What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-03-03 compared with 2022-03-16 · 937 added, 1654 removed, 175 unchanged (94% of the section changed)

FINANCIAL STATEMENTS.

of Independent Registered Public Accounting Firm (PCAOB ID No.

Balance Sheets

Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets

Consolidated Statements of Operations

2 unchanged sentences

Notes To Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and

of MariMed Inc.

on the Consolidated Financial Statements

have audited the accompanying consolidated balance sheets of MariMed Inc.

(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 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 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.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of MariMed Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of MariMed Inc.

(the Company) as of December 31, 2022 and 2021, 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, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These 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 PCAOB.

We 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 or fraud.

The Company 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.

Audit Matters

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

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

(1) relate to accounts or disclosures that are material to the financial

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

The communication of critical audit matters

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

matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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

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

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

management’s evaluation of principal versus agent.

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

to the relevant agreements.

discussed in Notes 2 & 7, the Company allocates a certain percentage of overhead cost to its manufactured inventory.

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

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

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

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.

Balance Sheets

Our 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.

Critical Audit Matters

The 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.

As discussed in the notes to the financial statements, the Company allocates a certain percentage of overhead cost to its manufactured inventory.

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

To 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.

/s/ M&K CPAS, PLLC

We have served as the Company’s auditor since 2018.

March XX , 2023

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

Current assets:

Cash and cash equivalents $ 9,737 $ 29,683

Accounts receivable, net

Accounts receivable, net of allowances of $ 4,603 and $ 41,401 at December 31, 2022 and 2021, respectively

Deferred rents receivable 704 1,678

Note receivable, current portion 2,637 127

Inventory 19,477 9,768

Investments, current 123 251

Due from related parties 29 —

Other current assets 7,282 1,440

1 unchanged sentence

Property and equipment, net 71,641 62,150

Intangibles, net

Note receivable, less current portion

Right-of-use assets under operating leases

Right-of-use assets under finance leases

$ 123,204,901

Intangible assets, net 14,201 162

Goodwill 8,079 2,068

Note receivable, net of current 7,467 8,987

Operating lease right-of-use assets 4,931 5,081

Finance right-of-use assets 713 46

Other assets 1,024 98

Total assets $ 152,202 $ 123,205

Liabilities, mezzanine equity and stockholders’ equity

Current liabilities:

Mortgages and notes payable, current portion $ 3,774 $ 1,410

Accounts payable 6,626 5,099

Accrued expenses

Accrued expenses and other 3,091 3,149

Income taxes payable 11,489 16,467

Sales and excise taxes payable

Debentures payable

Notes payable, current portion

Mortgages payable, current portion

Operating lease liabilities, current portion 1,273 1,071

Finance lease liabilities, current portion 237 27

Due to related parties

Other current liabilities

Total current liabilities 26,490 27,223

Notes payable, less current portion

Mortgages payable, less current portion

Operating lease liabilities, less current portion

Finance lease liabilities, less current portion

Mortgages and notes payable, net of current 25,943 17,262

Operating lease liabilities, net of current 4,173 4,574

Finance lease liabilities, net of current 461 22

Other liabilities 100 100

3 unchanged sentences

4,908,333 shares authorized, issued and outstanding at December 31, 2022 and 2021

14,725 14,725

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

12,432,432 shares authorized;

6,216,216 shares issued and outstanding at December 31, 2022 and 2021

23,000 23,000

Total mezzanine equity 37,725 37,725

1 unchanged sentence

Undesignated preferred stock, $ 0.001 par value;

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

32,659,235 shares authorized;

zero shares issued and outstanding at December 31, 2022 and 2021

Common stock, $ 0.001 par value;

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

700,000,000 shares authorized;

341,474,728 and 334,030,348 shares issued and outstanding at December 31, 2022 and 2021, respectively

Common stock subscribed but not issued;

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

70,000 and zero shares at December 31, 2022 and 2021, respectively

Additional paid-in capital 142,365 134,920

Accumulated deficit ( 83,924 ) ( 97,392 )

( 97,392,017 )

( 104,616,538 )

Noncontrolling interests ( 1,511 ) ( 1,563 )

( 1,563,382 )

Total stockholders’ equity 57,310 36,299

Total liabilities, mezzanine equity, and stockholders’ equity $ 152,202 $ 123,205

$ 123,204,901

accompanying notes to consolidated financial statements.

Statements of Operations

See accompanying notes to the consolidated financial statements.

Consolidated Statements of Operations

(in thousands, except per share amounts)

Year Ended December 31,

$ 121,464,158

Cost of revenues

Revenue $ 134,010 $ 121,464

Cost of revenue 70,053 55,201

Gross profit 63,957 66,263

Operating expenses:

Personnel 14,404 8,352

Marketing and promotion 3,736 1,625

General and administrative 20,735 27,561

Acquisition-related and other 961 —

Bad debt 3,752 1,862

Total operating expenses 43,588 39,400

Operating income

Non-operating income (expenses):

Income from operations 20,369 26,863

Interest and other (expense) income:

Interest expense ( 1,693 ) ( 2,356 )

( 2,355,904 )

( 9,810,475 )

Interest income 959 109

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 )

Other expense, net ( 127 ) ( 800 )

Total interest and other expense, net ( 861 ) ( 3,047 )

Income before income taxes 19,508 23,816

Provision for income taxes 5,894 16,192

Net income 13,614 7,624

Net income attributable to noncontrolling interests 146 399

Net income attributable to MariMed Inc.

Net income per share

Net income attributable to common stockholders $ 13,468 $ 7,225

Net income per share attributable to common stockholders:

Basic $ 0.04 $ 0.02

Diluted $ 0.04 $ 0.02

Weighted average common shares outstanding:

accompanying notes to consolidated financial statements.

Statements of Stockholders’ Equity

But Not Issued

Stockholders’

Balances at December 31, 2019

$ 112,245,730

$ ( 106,760,527 )

$ ( 553,465 )

Basic 337,697 326,467

Diluted 380,289 372,397

See accompanying notes to consolidated financial statements.

Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

Common stock Common stock subscribed but not issued Additional paid-in capital Accumulated deficit Non-controlling interests Total stockholders' equity

Shares Par Value Shares Amount

Balances at January 1, 2021 314,418,812 $ 314 11,413 $ 5 $ 112,975 $ ( 104,617 ) $ ( 577 ) $ 8,100

Issuance of subscribed shares 11,413 ( 11,413 ) ( 5 ) 5 —

( 3,236,857 )

( 1,168,074 )

Stock forfeitures

( 1,297,447 )

Release of shares under stock grants 256,591 235 235

Exercise of stock options 277,373 38 38

Exercise of warrants 980,062 1 92 93

Exercise of warrants, shares

Amortization of option grants 12,494 12,494

Issuance of stand-alone warrants 832 832

Issuance of warrants attached to debt

Issuance of warrants with stock 655 655

Discount on debentures payable

Beneficial conversion feature on debentures payable

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

Conversion of debentures payable to equity 4,610,645 5 1,352 1,357

Conversion of promissory notes to equity 11,399,268 11 3,810 3,821

Common stock issued to settle obligations 71,691 54 54

Purchase of property and equipment with stock

Purchase of property and equipment with stock, shares

Common stock issued to purchase property and equipment 750,000 1 704 705

Fees paid with stock 1,234,308 2 1,106 1,108

Fees paid with stock, shares

Return of stock

Return of stock, shares

Common stock returned to the Company ( 79,815 ) ( 10 ) ( 10 )

Equity issuance costs ( 387 ) ( 387 )

Acquisition of interest in subsidiary 100,000 965 ( 975 ) ( 10 )

Acquisition of 30% interest in subsidiary, shares

Distributions

Distributions to noncontrolling interests ( 410 ) ( 410 )

Net income 7,225 399 7,624

Balances at December 31, 2021 334,030,348 $ 334 — $ — $ 134,920 $ ( 97,392 ) $ ( 1,563 ) $ 36,299

$ 112,974,329

$ ( 104,616,538 )

$ ( 577,139 )

$ 112,974,329

$ ( 104,616,538 )

$ ( 577,139 )

Issuance of subscribed shares

Release of shares under stock grants 402,203 —

Exercise of stock options 55,000 10 10

Exercise of warrants

Amortization of option grants

Issuance of stand-alone warrants

Issuance of warrants with stock

Conversion of debentures payable

Conversion of promissory notes

Cashless exercise of stock options 200,000 —

Cashless exercise of warrants 317,298 —

Forfeiture of restricted shares ( 32,609 ) —

Conversion of promissory notes to common stock 1,142,858 1 399 400

Common stock issued to settle obligations 375,000 — 275 275

Purchase of property and equipment with stock

Fees paid with stock

Return of stock

Equity issuance costs

Acquisition of 30 %

interest in subsidiary

Distributions

Balances at December 31, 2021

$ 134,920,382

$ ( 97,392,017 )

$ ( 1,563,382 )

$ 134,920,382

( 97,392,017 )

Common stock issued under licensing agreement 218,345 121 121

Common stock issued to purchase property and equipment 422,535 1 299 300

Common stock issued as purchase consideration - Green Growth Group Inc.

2,343,750 3 1,497 1,500

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.

Statements of Cash Flows

Common stock issued as purchase consideration - Greenhouse Naturals LLC 2,000,000 2 710 712

Purchase of minority interests in certain of the Company's subsidiaries ( 2,165 ) 165 ( 2,000 )

Distributions to noncontrolling interests ( 259 ) ( 259 )

Stock-based compensation 70,000 39 6,299 6,338

Net income 13,468 146 13,614

Balances at December 31, 2022 341,474,728 $ 341 70,000 $ 39 $ 142,365 $ ( 83,924 ) $ ( 1,511 ) $ 57,310

See accompanying notes to the consolidated financial statements.

Consolidated Statements of Cash Flows

(in thousands)

Year Ended December 31,

Cash flows from operating activities:

Net income attributable to MariMed Inc.

Net income attributable to common stockholders $ 13,468 $ 7,225

Net income attributable to noncontrolling interests 146 399

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

Asset writeoff

Amortization of intangibles

Amortization of stock grants

Amortization of option grants

Amortization of stand-alone warrant issuances

Depreciation and amortization of property and equipment 3,432 2,098

Amortization of intangible assets 1,282 690

Stock-based compensation 6,338 13,440

Amortization of standalone warrant issuances — 776

Amortization of warrants attached to debt — 539

Amortization of warrants issued with stock

Amortization of beneficial conversion feature — 177

1 unchanged sentence

Bad debt expense 3,752 1,862

Fees paid with stock

Obligations settled with common stock 696 1,108

Loss on obligations settled with equity — 3

Equity in earnings of investments

Gain on investment

Change in fair value of investments

Gain on sale of investment — ( 309 )

Loss on changes in fair value of investments 1,082 1,107

Other investment income ( 954 ) —

Changes in operating assets and liabilities:

Accounts receivable ( 6,902 ) ( 4,697 )

( 4,697,063 )

( 5,988,861 )

Deferred rents receivable 132 262

Due from third parties

( 2,937,285 )

( 5,611,142 )

Inventory ( 5,383 ) ( 2,937 )

Other current assets ( 5,219 ) ( 868 )

Other assets ( 126 ) ( 17 )

Accounts payable 1,027 105

Accrued expenses

( 1,433,723 )

Accrued expenses and other ( 482 ) ( 732 )

Income taxes payable ( 4,978 ) 15,572

Sales and excise taxes payable

Operating lease payments

Finance lease interest payments

Other current liabilities

Net cash provided by operating activities 7,311 35,855

Cash flows from investing activities:

Purchase of property and equipment

( 17,873,636 )

( 4,687,795 )

Purchase of cannabis licenses

Return on investment

Purchases of property and equipment ( 12,140 ) ( 17,874 )

Business acquisitions, net of cash acquired ( 12,847 ) —

Advances toward future business acquisitions ( 800 ) —

Acquisition of interest in subsidiary — ( 10 )

Purchases of cannabis licenses ( 601 ) ( 692 )

Proceeds from sale of investment — 1,475

Proceeds from notes receivable 173 477

Due from related parties ( 29 ) —

Net cash used in investing activities ( 26,244 ) ( 16,624 )

( 16,623,838 )

( 4,463,165 )

Cash flows from financing activities:

Issuance of preferred stock

Proceeds from issuance of preferred stock — 23,000

Equity issuance costs — ( 387 )

Issuance of promissory notes

Payments on promissory notes

( 15,806,617 )

( 12,371,149 )

Proceeds from issuance of debentures

Proceeds from issuance of promissory notes — 35

Principal payments of mortgages and promissory notes ( 1,537 ) ( 16,424 )

Proceeds from mortgages 3,000 2,700

Payments on mortgages

( 5,102,862 )

Exercise of stock options

Exercise of warrants

Due to related parties

( 1,157,815 )

Finance lease principal payments

Proceeds from exercise of stock options 10 39

Proceeds from exercise of warrants — 93

Repayment of loans from related parties — ( 1,158 )

Principal payments of finance leases ( 227 ) ( 35 )

Redemption of minority interests ( 2,000 ) —

Distributions ( 259 ) ( 410 )

Net cash provided by financing activities

Net change to cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Net cash (used in) provided by financing activities ( 1,013 ) 7,453

Net (decrease) increase to cash and cash equivalents ( 19,946 ) 26,684

Cash and cash equivalents at beginning of year 29,683 2,999

Cash and cash equivalents at end of year $ 9,737 $ 29,683

Supplemental disclosure of cash flow information:

2 unchanged sentences

Non-cash activities:

receivables converted to notes receivable

Trade receivables converted to notes receivable $ 750 $ 7,844

Purchases of property and equipment with common stock $ 300 $ 705

Conversion of promissory notes $ 400 $ 3,821

Promissory note issued as purchase consideration $ 4,348 $ —

Entry into new operating leases $ 661 $ 466

Entry into new finance leases $ 794 $ —

Conversion of debentures payable $ — $ 1,356

Acquisition of 30 % interest in subsidiary

Purchase of property with stock

Operating lease right-of-use assets and liabilities

Common stock issued as purchase consideration $ 2,212 $ 975

Common stock issued to settle obligations $ 275 $ 51

Return of stock

Common stock issued under licensing agreement $ 121 $ —

Issuance of common stock associated with subscriptions $ — $ 5

Cashless exercise of warrants

Cashless exercise of stock options

Exchange of common stock to preferred stock

Conversion of accrued interest to promissory notes

Common stock issued to settle debt

Discount on promissory notes

Beneficial conversion feature on debentures payable

Discount on debentures

accompanying notes to consolidated financial statements.

to Consolidated Financial Statements

1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

(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 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.

2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation

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.

These reclassifications

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

of Consolidation

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

Return of common stock to the Company $ — $ 10

See accompanying notes to the consolidated financial statements.

Notes to Consolidated Financial Statements

(1) NATURE OF THE BUSINESS

(the “Company” or "MariMed") is a multi-state operator in the United States cannabis industry.

MariMed develops, operates, manages and optimizes state-of-the-art, regulatory-compliant facilities for the cultivation, production and dispensing of medical and adult-use cannabis.

MariMed also licenses its proprietary brands of cannabis products along with other top brands in domestic markets.

(2) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

On April 27, 2022 (the “Kind Acquisition Date”), the Company acquired Kind Therapeutics USA (“Kind”), the Company's former client in Maryland that holds licenses for the cultivation, production, and dispensing of medical cannabis (the “Kind Acquisition”).

The financial results of Kind are included in the Company's consolidated financial statements for the periods subsequent to the Kind Acquisition Date.

On May 5, 2022 (the "Green Growth Acquisition Date"), the Company completed the acquisition of 100 % of the equity ownership of Green Growth Group Inc.

(“Green Growth”), an entity that holds a craft cultivation and production cannabis license in the state of Illinois (the “Green Growth Acquisition”).

The financial results of Green Growth are included in the Company's consolidated financial statements for the period subsequent to the Green Growth Acquisition Date.

On December 30, 2022 (the "Greenhouse Naturals Acquisition Date"), the Company completed an asset purchase under which it acquired the cannabis license and assumed a property lease for a dispensary in Beverly, Massachusetts that had never been operational.

Certain reclassifications, not affecting previously reported net income or cash flows, have been made to the previously issued financial statements to conform to the current period presentation.

Significant Accounting Policies

Principles of Consolidation

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

and its majority-owned subsidiaries.

All intercompany transactions and balances have been eliminated.

Subsidiary Percentage

MariMed Advisors Inc.

6 unchanged sentences

Mari Holdings Mt.

Vernon LLC 100.0 %

Mari Mfg LLC 100.0 %

Hartwell Realty Holdings LLC 100.0 %

iRollie LLC 100.0 %

ARL Healthcare Inc.

4 unchanged sentences

MediTaurus LLC 100.0 %

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.

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

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.

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.

Company provides credit to its clients in the form of payment terms.

The Company limits its credit risk by performing credit evaluations

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 $ 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.

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

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

MMMO LLC 100.0 %

Green Growth Group Inc.

Noncontrolling Interests

Noncontrolling 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.

Use of Estimates and Judgments

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reporting amounts of revenue and expenses during the reporting periods.

Significant estimates and judgments relied upon in preparing these consolidated financial statements include accounting for business combinations, inventory valuations, assumptions used to determine the fair value of stock-based compensation, and intangible assets and goodwill.

The Company regularly assesses these estimates and records change in estimates in the period in which they become known.

The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances.

Actual results could differ from those estimates or assumptions.

Business Combinations

The Company recognizes identifiable assets acquired and liabilities assumed at fair value on the date of acquisition.

Goodwill is measured as the excess of consideration transferred over the net fair values of the assets acquired and the liabilities assumed and represents the expected future economic benefits arising from other assets acquire in the business combination that are not individually identified and separately recognized.

While the Company uses its best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the acquisition date, its estimates are inherently uncertain and subject to refinement.

As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with a corresponding offset to goodwill to the extent that it identifies adjustments to the preliminary purchase price allocation.

Upon the conclusion of the measurement period or final determination of the values of assets acquired and liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations.

Asset Purchases

The Company accounts for an acquisitive transaction determined to be an asset purchase based on the cost accumulation and allocation method, under which the costs to purchase the asset or set of assets are allocated to the assets acquired.

No goodwill is recorded in connection with an asset purchase.

Cash Equivalents

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

The fair values of these investments approximate their carrying values.

At December 31, 2022, the Company had $ 0.1 million of cash held in escrow.

At December 31, 2021, the Company had $ 5.1 million of cash held in escrow related to planned business acquisitions, which was primarily comprised of a $ 5.0 million escrow deposit in connection with the Kind Acquisition (see Note 3).

The 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 limits.

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.

Fair Value of Financial Instruments

The carrying amounts of the Company's financial instruments approximate their fair values and include cash equivalents, accounts receivable, deferred rents receivable, notes receivable, investments, mortgages and notes payable, and accounts payable.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

As such, fair value is a market-based measurement that should be determined based on assumptions that market participant would use in pricing an asset or a liability.

The three-tier fair value hierarchy is based on the level of independent, objective evidence surrounding the inputs used to measure fair value.

A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The fair value hierarchy is as follows:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs that are directly or indirectly observable in the marketplace, such as quoted price for similar assets or liabilities in active markets or quoted price for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets).

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Accounts Receivable

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

The Company provides credit to its clients in the form of payment terms.

The Company limits its credit risk by performing credit evaluations 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 $ 4.6 million and $ 41.4 million at December 31, 2022 and 2021, respectively.

The amount recorded at December 31, 2021 was comprised of $ 29.0 million to fully reserve a related party trade receivable from GenCanna Global Inc.

("GenCanna") (see Note 21), $ 11.3 million reserved against a related party trade receivable from Kind (the "Kind Reserve") and $ 1.1 million reserved against the Company's other trade accounts receivable.

The Company wrote off the trade receivable from GenCanna against the reserve in 2022, and the Kind Reserve was eliminated as part of the purchase accounting related to the Kind Acquisition (see Note 3).

Inventory is carried at the lower of cost or net realizable value, with the cost being determined on a first-in, first-out 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 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;

the performance obligations in the contract(s);

the transaction price;

the transaction price to the performance obligations in the contract(s);

revenue as the performance obligation is satisfied.

Additionally,

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

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

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

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.

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

Investments are comprised of equity holdings of public 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.

Revenue Recognition

The Company recognizes revenue in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) 606, Revenue from Contract with Customers ("ASC 606") , as amended by subsequently issued Accounting Standards Updates.

ASC 606 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:

• Identify the contract(s) with a customer;

• Identify the performance obligations in the contract(s);

• Determine the transaction price;

• Allocate the transaction price to the performance obligations in the contract(s);

• Recognize revenue as the performance obligation is satisfied.

Additionally, when another party is involved in providing goods or services to the Company’s clients, a determination is made as to who—the Company or the other party—is acting in the capacity as the principal in the sale transaction, and who is merely the agent arranging for goods or services to be provided by the other party.

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

• Product sales (retail and wholesale) – direct sales of cannabis and cannabis-infused products by the Company’s retail dispensaries and wholesale operations.

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

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

cannabis facilities to its cannabis-licensed clients.

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

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

and Development Costs

and development costs are charged to operations as incurred.

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.

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 years;

tenant improvements,

the remaining duration of the related lease ;

• Real estate rental income – rental income generated from leasing of the Company’s state-of-the-art, regulatory-compliant cannabis facilities to its cannabis-licensed clients.

Rental income is generally a fixed amount per month that escalates over the respective lease terms.

Prior to the third quarter of 2022, the Company charged additional rental fees based on a percentage of tenant revenues that exceeded specific amounts;

these incremental rental fees were eliminated in connection with new contract negotiations with the Company's client.

• Supply procurement – resale of cultivation and production resources, supplies and equipment that the Company has acquired from top national vendors at discounted prices to its client and third parties within the cannabis industry.

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

• Management fees – fees for providing the Company’s cannabis clients with comprehensive oversight of their cannabis cultivation, production and dispensary operations.

Prior to the third quarter of 2022, these fees are based on a percentage of such clients’ revenue and are recognized after services have been performed;

these fees were eliminated in connection with new contract negotiations with the Company's client.

• Licensing fees – revenue from the licensing of the Company's branded products, including Betty's Eddies, Bubby's Baked, Vibations and Kalm Fusion, to wholesalers and to regulated dispensaries throughout the United States and Puerto Rico.

The Company recognizes this revenue when the products are delivered.

Research and Development Costs

Research and development costs are charged to operations as incurred.

Property and Equipment

Property 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 of, 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.

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

buildings and building improvements, thirty-nine to forty years ;

tenant improvements, the lesser of the remaining duration of the related lease or the asset useful life;

furniture and fixtures, seven to ten years ;

machinery and equipment, ten years.

not depreciated.

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

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

holding period.

machinery and equipment, seven to ten years .

Land is not depreciated.

Software development costs associated with internal use software are incurred in three stages of development:

the preliminary project stage, the application development stage and the post-implementation stage.

Costs incurred during the preliminary project and post-implementation stages are expensed as incurred.

Certain qualifying costs incurred during the application development stage are capitalized as property and equipment.

Internal use software is amortized on a straight-line basis over its estimated useful life of five to seven years , beginning when the software is ready for its intended use.

The Company’s property and equipment are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable from the undiscounted future cash flows of such asset over the anticipated holding period.

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

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

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.

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

Company evaluates the recoverability of its fixed assets and other assets in accordance with ASC 360-10-15, Impairment or Disposal

of Long-Lived Assets .

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

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 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 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:

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

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

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.

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

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

For the years ended December 31, 2022 and 2021, based on the results of management’s impairment analyses, there were no impairment losses.

Intangible Assets and Goodwill

The Company's intangible assets are comprised of trade names and trademarks, license and customer and non-compete agreements.

Intangible assets are reviewed for impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable based upon the estimated undiscounted cash flows.

Recoverability of intangible assets with estimated lives and other long-lived assets is measured by a comparison of the carrying amount of an asset or asset group to future net undiscounted cash flows expected to be generated by the asset or asset group.

If these comparisons indicate that an asset is not recoverable, the Company will recognize an impairment loss for the amount by which the carrying value of the asset or asset group exceeds the related estimated fair value.

Estimated fair value is based on either discounted future operating cash flows or appraised values, depending on the nature of the asset.

The Company amortizes its intangible assets over their respective useful lives.

For the years ended December 31, 2022 and 2021, there was no impairment of goodwill.

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.

Right-of-use assets and obligations are recognized at the lease 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.

Impairment of Long-Lived Assets

The Company evaluates the recoverability of its fixed assets and other assets in accordance with ASC 360-10-15, Impairment or Disposal of Long-Lived Assets .

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.

Stock-Based Compensation

The Company's stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which generally corresponds with the vesting period.

The Company uses the Black-Scholes valuation model for estimating the fair value of stock options on the date of grant.

The fair value of stock option and warrant issuances is affected by the Company's stock price on the issuance date as well as valuation assumptions, including the volatility of the Company's common stock price, expected term of the option, risk-free interest rate and expected dividends.

The expected life of an instrument is calculated using the simplified method, 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.

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.

Extinguishment

of Liabilities

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

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.

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, 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

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 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.

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.

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

Extinguishment of Liabilities

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

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

The 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.

ASC 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 recognizes in the financial statements the benefit of a tax position which is "more likely than not" to be sustained under examination based solely on the technical merits of the position, assuming a review by tax authorities having all relevant information.

Tax positions that meet the recognition threshold are measured using a cumulative probability approach, at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement.

The Company's policy is to recognize interest and penalties related to the unrecognized tax benefits, if any, as a component of income tax expense.

Certain of the Company’s subsidiaries, due to their cannabis activities, 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.

Related Party Transactions

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

In 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 Income

The 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.

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

Commitments and Contingencies

The Company regularly assesses 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.

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.

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, 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 cannabis industries, including, but not

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

Noncontrolling

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.

Balance Sheet Arrangements

Company does not have any off-balance sheet arrangements.

Accounting Pronouncements

Company has reviewed all recently issued, but not yet effective, accounting pronouncements, and does not believe the future adoption

of any such pronouncements will have a material impact on its financial condition or the results of its operations.

3 – ACQUISITIONS

Harvest Foundation LLC

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.

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 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 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

December 31, 2021 and 2020, the Company’s investments were comprised of the following:

SCHEDULE OF INVESTMENTS

Current investments:

(formerly Terrace Inc.)

Non-current investments:

MembersRSVP LLC

Total investments

(formerly Terrace Inc.)

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 .

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.

If 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.

While not assured, management does not believe, based upon information available at this time, that any loss contingency will have material adverse effect on the Company’s financial position, results of operations or cash flows.

Beneficial Conversion Features on Convertible Debt

Convertible 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.

A 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, 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.

Risk and Uncertainties

The 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.

Off Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Recent Accounting Pronouncements

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements, and does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations.

(3) BUSINESS COMBINATIONS AND ASSET PURCHASES

In December 2021, the Company entered into a membership interest purchase agreement with the members of Kind (the "Kind Sellers") to acquire 100 % of the equity ownership of Kind.

Kind was the Company's client in Maryland that holds licenses for the cultivation, production, and dispensing of medical cannabis.

Upon execution of the membership interest purchase agreement, the Company deposited $ 5.0 million into escrow as a contract down payment.

In April 2022, the Maryland Medical Cannabis Commission approved the Company’s acquisition of Kind, and the acquisition was completed on the Kind Acquisition Date (the “Kind Acquisition”).

As consideration for Kind, the Company paid the Kind Sellers $ 13.1 million, which amount was reduced by $ 2.3 million of cash acquired (together, the "Kind Cash Consideration"), and issued four-year 6.0 % promissory notes in the aggregate principal amount of $ 6.5 million to the Kind Sellers, secured by a first priority lien on the Company’s property in Hagerstown, MD (the "Kind Notes" and, together with the "Kind Cash Consideration, the "Kind Consideration").

The Kind Acquisition has allowed the Company to expand its operations into the Maryland cannabis industry and marketplace.

The Kind Acquisition has been accounted for as a business combination and the financial results of Kind have been included in the Company’s consolidated financial statements for the period subsequent to the Kind Acquisition Date.

The Company’s financial results for the year ended December 31, 2022 include $ 8.1 million of revenue and a net loss of $ 1.5 million attributable to Kind.

A summary of the preliminary allocation of Kind Consideration to the acquired assets, identifiable intangible assets and certain assumed liabilities at December 31, 2022 is as follows (in thousands):

Fair value of consideration transferred:

Cash consideration:

Cash paid at closing $ 10,128

Release of escrow 2,444

Severance paid from escrow 556

Less cash acquired ( 2,310 )

Net cash consideration 10,818

Note payable 5,634

Write-off of accounts receivable 658

Write-off of deferred accounts receivable 842

Total fair value of consideration transferred $ 17,952

Fair value of assets acquired and (liabilities assumed):

Current assets, net of cash acquired $ 5,047

Property and equipment 622

Intangible assets:

Trade name and trademarks 2,041

Licenses and customer base 4,700

Non-compete agreements 42

Goodwill 6,011

Current liabilities ( 511 )

Fair value of net assets acquired $ 17,952

The valuation of the acquired intangible assets is inherently subjective and relies on significant unobservable inputs.

The Company used an income approach to value the acquired trade name/trademarks, licenses/customer base, and non-compete intangible assets.

The valuation for each of these intangible assets was based on estimated projections of expected cash flows to be generated by the assets discounted to the present value at discount rates commensurate with perceived risk.

The valuation assumptions take into consideration the Company’s estimates of new markets, products and customers and its outcome through key assumptions driving asset values, including sales growth, royalty rates and other related costs.

The Company is amortizing the identifiable intangible assets in relation to the expected cash flows from the individual intangible assets over their respective useful lives, which have a weighted average life of 5.77 years (see Note 10).

Goodwill resulted from assets that were not separately identifiable as part of the transaction and was not deductible for tax purposes.

Concurrent with entering into the Kind membership purchase agreement, 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.

Upon the dismissal in September 2022 of the derivative claims in the DiPietro lawsuit (see Note 21), the Company paid the aggregate purchase consideration of $ 2.0 million, and the transaction was completed, increasing the Company’s ownership of Mari-MD and Mia to 99.7 % and 94.3 %, respectively.

Pro Forma Results

The following unaudited pro forma information presents the condensed combined results of MariMed and Kind for the years ended December 31, 2022 and 2021 as if the Kind Acquisition had been completed on January 1, 2021, with adjustments to give effect to pro forma events that are directly attributable to the Kind Acquisition.

These pro forma adjustments include the reversal of MariMed revenue and related cost of sales derived from Kind prior to the Kind Acquisition Date, amortization expense for the acquired intangible assets, depreciation expense for property and equipment acquired by MariMed as part of the Kind Acquisition, and interest expense related to the Kind Notes.

Pro forma adjustments also include the elimination of acquisition-related and other expense directly attributable to the Kind Acquisition from the year ended December 31, 2022 and inclusion of these expenses in the year ended December 31, 2021.

The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings that may result from the consolidation of the operations of MariMed and Kind.

Accordingly, these unaudited pro forma results are presented for illustrative purposes and are not intended to represent or be indicative of the actual results of operations of the combined company that would have been achieved had the Kind Acquisition occurred at the beginning of the period presented or are they intended to represent or be indicative of future results of operations (in thousands):

Year ended December 31,

Revenue 136,078 131,658

Net income 15,823 16,627

Green Growth Group Inc.

In January 2022, the Company entered into a stock purchase agreement to acquire 100 % of the equity ownership of Green Growth Group Inc.

(“Green Growth”), an entity that holds a craft cultivation and production cannabis license issued by the Illinois Department of Agriculture, in exchange for cash of $ 1.9 million and shares of the Company’s common stock valued at $ 1.5 million.

Concurrently, the Company made a good faith deposit of $ 0.1 million.

In April 2022, the Illinois Department of Agriculture approved the Company’s acquisition of Green Growth, and the purchase transaction (the “Green Growth Acquisition”) was completed on May 5, 2022 (the “Green Growth Acquisition Date”).

The Company paid the remaining $ 1.8 million in cash and issued 2,343,750 shares of MariMed common stock to the sellers on the Green Growth Acquisition Date.

With this license, the Company can cultivate up to 14,000 square feet of cannabis flowers and produce cannabis concentrates.

The Company believes that the acquisition of this cannabis license will allow it to be vertically integrated in Illinois by growing cannabis and producing cannabis products that can be distributed and sold at the Company-owned Thrive dispensaries and sold into the robust Illinois wholesale cannabis marketplace.

The Company has allocated the purchase price to its licenses/customer base intangible asset.

The Company recorded $ 0.2 million of amortization expense for the year ended December 31, 2022 for the intangible asset acquired, based on an estimated ten-year life for such asset.

Greenhouse Naturals LLC

In November 2021, the Company entered into an asset purchase agreement with Greenhouse Naturals LLC (the "Greenhouse Naturals Sellers") to acquire the cannabis license and assume the property lease associated with a cannabis dispensary in Beverly, MA.

The purchase price was comprised of 2,000,000 shares of the Company’s common stock

payable at closing and $ 5.1 million in cash, with $ 5.0 million of the cash amount payable post-closing on a monthly basis as a percentage of the dispensary's monthly gross sales.

The purchase transaction (the "Greenhouse Naturals Acquisition") was completed on December 30, 2022 (the "Greenhouse Naturals Acquisition Date").

The Company paid $ 0.1 million of cash and issued 2,000,000 shares of the Company's common stock, with a fair value of $ 0.7 million on the Greenhouse Naturals Acquisition Date, to the Sellers.

The Company issued a note to the Greenhouse Naturals Sellers for the remaining $ 5.0 million of the cash purchase price (the "Greenhouse Naturals Note"), and has recorded the Greenhouse Naturals Note at present value of $ 4.3 million.

The difference between the face value of the Greenhouse Naturals Note and the net present value recorded will be amortized to interest expense over the term of the note.

Upon final inspection by the State of Massachusetts, the dispensary will be able to open, and the Company hopes that this will occur in the first half of 2023.

The Company has allocated the purchase price to a licenses/customer base intangible asset, which has an estimated useful life of 10 years.

MediTaurus LLC

In 2019, the Company acquired a 70.0 % ownership interest in MediTaurus LLC ("MediTaurus), a developer of CBD products sold under the Florance brand name, in exchange for stock and cash aggregating $ 2.8 million.

In September 2021, the Company acquired the remaining 30.0 % ownership interest of MediTaurus in exchange for 100,000 shares of the Company’s common stock, valued at approximately $ 94,000 , and $ 10,000 in cash.

The carrying value of the noncontrolling interest of approximately $ 975,000 was eliminated on the date such remaining ownership interest was acquired, and as there was no change in control of MediTaurus from this transaction, the resulting gain on the bargain purchase was recognized in Additional paid-in capital in the consolidated balance sheets.

As part of this transaction, the initial purchase agreement was amended, eliminating all future license fees and payments to the prior owners of MediTaurus.

The Company has since discontinued sales of its MediTaurus products.

Pending Acquisitions

Allgreens Dispensary, LLC ("Allgreens")

In August 2022, the Company entered into an agreement to purchase 100 % of the membership interests in Allgreens Dispensary, LLC (the "Allgreens Agreement"), a conditional adult-use cannabis dispensary license in Illinois for $ 2,250,000 of cash.

Completion of the acquisition is dependent upon certain conditions, including resolution of any remaining legal challenges affecting nearly 200 social equity dispensary licenses, and regulatory approval of the acquisition.

Once the acquisition is complete, which the Company expects to occur in 2023, the Company will have five adult-use dispensaries operating in Illinois.

Under the Allgreens Agreement, the Company made an initial advance payment of $ 250,000 to the Allgreens members, with additional cash payments aggregating $ 2.0 million to be made as specific milestones as defined in the Allgreens Agreement are reached.

The Company will issue promissory notes for the final payment of $ 1.0 million, which is due at closing (the "Allgreens Notes").

The Allgreens Notes will mature one year from the date the dispensary may begin operating.

Robust Missouri Process and Manufacturing 1, LLC ("Robust")

In September 2022, the Company entered into an agreement to acquire 100 % of the membership interests in Robust Missouri Processing and Manufacturing 1, LLC (the "Robust Agreement"), a Missouri wholesale and cultivator, for $ 0.7 million of cash.

Completion of the acquisition is dependent upon obtaining all requisite approvals from the Missouri Department of Health and Senior Services, which is expected to occur in 2023.

Under the Robust Agreement, the Company made an initial advance payment of $ 350,000 to the Robust members, with an additional payment of $ 350,000 to be made at closing.

Cancelled Acquisition

The Harvest Foundation LLC

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

Harvest, as a good faith deposit, which were issued upon execution of the purchase agreement.

The issued shares were recorded at par value.

Such shares were restricted and a portion of these shares could be returned to the Company in the event the transaction did not close.

In addition, $ 1.2 million of the Company’s common stock would be issued at closing and 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 would be granted on the day prior to legislative approval of the transaction.

The acquisition was conditioned upon state regulatory approval of the transaction and other closing conditions.

Upon approval, and the fulfillment of other closing conditions, the ownership of Harvest would be transferred to the Company.

There was no assurance that the closing conditions to the Company’s acquisition of Harvest, including regulatory approval, would be achieved or that the acquisition would be consummated.

The regulatory approval process for license transfers in Nevada experienced significant delays as a result of multiple factors, including the impact of COVID.

Additionally, the progress of this potential acquisition had been delayed as a result of actions taken by the Nevada Cannabis Control Board (the "CCB") relating to regulatory operating violations by Harvest.

Harvest was unable to negotiate a settlement with the CCB to resolve these violations, which would have allowed it to proceed with the sale.

In October 2022, the CCB issued an order approving the placement of a receiver to oversee Harvest and its licenses.

The Company monitored the status of these regulatory matters, and ultimately determined that it should withdraw from the agreement to purchase Harvest, and submitted such request to the CCB.

The CCB accepted the request by the Company, releasing the Company from the liabilities related to this cancelled transaction.

(4) EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the period.

Diluted net earnings per share is determined by using the weighted average number of common and dilutive common equivalent shares outstanding during the period, unless the effect is antidilutive.

The calculations of shares used to compute net earnings per share were as follows (in thousands):

Year ended December 31,

Weighted average shares outstanding - basic 337,697 326,467

Potential dilutive common shares 42,592 45,930

Weighted average shares outstanding - diluted 380,289 372,397

(5) DEFERRED RENTS RECEIVABLE

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 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 prior to the third quarter of 2022, contingent rental payments based on a percentage of monthly tenant revenues.

The Company is not the lessor under any finance leases.

Company recognizes fixed rental receipts from such lease agreements on a straight-line basis over the expected lease term.

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

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

Company leases the following owned properties:

– 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 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

The Company recognizes fixed rental receipts from such lease agreements on a straight-line basis over the expected lease term.

Differences between amounts received and amounts recognized are recorded in Deferred rents receivable in the consolidated balance sheets.

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

The Company currently leases or previously leased the following owned properties:

• Delaware – 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.

• Maryland – a 180,000 square foot cultivation and processing facility which was leased to Kind prior to the Kind Acquisition Date.

• Massachusetts – a 138,000 square foot industrial property, of which approximately half of the available square footage was leased to a non-cannabis manufacturing company (the "Tenant") under a lease that expired in

February 2023.

The Tenant currently continues to rent this space on a month-to-month basis.

The Company subleases the following properties:

• Delaware – a 4,000 square foot cannabis dispensary which is subleased to a cannabis-licensed client under a under a sublease that expires in April 2027.

• Delaware – a 100,000 square foot warehouse, of which the Company developed 60,000 square feet into a cultivation facility that is subleased to a cannabis-licensed client.

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

The Company intends to develop the remaining space into a processing facility.

• Delaware – a 12,000 square foot cannabis production facility with offices which is subleased to a cannabis-licensed client.

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

The Company submitted invoices to its rental clients aggregating $ 3.0 million and $ 18.7 million in the years ended December 31, 2022 and 2021, respectively.

The Company recognized rental revenue on a straight-line basis totaling $ 2.9 million and $ 20.4 million for the years ended December 31, 2022 and 2021, respectively.

Future minimum rental receipts for non-cancellable leases and subleases as of December 31, 2022 were as follows (in thousands):

Year ending December 31,

Thereafter 4,537

Total $ 10,991

(6) NOTES RECEIVABLE

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.

Notes receivable, including accrued interest, at December 31, 2022 and 2021, was comprised of the following (in thousands):

First State Compassion Center (FSCC Initial Note) $ 328 $ 403

First State Compassion Center (FSCC Secondary Notes) 8,160 7,845

First State Compassion Center (FSCC New Note) 750 —

Healer LLC 866 866

Total notes receivable 10,104 9,114

Notes receivable, current portion ( 2,637 ) ( 127 )

Notes receivable, less current portion

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

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,

Notes receivable, net of current $ 7,467 $ 8,987

First State Compassion Center

The Company’s cannabis-licensed client in Delaware, First State Compassion Center (“FSCC”), issued a 10-year promissory note to the Company in May 2016 for $ 0.7 million, bearing interest at a rate of 12.5 % per annum and maturing in April 2026, as amended (the "FSCC Initial Note").

The monthly payments on the FSCC Initial Note approximate $ 10,000 .

At December 31, 2022 and 2021, the current portions of the FSCC Initial Note approximated $ 85,000 and $ 75,000 , respectively, and were included in Notes receivable, current, in the consolidated balance sheets.

In December 2021, the Company converted financed trade accounts receivable balances from FSCC aggregating $ 7.8 million into notes receivable, whereby FSCC issued promissory notes to the Company aggregating $ 7.8 million (the "FSCC Secondary Notes").

The FSCC Secondary Notes bear interest of 6.0 % per annum and mature in December 2025.

FSCC is required to make periodic payments of principal and interest throughout the term of the FSCC Secondary Notes.

At December 31, 2022, the FSCC Secondary Notes included approximately $ 49,000 of unpaid accrued interest.

The increase in the FSCC Secondary Notes in the year ended December 31, 2022 was attributable to the accreted interest, which increased the value of such notes.

The current portion of the FSCC Secondary Notes aggregated $ 2.5 million at December 31, 2022.

The entire balance of the FSCC Secondary Notes was long-term at December 31, 2021.

In December 2022, the Company converted a short-term loan and other receivable balances from FSCC aggregating $ 750,000 into a note receivable, whereby FSCC issued a promissory note to the Company for $ 750,000 (the "FSCC New Note").

The FSCC New Note bears interest of 6.0 % per annum and matures in December 2026.

FSCC is required to make quarterly interest payments, with the full amount of principal due on December 31, 2026.

At December 31, 2022, the entire balance of the FSCC New Note was long-term.

In March 2021, the Company was issued a promissory note in the principal amount of approximately $ 894,000 (the "Revised Healer Note") from Healer LLC, an entity that provides cannabis education, dosage programs, and products developed by Dr.

Dustin Sulak ("Healer").

The principal balance of the note represents previous loans extended to Healer by the Company totaled $ 800,000 , plus approximately $ 94,000 of accrued interest through the Revised Healer Note issuance date.

The Revised Healer Note bears interest of 6.0 % per annum and requires quarterly payments of interest through its April 2026 maturity date.

The Company has the right to offset any licensing fees payable by the Company to Healer in the event Healer fails to make any payment when due.

In March 2021, the Company offset approximately $ 28,000 of licensing fees payable to Healer against the principal balance of the Revised Healer Note, reducing the principal amount to approximately $ 866,000 .

At each of December 31, 2022 and 2021, the total amounts of principal and accrued interest due under the Revised Healer Note were approximately $ 866,000 , of which approximately $ 52,000 was current.

High Fidelity Inc.

In August 2021, a $ 250,000 loan, which bore interest of 10.0 % per annum, to High Fidelity inc., an entity with cannabis operations in the State of Vermont, was repaid in full.

(7) INVENTORY

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

Inventory at December 31, 2022 and 2021 consisted of the following (in thousands):

Plants $ 2,653 $ 1,015

Ingredients and other raw materials 3,255 262

2 unchanged sentences

Total inventory $ 19,477 $ 9,768

(8) INVESTMENTS

The Company's investments at December 31, 2022 and 2021 were all classified as current and were comprised of the following (in thousands):

WM Technology Inc.

Total investments $ 123 $ 251

The Company did not have any noncurrent investments at December 31, 2022 or 2021.

(formerly Terrace Inc.)

In December 2021, 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 (the "Flowr Investment").

The investment in Flowr was carried at fair value, with changes in fair value recorded as a component of Other expense, net, in the consolidated statements of operations.

The Company recorded losses of $ 0.3 million and $ 1.1 million in the years ended December 31, 2022 and 2021, respectively.

The loss recorded in the year ended December 31, 2022 is comprised of the loss on the change in the Flowr Investment for the year, plus the $ 61,000 write-off of the remaining fair value of the Flowr Investment in December 31, 2022 arising from Flowr's bankruptcy filing and delisting from the exchanges on which it traded.

The loss recognized in the year ended December 31, 2021 represented the change in the fair value of the investment in Flowr for that year.

WM Technology Inc.

(formerly MembersRSVP LLC)

In January 2021, the Company and MembersRSVP LLC, an entity that develops cannabis-specific software ("MRSVP), in which the Company owned a 23.0 % membership interest, entered into an agreement under which the Company returned membership interests comprising 11.0 % ownership in MRSVP in exchange for a release of the Company from any further obligation to make any incremental investments or payments to MRSVP 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 MSRVP's board of directors.

As a result, the Company no longer had the ability to exercise significant influence over MRSVP, and accordingly, as of January 1, 2021, the Company discontinued accounting for this investment under the equity method.

In 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 $ 1.5 million, representing the Company’s pro rata share of the cash consideration received by MRSVP upon the closing of the transaction.

The cash proceeds reduced the Company's MRSVP investment balance to zero and resulted in a gain of $ 0.3 million, which was reported as a component of Other expense, net, in the Company's consolidated statement of operations for the year ended December 31, 2021.

In February 2022, the Company received 121,698 shares of common stock of WM Technology Inc.

(the "MAPS Shares"), a technology and software infrastructure provider to the cannabis industry, which represented the Company's pro rata share of the additional consideration received by MRSVP pursuant to the asset purchase agreement, which had a fair value of approximately $ 953,000 at the time of receipt.

The Company recognized a loss of $ 0.8 million in the year ended December 31, 2022, which is included as a component of Other (expense) income, net, in the consolidated statement of operations.

This amount represents the decrease in the fair value of the MAPS Shares for the period from the Company's receipt of such shares in February 22, 2022 through December 31, 2022.

(9) PROPERTY AND EQUIPMENT

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

OF PROPERTY AND EQUIPMENT

The Company's property and equipment, net, at December 31, 2022 and 2021 was comprised of the following (in thousands):

Land $ 4,450 $ 4,450

Buildings and building improvements 43,542 35,231

3 unchanged sentences

Construction in progress 4,761 10,569

accumulated depreciation

81,865 69,104

( 4,888,722 )

accumulated depreciation ( 10,224 ) ( 6,954 )

Property and equipment, net $ 71,641 $ 62,150

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, 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.

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

During the years ended December 31, 2022 and 2021, additions to property and equipment totaled $ 12.4 million and $ 18.6 million, respectively.

Of the additions to property and equipment, $ 0.3 million and $ 0.7 million of such additions in the years ended December 31, 2022 and 2021, respectively, were paid for by the issuance of Company common stock.

Depreciation expense for the years ended December 31, 2022 and 2021 was $ 3.4 million and $ 2.1 million, respectively.

(10) INTANGIBLE ASSETS AND GOODWILL

The Company's acquired intangible assets at December 31, 2022 consisted of the following (in thousands):

period (years) Cost Accumulated

amortization Net

Trade name and trademarks 3.00 $ 2,041 $ 453 $ 1,588

Licenses and customer base 8.94 13,260 675 12,585

Non-compete agreements 2.00 42 14 28

8.13 $ 15,343 $ 1,142 $ 14,201

Estimated future amortization expense for the Company’s intangible assets at December 31, 2022 was as follows (in thousands):

Year ending December 31,

Thereafter 4,950

Total $ 14,201

The changes in the carrying value of the Company’s goodwill in the years ended December 31, 2022 and 2021 were as follows (in thousands):

Year ended December 31,

Balance at January 1, $ 2,068 $ 2,068

Kind Acquisition 6,011 —

Balance at December 31, $ 8,079 $ 2,068

Goodwill is reviewed on an annual basis for impairment.

Based on these reviews and other factors, the Company determined there was no goodwill impairment in the years ended December 31, 2022 and 2021.

(11) MORTGAGES AND NOTES PAYABLE

The Company's mortgage balances at December 31, 2022 and 2021 were comprised of the following (in thousands):

Bank of New England

– New Bedford,

MA and Middleboro, MA properties

New Bedford, MA and Middleborough, MA properties $ 12,141 $ 12,499

Bank of New England

1 unchanged sentence

DuQuoin State Bank

– Anna, IL and Harrisburg,

IL properties

Anna, IL and Harrisburg, IL properties 750 778

DuQuoin State Bank

Metropolis, IL property 2,508 2,658

DuQuoin State Bank

Vernon, IL property 2,974 —

South Porte Bank

2 unchanged sentences

Mortgages payable, current portion ( 1,491 ) ( 1,400 )

( 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,

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 %

Mortgages payable, net of current $ 19,028 $ 16,814

In November 2017, the Company entered into a 10-year mortgage agreement with Bank of New England in the amount of $ 4.9 million (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 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 2.0 %, 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 2.0 %, with a floor of 6.25 % per annum.

In July 2020, at which time the Initial Mortgage had a remaining principal balance of $ 4.8 million, the parties consummated an amended and restated mortgage agreement, secured by the Company’s properties in New Bedford, MA and Middleborough, MA in the amount of $ 13.0 million and bearing interest 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 described below.

The outstanding principal balance of the Refinanced Mortgage was $ 12.1 million and $ 12.5 million, respectively, at December 31, 2022 and 2021, of which approximately $ 382,000 and $ 358,000 , respectively, was current.

The Company maintains another mortgage with Bank of New England for 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.

The mortgage matures in 2031, with monthly principal and interest payments at a rate of 5.25 % per annum through September 2021, with the rate adjusting every five years to the then prime

rate plus 1.5 % with a floor of 5.25 % per annum.

For the remainder of 2022, 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

At December 31, 2022 and 2021, the outstanding principal balance on this mortgage was $ 1.3 million and $ 1.5 million, respectively, of which approximately $ 126,000 and $ 130,000 , respectively, was current.

In 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.

On May 5 th of each year of the mortgage agreement, this mortgage is due to be repaid unless it is renewed for another year at a rate determined by DSB’s executive committee.

The mortgage was renewed in May 2022 at a rate of 6.75 % per annum.

At December 31, 2021 and 2020, the outstanding principal

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.

At December 31, 2022 and 2021, the outstanding principal balance on this mortgage approximated $ 750,000 and $ 778,000 respectively, of which approximately $ 36,000 and $ 33,000 , respectively, was current.

In 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 $ 0.7 million in the aggregate on the date of the transaction, and payoff of the seller’s remaining mortgage of $ 1.6 million.

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 rate 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, 2022 and 2021, the outstanding principal balance on this mortgage was $ 2.5 million and $ 2.7 million, respectively, of which approximately $ 77,000 and $ 73,000 , respectively, was current.

In July 2022, Mari Holdings Mt.

Vernon LLC, a wholly-owned subsidiary of the Company, entered into a $ 3.0 million loan agreement and mortgage with DSB secured by property owned in Mt.

Vernon, IL, which the Company is developing into a grow and production facility (the "DSB Mt.

Vernon Mortgage").

Vernon Mortgage has a 20 -year term and initially bears interest at the rate of 7.75 %, subject to upward adjustment on each annual anniversary date to the Wall Street Journal U.S.

Prime Rate (with an interest rate floor of 7.75 %).

The proceeds of the loan are being utilized for the build-out of the property and other working capital needs.

The current portion of the DSB Mt Vernon Mortgage was approximately $ 68,000 at December 31, 2022.

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

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 2023, at which time all remaining principal, interest and fees shall be due.

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 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 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.

Promissory Notes Issued by the Company and its MariMed Hemp Inc.

In 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”) earlier in 2020.

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 $ 3.0 million in the aggregate, which the Company made in the first half of 2021.

The 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 approximated the price of the Company’s common stock on the second amendment 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 which matured in June 2022 (the “$8.8M Note”).

In 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 $ 0.50 per share.

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.

The Company made a required principal payment of $ 4.0 million in July 2020, with a portion of proceeds of the Refinanced Mortgage discussed above, and additional principal payments aggregating $ 0.6 million in the year ended December 31, 2020.

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

The 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 had no intrinsic value on the agreement date, and therefore no beneficial conversion feature arose.

In March 2021, the Noteholder converted $ 1.0 million 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 $ 3.2 million.

The 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 $ 3.2 million (the “$3.2M Note”), which bore interest at the rate of 0.12 % per annum and which would mature in April 2023.

The Noteholder had 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, subject to adjustment.

The third amended agreement resulted in a decrease in the fair value of the embedded conversion feature of the $3.2M Note, and accordingly, no accounting was required for such conversion feature.

On or after the one-year anniversary of the $3.2M Note issuance date, upon twenty days prior written notice to the Noteholder, the Company had the right to 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 remained entitled to convert the $3.2M Note during such notice period.

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

In 2021, the Noteholder converted $ 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 $ 0.4 million at December 31, 2021.

All note conversions were effected in accordance with the terms of their respective note agreements, and accordingly, the Company was not required to record a gain or loss on such conversions.

In the first quarter of 2022, the Noteholder converted the remaining principal balance of $ 0.4 million into 1,142,858 shares of the Company's common stock and the $3.2M Note was retired.

The note conversion was effected in accordance with the terms of the note agreement, and accordingly, the Company was not required to record a gain or loss on this conversion.

Promissory Notes Issued Pursuant to an Exchange Agreement

In February 2020, pursuant to an exchange agreement (see Note 13), the Company issued two promissory notes in the aggregate principal amount of $ 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, 2021, the principal and accrued interest balance of the $4.4M Notes was $ 4.6 million.

In March 2021, utilizing a portion of the proceeds from the Hadron transaction (see Note 13), the $4.4M Notes were paid in full, along with accrued interest through the repayment date.

Promissory Notes Issued for Operating Liquidity

In 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 in 2020.

The $6.0M Note bore interest at a rate of 13.0 % per annum and required the payment of a service fee of $ 0.9 million (the “Service Fee”).

Pursuant 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.

Prior 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 2019, bearing interest at a rate of 10.0 % per annum (the “$3.0M Note”).

The 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 % per annum during the extension period.

Pursuant to the Initial Extension Agreement, the maturity date of the $3.0M Note was extended to December 2020.

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 Company and the Holding Party entered into a second note extension agreement in October 2020 (the “Second Extension Agreement”) whereby the Company (i) paid $ 1.0 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 $ 5.8 million (the “$5.8M Note”) to replace the $6.8M Note;

and (iii) amended and restated the $3.0M 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 2022.

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 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

In 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 2021, with the remainder to be amortized over the life of the Amended Notes.

The 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 (see Note 13), the Amended Notes were paid in full, along with accrued interest through the repayment date.

Additionally, the remaining discount of approximately $ 450,000 on these notes was fully amortized on the payment date.

Promissory Notes Issued as Purchase Consideration

Greenhouse Naturals Acquisition

In connection with the Greenhouse Naturals Acquisition, the Company issued the Greenhouse Naturals Note (see Note 3) to the Greenhouse Naturals Sellers.

The Greenhouse Naturals Note had an outstanding balance of $ 5.0 million at December 31, 2022, including $ 0.7 million recorded as a debt discount, which will be accreted through the term of the note.

At December 31, 2022, $ 0.9 million was recorded as current.

Kind Acquisition

In connection with the Kind Acquisition, the Company issued the Kind Notes (see Note 3) to the Kind Sellers.

The Kind Notes had an aggregate outstanding balance of $ 5.5 million at December 31, 2022, of which $ 1.6 million was current.

On January 24, 2023, in connection with the Company's new $ 35.0 million credit facility (see Note 22), the Company repaid the Kind Notes in full, aggregating $ 5.4 million, including approximately $ 20,000 of accrued interest.

There was no penalty in connection with the early repayment of the Kind Notes.

Promissory Notes Issued to Purchase Commercial Vehicles

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

The note bears interest of 5.74 % per annum and matures in July 2026.

At December 31, 2022 and 2021, the balance of this note approximated $ 20,000 and $ 26,000 , respectively, of which approximately $ 5,000 was current at each date.

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

The note bears interest of 10.0 % per annum and matures in May 2027.

At December 31, 2022 and 2021, the balance of this note approximated $ 28,000 and $ 33,000 , respectively, of which approximately $ 7,000 and $ 5,000 , respectively, was current.

Promissory Note Issued by MMH

MMH issued a $ 1.0 million promissory note (the “$1.0M Note”) in 2020 to an unaffiliated party and paid $ 0.5 million of principal amount thereof.

In March 2021, the Company paid interest on the $1.0M Note of $ 0.2 million and paid off the remaining principal balance of $ 0.5 million utilizing a portion of the proceeds from the Hadron transaction (see Note 13).

Other Promissory Note Issuances

In addition to the above transactions, in March 2021, the Company repaid in full promissory notes entered into in prior years.

The payments aggregated $ 2.3 million, comprised of $ 2.0 million of principal and $ 0.3 million of accrued interest .

(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

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 ;

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 $ 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 .

In a series of transactions between October 2018 and 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.

As of December 31, 2020, $ 1.0 million of the $21M Debentures had not been previously converted into the Company's common stock (the "Remaining Debenture Balance").

During the first quarter of 2021, the holder of the $21M Debentures (the “Holder”) converted the Remaining Debenture Balance 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, and an aggregate of $ 1.3 million of principal and approximately $ 56,000 of accrued interest was converted into 4,610,645 shares of the Company's common stock at a conversion price of $ 0.29 per share.

These 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.

(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 – 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 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.

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

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.

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

stock grants to an employee.

These shares were issued in February 2021.

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

15 – STOCK OPTIONS

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, 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

Exercise Price

Shares Under Option

Remaining Life

16 – WARRANTS

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.

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

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

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

17 – REVENUES

the years ended December 31, 2021 and 2020, the Company’s revenues were comprised of the following major categories:

SCHEDULE OF REVENUES COMPRISED OF MAJOR CATEGORIES

Series B Convertible Preferred Stock

In 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 the Company's newly designated Series B convertible preferred stock, and (ii) issued the $4.4M Notes (see Note 11).

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

The 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.

The 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.

In 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.

At 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, of the shares of Series B convertible preferred stock into the Company's 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.

On 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:

• If 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.

• If 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.

The Company shall at all times when the Series B convertible preferred stock is outstanding, reserve and keep available enough 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.

Series C Convertible Preferred Stock

In 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 "Hadron Facility").

At the closing of the transaction in March 2021, Hadron purchased $ 23.0 million of Units (as defined below) 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 MariMed 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.

The Company incurred costs of approximately $ 387,000 related to the issuance of the aforementioned shares to Hadron, which was recorded as a reduction to additional paid-in capital in March 2021.

In 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.

Of the $ 23.0 million of proceeds received by the Company in March 2021, $ 7.8 million was designated to fund construction and upgrades of certain of the Company’s owned and managed facilities during 2021 and $ 15.2 million was used to pay down debt and obligations, comprised of principal and interest on various notes outstanding (see Note 11) and payments of certain amounts due to related parties (see Note 19).

Provided that at least 50.0 % of the shares of Series C convertible preferred stock remained outstanding, the holders had 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 became available, at which time the observer roles would terminate.

The transaction also imposed 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.

No further funding has occurred under the Hadron Facility and, on August 4, 2022, the Company and Hadron entered into a second amendment to the purchase agreement pursuant to which, inter alia, (i) Hadron's obligation to provide any further funding to the Company and the Company's obligation to sell any further securities to Hadron was terminated, (ii) Hadron's right to appoint a designee to the Company's board of directors was eliminated, and (iii) certain covenants restricting the Company's incurrence of new indebtedness were eliminated.

For the years ended December 31, 2022 and 2021, the Company’s revenue was comprised of the following major categories (in thousands):

Year ended December 31,

Product sales - retail $ 92,836 $ 82,127

Product sales - wholesale 32,865 26,119

Total product revenue 125,701 108,246

Other revenue:

Real estate rentals 3,526 6,548

Management fees

Supply procurement 3,353 2,108

Management fees 848 3,079

Licensing fees 582 1,483

Total revenues

Total other revenue 8,309 13,218

Total revenue $ 134,010 $ 121,464

(14) STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

Stockholder Resolutions

At the Company’s 2021 annual meeting of stockholders in September 2021 (the “2021 Annual Meeting”), stockholders approved an amendment to the Company’s certificate of incorporation, increasing the number of authorized shares of common stock from 500 million to 700 million.

Also at the 2021 Annual Meeting, stockholders approved an amendment to the Company’s Amended and Restated 2018 Stock Award and Incentive Plan (the “2018 Plan”), increasing the aggregate number of shares available for issuance under the Plan from 40 million to 70 million.

Amended and Restated 2018 Stock Award and Incentive Plan

The 2018 Plan provides for the award of options to purchase the Company's common stock ("stock options"), restricted stock units ("RSUs"), stock appreciation rights, restricted stock, deferred stock, dividend equivalents, performance shares or other stock-based performance awards, as well as other stock- or cash-based awards.

At December 31, 2022, there were 29,969,580 total shares of common stock available for future issuance under the 2018 Plan.

Stock Options

A summary of the Company's stock option activity during the year ended December 31, 2022 is below:

Shares Weighted average exercise price

Outstanding at January 1, 2022 39,821,671 $ 1.10

Granted 805,500 $ 0.61

Exercised ( 367,248 ) $ 0.22

Forfeited ( 1,455,250 ) $ 1.00

Expired ( 2,300,000 ) $ 2.24

Outstanding at December 31, 2022 36,504,673 $ 0.82

The amount reported as stock options exercised was comprised of 55,000 options exercised in cash transactions, from which the Company received approximately $ 10,000 , and a cashless exercise of 312,248 stock options, under which 200,000 shares were released and 112,248 shares were returned to the Company in lieu of cash.

Stock options granted under the 2018 Plan generally expire five years from the date of grant.

At December 31, 2022, the options outstanding had a weighted average remaining life of approximately three years .

The grant date fair values of stock options granted in the year ended December 31, 2022 were estimated using the Black-Scholes valuation model with the following assumptions:

Estimated life (in years) 5.0

Weighted average volatility 93.24 %

Weighted average risk-free interest rate 3.18 %

Dividend yield —

Restricted Stock Units

The Company began to grant restricted stock units ("RSUs") under the 2018 Plan in the fourth quarter of 2022.

Holders of unvested restricted stock units ("RSUs") do not have voting and dividend rights.

The grant date fair value of RSUs is recognized as expense on a straight-line basis over the requisite service periods.

The fair value of RSUs is determined based on the market value of the Company's shares on the date of grant.

The Company granted 2,433,332 RSUs in the year ended December 31, 2022, 833,333 RSUs were granted to each of the Company's then-Chief Executive Officer and its President, 666,667 RSUs were granted to the Company's Chief Operating Officer, and 33,333 RSUs were granted to each of the three independent members of its Board of Directors.

Each of these RSUs had a grant date fair value of $ 0.53 .

At December 31, 2022, there were 1,599,999 unvested RSUs outstanding.

In April 2022, 750,000 warrants were exercised in a cashless transaction under which the Company withheld 515,039 shares underlying such warrants and issued 234,961 shares of common stock.

In October 2022, 896,031 warrants were exercised in a cashless transaction under which the Company withheld 813,694 shares underlying such warrants and issued 82,337 shares of common stock.

At December 31, 2022, warrants to purchase up to 22,855,540 shares of common stock were outstanding, with a weighted average exercise price of $ 0.85 .

Other Common Stock Issuances

During 2021 and 2022, the Company issued an aggregate of 12,542,126 shares of common stock in a series of conversions of a promissory note in the original principal amount of $ 8.8 million, of which 1,142,858 shares were issued in the first quarter of 2022, resulting in the promissory note being fully paid and retired (see Note 11).

In addition to the activity described previously, the Company also issued during the year ended December 31, 2022:

• 4,343,750 shares of restricted common stock in the aggregate as purchase consideration for two business acquisitions with an aggregate fair value of $ 2.2 million (see Note 3);

• 422,535 shares of restricted common stock with a fair value of approximately $ 300,000 to purchase property and equipment;

• 375,000 shares of restricted common stock with a fair value of approximately $ 275,000 in exchange for consulting services;

• 350,000 shares of restricted common stock with a grant date fair value of approximately $ 217,000 to the Company’s Chief Financial Officer in connection with her appointment;

• 218,345 shares of restricted common stock under a royalty agreement with an aggregate fair value of approximately $ 121,000 ;

• 34,976 shares of common stock issued in connection with the vesting of restricted stock units with a grant date fair value of approximately $ 19,000 (see "Extension of Exercise Period and Accelerated Vesting of RSUs" below);

• 17,227 shares of restricted common stock to an employee with an aggregate grant date fair value of approximately $ 9,000 .

Extension of Exercise Period and Accelerated Vesting of RSUs

In connection with the death of the Company's former Chief Executive Officer Robert Fireman ("Mr.

Fireman") on December 11, 2022, the Company, in accordance with the 2018 Plan, extended the exercise period for Mr.

Fireman's outstanding stock options, which were fully vested, to the earlier of three years from the date of death or the contractual expiration date of the respective stock options.

Accordingly, Mr.

Fireman's stock options will remain exercisable until December 11, 2025.

Additionally, the Compensation Committee of the Company's Board of Directors, as prescribed in the 2018 Plan, accelerated the vesting, on a prorated basis, of Mr.

Fireman's RSUs, which had been granted to him on October 27, 2022, such that 34,976 RSUs were accelerated and the underlying shares were released in trust to Mr.

Fireman's estate on December 30, 2022.

The remaining 798,357 unvested RSUs that had been granted to Mr.

Fireman on October 27, 2022 were forfeited and returned to the 2018 Plan.

These amounts are included in the information related to RSUs above.

Stock-Based Compensation

The Company recorded stock-based compensation expense of $ 6.3 million and $ 13.4 million for the years ended December 31, 2022 and 2021, respectively.

Common Stock Issuance Obligations

At December 31, 2022, the Company was obligated to issue 70,000 shares of common stock in the aggregate, with an aggregate grant date fair value of approximately $ 39,000 , to two employees.

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

(16) MAJOR CUSTOMERS

The Company did not have any customers that contributed 10% or more of total revenue in the years ended December 31, 2022 or 2021.

At December 31, 2022, there were no customers that accounted for 10% or more of the Company' accounts receivable balance.

At December 31, 2021, one customer accounted for 10% or more of the Company's accounts receivable balance, representing approximately 28 % of total accounts receivable.

The Company performs ongoing credit evaluations of its customers and generally does not require collateral on accounts receivable.

(17) BAD DEBT

The Company maintains an allowance against trade accounts receivable (the “AR Allowance”) and previously also reserved against cash advanced by the Company to a cannabis-licensed client for working capital purposes (the "WC Reserve”).

During the year ended December 31, 2022, the Company recorded $ 3.8 million of expense to increase its AR Allowance.

During the year ended December 31, 2021, the Company increased the AR Allowance and the WC Reserve by $ 1.4 million and $ 0.5 million, respectively.

The increase to the WC Reserve in the year ended December 31, 2021 was related to Harvest's working capital balance (see Note 3).

These amounts are reported as Bad debt in the consolidated statements of operations for the respective years.

Lease Commitments

The Company is the lessee under six operating leases and seven 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 details of the Company’s operating lease agreements are as follows:

• Delaware – 4,000 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 a cannabis-licensed client.

• Delaware – a 100,000 square foot warehouse, of which the Company developed 60,000 square feet into a cultivation facility, and is developing the remaining space into a processing facility, subleased to a cannabis-licensed client.

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

• Delaware – a 12,000 square foot premises which the Company developed into a cannabis production facility with offices, and is subleased to a cannabis-licensed client.

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

• Massachusetts – 10,000 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.

• Massachusetts – a 2,700 square foot dispensary, which lease the Company assumed under a lease that expires in 2026, with options to extend the term for three additional five-year periods through 2041.

• Maryland – a 2,700 square foot two-unit apartment under a lease that expires in July 2023.

The Company leases machinery and office equipment under finance leases that expire in July 2023 through January 2028 with such terms being a major part of the economic useful life of the leased property.

The components of lease expense for the year ended December 31, 2022 were as follows (in thousands):

Operating lease expense $ 1,160

Finance lease expense:

Amortization of right-of-use assets $ 169

Interest on lease liabilities 47

Total finance lease expense $ 216

The weighted average remaining lease term for operating leases and finance leases is 6.3 years and 3.7 years, respectively.

The weighted average discount rate used to determine the right-of-use assets and lease liabilities was between 7.50 % to 12.75 % for all leases.

Future minimum lease payments as of December 31, 2022 under all non-cancelable leases having an initial or remaining term of more than one year were as follows (in thousands):

Year ending December 31, Operating

leases Finance

2023 $ 1,153 237

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 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

2024 1,158 216

2025 1,178 215

2026 1,127 95

2027 1,066 46

Thereafter 2,143 2

Total lease payments 7,825 811

imputed interest ( 2,379 ) ( 125 )

Present value of lease liabilities $ 5,446 686

In November 2021, the Company entered into lease agreements for six retail properties, each with square footage between 4,000 and 6,000 square feet, in the State of Ohio (each an “Ohio Lease” and collectively the “Ohio Leases”).

Each Ohio Lease had an initial lease period of eleven months , with a minimum rent of $ 31.00 per square foot, which increased 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 could 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 the extended Ohio Lease, which the Company is building out into a medical use dispensary.

In February 2022, the Company was notified that it was awarded a cannabis dispensary license from the State of Ohio.

The Company is awaiting the final verification process to be completed by the state.

In April 2022 the Company extended the term of one of the Ohio Leases to February 2023 (the "Extended Ohio Lease"), and the remaining five Ohio Leases were terminated.

The Company intends to enter into a ten-year lease on the Extended Ohio Lease property, which will become effective upon the completion of the final verification process by the state, which is expected to occur in the first half of 2023.

As of December 31, 2022, the lease term of the Extended Ohio Lease was less than one year, and the Company was not required to record a right-of-use asset and corresponding lease liability on its balance sheet.

Accordingly, the future lease payments of the Extended Ohio Lease are excluded from the table of future minimum lease payments shown above.

(19) RELATED PARTY TRANSACTIONS

The Company’s corporate offices are leased from an entity in which the Company’s President and Chief Executive Officer ("Mr.

Levine") has an investment interest.

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

Expenses under this lease in both of the years ended December 31, 2022 and 2021 approximated $ 156,000 .

The Company procures nutrients, lab equipment, cultivation supplies, furniture, and tools from an entity owned by the family of the Company’s Chief Operating Officer (the "COO").

Purchases from this entity totaled $ 4.8 million and $ 4.9 million in the years ended December 31, 2022 and 2021, respectively.

The Company pays royalties on the revenue generated from its Betty’s Eddies product line to an entity owned by the COO and the Company's Chief Revenue Officer (the "CRO") 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 3.0 % if sold directly by the Company and between 1.3 % and 2.5 % if licensed by the Company for sale by third parties.

Future developed products (i.e., ice cream) have a royalty rate of 0.5 % if sold directly by the Company and between 0.125 % and 0.135 % if licensed by the Company for sale by third parties.

The aggregate royalties due to this entity for the years ended December 31, 2022 and 2021 approximated $ 219,000 and $ 266,000 , respectively.

During the years ended December 31, 2022 and 2021, one of the Company’s majority-owned subsidiaries paid distributions aggregating approximately $ 27,300 and $ 44,000 , respectively, to Mr.

Fireman and Mr.

Levine, who own

minority equity interests in such subsidiary.

In addition, the Company accrued $ 1,800 in the aggregate at December 31, 2022 for payments relate to the fourth quarter of 2022.

During the years ended December 31, 2022 and 2021, another of the Company’s majority-owned subsidiaries paid distributions of approximately $ 17,500 and $ 7,000 to a current employee who owns a minority equity interest in such subsidiary, and accrued $ 9,000 at December 31, 2022 for a payment related to the fourth quarter of 2022.

During the years ended December 31, 2022 and 2021, the Company purchased fixed assets and consulting services aggregating $ 1.2 million and $ 0.9 million, respectively, from two entities owned by two of the Company’s general managers.

During the years ended December 31, 2022 and 2021, the Company purchased fixed assets aggregating approximately $ 600,000 and $ 642,000 from an entity owned by an employee.

In the first quarter of 2021, the Company made payments aggregating $ 1.2 million that had been accrued at December 31, 2020, comprised of approximately $ 460,000 paid to Mr.

Fireman, $ 653,000 paid to entities owned by Mr.

Fireman and Mr.

Levine, and $ 45,000 paid to a stockholder of the Company.

At December 31, 2022, the Company’s mortgages with Bank of New England, DuQuoin State Bank, and South Porte Bank were personally guaranteed by Mr.

(20) INCOME TAXES

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

The Company recorded provisions for income taxes of $ 5.9 million and $ 16.2 million for the years ended December 31, 2022 and 2021, respectively.

At December 31, 2022 and 2021, the Company’s cumulative federal net operating losses were $ 39.2 million and $ 24.0 million, respectively.

The provision recorded in the year ended December 31, 2022 was due in part to the impact of Section 280E of the Internal Revenue Code, which prohibits the deduction certain ordinary business expenses, and true-ups from changes that occurred between when the provision for the year ended December 31, 2021 was determined and when the related tax return was filed.

Reconciliations of the Company’s effective tax rates and the statutory tax rate for the years ended December 31, 2022 and 2021 were as follows:

Year ended December 31,

U.S federal taxes at the statutory rate 21.0 % 21.0 %

2 unchanged sentences

Stock-based compensation 2.2 % 10.5 %

FIN 48 reserve 19.5 % — %

Return to Provision adjustments ( 48.7 ) % ( 19.8 ) %

Other 8.2 % 0.9 %

Valuation allowance 2.0 % 19.5 %

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

Net operating

loss carryforwards

Allowance for doubtful

Effective tax rate 28.6 % 63.3 %

The income tax effect of the Company’s loss carryforwards and temporary differences at December 31, 2022 and 2021 were as follows:

Year ended December 31,

Deferred tax assets:

Net operating loss carryforwards $ 6,947 6,981

Allowance for doubtful accounts 256 11,810

Stock compensation 2,557 2,557

Loss on equity investments 8,602 8,633

Goodwill writeoffs

Change in fair value of

Goodwill write-offs 1,188 1,263

Change in fair value of investments 616 599

Lease payments 525 171

Reserves 225 148

Deferred tax liabilities:

Depreciation ( 4,758 ) ( 2,520 )

Real estate revenue ( 500 ) ( 1,000 )

Net deferred tax asset 15,753 28,642

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.

Valuation allowance ( 15,753 ) ( 28,642 )

Total $ — $ —

Federal net operating losses carry forward 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 Internal Revenue Code Section 382.

The Company recorded valuation allowances against its net deferred tax assets at December 31, 2022 and 2021 due to the uncertainty regarding the realization of such assets.

The Company’s assessment of the realization of its deferred tax assets in future periods may differ due to changing circumstances.

The Company's gross unrecognized tax benefits for the years ended December 31, 2022 and 2021 were as follows (in thousands):

Year ended December 31,

Balance at January 1, $ — $ —

Additions based on tax positions related to prior years 4,014 —

Balance at December 31, $ 4,014 $ —

All of the unrecognized tax benefits are included as a component of Income taxes payable, which is a current liability.

The Company does not expect its unrecognized tax benefits to change significantly over the next twelve months.

During the year ended December 2022, the Company's unrecognized tax benefits increased by $ 4.0 million as a result of uncertain tax positions relating to net operating losses deducted by subsidiaries that are subject to the provision of Section 280E of the Internal Revenue Code.

The Company believes that its reserves for uncertain tax positions are appropriate, and that it has meritorious defenses for its tax filings and will vigorously defend them during any audit process, appellate process and through litigation in courts, as necessary.

The 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.

20 – RELATED PARTY TRANSACTIONS

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.

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.

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.

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

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 2018 through 2022.

At December 31, 2022, the Company recorded a receivable for income taxes of $ 3.1 million, comprised of $ 1.3 million of overpayments that will be applied to future periods and $ 1.8 million that was requested for refund from the Internal Revenue Service.

This receivable is reported as a component of Other current assets in the Company's consolidated balance sheet at December 31, 2022.

(21) COMMITMENTS AND CONTINGENCIES

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.

details of the Company’s operating lease agreements are as follows:

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.

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

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:

SCHEDULE OF COMPONENTS OF LEASE EXPENSE

Operating lease cost

Finance lease cost:

Amortization of right-of-use assets

Interest on lease liabilities

Total finance lease cost

weighted average remaining lease term for operating leases is 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

Total lease payments

imputed interest

( 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, 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 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.

Maryland Litigation and DiPietro Lawsuit

In November 2019, Kind Therapeutics USA Inc.

("Kind") filed a complaint against the Company in the Circuit Court for Washington County, Maryland, captioned Kind Therapeutics USA, Inc.

MariMed Inc., et al.

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.

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”).

C-21-CV-19-000670) (the "Maryland Litigation").

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 then-Chief Executive Officer and then-Chief Financial Officer and its wholly-owned subsidiary MariMed Advisors Inc., in Suffolk Superior Court, Massachusetts (the "DiPietro Lawsuit").

In December 2021, (i) the parties in the Maryland Litigation and the DiPietro Lawsuit entered into a global Confidential Settlement and Release Agreement (the "Settlement Agreement") in resolution of both litigation matters and (ii) the Company entered into (a) a membership interest purchase agreement with the members of Kind to acquire 100 % of the equity ownership of Kind (the "Kind Acquisition") and (b) a membership interest purchase agreement with Jennifer DiPietro to acquire her entire equity ownership interest in Mari-MD and Mia (the "DiPietro Acquisition").

In April 2022, following the consummation of the Kind Acquisition, the Maryland Litigation was dismissed in its entirety with prejudice, and the parties released each other from any and all claims between them.

In June 2022, upon the approval of the court in the DiPietro Lawsuit, the DiPietro Acquisition was consummated and the parties released each other from any and all direct and derivative claims, and a stipulation dismissing all claims and counterclaims with prejudice was filed with the court.

Bankruptcy Claim

During 2019, the Company’s MMH subsidiary sold and delivered hemp seed inventory to OGG, Inc.

(f/k/a 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 million from the sale, which was fully reserved on December 31, 2019.

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.

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.

On January 24, 2020, an involuntary bankruptcy proceeding under Chapter 11 was filed against GenCanna and its wholly-owned subsidiary, OGGUSA Inc.

(f/k/a GenCanna Global US, Inc.) ("OGGUSA" and together with GenCanna, the "OGGUSA Debtors") in the U.S.

Bankruptcy Court in the Eastern District of Kentucky (the "Bankruptcy Court").

In February 2020, the OGGUSA Debtors, under pressure from certain of its creditors including its senior lender MGG Investment Group LP (MGG"), agreed to convert the involuntary bankruptcy proceeding into a voluntary Chapter 11 proceeding.

The OGGUSA Debtors' subsidiary, Hemp Kentucky LLC, also filed voluntary petitions under Chapter 11 in the Bankruptcy Court.

In May 2020, after an abbreviated solicitation/bid/sale process, the Bankruptcy Court, over numerous objections by creditors and shareholders of the OGGUSA Debtors, which included the Company, entered an order authorizing the sale of all or substantially all of the assets of the OGGUSA Debtors to MGG.

After the consummation of the sale of all or substantially all of their assets and business, 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 OGGUSA Debtors, and make payments to creditors.

The Liquidating Plan was confirmed by the Bankruptcy Court on November 12, 2020.

Since 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 Oxford Restructuring Advisors LLC, the administrator of the Liquidating Plan for the OGGUSA Debtors (the "Plan Administrator"), 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 Huron.

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.

In connection with the discussions of the Company with the OGGUSA Debtors relating to the Huron settlement, the Plan Administrator raised issues relating to a potential claim against MariMed Hemp, Inc.

("MHI") for certain preferential transfers of assets, which were valued at $ 250,000 by the Plan Administrator, of the OGGUSA Debtors alleged to have been made to MHI in payment of a $ 600,000 loan made by the Company prior to the Chapter 11 bankruptcy of the OGGUSA Debtors (the "Preferential Claim").

On April 20, 2022, the Plan Administrator filed its Complaint to Avoid and Recover Transfers Pursuant to 11 U.S.C.

§§547 and 550 and to Disallow Claims Pursuant to 11 U.S.C.

§502 (the "Complaint"), asserting the Preferential Claim seeking the recovery of an amount no less than $ 200,000 and to disallow the MHI claim until such time as such preferential transfer has been repaid to the OGGUSA Debtors.

On August 1, 2022, an answer to the Complaint was filed, asserting counterclaims and third-party claims against OGGUSA, the Plan Administrator, and Huron for declaratory judgment (the "Related Claims") in relation to terms of the Plan of Reorganization (the "Plan") and the allowance of the MHI claim under the Plan.

The Company has and continues to vigorously deny that any of the Preferential Claim exists in that such claims were waived and released in connection with the Company's settlement agreement and stipulations for its support of and voting for the Plan.

As such, the Company believes that such claims are meritless and have no basis in fact or law.

As of the date of this filing, there is insufficient information as to how much of the Company's allowed general unsecured claim, if any, will be paid upon the completion of the liquidation of the remaining assets of the OGGUSA Debtors.

(22) SUBSEQUENT EVENTS

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

Planned Acquisition of Dispensary

On February 21, 2023, the Company announced its intention to acquire the operating assets of Ermont, Inc.

("Ermont"), a medical licensed vertical cannabis operator, located in Quincy, Massachusetts.

This acquisition, which is subject to approval by the Massachusetts Cannabis Control Commission (the "CCC"), will provide the Company with its third dispensary in Massachusetts, substantially completing its buildout to the maximum allowable by state regulations.

The Company anticipates rebranding the dispensary as Panacea Wellness and intends to commence medical sales upon receipt of final approvals and closing conditions.

The acquisition includes a Host Community Agreement with the city of Quincy to conduct adult-use cannabis sales.

The Company expects to commence adult-use sales upon approval by the CCC.

The Company also plans to expand the existing medical dispensary to accommodate the expected increased traffic associated with adult-use sales.

Additionally, the Company plans to repurpose Ermont's existing cultivation facility to use for its pheno-hunting activities.

The Company expects this will allow it to move pheno-hunting out of its New Bedford facility and to use the freed space in New Bedford for much-needed additional capacity to cultivate its Nature's Heritage flower.

Credit Agreement

On January 24, 2023, the Company entered into a Loan and Security Agreement (the “Credit Agreement”), by and among the Company, subsidiaries of the Company from time-to-time party thereto (together with the Company, collectively, the “Borrowers”), lenders from time-to-time party thereto (the “Lenders”), and Chicago Atlantic Admin, LLC (“Chicago Atlantic”), as administrative agent for the Lenders.

Proceeds from the Credit Agreement are designated to complete the build-out of a new cultivation and processing facility in Illinois, complete the buildout of a new processing kitchen in Missouri, expand existing cultivation and processing facilities in Massachusetts and Maryland, fund certain capital expenditures, and to repay in full the Kind Therapeutics seller notes incurred in connection with the Kind acquisition in April 2022.

The remaining balance, if any, will be used to fund acquisitions.

Principal, Security, Interest and Prepayments

The Credit Agreement provides for $ 35.0 million in principal borrowings at the Borrowers’ option in the aggregate and further provides the Borrowers with the right, subject to customary conditions, to request an additional incremental term

loan in the aggregate principal amount of up to $ 30.0 million;

provided that the Lenders elect to fund such incremental term loan.

$ 30 million of loan principal was funded at the initial closing and the Company has the option, during a six-month period following the initial closing, to draw down an additional $ 5.0 million.

The loans require scheduled amortization payments of 1.0 % of the principal amount outstanding under the Credit Agreement per month commencing in May 2023, and the remaining principal balance is due in full on January 24, 2026, subject to extension to January 24, 2028 under certain circumstances.

The Credit Agreement provides the Borrowers with the right, subject to specified limitations, to (a) incur seller provided debt in connection with future acquisitions, (b) incur additional mortgage financing from third-party lenders secured by real estate currently owned and acquired after the closing date, and (c) to incur additional debt in connection with equipment leasing transactions.

The obligations under the Credit Agreement are secured by substantially all of the assets of the Borrowers, excluding specified parcels of real estate and other customary exclusions.

The Credit Agreement provides for a floating annual interest rate equal to the prime rate then in effect plus 5.75 %, which rate may be increased by 3.00 % upon an event of default or 7.50 % upon a material event of default as provided in the Credit Agreement.

At any time, the Company may voluntarily prepay amounts due under the facility in $ 5.0 million increments, subject to a three -percent prepayment premium and, during the first 20-months of the term, a “make-whole” payment.

Representations, Warranties, Events of Default and Certain Covenants

The Credit Agreement includes customary representations and warranties and customary events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to material indebtedness, and events of bankruptcy and insolvency.

The Credit Agreement also includes customary negative covenants limiting the Borrowers’ ability to incur additional indebtedness and grant liens that are otherwise not permitted, among others.

Additionally, the Credit Agreement requires the Borrowers to meet certain financial tests.

Warrant Issuance

The Credit Agreement provides for 30 % warrant coverage against amounts funded under the facility, priced at a 20 % premium to the trailing 20-day average price on the closing date of each such funding.

At the initial closing, upon funding of the initial $ 30.0 million under the facility, the Company issued to the Lenders an aggregate of 19,148,936 warrants to purchase shares of the Company’s common stock at $ 0.47 per share, exercisable for a five-year period following issuance.

Incremental warrants are issuable upon further draw-downs under the facility.

Repayment of Kind Notes

On January 24, 2023, in connection with the Company's Credit Agreement described above, the Company repaid in full the Kind Notes (see Note 11).

Equity Transactions

Subsequent to December 31, 2022, the following equity transaction occurred:

• 1,793 shares of restricted common stock issued as payment under a royalty agreement with an aggregate fair market value of approximately $ 700 .

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