a five-year extension option.

Previous to this lease, the Company’s former corporate offices were

also leased from a company owned by a related party.

For the year ended December 31, 2019 and 2018, expenses incurred under

these leases approximated $156,000 and $78,000, respectively.

balance of Due To Related Parties at December 31, 2019 and 2018 of approximately $1,455,000 and $276,000,

respectively, were comprised of amounts owed of approximately (i) $420,000 and $81,000, respectively, to the Company’s

CEO and CFO, (ii) $975,000 and $135,000, respectively, to two companies partially owned by these officers, and (iii) $60,000

in both periods to two stockholders of the Company.

The aggregate fair value of these options approximated $ 191,000 , of which approximately

$ 189,000 was amortized in 2019 and the remainder in 2020.

No options were granted to related parties during 2020.

2020, options to purchase an aggregate of 550,000 shares of common stock were exercised by the Company’s CEO, CFO, and an

independent board member at exercise prices of $ 0.13 and $ 0.14 per share.

In 2019, options to purchase an aggregate of 332,499

shares of common stock were exercised by the Company’s CEO and an independent board member at exercise prices of $ 0.08 and

$ 0.14 per share.

The independent board member’s 132,499 options were exercised on a cashless basis with the exercise prices

paid via the surrender of 3,108 shares of common stock.

At December 31, 2019, the shares of common stock associated with the exercise

by the Company’s CEO were not issued and included in Common Stock Subscribed But Not Issued on the balance sheet.

2019, options to purchase 117,501 shares of common stock were forfeited by board members.

No options were forfeited by related

parties in 2020.

Company’s current corporate offices are leased from a company owned by the CFO under a 10 -year lease that commenced August

2018 and contains a five-year extension option.

In 2020 and 2019, expenses incurred under this lease approximated $ 156,000 in

2020 and 2019, the Company procured nutrients, lab equipment, cultivation supplies, a vehicle, small tools, and furniture from

an entity owned by the Company’s COO and President.

The aggregate purchases in 2020 and 2019 approximated $ 2.5 million and

$ 3.2 million, respectively.

2020 and 2019, the Company paid royalties on the revenue generated from its Betty’s Eddies® product line to an entity

owned by the Company’s COO and President.

The aggregate royalties owed in 2020 and 2019 approximated $ 615,000 and $ 600,000 ,

respectively.

2020, the Company purchased fixed assets and consulting services of approximately $ 938,000 in the aggregate from two entities

owned by two of the Company’s general managers.

The Company did not make any purchases from these two entities in 2019.

2020 and 2019, the Company paid management fees to an entity owned by the Company’s CEO and CFO.

The aggregate paid in 2020

and 2019 approximated $ 41,000 and $ 145,000 , respectively.

2020 and 2019, one of the Company’s majority owned subsidiaries paid distributions to the Company’s CEO and CFO,

who own minority equity interests in such subsidiary.

The aggregate distributed in 2020 and 2019 approximated $ 30,000

and $ 52,000 ,

respectively.

balance of Due To Related Parties at December 31, 2020 and 2019 of approximately $ 1.2 million and $ 1.5 million, respectively,

were comprised of amounts owed of approximately (i) $ 460,000 and $ 420,000 , respectively, to the Company’s CEO and CFO, (ii)

$ 653,000 and $ 990,000 , respectively, to companies owned by these officers, and (iii) $ 45,000 in both periods to a stockholder

of the Company.

Such amounts owed are not subject to repayment schedules.

balance of Due From Related Parties at December 31, 2018 of approximately $120,000 was comprised of an advance to

an entity partially owned by the Company’s CEO and CFO.

This amount was entirely offset by payments made to the

Company from the related entity.

At December 31, 2019, there were no amounts due from related parties.

Company’s mortgages with Bank of New England and a portion of the Third Party Notes, as discussed in Note 11 –

Debt, are personally guaranteed by the Company’s CEO and CFO.

21 – COMMITMENTS AND CONTINGENCIES

6 unchanged sentences

payment of property taxes, insurance and/or maintenance costs in addition to the rent payments.

details of the Company’s operating lease agreements are as follows:

– 4,000 square feet of retail space in a multi-use building under a five-year lease that commenced in October 2016 and

2 unchanged sentences

to its cannabis-licensed client.

a 100,000 square foot warehouse leased in March 2019 that the Company is developing into

a cultivation and processing facility to be subleased to the same Delaware client.

The lease term is 10 years, with an option

to extend the term for three additional five-year periods.

– a 100,000 square foot warehouse leased in March 2019 that the Company is developing into a cultivation and processing

facility to be subleased to the same Delaware client.

The lease term is 10 years, with an option to extend the term for three

additional five-year periods.

– 10,000 square feet of an industrial building that the Company has built-out into a cannabis cultivation facility and

7 unchanged sentences

components of lease expense for the year ended December 31, 2020 were as follows:

of right-of-use assets

on lease liabilities

SCHEDULE OF COMPONENTS OF LEASE EXPENSE

Operating lease cost

Finance lease cost:

Amortization of right-of-use assets

Interest on lease liabilities

Total finance lease cost

weighted average remaining lease term for operating leases is 8.5 years, and for the finance lease is 2.8 years.

2 unchanged sentences

one year were:

lease payments

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER ALL NON-CANCELABLE OPERATING LEASES

Total lease payments

imputed interest

( 2,135,425 )

Employment Agreement

employment agreement which commenced in 2012 with Thomas Kidrin, the former CEO of the Company, that provided Mr.

salary, car allowances, stock options, life insurance, and other employee benefits, was terminated by the Company in 2017.

December 31, 2019 and 2018, the Company maintained an accrual of approximately $1,043,000 for any amounts that may be owed under

employment agreement which commenced in 2012 with Thomas Kidrin, the former CEO of the Company, which provided Mr.

with salary, car allowances, stock options, life insurance, and other employee benefits, was terminated by the Company in 2017.

At December 31, 2019 and 2018, the Company maintained

an accrual of approximately $ 1,043,000

for any amounts that may be owed under

this agreement, although the Company contends that such agreement is not valid and no amount is due.

July 2019, Mr.

Kidrin, also a former director of the Company, filed a complaint in the Massachusetts Superior Court, that alleges

the Company failed to pay all wages owed to him and breached the employment agreement, and requests multiple damages, attorney

fees, costs, and interest.

The Company has moved to dismiss certain counts of the complaint and has asserted counterclaims against

Kidrin, also a former director of the Company, filed a complaint in the Massachusetts Superior Court, which

alleges the Company failed to pay all wages owed to him and breached the employment agreement, and requests multiple damages,

attorney fees, costs, and interest.

The Company has moved to dismiss certain counts of the complaint and has asserted counterclaims

Kidrin alleging breach of contract, breach of fiduciary duty, money had and received, and unjust enrichment.

The Company believes

that the allegations in the complaint are without merit and intends to vigorously defend this matter and prosecute its counterclaims.

previously disclosed in Note 3 –

Acquisitions , the sellers of Kind have attempted to renegotiate the terms of the

MOU, alleging that the MOU is not an enforceable agreement, despite the MOU containing all the definitive material terms with

respect to the acquisition transaction and confirming the management and lease agreements.

The Company engaged with the sellers

in a good faith attempt to reach updated terms acceptable to both parties, but the non-reciprocation of the sellers resulted in

an impasse and both parties commenced legal proceedings.

November 13, 2019, Kind commenced an action in the Circuit Court for Washington County, MD against the Company alleging, inter

alia, breach of contract, breach of fiduciary duty and unjust enrichment, and seeking a declaratory judgment, injunctive relief,

an accounting and damages in excess of $75,000.

On November 15, 2019, the Company filed counterclaims against Kind and, as plaintiffs,

the Company commenced an action against the Kind sellers alleging breach of contract with respect to the MOU and the management

agreement, unjust enrichment, promissory estoppel/detrimental reliance, and fraud in the inducement.

The Company seeks a declaratory

judgement that the MOU is an enforceable contract, specific performance of such contact, and the establishment of a constructive

trust for the Company’s benefit.

parties brought motions for a temporary restraining order and a preliminary injunction.

On November 21, 2019, the Court denied

both parties’

motion for a temporary restraining order.

In its opinion, the Court specifically noted that, contrary to Kind’s

allegations, the management agreement and lease “appear to be independent, valid and enforceable contracts.”

each party’s preliminary injunction motion is pending before the Court.

The Company believes that its claims for breach

of contract with respect to the MOU and the management agreement, unjust enrichment, promissory estoppel/detrimental reliance,

and fraud in the inducement are meritorious and that Kind’s claims against the Company are without merit.

The Company intends

to aggressively prosecute and defend the action.

believes that the allegations in the complaint are without merit and intends to vigorously defend this matter and prosecute its

counterclaims.

As previously disclosed in Note 3 –

Acquisitions , Kind has sought to renege on the MOU and the parties’ agreement to a partnership/joint venture

made in the fall of 2016.

The Company engaged with the members of Kind in good faith in an attempt to reach updated terms

acceptable to both parties, however the members of Kind failed to reciprocate in good faith, resulting in an impasse.

Incrementally, both parties through counsel further sought to resolve the impasse, however such initiative resulted in both

parties commencing legal proceedings.

In November 2019, Kind commenced an

action in the Circuit Court for Washington County, MD captioned Kind Therapeutics USA, Inc.

MariMed, Inc., et al.

C-21-CV-19-000670) asserting claims against the Company, including breach of contract, breach of fiduciary duty, unjust

enrichment, and seeking an accounting and declaratory judgment and damages in excess of $ 75,000 .

On November 15, 2019, the Company filed counterclaims against Kind and a third-party complaint against the members of Kind

(Jennifer DiPietro, Susan Zimmerman, and Sophia Leonard-Burns) and William Tham (the “Counterclaims”).

Counterclaims, as amended, allege breach of contract with respect to each of the partnership/joint venture agreement, the

MOU, the MSA, the Lease, and the Licensing and Manufacturing Agreement (“LMA”), unjust enrichment, promissory

estoppel/detrimental reliance, fraud in the inducement, breach of fiduciary duty, and seeks reformation of the MSA, a

declaratory judgment regarding enforceability of the partnership/joint venture arrangement and/or the MOU, specific

performance of the parties’ various contracts, and the establishment of a constructive trust for the Company’s

The Counterclaims also seek damages.

Both parties, MariMed (including MariMed Holdings MD, LLC and MariMed Advisors

Inc.) and Kind, brought motions for a temporary restraining order and a preliminary injunction.

By Opinion and Order entered

on November 21, 2019, the Court denied both parties motions for a temporary restraining order.

In its opinion, the Court

specifically noted that, contrary to Kind’s allegations, the MSA and the Lease “appear to be independent, valid

and enforceable contracts.”

A hearing on the parties’ cross-motions

for preliminary injunction was held in September 2020 and November 2020.

Also in November 2020, the Court granted the Company’s

motion for summary judgment as to the Lease, determining that the Lease is valid and enforceable.

Based on this ruling, the Company

is seeking judgment at trial in the amount of approximately $ 5.4 million for past due rent and expenses owed by Kind under

In December 2020, the Court entered a Preliminary

Injunction Order, accompanied by a Memorandum Opinion, denying Kind’s motion for a preliminary injunction (which Kind had

withdrawn at the conclusion of the hearing) and granting the Company’s request for preliminary injunction.

The Court determined

that the Company is likely to succeed with respect to the validity and enforceability of the MSA and the LMA, that the Company

would suffer substantial and irreparable harm without the preliminary injunction, and that the balance of convenience and public

interest both warranted the issuance of a preliminary injunction in the Company’s favor.

The Court ordered, inter alia,

that the MSA and LMA are in effect pending judgment after trial on the merits, and that Kind and its members, and their attorneys,

agents, employees, and representatives, are prohibited from (a) interfering with the Company’s duties and responsibilities

under the MSA and (b) withdrawing funds, making any distribution, paying any loans, returning any capital, or making any payment

towards a debt from any Kind bank or other financial account(s) without written consent of the Company or Order of the Court,

thereby preserving the Company’s control of Kind’s operations and finances at least through the jury trial currently

scheduled to begin on March 28, 2022.

Further, the Court ordered Kind to pay management and licensing fees to the Company beginning

January 1, 2021.

Kind has noted an appeal of the Order to the Maryland Court of Special Appeals, which is pending;

preliminary injunction order remains in effect.

In addition to the favorable rulings

on the Lease, MSA, and LMA, the Company believes that its claims for declaratory relief, specific performance, and/or breach

of contract with respect to the 70%/30% partnership/joint venture agreement claims are meritorious.

Further, the Company

believes that Kind’s claims against the Company are without merit.

On March 18, 2021, the Court issued an opinion and

order on Kind’s motion for summary judgment finding that the MOU was not enforceable by the Company against Kind as a

final binding agreement.

The Company is evaluating an appeal of this ruling which under Maryland rules can only be pursued

upon final judgment.

The Company intends to aggressively prosecute and defend the action.

Trial has been scheduled from March

28, 2022 to April 11, 2022.

In August 2020, Jennifer DiPietro, directly

and derivatively on behalf of Mari Holdings MD LLC (“Mari-MD”) and Mia Development LLC (“Mia”), commenced

a suit against the Company’s CEO, CFO, and wholly-owned subsidiary MariMed Advisors Inc.

(“MMA”), in Suffolk

Superior Court, Massachusetts.

In this action, DiPietro, a party to

prior ongoing litigation in Maryland involving the Company and Kind as discussed above, brings claims for breach of fiduciary

duty, breach of contract, fraud in the inducement, aiding and abetting the alleged breach of fiduciary duty, seeks access to

books and records, and an accounting related to her investments in Mari-MD and Mia.

DiPietro seeks unspecified money

damages and rescission of her interest in Mari-MD, but not of her investment in Mia, which has provided substantial returns

The Company has answered the complaint

and MMA has moved for leave to file counterclaims against DiPietro on its own behalf and derivatively on behalf of Mari-MD for

breach of her fiduciary duties to each of those entities, for tortious interference with Mari-MD’s lease and MMA’s

management services agreement with Kind, and for breach of Mari-MD’s operating agreement.

The Company believes that the allegations

of the complaint are without merit and intends to defend the case vigorously.

The Company’s counterclaim seeks monetary

damages from DiPietro, including the Company’s legal fees in the Kind action.

discussed in Note 4 – Investments , in February 2020, GenCanna USA, under pressure from certain of its creditors including

MGG, agreed to convert the involuntary bankruptcy proceeding into a voluntary Chapter 11 proceeding.

In addition, GenCanna and

GenCanna USA’s subsidiary, Hemp Kentucky LLC (collectively with GenCanna and GenCanna USA, the “GenCanna Debtors”),

filed voluntary petitions under Chapter 11 in the Bankruptcy Court.

May 2020, after an abbreviated solicitation/bid/sale process, the Bankruptcy Court, over numerous objections by creditors and

shareholders of the GenCanna Debtors which included the Company, entered an order authorizing the sale of all or substantially

all of the assets of the GenCanna Debtors to MGG.

After the consummation of the sale of all or substantially all of their assets

and business, the GenCanna Debtors n/k/a OGGUSA, Inc.

and OGG, Inc.

(the “OGGUSA Debtors”) filed their liquidating

plan of reorganization (the “Liquidating Plan”) to collect various prepetition payments and commercial claims against

third parties, liquidate the remaining assets of the ODDUSA Debtors, and make payments to creditors.

The Company and the unsecured

creditors committee filed objections to such Liquidating Plan, including opposition to the release of litigation against the OGGUSA

Debtors’ senior lender, MGG, for lender liability, equitable subordination, and return of preference.

As a part of such

plan confirmation process, the OGGUSA Debtors filed various objections to proofs of claims filed by various creditors, including

the proof of claim in the amount of approximately $ 33.6 million filed by the Company.

Through intense and lengthy negotiations

with the OGGUSA Debtors and the unsecured creditors committee regarding the objections to the Liquidating Plan, the Company reached

an agreement with the OGGUSA Debtors to withdraw the objections to the Company’s claim and to have it approved by the Bankruptcy

Court as a general unsecured claim in the amount of $ 31.0 million.

the approval of the Liquidating Plan, the OGGUSA Debtors have been in the process of liquidating the remaining assets, negotiating

and prosecuting objections to other creditors’ claims, and pursuing the collection of accounts receivable and Chapter 5

bankruptcy avoidance claims.

As of the date of this filing, there is insufficient information as to how much of the Company’s

allowed claim will be paid upon the completion of the liquidation of the remaining assets of the OGGUSA Debtors.

22 – SUBSEQUENT EVENTS

Bankruptcy Filing

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

Bankruptcy Court

for 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.

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 Note 1 –

and Description of Business.

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 Note 4 –

Investments .

February 2020, the Company entered into an exchange agreement with two institutional shareholders (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 $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 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 per share.

Note Extensions

previously discussed in Note 11 –

Debt , the Company and MariMed Hemp issued the $11.5M Note in February 2020 which

amended and restated the previously issued $10M Note.

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 $3,000,000 in the aggregate due on or before

April 30, 2020, of which the Company has already paid $2.3 million.

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.

The $11.5M Note imposes certain covenants on the borrowers effective on the date of the amendment

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

paperwork to extend another $3.0 million of promissory notes, as a result of which the Company will not be in default on any of

its debt servicing payments.

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.

March 2021, the Company entered into a securities purchase agreement with Hadron Healthcare Master Fund (“Hadron”)

with respect to a financing facility of up to $ 46.0 million in exchange for newly-designated Series C convertible preferred stock

of the Company and warrants to purchase the Company’s common stock.

the closing of the transaction in March 2021, Hadron purchased $ 23.0 million of Units at a price of $ 3.70 per Unit.

is comprised of one share of Series C preferred stock and a four -year warrant to purchase two and one-half shares of common stock.

Accordingly, the Company issued to Hadron 6,216,216 shares of Series C preferred stock and warrants to purchase up to an aggregate

of 15,540,540 shares of common stock.

Each share of Series C preferred stock is convertible, at Hadron’s option, into five

shares of common stock, and each warrant is exercisable at an exercise price of $ 1.087 per share.

The warrants shall be subject

to early termination if certain milestones are attained and the market value of the Company’s common stock reaches certain

predetermined levels.

connection with the closing of the transaction, the Company filed a certificate of designation with respect to the rights and

preferences of the Series C convertible preferred stock.

Such stock is zero coupon, non-voting.

and has a liquidation preference

equal to its investment amount plus declared but unpaid dividends.

Holders of Series C convertible preferred stock are entitled

to receive dividends on an as-converted basis.

the $ 23.0 million of proceeds received by the Company in March 2021, approximately (i) $ 7.8 will fund construction and upgrades

of certain of the Company’s owned and managed facilities, and (ii) $ 15.2 million was used to pay down debt and obligations,

comprised of the $ 4.4 M Notes, the $ 1 M Note , the New $ 3 M Note, the $ 5.8 M Note, the Existing Notes, a portion of the Third Party

Notes (all referred to in Note 11 – Debt ), and a portion of the Due To Related Parties balance discussed in

Note 20 – Related Party Transactions .

balance of the committed facility of up to an additional $23.0 million is intended to fund the Company’s specific targeted

acquisitions provided such acquisitions are contracted in 2021 and consummated, including obtaining the necessary regulatory approvals,

no later than the end of 2022.

Such funds shall be provided by Hadron on the same aforementioned terms as the initial proceeds.

that as at least 50 % of the shares of Series C convertible preferred stock remain outstanding, the holders shall have the right

to appoint one observer to the Company’s board and to each of its board committees, and appoint a member to the Company’s

board if and when a seat becomes available, at which time the observer roles shall terminate.

transaction imposes certain covenants on the Company with respect to the incurrence of new indebtedness, the issuance of additional

shares of any designation of preferred stock, and the payment of distributions.

February 2021, the Company entered into a five-year

lease agreement for a 12,000

square foot premises located in Wilmington,

DE which the Company intends to develop into a cannabis production facility with offices, and sublease to its cannabis-licensed

client in this state.

The lease contains an option to negotiate an extension at the end of the lease term.

January 2021, the Company and MRSVP entered into an agreement whereby the Company assigned and transferred membership interests

comprising an 11 % ownership in MRSVP in exchange for a release from all further obligation by the Company to make future investments

or payments and certain other non-monetary consideration.

Following the interest transfer, the Company’s ownership interest

in MRSVP was reduced to 12 % on a fully diluted basis.

of Debentures Payable

January 2021, the holder of the $ 21 M Debentures converted $ 1,300,000 of principal and approximately $ 56,000 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 CEO.

into 4,610,645 shares of the Company’s common stock at a conversion price of $ 0.29 per share.

After this conversion, the

entire $21M Debentures were retired and no amounts remain outstanding.

the first quarter of 2021, the Company granted five-year

options to purchase up to 975,000

of common stock at exercise prices ranging from $ 0.51

The aggregate fair value of

these options of approximately $ 372,000

will be amortized to compensation expense

over the respective vesting periods.

Also during this period, (i) a warrant to purchase 50,000

of common stock at $ 0.15

per share was exercised, (ii) a warrant

to purchase up to 200,000

shares of common stock at $ 1.75

per share was forfeited, (iii) a three-year

warrant to purchase up to 100,000

shares of common stock at $ 0.82

was issued, and (iv) 42,857

shares of common stock were issued to

settle an outstanding obligation.

Revised Note Receivable

In March 2021, the Company was issued a

revised promissory note from Healer in the principal amount of approximately $ 894,000 representing the previous loans of $ 800,000

extended to Healer by the Company plus accrued interest through the revised promissory note issuance date.

The revised promissory

note bears interest at a rate of 6 % per annum and requires quarterly payments of interest from April 2021 through the maturity

date in April 2016.

Additionally, the Company has the right to offset any licensing fees owed to Healer by the Company

in the event Healer fails to make any timely payment.

In March 2021, the Company offset approximately $ 28,000 of licensing fees

payable to Healer against the principal balance of the revised promissory note, reducing the principal amount to approximately

Stock Issuance Obligations

February 2021, the Company issued 11,413 shares of common stock in connection with the stock grant to a current employee previously

disclosed in Note 14 – Stockholders’ Equity.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data