What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-16 compared with 2021-03-23 · 1451 added, 1625 removed, 378 unchanged (89% of the section changed)

FINANCIAL STATEMENTS.

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

of Independent Registered Public Accounting Firm (PCAOB ID No.

Balance Sheets

Consolidated Statements of Operations

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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

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

In our opinion,

the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020

and 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31,

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

(the Company) as of December 31, 2021 and 2020, and the related

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

December 31, 2021, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements

present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of

its operations and its cash flows for each of the years in the two-year period ended December 31, 2021, 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

Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance

with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the

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 Accounting Oversight Board

(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

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.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

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.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

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.

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.

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

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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.

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.

discussed in Notes 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.

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Right-of-use assets under finance leases

$ 123,204,901

Liabilities, mezzanine equity, and stockholders’ equity

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Accrued expenses

Notes payable, net

Mortgages payable

Debentures payable, net

Operating lease liabilities

Finance lease liabilities

Income taxes payable

Sales and excise taxes payable

Debentures payable

Notes payable, current portion

Mortgages payable, current portion

Operating lease liabilities, current portion

Finance lease liabilities, current portion

Due to related parties

1 unchanged sentence

Total current liabilities

Notes payable, less current portion, net

Notes payable, less current portion

Mortgages payable, less current portion

Debentures payable, less current portion, net

Operating lease liabilities, less current portion

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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

4,908,333 shares authorized, issued and outstanding at December 31, 2021 and 2020

Series C convertible preferred stock, $ 0.001 par value;

6,216,216 and zero shares authorized, issued and outstanding at December 31, 2021 and 2020, respectively

Total mezzanine equity

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;

Undesignated preferred stock, $ 0.001 par value;

38,875,451 and 45,091,667 shares authorized at December 31, 2021 and 2020, respectively;

zero shares issued and outstanding at December 31, 2021 and 2020

Common stock, $ 0.001 par value;

500,000,000 shares authorized at December

31, 2020 and 2019;

700,000,000 and 500,000,000 shares authorized at December 31, 2021 and 2020, respectively;

334,030,348 and 314,418,812 shares issued and outstanding at December 31, 2021 and 2020, respectively

Common stock subscribed but not issued;

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

31, 2020 and 2019, respectively

zero and 11,413 shares at December 31, 2021 and 2020, respectively

Additional paid-in capital

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Noncontrolling interests

( 1,563,382 )

Total stockholders’ equity

Total liabilities, mezzanine equity, and stockholders’ equity

$ 123,204,901

accompanying notes to consolidated financial statements.

Statements of Operations

Ended December 31,

from related party

and promotion

and administrative

Year Ended December 31,

$ 121,464,158

Cost of revenues

Operating expenses:

income (loss)

Non-operating

income (expenses):

on debt settlements

(losses) of equity investments

in fair value of investments

non-operating expenses, net

Income (loss) before income taxes

Marketing and promotion

General and administrative

Total operating expenses

Operating income

Non-operating income (expenses):

Interest expense

( 2,355,904 )

( 9,810,475 )

Interest income

Loss on obligations settled with equity

Equity in earnings of investments

Change in fair value of investments

( 1,106,593 )

Total non-operating expenses, net

( 3,047,612 )

( 10,034,341 )

Income before income taxes

Provision for income taxes

income (loss)

income (loss) attributable to noncontrolling interests

income (loss) attributable to MariMed Inc.

income (loss) per share

average common shares outstanding

Net income attributable to noncontrolling interests

Net income attributable to MariMed Inc.

Net income per share

Weighted average common shares outstanding

accompanying notes to consolidated financial statements.

Statements of Stockholders’ Equity

Common Stock Subscribed

But Not Issued

Total Stockholders’

Stockholders’

Balances at December 31, 2019

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$ ( 106,760,527 )

Sales of common stock

Common stock issued for acquisitions

Common stock issued for investments

Common stock issued to settle obligations

$ ( 553,465 )

Issuance of subscribed shares

Amortization of stock option grants

Amortization of stand-alone warrant issuances

Exercise of options

( 3,236,857 )

( 1,168,074 )

Stock forfeitures

( 1,297,447 )

Exercise of stock options

Exercise of warrants

Exercise of warrants, shares

Amortization of option grants

Issuance of stand-alone warrants

Issuance of warrants attached to debt

Issuance of warrants with stock

Discount on debentures payable

Discount on 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)

( 4,908,333 )

( 14,720,092 )

Balances at December 31, 2019

( 14,725,000 )

$ ( 106,760,527 )

$ ( 553,465 )

Conversion of promissory notes

Extinguishment of promissory notes

Common stock issued to settle obligations

Purchase of property and equipment with stock

Purchase of property and equipment with stock, shares

Fees paid with stock

Fees paid with stock, shares

Return of stock

Return of stock, shares

Equity issuance costs

Acquisition of 30% interest in subsidiary

Acquisition of 30% interest in subsidiary, shares

Distributions

Balances at December 31, 2020

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$ ( 577,139 )

Issuance of subscribed shares

$ 112,974,329

$ ( 104,616,538 )

Stock forfeitures

$ ( 577,139 )

Issuance of subscribed shares

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

Beneficial conversion feature on debentures payable

Issuance of warrants with stock

Conversion of debentures payable

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

Purchase of property and equipment with stock

Fees paid with stock

Return of stock

Equity issuance costs

Acquisition of 30 %

interest in subsidiary

Distributions

Net income (loss)

Balances at December 31, 2021

2 unchanged sentences

$ ( 1,563,382 )

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.

$ 134,920,382

( 97,392,017 )

( 1,563,382 )

above statement does not show columns for shares and par value of undesignated

stock as the balances were zero and there was no activity in the reported periods.

accompanying notes to consolidated financial statements.

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Cash flows from operating activities:

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:

Net income attributable to MariMed Inc.

Net income attributable to noncontrolling interests

Adjustments to reconcile net income to net cash provided by operating activities:

Asset writeoff

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Amortization of warrants attached to debt

Amortization of warrants issued with stock

Amortization of beneficial conversion feature

Amortization of original issue discount

Goodwill write-downs

Bad debt expense

Loss on equity issued to settle obligations

Loss (earnings) on equity investments

Fees paid with stock

Loss on obligations settled with equity

Equity in earnings of investments

Gain on investment

Change in fair value of investments

6 unchanged sentences

( 2,937,285 )

( 5,611,142 )

Other current assets

1 unchanged sentence

Accrued expenses

Deferred rents payable

( 1,433,723 )

Income taxes payable

Sales and excise taxes payable

Operating lease payments

1 unchanged sentence

Other current liabilities

Other liabilities

Net cash provided by (used in) operating activities

( 24,138,317 )

Net cash provided by operating activities

Cash flows from investing activities:

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Purchase of cannabis licenses

Investment in notes receivable

( 2,680,000 )

Receipts on notes receivable

Due from related parties

Return on investment

Acquisition of 30 % interest in subsidiary

Proceeds from notes receivable

Net cash used in investing activities

2 unchanged sentences

Cash flows from financing activities:

Issuance of common stock

Issuance of preferred stock

Equity issuance costs

Issuance of promissory notes

1 unchanged sentence

( 15,806,617 )

( 12,371,149 )

Proceeds from issuance of debentures

5 unchanged sentences

Due to related parties

( 1,157,815 )

Finance lease principal payments

2 unchanged sentences

Net change to cash and cash equivalents

( 3,365,627 )

Cash and cash equivalents at beginning of period

4 unchanged sentences

Non-cash activities:

Conversion of debentures receivable

receivables converted to notes receivable

Conversion of promissory notes

Conversion of debentures payable

Acquisition of 30 % interest in subsidiary

Purchase of property with stock

Operating lease right-of-use assets and liabilities

Common stock issued to settle obligations

Return of stock

Issuance of common stock associated with subscriptions

Cashless exercise of warrants

Cashless exercise of stock options

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

Common stock issued to settle debt

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

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

Discount on debentures

accompanying notes to consolidated financial statements.

2 unchanged sentences

(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

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

to providing operational and corporate guidance.

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

manage the continuing growth of their operations.

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.

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 ongoing regulatory, accounting,

real estate, human resources, and administrative services.

the last few years, the Company made the strategic decision to transition from a consulting business to a direct owner and operator of

cannabis licenses in high-growth states.

Core to this transition is the acquisition and consolidation of the Company’s clients

(the “Consolidation Plan”).

Among several benefits, the Consolidation Plan would 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 of these entities, from the securing

of their cannabis licenses, to the development of facilities that are models of excellence, to funding their operations, and to providing

operational and corporate guidance.

Accordingly, the Company believes it is well suited to own these businesses and manage the continuing

growth of their operations.

date, the acquisition and consolidation of the Company’s client businesses in Massachusetts and Illinois have been completed.

The acquisition of a client business in Maryland has been contracted, and the Company is awaiting approval by the Maryland Cannabis

Control Commission, which is pending.

Upon approval, this entity will be consolidated.

The acquisitions of the remaining businesses

located in Nevada and Delaware are at various stages of completion and subject to each state’s laws governing the ownership

transfer of cannabis licenses and other closing conditions.

Delaware will require a modification of current cannabis ownership laws

to permit for-profit ownership, which is expected to occur when the state legalizes recreational adult-use cannabis.

Until the law changes and the acquisition is approved, the

Company continues to generate revenue from rental income, management fees, and licensing royalties.

transition to a fully integrated muti-state cannabis operator (“MSO”) is part of a strategic growth plan (the “Strategic

Growth Plan”) the Company is implementing to drive its revenues and profitability.

The Strategic Growth Plan has four components:

(i) complete the Consolidation Plan, (ii) increase revenues in existing states, by spending capital to increase the Company’s cultivation

and production capacity, and develop additional assets within those states, (iii) expand the Company’s footprint in additional

legal cannabis states through new applications and acquisitions of existing cannabis businesses, and (iv) optimize the Company’s

brand portfolio and licensing revenue by expanding into additional states with legal cannabis programs.

The Company has 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 quality 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 product recipes.

Company markets its high-quality cannabis flowers and concentrates under the award-winning 1 Nature’s

Heritage brand;

cannabis-infused chewable tables and powder drink mixes under the brand names Kalm Fusion and K Fusion;

all natural fruit

chews under the award-winning 1 Betty’s Eddies brand;

and brownies, cookies, and other social sweets under the Bubby’s

The Company’s cannabis-infused brands have been top-selling products in Maryland and Massachusetts.

2 The Company

intends to introduce additional product lines under these brands in the foreseeable future.

Company also has strategic alliances with prominent brands.

The Company has partnered with renowned ice cream maker Emack & Bolio’s®

to create a line-up of cannabis-infused vegan and dairy ice cream.

Additionally, the Company has secured distribution rights for 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.

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.

Awards won by the Company’s Betty’s Eddies brand include LeafLink 2021 Best Selling Medical Product, Reddit Sparkie

2021 Best Edible, Respect My Region 2021 Hottest Edible, LeafLink 2020 Industry Innovator, and Explore Maryland Cannabis 2020 Edible

Awards won by the Company’s Nature’s Heritage brand include the Cultivators Cup 2021 Silver Medal and the High

Times Cannabis Cup 2021 Bronze Medal.

LeafLink Insights 2020.

1 unchanged sentence

of Presentation

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

States of America (“GAAP”).

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.

2 unchanged sentences

of Consolidation

accompanying condensed consolidated financial statements include the accounts of MariMed Inc.

and the following majority-owned

subsidiaries:

accompanying consolidated financial statements include the accounts of MariMed Inc.

and the following majority-owned subsidiaries

at December 31, 2021:

SCHEDULE OF MAJORITY OWNED SUBSIDIARIES

3 unchanged sentences

Mari Holdings MD LLC

Mari Holdings NJ LLC

Mari Holdings NV LLC

Mari Holdings Metropolis LLC

Mari Holdings Mt.

Hartwell Realty Holdings LLC

2 unchanged sentences

KPG of Harrisburg LLC

MariMed OH LLC

MariMed Hemp Inc.

1 unchanged sentence

accounts and transactions have been eliminated.

preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect

the reported amounts within the financial statements and disclosures thereof.

Actual results could differ from these estimates

or assumptions.

preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported

amounts within the financial statements and disclosures thereof.

Actual results could differ from these estimates or assumptions.

Company considers all highly liquid investments with a maturity date of three months or less to be cash equivalents.

values of these investments approximate their carrying values.

The fair values

of these investments approximate their carrying values.

At December 31, 2021 and 2020, cash of approximately

$ 5,101,000 and $ 101,000 , respectively, was held in escrow.

The 2021 balance was primarily comprised of a $ 5,000,000 escrow deposit in

connection with the acquisition of Kind Therapeutics USA Inc.

as further discussed in Note 3 – Acquisitions .

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

The Company has not experienced losses on balances in excess of such limits and management believes the Company is not

exposed to significant risks in that regard.

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

Company has not experienced losses on balances in excess of such limits and management believes the Company is not exposed to significant

risks in that regard.

receivable consist of trade receivables and are carried at their estimated collectible amounts.

2 unchanged sentences

of its clients and maintaining a reserve, if deemed necessary, for potential credit losses.

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 $ 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.

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 $ 41.4

million and $ 40.0

million at December 31, 2021 and 2020, respectively.

For further discussion on receivable reserves, please refer to Note 18 – Bad Debts and the Bankruptcy Claim section

of Note 21 – Commitments and Contingencies .

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

The Company allocates a certain percentage of overhead cost to its manufactured inventory;

such allocation is based on square

footage and other industry-standard criteria.

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.

Investments are evaluated for permanent impairment and are written

down if such impairments are deemed to have occurred.

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:

allocates a certain percentage of overhead cost to its manufactured inventory;

such allocation is based on square footage and other industry-standard

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 public and private companies.

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

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

Investments are evaluated for permanent impairment and are

written down if such impairments are deemed to have occurred.

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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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.

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.

Company is typically considered the principal if it controls the specified good or service before such good or service is transferred

to its client.

The Company may also be deemed to be the principal even if it engages another party (an agent) to satisfy some

of the performance obligations on its behalf, provided the Company (i) takes on certain responsibilities, obligations and risks,

(ii) possesses certain abilities and discretion, or (iii) other relevant indicators of the sale.

If deemed an agent, the Company

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

The Company may also be deemed to be the principal even if it engages another party (an agent) to satisfy some of the

performance obligations on its behalf, provided the Company (i) takes on certain responsibilities, obligations, and risks, (ii) possesses

certain abilities and discretion, or (iii) other relevant indicators of the sale.

If deemed an agent, the Company would not recognize

revenue for the performance obligations it does not satisfy.

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).

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

in Massachusetts and Illinois, and sales of hemp and hemp-infused products.

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

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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®, Nature’s

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

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 amounts.

– 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.

– royalties from the licensed distribution of the Company’s branded products including Kalm Fusion and Betty’s

Eddies, and from sublicensing of contracted brands including Healer and Tikun Olam, to regulated dispensaries throughout the

United States and Puerto Rico.

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

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and Equipment

and equipment are stated at cost less accumulated depreciation, with depreciation recognized on a straight-line basis over the

shorter of the estimated useful life of the asset or the lease term, if applicable.

When assets are retired or disposed, the cost

and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income.

and maintenance are charged to expense in the period incurred.

and equipment are stated at cost less accumulated depreciation, with depreciation recognized on a straight-line basis over the shorter

of the estimated useful life of the asset or the lease term, if applicable.

When assets are retired or disposed, the cost and accumulated

depreciation are removed from the accounts, and any resulting gains or losses are included in income.

Repairs and maintenance are charged

to expense in the period incurred.

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

buildings and building improvements, forty

tenant improvements, the remaining duration of the related lease ;

buildings and building improvements, forty years;

tenant improvements,

the remaining duration of the related lease ;

furniture and fixtures, seven to ten years;

and equipment, ten years.

Land is not depreciated.

machinery and equipment, ten years.

not depreciated.

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

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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.

If these criteria

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

the years ended December 31, 2021 and 2020, 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.

The most prominent change from previous accounting guidance

is the requirement to recognize right-of-use assets and lease liabilities on the consolidated balance sheet representing the rights

and obligations created by operating leases that extend more than twelve months in which the Company is the lessee.

elected the package of practical expedients permitted under ASC 842.

Accordingly, the Company accounted for its existing operating

leases that commenced before the effective date as operating leases under the new guidance without reassessing (i) whether the

contracts contain a lease, (ii) the classification of the leases (iii) the accounting for indirect costs as defined in ASC 842.

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

from the lease.

Non-lease components within lease agreements are accounted for separately.

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.

Lease expense for lease payments is recognized on a straight-line basis over

the lease term.

standards updates.

Under ASC 842, arrangements that are determined to be leases with a term greater than one year are accounted

for by the recognition of right-of-use assets, that represent the Company’s right to use an underlying asset for the lease term,

and lease liabilities, that represent the Company’s obligation to make lease payments arising from the lease.

Non-lease components

within lease agreements are accounted for separately.

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.

Lease expense for lease payments is recognized on a straight-line

basis over the lease term.

of Long-Lived Assets

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Impairment of long-lived assets is recognized when the net book value of such assets exceeds their expected

cash flows, in which case the assets are written down to fair value, which is determined based on discounted future cash flows

or appraised values.

cash flows, in which case the assets are written down to fair value, which is determined based on discounted future cash flows or appraised

Value of Financial Instruments

Company follows the provisions of ASC 820, Fair Value Measurement , to measure the fair value of its financial instruments,

and ASC 825, Financial Instruments, for disclosures on the fair value of its financial instruments.

To increase consistency

and comparability in fair value measurements and related disclosures, ASC 820 establishes a fair value hierarchy which prioritizes

the inputs to valuation techniques used to measure fair value into three broad levels.

The fair value hierarchy gives the highest

priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable

The three levels of fair value hierarchy defined by ASC 820 are:

Company follows the provisions of ASC 820, Fair Value Measurement , to measure the fair value of its financial instruments, and

ASC 825, Financial Instruments, for disclosures on the fair value of its financial instruments.

To increase consistency and comparability

in fair value measurements and related disclosures, ASC 820 establishes a fair value hierarchy which prioritizes the inputs to valuation

techniques used to measure fair value into three broad levels.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted)

in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

The three levels of fair value

hierarchy defined by ASC 820 are:

market prices available in active markets for identical assets or liabilities as of the reporting date.

inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable

as of the reporting date.

inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the

reporting date.

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.

fair value of option and warrant issuances are determined using the Black-Scholes pricing model and employing several inputs such

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:

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.

fair value of option and warrant issuances are determined using the Black-Scholes pricing model and employing several inputs such 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

1.5 to 5.0 years

0.8 to 4.3 years

Volatility factors

1.198 to 1.266

1.059 to 1.180

Risk-free interest rates

0.4 % to 1.3 %

0.3 % to 1.3 %

Dividend yield

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Payment , which allows for using the mid-point between the vesting date and expiration date.

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

interest rate is based on U.S.

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 interest

rate is based on U.S.

Treasury rates with maturity periods similar to the expected instruments life on the issuance date.

Company amortizes the fair value of option and warrant issuances on a straight-line basis over the requisite service period of

each instrument.

Company amortizes the fair value of option and warrant issuances on a straight-line basis over the requisite service period of each instrument.

Extinguishment

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Company accounts for extinguishment of liabilities in accordance with ASC 405-20, Extinguishments of Liabilities.

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

based on the fair value of the award on the grant date, with limited exceptions.

Such value will be incurred as compensation expense

over the period an employee is required to provide service in exchange for the award, usually the vesting period.

No compensation

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

When 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 based on the fair

value of the award on the grant date, with limited exceptions.

Such value will be incurred as compensation expense over the period an

employee is required to provide service in exchange for the award, usually the vesting period.

No compensation cost is recognized for

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

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.

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

uncertain tax positions taken or expected to be taken on a tax return.

The Company did not take any uncertain tax positions and

had no adjustments to unrecognized income tax liabilities or benefits for the years ended December 31, 2020 and 2019.

Party Transactions

Company follows ASC 850, Related Party Disclosures , for the identification of related parties and disclosure of related

The Company did not take any uncertain tax positions and had no

adjustments to unrecognized income tax liabilities or benefits for the years ended December 31, 2021 and 2020.

of the Company’s subsidiaries are subject to the provisions of Section 280E of the Internal Revenue Code, as amended, which prohibits

businesses from deducting certain expenses associated with the trafficking of controlled substances within the meaning of Schedule I

and II of the Controlled Substances Act.

Such non-deductibility of certain ordinary business expenses results in permanent differences

and can cause the Company’s effective tax rate to be highly variable and not necessarily correlated with pre-tax income.

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

as transactions that are eliminated in the preparation of financial statements.

Company follows ASC 850, Related Party Disclosures , for the identification of related parties and disclosure of related 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 as transactions that

are eliminated in the preparation of financial statements.

Comprehensive

Company reports comprehensive income and its components following guidance set forth by ASC 220, Comprehensive Income ,

which establishes standards for the reporting and display of comprehensive income and its components in the consolidated financial

There were no items of comprehensive income applicable to the Company during the period covered in the financial statements.

Company reports comprehensive income and its components following guidance set forth by ASC 220, Comprehensive Income , which establishes

standards for the reporting and display of comprehensive income and its components in the consolidated financial statements.

no items of comprehensive income applicable to the Company during the period covered in the financial statements.

per common share is computed pursuant to ASC 260, Earnings Per Share .

Basic earnings per share is computed by dividing

net income by the weighted average number of shares of common stock outstanding during the period.

Diluted net income per share

is computed by dividing net income by the sum of the weighted average number of shares of common stock outstanding plus the weighted

average number of potentially dilutive securities during the period.

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.

Basic earnings per share is computed by dividing net income

by the weighted average number of shares of common stock outstanding during the period.

Diluted net income per share is computed by dividing

net income by the sum of the weighted average number of shares of common stock outstanding plus the weighted average number of potentially

dilutive securities during the period.

December 31, 2021 and 2020, there were potentially dilutive securities convertible into shares of common stock comprised of (i) stock

options – convertible into 39,821,671 and 9,805,750 shares, respectively, (ii) warrants – convertible into 26,351,571 and

16,917,168 shares, respectively, (iii) Series B preferred stock – convertible into 4,908,333 shares in both periods, (iv) Series

C preferred stock – convertible into 31,081,080 and zero shares, respectively, (v) debentures payable – convertible into

zero and 4,610,645 shares, respectively, and (vi) promissory notes – convertible into 1,142,857 and 15,503,282 shares, respectively.

the years ended December 31, 2021 and 2020, the aforementioned potentially dilutive securities increased the number of weighted average

common shares outstanding on a diluted basis by approximately 45.9 million and 57.2 million net shares of common stock, respectively.

Such share amounts were reflected in the calculation of diluted net income per share for the years ended December 31, 2021 and 2020.

and Contingencies

Company follows ASC 450, Contingencies , which requires the Company to assess the likelihood that a loss will be incurred

from the occurrence or non-occurrence of one or more future events.

Company follows ASC 450, Contingencies , which requires the Company to assess the likelihood that a loss will be incurred from

the occurrence or non-occurrence of one or more future events.

Such assessment inherently involves an exercise of judgment.

In assessing possible loss contingencies from legal proceedings or unasserted claims, the Company evaluates the perceived merits

of such proceedings or claims, and of the relief sought or expected to be sought.

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

indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be

estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material,

would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which

case the guarantees would be disclosed.

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.

possible loss contingencies from legal proceedings or unasserted claims, the Company evaluates the perceived merits of such proceedings

or claims, and of the relief sought or expected to be sought.

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 indicates

that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then

the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be

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

instruments that are not bifurcated as a derivative pursuant to ASC 815, Derivatives and Hedging , and not accounted for

as a separate equity component under the cash conversion guidance are evaluated to determine whether their conversion prices create

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

instruments that are not bifurcated as a derivative pursuant to ASC 815, Derivatives and Hedging , and not accounted for as a separate

equity component under the cash conversion guidance are evaluated to determine whether their conversion prices create 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.

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

to the carrying amount of convertible debt to which it is attached.

The discount is amortized to interest expense over the life

of the debt with adjustments to amortization upon full or partial conversions of the debt.

The in-the-money

portion, also known as the intrinsic value, is recorded in equity, with an offsetting discount to the carrying amount of convertible

debt to which it is attached.

The discount is amortized to interest expense over the life of the debt with adjustments to amortization

upon full or partial conversions of the debt.

and Uncertainties

Company is subject to risks common to companies operating within the legal and medical marijuana industries, including, but not

Company is subject to risks common to companies operating within the legal and medical cannabis industries, including, but not

limited to, federal laws, government regulations and jurisdictional laws.

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

Net income attributable to

noncontrolling interests is shown in the consolidated statements of operations;

and the value of net assets owned by noncontrolling

interests are presented as a component of equity within the balance sheets.

Net income attributable to noncontrolling

interests is shown in the consolidated statements of operations;

and the value of net assets owned by noncontrolling interests are presented

as a component of equity within the balance sheets.

Balance Sheet Arrangements

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

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3 – ACQUISITIONS

of Anna LLC and KPG of Harrisburg LLC

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.

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:

SCHEDULE OF FAIR VALUE OF ASSETS ACQUIRED ON ACQUISITION

Cash and cash equivalents

Minority interests

Accounts payable

Accrued expenses

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)

$ ( 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.

Amounts do not include any

operating efficiencies or costs savings that the Company would have been able to achieve.

Harvest Foundation LLC

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.

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 state regulatory approval of the transaction and other closing

Upon approval, and the fulfillment of other closing conditions, the ownership of Harvest will be transferred to the

Company, and the operations of Harvest will begin to be consolidated into the Company’s financial statements.

is no assurance that the closing conditions to the Company’s acquisition of

Harvest, including regulatory approval, will be achieved or that the acquisition will be consummated.

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 transaction.

The issued shares were recorded at par

Such shares are restricted and will be returned to the Company in the event the transaction does not close.

Therapeutics USA Inc.

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

2016, the Company and the members of Kind Therapeutics USA Inc., the Company’s client in Maryland that holds licenses for

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

would be owned 70 .0%

by the Company and 30.0 %

by the members of Kind, subject to approval by the

Maryland Medical Cannabis Commission (“MMCC”).

In reliance thereon, the Company purchased, designed, and developed a 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

facility in Hagerstown, MD for occupancy and use by Kind, which became operational in late 2017, and the Company further agreed to manage

and finance all aspects of Kind’s cannabis business, as Kind had no background or experience in the industry.

2018, prior to finalizing the documents confirming

the partnership/joint venture 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.

Also at that time, the parties entered into a management services agreement for

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

lease agreement for Kind’s utilization of the Company’s 180,000

square foot cultivation and production facility

in Hagerstown, MD.

Additionally, in 2019, the Company 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™ 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.

The following table summarizes the allocation, adjusted in September

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

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.

February 2019, the Company commenced legal proceedings against AgriMed seeking specific performance of the purchase agreement.

May 2019, the dispute between the parties was resolved through the cash payment to the Company of $ 3.1 million and other good

and valuable consideration, in exchange for the Company relinquishing its rights under the purchase agreement and releasing its

claims against AgriMed.

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.

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

2019, the members of Kind sought to renegotiate the terms of the MOU and subsequently sought to renege on both the original partnership/joint

venture and the MOU.

The Company engaged with the member 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 December 2021, the Company entered into

a membership interest purchase agreement with the members of Kind to acquire 100 % of the equity ownership of Kind in exchange for $ 13,500,000 payable in cash (subject to adjustment) and $ 6,500,000 payable by the issuance of four-year

6.0% promissory notes to the members of Kind.

The notes shall be secured by a first priority lien on the Company’s property in

Hagerstown, MD.

Upon execution of the membership interest purchase agreement, the Company deposited, in escrow, the sum of $ 5,000,000

as a contract down-payment.

Simultaneously, the

Company entered into a membership interest purchase agreement with one of the members of Kind to acquire such member’s entire equity

ownership interest in (i) Mari Holdings MD LLC (“Mari-MD”), the Company’s majority owned subsidiary that owns production

and retail cannabis facilities in Hagerstown, MD and Annapolis, MD, and (ii) Mia Development LLC (“Mia”), the Company’s

majority owned subsidiary that owns production and retail cannabis facilities in Wilmington, DE.

The purchase price for the interests in Mari-MD and Mia is $ 2,000,000 in

the aggregate, payable in cash.

Giving effect to the purchase of these

interests, the Company will own approximately 99.7 % and 94.3 %, respectively, of Mari-MD and Mia.

The closings under the foregoing agreements

are subject to the fulfilment of closing conditions including, but not limited to, approval by the MMCC, which is pending.

There is no assurance that the

approval of the MMCC will be obtained or that the further closing conditions will be met.

Simultaneous with the closing of the transactions

contemplated by the foregoing agreements, the aforementioned litigation between the parties will be dismissed.

For further information,

see Note 21 – Commitment and Contingencies .

2019, the Company acquired a 70.0 %

ownership interest in MediTaurus LLC (“MediTaurus”),

a company formed by Jokubas Ziburkas PhD, a neuroscientist and leading authority on cannabidiol (“CBD”) and the endocannabinoid

system, in exchange for $ 2.8

million of cash and stock.

Company currently sells CBD products developed by MediTaurus under its Florance™ brand .

September 2021, the Company acquired the remaining 30.0 %

ownership interest of MediTaurus in exchange for

shares of the Company’s common stock, valued

at approximately $ 94,000 ,

The carrying value of the noncontrolling

interest of approximately $ 975,000

was eliminated, and since there was no change

in control of MediTaurus from this transaction, the resulting gain on bargain purchase was recognized in Additional Paid-In Capital

on the September 30, 2021 balance sheet.

The shares and cash were issued and paid in November 2021.

As part of this transaction,

the initial purchase agreement was amended whereby any and all future license fees and payments to MediTaurus were eliminated.

Beverly Asset Purchase

In November 2021, the Company entered into an

asset purchase agreement to acquire the cannabis license, property lease, and other assets and rights of, and to assume the liabilities

and operating obligations associated with, a cannabis dispensary that is currently operating in Beverly, MA.

The purchase price is comprised

of 2,000,000 shares of the Company’s common stock and $ 5.1 million, with the cash amount to be paid over time on a monthly basis

as a percentage of the business’ monthly gross sales.

The purchase is contingent upon the approval of

the Massachusetts Cannabis Control Commission, which is expected by the summer of 2022.

Concurrent with the execution of this agreement,

the parties entered into a consulting agreement pursuant whereby the Company shall provide certain oversight services related to the

development, staffing, and operation of the business in exchange for a monthly fee.

4 – INVESTMENTS

3 unchanged sentences

(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

November 2019, the common stock of Terrace commenced public trading on the Toronto Stock Venture Exchange.

In accordance with

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

in net income.

Prior to Terrace becoming publicly traded, the Company had elected the measurement alternative to value this equity

investment without a readily determinable fair value.

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 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

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 ® products,

subject to an annual minimum royalty.

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

December 2020, Terrace Inc., a Canadian cannabis entity in which the Company had an ownership interest of 8.95 % (“Terrace”),

was acquired by Flowr Corp.

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

Australia (“Flowr”).

Under the terms of the transaction, each shareholder of Terrace received 0.4973 of a share in Flowr

for each Terrace share held.

investment is carried at fair value.

The decrease in fair value of this investment during the years ended December 31, 2021 and 2020

of approximately $ 1,107,000 and $ 92,000 , respectively, was reflected in the Change In Fair Value Of Investments on the statement

of operations.

2020, the Company owned a 23.0 % member interest in MembersRSVP LLC (“MRSVP”), an entity that developed cannabis-specific

customer relationship management software, which was accounted for under the equity method.

Based on the Company’s equity in MRSVP’s

net income during this period, the Company recorded earnings in 2020 of approximately $ 99,000 , which comprised the balance of Equity

in Earnings of Investments on the statement of operations.

January 2021, the Company and MRSVP entered into an agreement whereby the Company assigned and transferred 11.0 %

of its member interests to 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.

In addition to the reduction of the Company’s ownership interest to 12.0 %,

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

Company discontinued accounting for this investment under the equity method as of January 1, 2021.

September 2021, MRSVP sold substantially all of its assets pursuant to an asset purchase agreement.

In furtherance of the transaction,

the Company received cash proceeds of $ 1,475,000 , representing the Company’s pro rata share of the cash consideration received

by MRSVP upon the closing of the transaction.

As an ongoing member of MRSVP, the Company will receive its pro rata share of any additional

consideration received by MRSVP pursuant to the asset purchase agreement, which may include securities or other forms of non-cash or

in-kind consideration and holdback amounts, if and when it is received and distributed by MRSVP.

receipt of the cash consideration, the Company reduced the investment balance to zero and recorded a gain of approximately $ 309,000 which

comprised Other non-operating expenses on the statement of operations.

In February 2022, the Company received its

pro rata share of additional consideration received by MRSVP pursuant to the asset purchase agreement which is further discussed in Note

22 – Subsequent Events .

5 – DEFERRED RENTS RECEIVABLE

Company is the lessor under several operating leases which contain rent holidays, escalating rents over time, options to renew,

requirements to pay property taxes, insurance and/or maintenance costs, and contingent rental payments based on a percentage of

monthly tenant revenues.

Company is the lessor under operating leases which contain rent holidays, escalating rents over time, options to renew, requirements

to pay property taxes, insurance and/or maintenance costs, and contingent rental payments based on a percentage of monthly tenant revenues.

The Company is not the lessor under any finance leases.

3 unchanged sentences

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 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

cultivation and processing facility which is leased to a licensed cannabis client under a triple net lease that commenced

2018 and expires in 2037 .

– a 45,000 square foot cannabis cultivation, processing, and dispensary facility which is leased to a cannabis-licensed client

under a triple net lease that expires in 2035 .

– a 180,000 square foot cultivation and processing facility which is leased to a licensed cannabis client under a triple net

lease that expires in 2037 .

Massachusetts

– a 138,000 square foot industrial property of which approximately half of the available square footage is leased to

a non-cannabis manufacturing company under a lease that commenced in 2017 and expires in 2022 .

– two 3,400 square foot free-standing retail dispensaries in the cities of Anna and Harrisburg and leased to the KPGs,

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

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.

Accordingly, the rental receipts on such leases

have been removed from the table of future minimum rental receipts below.

Company subleases the following property:

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

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:

– a 138,000 square foot industrial property of which approximately half of the available square footage is leased to a non-cannabis

manufacturing company under a lease that expires in October 2022 .

Company subleases the following properties:

square foot cannabis dispensary which

is subleased to its cannabis-licensed client under a under a sublease expiring in April 2027.

square foot warehouse, of which the

Company developed 60,000 square feet into a cultivation facility, and is developing the remaining space into

processing facility, subleased to its cannabis-licensed client.

sublease expires in March 2030, with an option to extend the term for three additional five-year periods.

square foot cannabis production facility

with offices which is subleased to its cannabis-licensed client.

sublease expires in January 2026 and contains an option to negotiate an extension at the end of the lease term.

of December 31, 2021 and 2020, cumulative fixed rental receipts under such leases approximated $ 18.7 million and $ 13.9 million, respectively,

compared to revenue recognized on a straight-line basis of approximately $ 20.4 million and $ 15.8 million, respectively.

the deferred rents receivable balance approximated $ 1.7 million and $ 1.9 million at December 31, 2021 and 2020, respectively.

minimum rental receipts for non-cancellable leases and subleases as of December 31, 2021 were:

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.

6 – NOTES RECEIVABLE

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

SCHEDULE OF NOTES RECEIVABLE

First State Compassion Center

December 31, 2021 and 2020, notes receivable, including accrued interest, consisted of the following:

OF RECEIVABLES AND ACCRUED INTEREST

First State Compassion Center (initial note)

First State Compassion Center (secondary note)

High Fidelity Inc.

Maryland Health & Wellness Center Inc.

Total notes receivable

1 unchanged sentence

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.

State Compassion Center

Company’s cannabis-licensed client in Delaware, First State Compassion Center (“FSCC”), 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

$ 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.

will continue through April 2026, at which time

the note will be paid in full.

At December 31, 2021 and 2020, the current portion of this note approximated $ 75,000

and $ 66,000 ,

respectively, and was included in Notes Receivable, Current Portion on the respective balance sheets.

December 2021, financed trade accounts receivable balances from FSCC of approximately $ 7.8 million in the aggregate were converted

into notes receivable whereby FSCC issued promissory notes to the Company in the aggregate amount of approximately $ 7.8 million

bearing interest at a rate of 6.0 % per annum.

The promissory notes call for the payment of principal and interest throughout the

term of the note which matures in December 2025.

At December 31, 2021, the entire balance of the note was long-term.

2018 and 2019, the Company loaned an aggregate of $ 800,000

to Healer LLC, 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”).

Healer issued promissory notes to the Company for the aggregate amount loaned that bear interest

at a rate of 6.0 %

per annum, with principal and interest payable

on maturity dates three years from the respective loan dates.

March 2021, the Company was issued a revised promissory note from Healer in the principal amount of approximately $ 894,000

representing the previous loans 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 .0%

per annum and requires

quarterly payments of interest through the maturity date in April 2026 .

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 payment when

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 $ 866,000 .

December 31, 2021 and 2020, the total amount of principal and accrued interest due under the aforementioned promissory notes approximated

and $ 899,000 ,

respectively, of which approximately $ 52,000

and $ 337,000 ,

respectively, was current.

August 2021, the Company was fully repaid on a loan to High Fidelity Inc., an entity with cannabis operations in the state of Vermont.

The loan had a principal balance of $ 250,000 and bore interest at a rate of 10.0 % per annum,

7 – INVENTORY

December 31, 2021 and 2020, inventory was comprised of the following:

SCHEDULE OF INVENTORY

Ingredients and other raw materials

2 unchanged sentences

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.

8 – PROPERTY AND EQUIPMENT

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

SCHEDULE OF PROPERTY AND EQUIPMENT

and December 31, 2021 and 2020, property and equipment consisted of the following:

OF PROPERTY AND EQUIPMENT

Buildings and building improvements

7 unchanged sentences

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.

the year ended December 31, 2021 and 2020, additions to property and equipment approximated $ 18,579,000 and $ 4,688,000 , respectively.

2021 additions were primarily comprised of (i) the development of facilities in Metropolis, IL and Milford, DE, and (ii)

purchases of building improvements, machinery, and equipment at the facilities in Hagerstown, MD and New Bedford, MA.

The 2020 additions

consisted primarily of (i) the commencement of construction in Mt.

Vernon, IL, and (ii) machinery and equipment purchases for facilities

in Massachusetts, Maryland, Illinois, and Delaware.

construction in progress balances of approximately $ 10,569,000 million and $ 3,141,000 at December 31, 2021 and 2020, respectively, consisted

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

expense for the year ended December 31, 2021 and 2020 approximated $ 2,098,000 and $ 1,792,000 , respectively.

9 – 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 .

December 31, 2021 and 2020, intangible assets were comprised of (i) the carrying value of cannabis license fees, and (ii) goodwill arising

from the Company’s 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:

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

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, 2021 and 2020, the carrying value of these cannabis licenses approximated $ 163,000 and

$ 161,000 , respectively.

goodwill associated with acquisitions is reviewed on a quarterly basis for impairment.

Based on this review and other factors, the goodwill

of approximately $ 2,068,000 December 31, 2021 and 2020 was deemed to be unimpaired.

10 – MORTGAGES

December 31, 2021 and 2020, mortgage balances, including accrued interest, were comprised of the following:

OF MORTGAGE AND ACCRUED INTEREST

Bank of New England

– New Bedford,

MA and Middleboro, MA properties

Bank of New England

– Wilmington, DE property

DuQuoin State Bank

– Anna, IL and Harrisburg,

IL properties

DuQuoin State Bank

– Metropolis, IL property

South Porte Bank

Vernon, IL property

Total mortgages payable

1 unchanged sentence

( 1,400,331 )

( 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.

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

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,

MA, within which the Company has built a 70,000

square foot cannabis cultivation and processing

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 .0%,

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

with a floor of 6.25 %

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”).

from the Refinanced Mortgage were used to pay down the Initial Mortgage and approximately $ 7.2 million of promissory notes as further

in Note 11 – Promissory Notes .

At December 31, 2021 and 2020, the outstanding principal balance of the Refinanced Mortgage

approximated $ 12,499,000 and $ 12,834,000 , respectively, of which approximately $ 358,000 and $ 335,000 , respectively, was current.

Company maintains another mortgage with Bank of New England from the 2016 purchase of a 45,070

square foot building in Wilmington, DE which

was developed into a cannabis seed-to-sale facility and is currently leased to the Company’s cannabis-licensed client in that state.

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 %

For the remainder of 2021, the interest rate on this mortgage remained at 5.25 %.

At December 31, 2021 and 2020, the

outstanding principal balance on this mortgage approximated $ 1,463,000

and $ 1,576,000 ,

respectively, of which approximately $ 130,000

and $ 114,000 ,

respectively, was current.

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

Anna, IL and Harrisburg, IL which the Company developed into two 3,400 square foot free-standing retail dispensaries.

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 2021 at a rate of 6.75 % per annum.

At December 31, 2021 and 2020, 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 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,

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.

balance on this mortgage approximated $ 778,000 and $ 815,000 respectively, of which approximately $ 33,000 and $ 31,000 , respectively, was

July 2021, the Company purchased the land and building in which it operates its cannabis dispensary in Metropolis, IL.

The purchase price

consisted of 750,000

shares of the Company’s common stock, which

were valued at $ 705,000

on the date of the transaction, and payoff of

the seller’s remaining mortgage of approximately $ 1.6

In connection with this purchase, the

Company entered into another mortgage agreement with DSB in the amount of $ 2.7

million that matures

in July 2041 and initially bears interest at a

rate of 6.25 %

per annum which is adjusted each year based on a certain interest rate index plus a margin.

As part of this transaction, the seller was

provided with a 30.0 %

ownership interest in Mari Holdings Metropolis LLC

(“Metro”), the Company’s subsidiary that owns the property and related mortgage obligation, reducing the Company’s

ownership interest in Metro to 70 .0%.

At December 31, 2021, the outstanding principal

balance on this mortgage approximated $ 2,658,000 ,

of which approximately $ 73,000

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

Pursuant to the amended mortgage agreement, the mortgage shall be repaid in monthly installments of principal and interest

of approximately $ 6,000 which began in August 2021 and continues through its maturity in June 2022, at which time all remaining principal,

interest and fees shall be due.

11 – PROMISSORY NOTES

Notes Issued by the Company and its MariMed Hemp Inc.

February 2020, the Company and MariMed Hemp Inc., its wholly-owned subsidiary (“MMH”), amended a secured $ 10.0

million promissory note (the $10.0M Note”)

issued to an unaffiliated party (the “Noteholder”) in 2019.

The $10.0M Note, which provided for the repayment of principal

plus a payment of $ 1.5

million (the “$1.5M Payment”), was

amended whereby the Company and MMH issued a restated promissory note maturing

in June 2020 in the principal amount of $ 11.5

million (the “$11.5M Note”), comprised

of the principal amount of the $10.0M Note and the $1.5M Payment.

The $11.5M Note bore interest at a rate of 15 .0%

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

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 approximated the price of the Company’s common

stock on the agreement date), and (ii) the Company and MMH issued a second amended and restated promissory note in the principal amount

of approximately $ 8.8

million, comprised of the outstanding principal

and unpaid interest balances of the $11.5M Note, plus an extension fee of approximately $ 330,000 ,

bearing interest at a rate of 15 .0%

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

in June 2022 (the “$8.8M Note”).

addition, the Company issued three -year

warrants to the Noteholder to purchase up to 750,000

shares of common stock at an exercise price of

The fair value of these warrants on

the issuance date of approximately $ 66,000

was recorded as a discount to the $8.8M Note,

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

Company made a required principal payment of $ 4,000,000 in July 2020 with a portion of proceeds of the Refinanced Mortgage previously

discussed in Note 10 – Mortgages , and additional principal payments of $ 600,000 in the aggregate in calendar 2020.

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

Noteholder had 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 per share, 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.

In March 2021, the Noteholder converted

$ 1,000,000 of principal and approximately $ 10,000 of accrued interest into 3,365,972 shares of the Company’s common stock, reducing

the carrying value of the $8.8M Note to approximately $ 3.2 million.

Company entered into a third amendment agreement with the Noteholder in April 2021 whereby the Company and MMH issued a third amended

and restated promissory note in the principal amount of approximately $ 3.2 million (the “$3.2M Note”) which bears interest

at a rate of 0.12 % per annum and matures in April 2023 .

The Noteholder has the option to convert, subject to certain conversion limitations,

all or a portion of the $3.2M Note into shares of the Company’s common stock at a conversion price of $ 0.35 per share, such conversion

price subject to adjustment in the event of certain transactions by the Company.

The third amended agreement resulted in a decrease in

the fair value of the embedded conversion feature of the $3.2M Note and therefore no accounting was required for such conversion feature.

or after the one-year anniversary of the $3.2M Note, upon twenty days prior written notice to the Noteholder, the Company can prepay

all of the outstanding principal and unpaid interest of the $3.2M Note, along with a prepayment premium equal to 10.0 %

of the principal amount being prepaid.

The Noteholder

shall remain entitled to convert the $3.2M Note during such notice period.

On or after the one-year anniversary of the $3.2M Note, the

Noteholder has the right to require the redemption in cash of up to $ 125,000

of principal and unpaid interest thereon per

calendar month.

2021, the Noteholder converted approximately $ 2.8 million of principal on the $3.2M Note into 8,033,296 shares of the Company’s

common stock, reducing the carrying value of the $3.2M Note to approximately $ 400,000 at December 31, 2021.

All note conversions were

effected in accordance with the terms of their respective note agreements, and therefore the Company was not required to record a gain

or loss on such conversions.

Notes Issued Pursuant to an Exchange Agreement

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.

At December 31, 2020, the principal and accrued

interest balance of the $4.4M Notes approximated $ 4.6 million.

In March 2021, utilizing a portion of the proceeds from the Hadron transaction

discussed in Note 13 – Mezzanine Equity, the $4.4M Notes were fully paid down, along with accrued interest through the repayment

Notes Issued for Operating Liquidity

April 2020, the Company entered into a note extension agreement (the “Initial Extension Agreement”) with the unaffiliated

holder (the “Holding Party”) of a secured $ 6.0 million promissory note (the “$6.0M Note”) issued by the Company

The $6.0M Note bore interest at a rate of 13.0 % per annum and required the payment of a service fee of $ 900,000 (the “Service

to the Initial Extension Agreement, (i) the $6.0M Note’s due date was extended to September 2020, and the $6.0M Note was modified

to include unpaid accrued interest of $ 845,000 through the modification date and interest at a rate of 10.0 % 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 12.0 % per annum.

The Company satisfied the $900k 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, in payment of the other half of the principal

and accrued interest.

to the issuance of the $6.0M Note, the Company raised $ 3.0

million from the issuance of a secured promissory note to the Holding Party in 2018, bearing interest at a rate of 10.0 %

per annum (the “$3.0M Note”).

maturity date of the $3.0M Note, initially in March 2020, was extended for an additional six months in accordance with its terms, with

the interest rate increasing to 12.0 %

annum during the extension period.

Pursuant to the Initial Extension Agreement, the maturity date of the $3.0M Note was extended to December

Company and the Holding Party entered into a second note extension agreement in October 2020 (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 Note;

(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 $3.0M Note”, and together with the $5.8M

Note, the “Amended Notes”).

The Amended Notes bore interest at a rate of 12.0 % per annum with initial maturity dates in September

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.

Company made a required principal payment of $ 400,000 on the $5.8M Note in February 2021.

In March 2021, utilizing a portion of the proceeds

from the Hadron transaction discussed in Note 13 – Mezzanine Equity, the Amended Notes were fully paid down, along with

accrued interest through the repayment date.

In addition, the remaining discount of approximately $ 450,000 on this note was fully amortized

on the payment date.

Notes Issued to Purchase Commercial Vehicles

August 2020, the Company entered into a note agreement with First Citizens’ Federal Credit Union for the purchase of a commercial

The note bears interest at a rate of 5.74 %

per annum and matures

in July 2026 .

At December 31, 2021 and

2020, the balance of this note approximated $ 26,000

and $ 30,000 ,

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:

respectively, of which approximately $ 5,000

was current in both periods.

June 2021, the Company entered into a note agreement with Ally Financial for the purchase of a second commercial vehicle.

The note bears

interest at the rate of 10.0 %

per annum and matures in May 2027.

31, 2021, the balance of this note approximated $ 33,000 ,

of which approximately $ 5,000

Note Issued by MMH

September 2020, the Company paid down $ 500,000 of principal on a $ 1,000,000 promissory note (the “$1.0M Note”) issued by

MMH in 2019 to an unaffiliated party.

At December 31, 2020, $ 500,000 of principal on the $1.0M Note remained outstanding.

March 2021, the Company paid interest on the $1.0M Note of $ 200,000 , and utilizing a portion of the proceeds from the Hadron transaction

discussed in Note 12 – Mezzanine Equity, paid off remaining principal of $ 500,000 .

December 31, 2021, the Company was carrying an accrued interest balance of approximately $ 125,000 to cover interest due on the $1.0M

Note as of such date.

Promissory Note Issuances

addition to the above transactions, at the start of 2020, the Company was carrying $ 3,190,000 of principal on promissory notes bearing

interest at rates ranging from 6.5 % to 18.0 % per annum (the “Existing Notes”).

During 2020, the Company (i) raised approximately

$ 2,147,000 from the issuance of new promissory notes bearing interest at interest rates of 12.0 % and 15.0 % per annum (the “New

2020 Notes”), (ii) repaid $ 2,100,000 of the Existing Notes, (iii) retired $ 500,000 of the Existing Notes 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 $ 0.32 per

share, and (iv) repaid $ 700,000 of the New 2020 Notes.

Accordingly, the remaining balance on the Existing Notes and New 2020 Notes approximated

$ 2,037,000 in the aggregate at December 31, 2020.

This balance along with accrued interest through the repayment date of approximately

$ 200,000 were fully paid down in March 2021 utilizing a portion of the proceeds from the Hadron transaction discussed in Note 13 –

Mezzanine Equity .

of December 31, 2021, the aggregate scheduled maturities of the Company’s total debt outstanding were:

OF MATURITY TABLES

12 – DEBENTURES PAYABLE

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 unaffiliated investor pursuant to an amended securities purchase agreement.

following table as of December 31, 2021 summarizes the purchase dates and selected terms of each debenture agreement that comprised 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, 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 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.

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;

Initial Principal

of December 31, 2021, the holder of the $21M Debentures (the “Holder”) had converted all of the $21M Debentures into the

Company’s common stock at conversion prices equal to 80.0 %

of a calculated average of the daily volume-weighted

price preceding the date of conversion.

Specifically, over the life of the $21M Debentures, the Holder converted, in several transactions,

an aggregate of $ 21.0

million of principal and approximately $ 836,000

of accrued interest into 92,704,035

shares of common stock at conversion prices ranging

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 conversion prices ranging

per share, and (ii) during 2021, an aggregate

million of principal and approximately $ 56,000

of accrued interest was converted into 4,610,645

shares of common stock at a conversion price

of the aforementioned conversions were effected in accordance with the terms of the debenture agreements, and therefore the Company was

not required to record a gain or loss on such conversions.

The conversions were limited in any given month to certain agreed-upon amounts

based on the conversion price, and the Holder was also limited from beneficially owning more than 4.99 % of the Company’s outstanding

common stock.

conjunction with the issuance of the $21M Debentures, the Company issued the Holder three -year warrants to purchase an aggregate of 1,354,675

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 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, and amortized to interest expense over the respective term of the individual debentures comprising the

$21M Debentures.

2020, amortization of the beneficial conversion features, after adjustment for the aforementioned conversions, approximated $ 3.2 million;

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.

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.

amortization of original issue discounts approximated $ 321,000 ;

expense approximated $ 224,000 .

At 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.

Accordingly, at December 31, 2020, the carrying value of the $21M Debentures

approximated $ 5.8 million, all of which was long term.

approximated $ 1,032,000 , all of which was current.

2021, amortization of the beneficial conversion features, after adjustment for the aforementioned conversions, approximated $ 177,000 ;

amortization of the warrant discounts approximated $ 39,000 ;

amortization of original issue discounts approximated $ 52,000 ;

expense approximated $ 1,000 .

13 – MEZZANINE EQUITY

B Convertible Preferred Stock

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

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 – Promissory Notes .

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

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 share.

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.

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.

C Convertible Preferred Stock

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.

Each 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.

The fair value of the warrants

of approximately $ 9.5 million on the issuance date was allocated to the proceeds and recorded as additional paid-in capital.

incurred costs of approximately $ 387,000 relative to the issuance of the aforementioned shares to Hadron which was recorded as a reduction

to additional paid-in capital in March 2021.

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

the $ 23.0 million of proceeds received by the Company in March 2021, approximately (i) $ 7.8 million was designated to fund construction

and upgrades of certain of the Company’s owned and managed facilities, which was expended in 2021, and (ii) $ 15.2 million was used

to pay down debt and obligations, comprised of principal and interest on the $4.4M Notes, the $1.0M Note, the New $3.0M Note, the $5.8M

Note, the Existing Notes, the New 2020 Notes (all referred to in Note 11 – Promissory Notes ), and a portion of the Due

To Related Parties balance discussed in Note 19 – Related Party Transactions .

portion of the balance of the facility is available to fund the Kind acquisition previously discussed in Note 3 – Acquisitions ,

provided such acquisition is 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 50.0 %

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.

14 – STOCKHOLDERS’ EQUITY

February 2020, the Company filed a certificate of elimination to return all shares of the Series A convertible preferred stock

to the status of authorized and unissued shares of undesignated preferred stock.

Concurrent with this filing, the Company also

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 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.

the Company’s 2021 annual meeting of stockholders in September 2021 (the “Annual Meeting”), stockholders approved an

amendment to the Company’s certificate of incorporation increasing the number of authorized shares of common stock from 500,000,000

to 700,000,000 .

at the Annual Meeting, stockholders approved an amendment to the Company’s Amended and Restated 2018 Stock Award and Incentive

Plan (the “Plan”) increasing the aggregate number shares reserved for issuance under the Plan from 40,000,000 to 70,000,000 .

Preferred Stock

February 2020, the Company filed a certificate of elimination to return all shares of formerly designated Series A convertible preferred

stock to the status of authorized and unissued shares of undesignated preferred stock.

February 2020, pursuant to the TIS Exchange Agreement discussed in Note 13 – Mezzanine Equity , 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 .

2021 and 2020, the Company granted 11,374

shares of common stock, respectively, to an employee

for services in lieu of salary.

The fair value of these shares of approximately $ 9,000

in 2021 and $ 21,000

in 2020 was charged to compensation expense.

Of the shares granted in 2020, 11,413

shares, with a fair value of approximately $ 5,000 ,

were yet to be issued at December 31, 2020, and were included in Common Stock Subscribed But Not Issued on the balance sheet at

2021, the Company granted 245,217 shares of restricted common stock to three employees.

The fair value of these restricted shares of

approximately $ 226,000 was charged to compensation expense.

No shares of restricted common stock were issued in 2020.

2021 and 2020, the Company issued 71,691 and 4,400,000 shares of common stock, respectively, to settle obligations of $ 51,000 and approximately

$ 699,000 , respectively.

Based on the price of the Company’s common stock on the settlement dates, the Company incurred non-cash

losses of approximately $ 2,500 in 2021 and $ 45,000 in 2020, which were reflected under Loss On Obligations Settled with Equity on

the statement of operations for each period.

2021, the Company issued (i) 1,125,000 shares of common stock valued at approximately $ 1,016,000 in exchange for consulting services,

and (ii) 109,308 shares valued at approximately $ 92,000 to pay for licensing fees.

No such services or fees were paid with common stock

2021, 79,815 shares

of common stock were returned to the Company from the adjustment of a previously converted debenture.

In 2020, 90,000 shares of common

stock granted to employees and 1,297,447 shares of common stock issued from the exercise of stock options by a related party, were returned

by the holders of such common stock.

In 2021, the Company issued 750,000 shares of common stock as part

of the purchase price for land and buildings located in Metropolis, IL.

No stock was issued to purchased fixed assets in 2020.

2021 and 2020, the Company issued 11,413 and 3,236,857 shares of common stock, respectively, associated with previously issued subscriptions

on common stock with a value of approximately $ 5,000 and $ 1,168,000 , respectively.

As previously disclosed

in Note 3 – Acquisitions, the Company issued 100,000 shares of common stock as part of the purchase price to acquire the remaining

30.0 % ownership interest of MediTaurus.

previously disclosed in Note 11 – Promissory Notes , the Company issued (i) 1,900,000 shares of common stock in 2020 to extinguish

$ 352,000 of principal on the $11.5M Note, (ii) 2,525,596 shares common stock in 2020 upon the conversion of $ 460,050 of principal and

interest on the $900k Note, (iii) 1,739,759 shares of common stock in 2020 to retire $ 500,000 of the Existing Notes, (iv) 3,365,972 shares

of common stock in 2021 upon the conversion of approximately $ 1,010,000 of principal and interest on the $8.8M Note, (v) 8,033,296 shares

of common stock in 2021 upon the conversion of approximately $ 2,812,000 of principal on the $3.2M Note,

previously disclosed in Note 12 – Debentures Payable , the holder of the $21M Debentures converted (i) approximately $ 10.1

million of principal and interest in 2020 into 77,766,559 shares of common stock, and (ii) approximately $ 1.4 million of principal and

interest in 2021 into 4,610,645 shares of common stock.

further disclosed in Note 15 – Options , in 2021 and 2020, 277,373 and 550,000 shares of common stock, respectively, were

issued in connection with the exercise of stock options.

further disclosed in Note 16 – Warrants , warrants to purchase 980,062 shares of common stock were exercised in 2021.

No warrants were exercised in 2020.

warrants were exercised in 2020.

Stock Issuance Obligations

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.

December 31, 2020, the Company was obligated to issue 11,413 shares of common stock, valued at approximately $ 5,000 , in connection with

stock grants to an 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

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

In September 2019, the

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

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

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

stock, dividend equivalents, performance shares, cash-based performance awards, and other stock-based awards.

Such awards can

be granted to employees, non-employee directors and other persons who provide substantial services to the Company and its affiliates.

Nothing in the Incentive Plan precludes the payment of other compensation to officers and employees, including bonuses based upon

performance, outside of the Incentive Plan.

aggregate of 40,000,000 shares are reserved for delivery to participants, and may be used for any type of award under the Incentive

Shares actually delivered in connection with an award will be counted against such number of reserved shares.

remain available for new awards if an award under the Incentive Plan expires, is forfeited, canceled, or otherwise terminated

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.

board of directors may amend, suspend, discontinue, or terminate the Incentive Plan or the authority to grant awards thereunder

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

after stockholder approval of the Incentive Plan, and the Incentive Plan will terminate when no shares remain available and the

Company has no further obligation with respect to any outstanding award.

The Company had no such obligation at December 31, 2021.

15 – STOCK OPTIONS

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,

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.

2021, the Company granted three - and five -year options to purchase up to 30,873,921 shares of common stock at exercise prices ranging

from $ 0.30 to $ 1.00 per share.

The fair value of these options of approximately $ 18,690,000 in the aggregate is being amortized to compensation

expense over the respective option vesting periods, of which approximately $ 12,281,000 was amortized in 2021.

Additionally, compensation

expense in 2021 for options issued in previous years, and continuing to be amortized over their respective vesting periods, approximated

2020, five -year options to purchase up to 4,494,500 shares of common stock were issued to employees at exercise prices ranging from $ 0.14

to $ 0.30 per share.

The fair value of these options of approximately $ 501,000 in the aggregate is being amortized to compensation expense

over their respective vesting periods, of which approximately $ 282,000 was amortized in 2020.

Additionally, compensation expense in 2020

for options issued in previous years, and continuing to be amortized over their respective vesting periods, approximated $ 801,000 .

2021, options to purchase 496,000 shares of common stock were exercised at prices ranging from $ 0.14 to $ 0.63 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, 325,000 were exercised on a cashless basis with the exercise prices paid via the surrender of 218,627 shares of common stock.

2019, options to purchase 3,667,499 shares of common stock were exercised at prices ranging from $ 0.8 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.

2021 and 2020, options to purchase 362,000 and 200,000 shares of common stock, respectively, were forfeited or expired, resulting in

an aggregate reduction of amortized compensation expense of approximately $ 42,000 in 2021 and $ 113,000 in 2020.

options outstanding and exercisable as of December 31, 2021 were:

SCHEDULE OF STOCK OPTIONS OUTSTANDING AND EXERCISABLE

Shares Under Option

Exercise Price

Shares Under Option

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.

2021, the Company issued warrants to Hadron to purchase up to 15,540,540 shares of common stock at an exercise price of $ 1.087 per share,

expiring four years from issuance, as part of the Hadron transaction previously discussed in Note 13 – Mezzanine Equity .

The fair value of these warrants on the issuance date of approximately $ 9.5 million was allocated to the warrant of the $ 23.0 million

of proceeds from the Hadron transaction and recorded in additional paid in capital.

Also during 2021, the Company issued warrants to

purchase up to 2,100,000 shares of common stock at exercise prices ranging from $ 0.50 to $ 0.83 per share, expiring three and five years

from issuance.

The fair value of these warrants on their issuance dates approximated $ 1,487,000 in the aggregate which was charged to

compensation expense.

2020, in conjunction with the $21M Debentures discussed 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.

Also during 2020, as discussed in Note 11–

Promissory Notes, (i) in conjunction with the $8.8M Note, 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.

fair value of these warrants on their issuance dates approximated $ 639,000 in the aggregate, of which approximately $ 10,000 was amortized

to interest expense in the period and the remainder to be amortized over the terms of the respective debt instruments.

2021, warrants to purchase 1,237,500 shares of common stock were exercised at exercise prices ranging from $ 0.11 to $ 0.55 per share.

resulting in aggregate proceeds to the Company of approximately $ 612,000 .

No warrants were exercised during 2020.

Of these exercised warrants, 437,500 were exercised on a cashless basis with the exercise prices paid via the surrender of 257,438 shares

of common stock.

No warrants were exercised in 2020.

2021, warrants to purchase 6,968,637 shares of common stock with exercise prices ranging from $ 0.90 to $ 5.50 per share were forfeited

No warrants were forfeited in 2019.

During 2020, warrants to purchase 817,939 shares of common stock with exercise prices ranging from $ 0.40 to $ 2.25 per share

were forfeited or expired.

December 31, 2021 and 2020, warrants to purchase up to 26,351,571 and 16,917,168 shares of common stock, respectively, were outstanding

at exercise prices ranging from $ 0.15 to $ 5.50 per share in both years.

with exercise prices ranging from $ 0.11 to $ 5.50 per share across both periods.

17 – REVENUES

1 unchanged sentence

SCHEDULE OF REVENUES COMPRISED OF MAJOR CATEGORIES

Product sales

Product sales from related party

Product sales - retail

Product sales - wholesale

Real estate rentals

Management fees

Supply procurement

Licensing fees

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.

$ 121,464,158

the years ended December 31, 2021 and 2020, revenues from two clients represented 11 %

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

Company maintains two types of reserves to address uncertain collections of amounts due—an allowance against trade accounts receivable

(the “AR Allowance”), and a reserve against cash advanced by the Company to its cannabis-licensed clients for working capital

purposes (the WC Reserve”).

2021, the Company increased (i) the AR Allowance by $ 1,400,000 ,

as a general reserves against aging receivable balances, and (ii) the WC Reserve by approximately $ 462,000 ,

to reserve the working capital balance of Harvest.

During 2020, the Company increased (i) the AR Allowance by $ 500,000 ,

which was comprised of increases to the specific allowances against Kind and Harvest receivables of approximately $ 790,000

and $ 76,000 ,

respectively, offset by a reduction to the general allowance of approximately $ 366,000 ,

and (ii) the WC Reserve by approximately $ 482,000 ,

to reserve the working capital balance of Harvest.

The increases to the AR Allowance and WC Reserve were charged to Bad Debts

on the statement of operations for the year ended December 31, 2020

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:

December 31, 2021 and 2020, the Company’s cumulative federal net operating losses were approximately $ 24.0

million and $ 10.6 million,

respectively.

At December 31, 2021, the Company recorded a provision for income taxes of approximately $ 16.2

million, due in part to the aforementioned impact of Section 280E of the Internal Revenue Code, which prohibits the deduction

certain ordinary business expenses.

At December 31, 2020, no income tax provision was recorded.

reconciliations between the Company’s effective tax rates and the statutory tax rate for the years ended December 31, 2021 and

2020 were as follows:

SCHEDULE OF RECONCILIATION OF INCOME TAXES

1 unchanged sentence

State taxes net of federal benefit

Section 280E adjustment

Stock based compensation

Valuation allowance

approximate income tax effect of the Company’s loss carryforwards and temporary differences at December 31,

2020 and 2019 were as follows:

approximate income tax effect of the Company’s loss carryforwards and temporary differences at December 31, 2021 and 2020 were

SCHEDULE OF DEFERRED TAX ASSET

Deferred tax asset:

Net operating loss carryforwards

Allowance for doubtful accounts

Net operating

loss carryforwards

Allowance for doubtful

Stock compensation

1 unchanged sentence

Goodwill writeoffs

Change in fair value of investments

Change in fair value of

Lease payments

Deferred tax liabilities:

( 8,375,569 )

( 3,941,315 )

estate revenue

Real 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, 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.

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 .

attributes are subject to an annual limitation from equity shifts, which constitute a change of ownership as defined under IRC Section

The Company recorded a valuation allowance against its net deferred tax assets at December 31, 2021 and 2020 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.

Company files income tax returns in the U.S.

federal tax jurisdiction and various state jurisdictions.

The Company is currently

open to examination under the statute of limitations by the Internal Revenue Service and state jurisdictions for the tax years

ended 2017 through 2020.

The Company is currently open

to examination under the statute of limitations by the Internal Revenue Service and state jurisdictions for the tax years ended 2017

through 2020.

20 – RELATED PARTY TRANSACTIONS

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 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

July 1, 2021, the Company entered into employment agreements with its CEO, CFO, and COO, expiring in June 2024, that provide for an annual

base salary of $ 350,000 , $ 325,000 , and $ 300,000 , respectively, and the ability to receive annual bonuses of up to 75 % of the executive’s

annual base salary for each year during the term, based on reaching certain performance goals established by the Company.

to the agreements, the CEO, CFO, and COO were granted (i) on the effective date, options to purchase up to 5,000,000 , 5,000,000 , and

1,250,000 shares, respectively, of the Company’s common stock, at an exercise price of $ 0.88 per share, that vest over one year

and expire in July 2026 , and (ii) in October 2021, options to purchase up to 5,000,000 , 5,000,000 , and 1,250,000 shares, respectively,

of the Company’s common stock, at an exercise price of $ 0.90 per share, that vest over one year and expire in September 2026 .

Additionally,

the agreements (i) provide these officers with additional grants on each anniversary of the effective date of the agreements in the sole

discretion of the Company’s Compensation Committee, and contain covenants not to compete, non-solicitation provisions, and termination

obligations, among other terms and conditions.

July 2021, the Company granted five -year options to purchase up to 100,000 shares of common stock to each of the Company’s three

independent board members at an exercise price of $ 0.88 per share.

December 2021, the CEO and CFO each exercised options to purchase 100,000 shares of common stock on a cashless basis.

The exercise price

of $ 0.63 per share was paid via the surrender by each individual of 73,256 shares of common stock.

Also in this month, an independent

board member allowed to expire options to purchase up to 100,000 of commons stock at an exercise price of $ 0.63 per share.

April 2020, the Company issued options to purchase up to 50,000 shares of common stock to its COO, with an exercise price of $ 0.30 per

share and expiring three years from grant date.

The fair value of these options of approximately $ 6,000 was charged to compensation expense

over the annual vesting period.

No options were issued to related parties in 2021.

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.

Company’s corporate offices are leased from an entity in which the Company’s CFO has an investment interest.

This lease expires

in October 2028 and contains a five-year extension option.

In 2021 and 2020, expenses incurred under this lease approximated $ 156,000

in both years.

Company procures nutrients, lab equipment, cultivation supplies, furniture, and tools from an entity owned by the family of the Company’s

The aggregate purchases from this entity in 2021 and 2020 approximated $ 4.9 million and $ 2.5

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 ,

Company pays royalties on the revenue generated from its Betty’s Eddies product line to an entity owned by the Company’s

COO and its SVP of Sales under a royalty agreement.

This agreement was amended effective January 1, 2021 whereby, among other modifications,

the royalty percentage changed from 2.5% on all sales of Betty’s Eddies products to (i)

3.0% and 10.0% of wholesale sales of existing products within the product line if sold directly by the Company, or licensed by the Company

for sale by third-parties, respectively, and (ii) 0.5% and 1.0% of wholesale sales of future developed products within the product line

if sold directly by the Company, or licensed by the Company for sale by third-parties, respectively.

aggregate royalties due to this entity in 2021 and 2020 approximated $ 266,000 and $ 615,000 ,

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

2021 and 2020, one of the Company’s majority owned subsidiaries paid aggregate distributions of approximately $ 44,000 and $ 30,000 ,

respectively, to the Company’s CEO and CFO, who own minority equity interests in such subsidiary.

In 2021, another of the Company’s

majority owned subsidiaries paid distributions of approximately $ 7,000 to a current employee who owns a minority equity interest in such

2021 and 2020, the Company purchased fixed assets and consulting services of approximately $ 836,000 and $ 938,000 ,

respectively, in the aggregate from two entities owned by two of the Company’s general managers.

2021 and 2020, the Company purchased fixed assets of approximately $ 642,000 and $ 182,000 from an entity owned by an employee.

balance of Due To Related Parties at December 31, 2020 of approximately $ 1.2 million was comprised of amounts owed of approximately

(i) $ 460,000 to the Company’s CEO, (ii) $ 653,000 to entities owned by the Company’s CEO and CFO, and (iii) $ 45,000 to a stockholder

of the Company.

Such amounts owed are not subject to repayment schedules.

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.

All amounts owed were repaid in March 2021.

Company’s mortgages with Bank of New England, DuQuoin State Bank, and South Porte Bank are personally guaranteed by the Company’s

21 – COMMITMENTS AND CONTINGENCIES

Company is the lessee under five operating leases and four finance leases .

Company is the lessee under six operating leases and four finance leases .

These leases contain rent holidays and customary escalations

of lease payments for the type of facilities being leased.

The Company recognizes rent expense on a straight-line basis over the

expected lease term, including cancelable option periods which the Company fully expects to exercise.

Certain leases require the

payment of property taxes, insurance and/or maintenance costs in addition to the rent payments.

The Company recognizes rent expense on a straight-line basis over the expected

lease term, including cancelable option periods which the Company fully expects to exercise.

Certain leases require the 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

contains a five-year option to extend the term.

The Company developed the space into a cannabis dispensary which is subleased

square feet of retail space in a multi-use

building under a five-year

lease that expires in April 2027 that the Company has developed into a cannabis dispensary which is subleased

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.

– 10,000 square feet of an industrial building that the Company has built-out into a cannabis cultivation facility and

plans to rent to its cannabis-licensed client under a sub-lease which will be coterminous with this lease expiring in 2024 .

square foot warehouse, of which the

Company developed 60,000

into a cultivation facility, and is developing the remaining space into processing facility, subleased to its

cannabis-licensed client.

lease expires in March 2030, with an option to extend the term for three additional five-year periods .

square foot premises which the Company developed into a cannabis production facility with offices, and is subleases to its

cannabis-licensed client.

The lease expires

in January 2026 and contains an option to negotiate an extension at the end of the lease term.

Nevada – 10,000 square

feet of an industrial building that the Company has built-out into a cannabis cultivation facility and plans to rent to its cannabis-licensed

client under a sublease which will be coterminous with this lease expiring in 2024 .

Massachusetts – 10,000

– 10,000 square feet of office space which the Company utilizes as its corporate offices under a 10-year lease with

a related party expiring in 2028 , with an option to extend the term for an additional five-year period.

– a 2,700 square foot 2-unit apartment under a lease that expires in July 2020 with an option to renew for a two-year

Company leases machinery and office equipment under finance leases that expire in February 2022 through June 2024 with such terms

being a major part of the economic useful life of the leased property.

square feet of office space which the Company utilizes as its corporate offices under a lease with a related party expiring in 2028 ,

with an option to extend the term for an additional five-year period.

Maryland – a 2,700

square foot two-unit apartment under a lease that expires in July 2022 .

Company leases machinery and office equipment under finance leases that expire in February 2022 through June 2024 with such terms being

a major part of the economic useful life of the leased property.

components of lease expense for the year ended December 31, 2021 were as follows:

5 unchanged sentences

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.

average discount rate used to determine the right-of-use assets and lease liabilities was 7.5 % for all leases.

minimum lease payments as of December 31, 2020 under all non-cancelable leases having an initial or remaining term of more than

one year were:

weighted average remaining lease term for operating leases is 7.4

years, and for the finance leases is 2.0

The weighted average discount rate used

to determine the right-of-use assets and lease liabilities was between 7.5 %

for all leases.

minimum lease payments as of December 31, 2021 under all non-cancelable leases having an initial or remaining term of more than one year

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER ALL NON-CANCELABLE OPERATING LEASES

2 unchanged sentences

( 2,262,546 )

November 2021, the Company entered into lease agreements for six retail properties, each with square footage between 4,000

square feet, in the state of Ohio (each an “Ohio Lease” and collectively the “Ohio Leases”).

Each Ohio Lease

has an initial lease period of eleven months, with a minimum rent of $ 31.00

per square foot which increases 3.0% annually.

Should the Company be awarded one or more cannabis

licenses by the state of Ohio prior to the end of the initial lease period, it can extend the term of one or more of the Ohio Leases

to ten years (with two additional five-year options to extend) upon the payment of $ 50,000 for each extended Ohio Lease, and develop

the premises of such extended lease(s) into a cannabis dispensary.

As of December 31, 2021, the lease terms of the Ohio Leases were all

less than one year, and accordingly the Company was not required to record a right-of-use asset and corresponding lease liability on

its balance sheet.

The future lease payments of the Ohio Leases are excluded from the table of future minimum lease payments shown above.

Employment Agreement

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.

employment agreement which commenced in 2012 with Thomas Kidrin, the former CEO of the Company, was terminated by the Company in 2017.

Since the termination date, the Company had maintained an accrual of approximately $ 1,043,000 for any amounts that may be owed under

this agreement.

July 2019, Mr.

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.

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.

Kidrin, also a former director of the Company, filed a complaint in the Massachusetts Superior Court, which alleged the

Company failed to pay all wages owed to him and breached the employment agreement, and requested multiple damages, attorney fees, costs,

and interest.

The Company moved to dismiss certain counts of the complaint and asserted counterclaims against Mr.

Kidrin alleging breach

of contract, breach of fiduciary duty, money had and received, and unjust enrichment.

the Company’s motion to dismiss was pending, the parties entered into a settlement agreement and general release in August 2021

whereby, among other conditions, (i) Mr.

Kidrin’s complaint was dismissed with prejudice, (ii) the Company issued to Mr.

five-year warrants to purchase up to 1,000,000 shares of the Company’s common stock at an exercise price of $ 0.50 per share, (iii)

the Company irrevocably transferred intangible assets relating to the online virtual worlds business the Company had conducted in early

2014, prior to its pivot into the legal cannabis industry (such assets had zero carrying value on the Company’s balance sheet),

and (iv) each party released and discharged the other from all claims, losses, and liabilities.

August 2021, the fair value of the warrants of approximately $ 776,000 was charged to compensation expense, and the Company reversed its

accrual of approximately $ 1,043,000

previously disclosed in Note 3 – Acquisitions , the members of Kind had sought to renege on the parties’

original agreement to a partnership/joint venture made in 2016 and subsequent MOU.

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.

November 2019, Kind commenced an action by filing a complaint against the Company 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

C-21-CV-19-000670) (the “Complaint”).

The Complaint, as amended,

alleges breach of contract, breach of fiduciary duty, unjust enrichment, intentional misrepresentation, rescission, civil conspiracy,

and seeking an accounting and declaratory judgment and damages in excess of $ 75,000

(the Court has subsequently dismissed

Kind’s claims for declaratory judgment on the lease, rescission of the lease, and civil conspiracy).

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”).

The 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.

the time the Complaint and Counterclaims were filed, both parties, the Company (including its subsidiaries Mari-MD 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.”

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 the Lease.

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

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 management 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.

noted an appeal of the Order to the Maryland Court of Special Appeals, which the Court denied in December 2021, leaving the preliminary

injunction order in effect.

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 partnership/joint venture agreement claims are meritorious.

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.

March 2021, the Kind parties filed motions to modify the preliminary injunction order or, alternatively, for direction from the Court

based on Kind’s claim to have terminated the MSA.

In September 2021, the court denied the motion to modify the preliminary injunction

and granted, in part, the motion for direction, but only with respect to Kind’s request to pay litigation costs.

The preliminary

injunction remains in full effect, and the Company filed a petition for civil contempt against the Kind parties for interfering with

the Company’s management of Kind.

The contempt petition is currently pending.

December 31, 2021, the parties to the foregoing Maryland litigation entered into a global Confidential Settlement and Release Agreement,

along with the parties to the DiPietro lawsuit (described below).

Also on such date, as previously discussed in Note 3 -- Acquisitions

in this report, the Company entered into (i) a membership interest purchase agreement with the members of Kind to acquire 100 % of

the equity ownership of Kind, and (ii) a membership interest purchase agreement with one of the members of Kind to acquire such member’s

entire equity ownership interest Mari-MD and Mia.

January 4, 2022, the Maryland court entered an order staying the litigation and rescheduling the jury trial to October 24, 2022, to November

4, 2022, in the event the transactions contemplated by the Confidential Settlement and Release Agreement are not consummated.

simultaneous with the closing of the transactions contemplated by the Confidential Settlement and Release Agreement , the foregoing Maryland

litigation will be dismissed with prejudice, along with the DiPietro lawsuit.

the event the transactions contemplated by the Confidential Settlement and Release Agreement are not consummated, the Company intends

to aggressively prosecute and defend the action.

August 2020, Jennifer DiPietro, directly and derivatively on behalf of Mari-MD and Mia, commenced a suit against the Company’s

CEO, CFO, and wholly-owned subsidiary MariMed Advisors Inc.

(“MMA”), in Suffolk Superior Court, Massachusetts.

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,

and also 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 to

her as a member.

Company has answered the complaint and MMA filed 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, and for tortious interference with Mari-MD’s lease and MMA’s

management services agreement with Kind.

December 31, 2021, the parties to the foregoing Massachusetts litigation entered into a global Confidential Settlement and Release Agreement,

along with the parties to the Maryland lawsuit described above.

Because the Massachusetts litigation involves derivative claims, the

Massachusetts Superior Court must approve the parties’ proposed dismissal of those claims.

The parties to the Massachusetts litigation

have filed a joint motion seeking to dismiss the derivative claims.

Simultaneous with the closing of the transactions contemplated by

the Confidential Settlement and Release Agreement, all direct claims in the foregoing Massachusetts litigation will be dismissed with

prejudice, along with the Maryland lawsuit.

the event the transactions contemplated by the Confidential Settlement and Release Agreement are not consummated, the Company believes

that the allegations of the complaint in the foregoing Massachusetts litigation 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 Maryland lawsuit.

2019, the Company’s MMH subsidiary sold and delivered hemp seed inventory to GenCanna Global Inc., a Kentucky-based cultivator,

producer, and distributor of hemp (“GenCanna”).

At the time of sale, the Company owned a 33.5 % ownership interest in GenCanna.

The Company recorded a related party receivable of approximately $ 29.0 million from the sale, which was fully reserved on December 31,

February 2020, GenCanna USA, GenCanna’s wholly-owned operating subsidiary, under pressure from certain of its creditors including

MGG Investment Group LP, GenCanna’s senior lender (“MGG”), agreed to convert a previously-filed involuntary bankruptcy

proceeding with the U.S.

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

(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.

In January 2022, the

Company, at the request of the Liquidating Plan administrator for the OGGUSA Debtors, executed a written release of claims, if any, of

the Company against Huron Consulting Group (“Huron”), a financial consulting and management company retained by the senior

lender of the OGGUSA Debtors to perform loan management services for the lender and OGGUSA Debtors prior to and during their Chapter

11 bankruptcy cases.

Such release was executed in connection with a comprehensive settlement agreement between the OGGUSA Debtors and

In consideration for the Company’s execution of the release, Huron paid an additional $ 40,000 to the bankruptcy estates

of the OGGUSA Debtors to be included in the funds to be distributed to creditors, including the Company.

of the date of this filing, there is still insufficient information as to what portion, if any, 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

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 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.

January 2022, the Company entered into a stock purchase agreement to acquire 100 %

the ownership interests of Green Growth Group Inc., an entity that has been awarded a craft grow cannabis license issued by the Illinois

Department of Agriculture (“IDA”) for cultivation, production, and transporting of cannabis and cannabis-infused products

The purchase price of $ 3,400,000

be comprised of $ 1,900,000

cash and shares of the Company’s common stock valued at $ 1,500,000 .

The acquisition is conditioned upon the approval by the IDA, among other closing conditions, which is expected to occur by July 2022.

Property Purchase

In January 2022, the

Company entered into an agreement to purchase a 30-acre parcel of land located in Mt.

Vernon, IL containing a 33,000 square

foot manufacturing facility and a 13,000 square

foot storage warehouse, in exchange for $ 1,495,000 in

Upon execution of the agreement, the Company provided a deposit of $ 100,000 to

The transaction is expected to close in the second quarter of 2022, after the Company has performed a complete

inspection and feasibility review.

If such review determines that the premises will not satisfy the Company’s requirements,

the Company shall have the right to terminate the agreement with no other obligation other than the loss of the deposit.

Return on Investment

In February 2022, the Company received 121,968

shares of common stock of WM Technology, Inc.

MAPS), a technology and software infrastructure provider to the cannabis industry.

The shares were received for no consideration, and represent the Company’s pro rata share of additional consideration received

by MRSVP pursuant to the asset purchase agreement previously discussed in Note 4 – Investments .

Note Conversion

February 2022, the noteholder of the $3.2M Note converted $ 400,000 of

principal into 1,142,858 shares

of the Company’s common stock.

Such conversion was effected in accordance with the terms of the note agreement, and therefore

the Company was not required to record a gain or loss upon conversion.

Upon this conversion, the $3.2M Note no longer had an

outstanding balance and was fully retired.

February 2022, the Company was notified that it was awarded a cannabis dispensary license from the state of Ohio, and is awaiting the final verification process to be completed by the state.

to December 31, 2021, (i) options to purchase 10,000 shares of common stock were exercised at an exercise price of $ 0.30

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