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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023

For the fiscal year ended December 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission file number: 000-54457

TREES CORPORATION

(Exact name of registrant as specified in its charter)

COLORADO		90-1072649
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

215 Union Boulevard, Suite 415 Lakewood, Colorado 80228 (Address of principal executive offices)

215 Union Boulevard, Suite 415Lakewood, Colorado 80228 (Address of principal executive offices)

Registrant’s telephone number, including area code: (303) 759-1300

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered		Ticker symbol
N/A		N/A		N/A

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is anot required ~~well-known~~to ~~seasoned~~file ~~issuer,~~reports aspursuant ~~defined~~to ~~in Rule~~Section ~~405~~13 or Section 15(d) of the ~~Securities~~ Act. Yes ◻☐ No ⌧☒

Indicate by check mark ifwhether the registrant (1) has isfiled ~~not~~all ~~required~~reports to ~~file~~be ~~reports~~filed ~~pursuant~~by to Section 13 or ~~Section~~ 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ◻ ☒ No ⌧☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐

If an ~~Large~~emerging ~~accelerated~~growth ~~filer~~company, ◻indicate ~~Accelerated~~by ~~filer~~check ◻mark ~~Non-accelerated~~if ~~filer~~the ⌧registrant has ~~Smaller~~elected ~~reporting~~not ~~company~~to ☒use ~~Emerging~~the ~~growth~~extended ~~company~~transition ☐period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether ~~the~~any ~~registrant~~of isthose aerror corrections ~~shell~~are ~~company~~restatements ~~(as~~that ~~defined~~required ina ~~Rule 12b~~recovery analysis of incentive-2based compensation received by any of the ~~Act~~registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b)~~: Yes ☐ No~~. ⌧☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes ☐ No ☒

The aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing sale price of the registrant’s common stock, par value $0.01001 per share (“Common Stock”), on ~~June~~December 3029, ~~2022~~2023, was $127,~~919~~340,~~668~~390.

As of April 1, 2024, the Registrant had 108,746,520 issued and outstanding shares of Common Stock.

As of April 15, 2023, the Registrant had 118,664,094 issued and outstanding shares of Common Stock.

Table of Contents

TABLE OF CONTENTS


PART I
PART I
Item 1.	Business	2

Item 1A.	Risk Factors	10
Item 1.	Business	4
Item 1B.	Unresolved Staff Comments	22
Item 1A.	Risk Factors	12
Item 1C.	Cybersecurity	22
Item 1B.	Unresolved Staff Comments	24
Item 2.	Properties	23
Item 2.	Properties	25
Item 3.	Legal Proceedings	23
Item 3.	Legal Proceedings	25
Item 4.	Mine Safety Disclosures	23
Item 4.	Mine Safety Disclosures	26
PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24
PART II
Item 6.	Reserved	24

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	26
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	31
Item 6.	Reserved	26
Item 8.	Financial Statements and Supplementary Data	F-1
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 9.	Changes In and Disagreements With Accountants On Accounting and Financial Disclosure	32
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	34
Item 9A.	Controls and Procedures	32
Item 8.	Financial Statements and Supplementary Data	35
Item 9B.	Other Information	33
Item 9.	Changes In and Disagreements With Accountants On Accounting and Financial Disclosure	70
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	33
Item 9A.	Controls and Procedures	70
PART III
Item 9B.	Other Information	71
Item 10.	Directors, Executive Officers, and Corporate Governance	34

Item 11.	Executive Compensation	34
PART III
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	34

Item 13.	Certain Relationships and Related Transactions and Director Independence	34
Item 10.	Directors, Executive Officers, and Corporate Governance	72
Item 14.	Principal Accounting Fees and Services	34
Item 11.	Executive Compensation	72
PART IV
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	72
Item 15.	Exhibits and Financial Statement Schedules	35
Item 13.	Certain Relationships and Related Transactions and Director Independence	72
	Signatures	39
Item 14.	Principal Accounting Fees and Services	72

PART IV

Item 15.	Exhibits and Financial Statement Schedules	73
	Signatures	77

Table of Contents

PART I

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This Annual Report on Form 10-K (this “Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future, and they are not guarantees. Such statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, level of activity, performance, or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

We cannot predict all risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements will occur or that our objectives and plans will be achieved, and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management, any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

Some factors that might cause such differences are described in the section entitled “Risk Factors” in this Report and in other documents that we file from time to time with the Securities and Exchange Commission (“SEC”), which factors include, without limitation, the following:

●

Competition from other similar companies;

●

Regulatory limitations on the products or services we can offer and markets we can serve;

●

Other changes in the regulation of medical and recreational cannabis use;

●

Changes in underlying consumer behavior, which may affect the business of our customers;

●

Our ability to access adequate financing on reasonable terms and our ability to raise additional capital in order to fund our operations;

●

Our ability to identify and successfully integrate acquisitions, and the ability of acquired businesses to perform as expected;

●

Challenges with new products, services, and markets; and

●

Fluctuations in the credit markets and demand for credit.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether because of new information, future events, a change in events, conditions, circumstances, or assumptions underlying such statements, or otherwise.

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The following description of the business of TREES Corporation should be read in conjunction with the information included elsewhere in this Report. Unless the context indicates otherwise, references to the words “we,” “us,” “our,” “TREES,” and the “Company” in this Report refer to TREES Corporation.

ITEM 1. BUSINESS.

Business Summary

TREES Corporation is a cannabis retailer and cultivator in the States of Colorado and Oregon.

We presently operate six (6) cannabis dispensaries as follows:

We presently operate eight (8) cannabis dispensaries as follows:

●

Englewood, Colorado – 5005 S. Federal Boulevard –Recreational license only

● ~~Two (2) in~~ Denver, Colorado

o 468 S. Federal Boulevard –Recreational license only

East Hampden Avenue (formerly Green Man) –Recreational license only

●

Longmont, Colorado

12626 N. 107^th Street (formerly Green Tree/Ancient Alternatives) – Medical and Recreational licenses

● Berthoud, Colorado

o 1090 N. 2nd Street (formerly Green Tree/Natural Alternatives for Life) – Medical and Recreational licenses

●

Three (3) in Oregon

SW Corbett Avenue, Portland, OR – Medical and Recreational licenses

NE 102^nd Avenue, Portland, OR – Medical and Recreational licenses

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

We also operate two (2) cultivation facilities in Colorado as follows:

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

●

SevenFive Farm – 3705 N. 75^th Street, Boulder – Retail cultivation license only

● 6859 N. Foothills Highway D-300 (formerly Green Tree/Ancient Alternatives) – Medical and Retail cultivation licenses

● 6859 N. Foothills Highway C-100 (formerly Green Tree/Mountainside Industries) – Medical and Retail cultivation licenses

●

6859 N. Foothills Highway E-100 (formerly Green Tree/Hillside Enterprises) – Retail cultivation license only

● 1090 N. 2nd Street (formerly Green Tree/Natural Alternatives for Life) – Medical cultivation license only

Our principal business model is to acquire, integrate and optimize cannabis companies in the retail and cultivation segments utilizing the combined experience of entrepreneurs and synergistic operations of our vertically integrated network.

Business Strategy and Recent Transactions

As the cannabis industry becomes more mature, we focus on (1) identifying licensed cannabis assets that we can acquire, (2) executing our business strategy to continue to generate cash and meet our financial commitments, and (3) moving with an urgency that reflects our conviction and confidence in our ability to create customer loyalty and advocacy. To that end, during the years ended ~~2022~~2023 and ~~2021~~2022, we implemented the following significant actions in support of our continued growth:

● In ~~February~~December 2023, we completed ~~the~~a ~~acquisition~~restructuring of ~~Station~~our 2,senior ~~LLC,~~secured ~~the~~debt ~~assets~~with ofcertain ~~which~~accredited ~~consist~~investors ofparty ato ~~dispensary~~the ~~located~~September in2022 ~~Denver,~~note COoffering. ~~The~~We ~~consideration~~issued ~~paid~~and bysold senior secured convertible notes (the ~~Company~~“Amended ~~consists~~Notes”) ofwith ~~cash~~an ataggregate ~~closing~~principal ~~equal~~amount toof $~~256~~13,~~582~~500,000 ~~plus~~to ansuch ~~additional~~investors. ~~$385,873~~The inmaterial ~~twenty-four~~terms ~~(24)~~of ~~equal~~the ~~monthly~~Amended ~~payments~~Notes ~~commencing~~include ~~May~~no ~~2023~~changes to the aggregate principal amount; the maturity date; or the interest rate. ~~Timothy~~Material changes reflected in the Amended Notes include the following:

4o 25% of the total principal, i.e., $3,375,000, contains different terms than the remaining principal.

~~Table~~o Principal mandatorily convertible at any time during term upon occurrence of ~~Contents~~trigger event based on trading price and trading value.

~~Brown,~~o ~~one~~Interest ofsubject ~~our~~to ~~Board~~optional ~~members,~~conversion ~~was~~by ~~the~~TREES ~~sole~~if ~~owner~~trigger ofevent ~~Station 2 and has and will receive all consideration described above~~occurs.

o In the event of this conversion, the Principal Amount would be reduced to $10,125,000.

Current interest payments are deferred until March 2024; further, the Company shall make ‘catch-up’ interest payments beginning in December 2024 for deferred interest.

Conversion: Up to $3,375,000 of principal will be convertible at Investors’ option at a price per share equal to $0.50.

Warrant exercise price of previously granted senior debt warrants in respect of prior 12% and 10% note offerings reduced to $0.40 per share; warrant expiration date extended to September 15, 2029.

Working capital – Lead Investor agreed to provide an additional $250,000 on or after closing in a separate ‘Working Capital Note’ with a 1.25x liquidation preference, and up to an additional $250,000 at TREES’ option. In such event, a 1.5x liquidation preference shall apply to entire amount (the initial $250,000 plus the additional $250,000).

Lead Investor to provide up to $500,000 in additional M&A financing upon a mutually agreed transaction.

●

In August 2023, we re-sold the Station 2 license and related assets to Timothy Brown, one of our Board members, in exchange for extinguishment of all debt or other obligations of the Company, Trees Colorado, and any of their respective affiliates, directors, officers or agents, pursuant to the original Asset Purchase Agreement of October 2022, and (ii) repayment by Brown of certain debts of the Company in respect of a cultivation facility owned by the Company.

●

In July 2023, we ‘reversed’ a portion of the Green Tree business combination transaction originally consummated in December 2022, pursuant to a settlement agreement in which we sold back to the original Green Tree owners cannabis licenses and the related assets associated with (i) GT Retail, a cultivation facility and retail dispensary located in Berthoud, Colorado; and (ii) GT MIP, a ‘marijuana infused product’ dispensary located in Boulder County, Colorado. The consideration for this transaction was the redemption and cancellation of 9,917,574 shares of our Common Stock owned by Allyson Feiler Downing and Loree Schwartz originally issued in 2022. As part of the settlement agreement, all parties waived any potential claims with limited exceptions. In July 2023, Downing and Schwartz were terminated from employment with the Company, and in August 2023, Downing resigned from the Board.

●

In December 2022, we completed the acquisition of substantially all of the assets of Green Man Cannabis (“Green Man”, the overall transaction is referred to as the “Green Man Acquisition”). Green Man equity holders received cash equal to $1,225,000 together with an aggregate of 4,494,382 shares of the Common Stock. An additional $1,500,000 in cash will be paid out in eighteen (18) equal monthly payments equal to $83,333.33 per month commencing on the 12-month anniversary of the closing.

● Also in December 2022, we completed the acquisition of substantially all of the assets of Ancient Alternatives LLC, Natural Alternatives For Life, LLC, Mountainside Industries, LLC, Hillside Enterprises, LLC, and GT Creations, LLC, each a Colorado limited liability company (collectively, the “Green Tree Entities”, the overall transaction is referred to herein as the “Green Tree Acquisition”). At the closing, the Company delivered to the Green Tree Entities an aggregate of cash equal to $500,000 and delivered to equity holders of the Green Tree Entities an aggregate of 17,977,528 shares of Common Stock. An additional $3,500,000 in cash was paid by the Company to the Green Tree Entities in fifteen (15) equal monthly payments commencing on the 9-month anniversary of the closing. The number of shares is subject to adjustment based upon a formula specified in the definitive purchase agreement. We assumed certain operating obligations at closing, including certain manufacturing agreements between GT Creations and affiliates of the Green Tree Entities.

● ~~Also~~In inSeptember ~~December~~ 2022, we completed ~~the~~a ~~acquisition~~private ofoffering ~~substantially~~in ~~all~~which ofwe issued and sold to accredited investors senior secured convertible notes (the ~~assets~~“2022 ofNotes”) ~~Ancient~~with ~~Alternatives~~an ~~LLC,~~aggregate ~~Natural~~principal ~~Alternatives~~amount ~~For~~of ~~Life~~$13, ~~LLC~~500,000 ~~Mountainside~~(“Principal ~~Industries,~~Amount”) ~~LLC,~~to ~~Hillside~~such ~~Enterprises,~~investors ~~LLC~~(“2022 Note Offering”), ~~and~~in GTexchange ~~Creations~~for payment to the Company by certain of the investors of an aggregate amount of $10,587,250 ~~LLC~~in cash, ~~each~~as awell ~~Colorado~~as ~~limited~~cancellation ~~liability~~of ~~company~~outstanding ~~(collectively,~~indebtedness in the ~~"Green~~aggregate ~~Tree~~amount ~~Entities”~~of $2,912,750 ~~the~~represented ~~overall~~by ~~transaction~~certain isprior ~~referred~~promissory tonotes ~~herein~~we asissued ~~the~~in ~~“Green~~December ~~Tree~~2020 ~~Acquisition”)~~and April 2020. AtIn ~~the~~connection ~~closing,~~with the ~~Company~~2022 ~~delivered~~Note toOffering, ~~the~~Investors ~~Green~~received ~~Tree~~warrants ~~Entities~~to anpurchase ~~aggregate~~shares of ~~cash~~the ~~equal~~Company’s toCommon ~~$500,000~~Stock ~~and~~equal ~~delivered~~ to ~~equity~~20% ~~holders~~coverage of the ~~Green~~aggregate ~~Tree~~principal ~~Entities~~amount at $0.70 per share, which equals an aggregate of 17warrants to purchase 3,~~977~~857,~~528~~150 shares of the Common Stock. AnThe ~~additional~~lead ~~$3,500,000~~Investor in(“Lead ~~cash~~Investor”) ~~will~~received bean ~~paid~~additional by10% ~~the~~warrant ~~Company~~coverage toon the ~~Green~~aggregate ~~Tree~~principal ~~Entities~~amount inof ~~fifteen~~Notes ~~(15)~~for ~~equal~~total ~~monthly~~additional ~~payments~~warrants ~~commencing~~to onpurchase ~~the~~1,928,571 ~~9-month~~shares ~~anniversary~~ of ~~the~~Common ~~closing~~Stock. The ~~number~~Lead ofInvestor ~~shares~~also iswill ~~subject~~receive toa ~~adjustment~~five ~~based~~percent ~~upon~~cash afee ~~formula~~on ~~specified~~the inaggregate ~~the~~principal ~~definitive~~amount ~~purchase~~of ~~agreement.~~Notes, Wepayable ~~assumed~~by ~~certain~~the ~~operating~~Company; ~~obligations~~one-half atof ~~closing,~~such ~~including~~fee ~~certain~~may ~~manufacturing~~be ~~agreements~~deferred ~~between~~by GTthe ~~Creations~~Company ~~and~~for ~~affiliates~~up ofto ~~the~~five ~~Green~~months ~~Tree~~from ~~Entities~~the closing.

~~Allyson~~The ~~Feiler~~Notes will bear interest at an annual rate of 12% and will mature on September 16, a2026 (the “Maturity Date”). Investors have the option to convert up to 50% of the outstanding unpaid principal ~~owner~~and accrued interest of the ~~Green~~Notes ~~Tree~~into ~~Entities,~~Common ~~was~~Stock ~~elected~~at a fixed conversion price equal to ~~our~~$1.00 per ~~Board~~share. The Warrants are exercisable at an exercise price of ~~Directors~~$0.70 per Warrant, subject to adjustment as provided in the Warrants, at any time prior to the earlier of the ~~effective~~Maturity ~~December~~Date ~~12,~~and ~~2022~~an Acquisition (as defined in the Warrants). Payment on the Notes is secured by substantially all of the assets of the Company pursuant to a Security Agreement by and among the Company and the Investors.

● In December 2021, we completed the acquisition of substantially all the assets of Trees Portland, LLC and Trees Waterfront, LLC, representing a portion of the overall Trees transaction (“Trees Transaction”). The cash paid in connection with the Oregon Closing consisted of $331,581 and stock consideration of 6,423,575 shares of our Common Stock. Further, cash equal to $497,371 will be paid to sellers in equal monthly installments over a period of 24 months from the Oregon Closing.

● In September ~~2022~~2021, we ~~completed~~entered into a ~~private~~Securities ~~offering~~Purchase inAgreement ~~which~~with wevarious ~~issued and sold to~~ accredited investors, ~~senior~~pursuant ~~secured~~to ~~convertible~~which ~~notes (~~the ~~"2022~~Company ~~Notes”)~~issued ~~with~~and ansold ~~aggregate~~Units ~~principal~~consisting ~~amount~~ of ~~$13,500,000~~Series ~~("Principal~~A ~~Amount”)~~Convertible toPreferred ~~such~~Stock ~~investors~~ (~~"2022~~“Series ~~Note~~A ~~Offering~~Preferred”), inand ~~exchange~~warrants ~~for payment~~ to ~~the~~purchase ~~Company~~shares ~~by certain~~ of ~~the~~our ~~investors~~Common ofStock anThe ~~aggregate~~total ~~amount~~number of ~~$10,587,250~~Units insold ~~cash~~was 1,180. asEach ~~well~~Unit asconsists ~~cancellation~~ of ~~outstanding~~one ~~indebtedness~~(1) inshare ~~the aggregate amount~~ of ~~$2,912,750~~Series ~~represented~~A byPreferred ~~certain prior promissory notes we issued in December 2020~~ and ~~April~~300 ~~2020~~Warrants. InThe ~~connection with the 2022 Note Offering, Investors received warrants to~~ purchase ~~shares~~price of ~~the~~each ~~Company’s~~Unit ~~Common~~was ~~Stock equal to 20% coverage of the aggregate principal amount at~~ $~~0.70 per share~~1,000, ~~which~~for ~~equals~~ an aggregate ofamount ~~warrants~~sold toof ~~purchase 3~~$1,~~857~~180,~~150 shares of the Common Stock~~000. ~~The~~Each ~~lead~~share ~~Investor ("Lead Investor”) received an additional 10% warrant coverage on the aggregate principal amount~~ of ~~Notes~~Series ~~for~~A ~~total~~Preferred ~~additional~~is ~~warrants~~convertible tointo ~~purchase~~ 1,~~928,571~~000 shares of Common Stock. ~~The~~upon ~~Lead Investor also will receive a five percent cash fee on~~ the ~~aggregate~~consummation ~~principal amount~~ of ~~Notes,~~a ~~payable~~capital byraise ~~the Company; one-half~~ of ~~such~~at ~~fee~~least ~~may~~$5 ~~be deferred by the Company for up to five months from the closing~~million.

The Notes will bear interest at an annual rate of 12% and will mature on September 16, 2026 (the "Maturity Date”). Investors have the option to convert up to 50% of the outstanding unpaid principal and accrued interest of the Notes into Common Stock at a fixed conversion price equal to $1.00 per share. The Warrants are exercisable at an exercise price of $0.70 per Warrant, subject to adjustment as provided in the Warrants, at any time prior to the earlier of the Maturity Date and an Acquisition (as defined in the Warrants). Payment on the Notes is secured by substantially all of the assets of the Company pursuant to a Security Agreement by and among the Company and the Investors.

● In December 2021, we completed the acquisition of substantially all the assets of Trees Portland, LLC and Trees Waterfront, LLC, representing a portion of the overall Trees transaction ("Trees Transaction”). The cash paid in connection with the Oregon Closing consisted of $331,581 and stock consideration of 6,423,575 shares of our Common Stock. Further, cash equal to $497,371 will be paid to sellers in equal monthly installments over a period of 24 months from the Oregon Closing.

● In September 2021, we entered into a Securities Purchase Agreement with various accredited investors, pursuant to which the Company issued and sold Units consisting of Series A Convertible Preferred Stock (“Series A Preferred”) and warrants to purchase shares of our Common Stock The total number of Units sold

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was 1,180. Each Unit consists of one (1) share of Series A Preferred and 300 Warrants. The purchase price of each Unit was $1,000, for an aggregate amount sold of $1,180,000. Each share of Series A Preferred is convertible into 1,000 shares of Common Stock upon the consummation of a capital raise of at least $5 million.

●

Also in September 2021, we completed the acquisition of substantially all the assets of TDM, LLC, representing a portion of the overall Trees Transaction. The cash paid by the Company consisted of $1,155,256. We issued 22,380,310 shares of our Common Stock. Further, cash equal to $1,732,884 will be paid to Seller in equal monthly installments over a period of 24 months.

● In July 2021, we entered into an Asset Purchase Agreement with NBC Holdings LLC and Richard Cardinal (“NBC Buyer”) pursuant to which we agreed to sell substantially all the assets in our cultivation consulting business known as Next Big Crop (“NBC”) to Buyer. The Board of Directors approved the Agreement in furtherance of its previously disclosed plan to identify and acquire licensed cannabis assets that will allow us to continue to generate cash and meet our financial commitments. The purchase price for the sale consists of a payment by NBC Buyer of $75,000 payable upon signing, an additional $75,000 payable within one year of the closing, and ten percent (10%) of profits generated by NBC Buyer in the states of Michigan, Mississippi and Massachusetts for a period of twelve months from the Closing. Pursuant to amendment, NBC Buyer paid the additional $75,000 in March 2022, and the 10% profit share described above was eliminated.

● In April 2021, we completed an offering with accredited investors, pursuant to which the Company issued and sold convertible notes (“2021 Notes”) with an aggregate principal amount of $2.3 million to such Investors (“2021 Note Offering”). The notes are part of an over-allotment approved by the existing noteholders in connection with the original convertible note offering (and previous over-allotment) of $4.6 million consummated on December 23, 2020, and February 8, 2021. In connection with the 2021 Note Offering, each holder received warrants to purchase shares of our common stock equal to 20% coverage of the aggregate principal amount at $0.56 per share, except that the warrant coverage to one investor acting as lead investor in the 2021 Note Offering received approximately 35.5% of the aggregate principal amount invested. The notes bear interest at an annual rate of 10% and will mature on April 20, 2024. The investors have the option to convert up to 50% of the outstanding unpaid principal and accrued interest of the notes into Common Stock at a variable price of 80% of the market price but no less than $0.65 per share and no more than $1.00 per share.

We determined the sale of our operations consulting and products segment represented a strategic shift that had a significant effect on our results of operations and, as a result, we have presented the disposal as discontinued operations in our financial statements. Unless noted otherwise, discussion in this Annual Report on Form 10-K pertains to our continuing operations.

History and Corporate Structure

The accompanying consolidated financial statements include the results of TREES and its wholly-owned subsidiary companies, each a Colorado corporation or limited liability company:

●

6565 E. Evans Owner LLC

●

GC Corp

●

GC Capital Corp, LLC

●

GC Security LLC

●

General Cannabis Capital Corporation

●

Standard Cann, Inc.

●

SevenFive Farms Cultivation, LLC

●

SevenFive Farms, LLC

●

Trees Colorado LLC

●

Trees Oregon LLC

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●

Green Tree Colorado LLC

●

GT Cultivation LLC

●

GT Retail LLC

●

GT MIP LLC

●

Green Man Cannabis, LLC

Competitive Strengths

We believe we possess certain competitive strengths and advantages in the industries in which we operate:

Experience. Our management teams have extensive experience with a proven track record of success in developing, launching, and managing grow operations and retail dispensaries.

Strategic Alliances. We are dedicated to growing through strategic acquisitions, partnerships, and agreements that will enable us to enter and expand into new markets. Our strategy is to pursue alliances with potential targets that have the ability to generate positive cash flow, effectively meet customer needs, and supply desirable products, services or technologies, among other considerations.

Regulatory Compliance. The state and local laws regulating the cannabis industry change at a rapid pace. We have resources committed to ensure our operations comply with all state and local laws, policies, guidance, and regulations to which we are subject. We apply this compliance knowledge to our customers to ensure that they, too, are in full compliance.

Industry Knowledge. We continue to create, share, and leverage information and experiences with the purpose of creating awareness and identifying opportunities to increase shareholder value. Our management team has business expertise, extensive knowledge of the cannabis industry, and closely monitors changes in legislation. We work with partners who enhance the breadth of our industry knowledge.

Competition

Overall, we believe we have a competitive advantage by providing a range of goods and services to the cannabis industry. This allows us to provide integrated solutions to our customers, as well as sell additional goods and services to customers of a single segment. However, there is no aspect of our business that is protected by patents or copyrights.

Retail. We will compete with a variety of different operators across the states in which we operate. In most of such states, there are specific license caps that create high barriers to entry. However, in some markets, such as Colorado, there are few caps on licenses creating a more open marketplace.

Cultivation. The Colorado cultivation market is highly fragmented. There are over one million cannabis plants cultivated for cannabis sales each year, and a typical 15,000 to 20,000 square foot grow facility contains approximately 5,000 to 7,500 plants.

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Government and Industry Regulation

Cannabis continues to be a Schedule I controlled substance under the Controlled Substances Act (“CSA”) and is, therefore, illegal under federal law. Even in those states in which the use of cannabis has been legalized pursuant to state law, its use, possession, and/or cultivation remains a violation of federal law. A Schedule I controlled substance is defined as one that has no currently accepted medical use in the United States, a lack of safety for use under medical supervision and a high potential for abuse. The U.S. Department of Justice (the “DOJ”) describes Schedule I controlled substances as “the most dangerous drugs of all the drug schedules with potentially severe psychological or physical dependence.” If the federal government decides to enforce the CSA in Colorado with respect to state-regulated cannabis activities in Colorado and other states, persons that are charged with distributing, possessing with intent to distribute or growing cannabis could be subject to fines and/or terms of imprisonment, the maximum being life imprisonment and a $50 million fine.

Considering the conflict between federal laws and state laws regarding cannabis, the administration under President Obama had effectively stated that it was not an efficient use of resources to direct federal law enforcement agencies to prosecute those lawfully abiding by state-designated laws allowing the use and distribution of medical cannabis. For example, the prior DOJ Deputy Attorney General of the Obama administration, James M. Cole, issued a memorandum (the “Cole Memo”) to all United States Attorneys providing updated guidance to federal prosecutors concerning cannabis enforcement under the CSA. In addition, the Financial Crimes Enforcement Network (“FinCEN”) provided guidelines (the “FinCEN Guidelines”) on February 14, 2014, regarding how financial institutions can provide services to cannabis-related businesses consistent with their Bank Secrecy Act (“BSA”) obligations (see “-- FinCEN”). The policies of the Obama administration concerning federal law enforcement regarding cannabis, notwithstanding the rescission of the Cole Memo (see below), continued during the Trump administration and ~~we expect them to be continued~~ continues during the Biden administration.

Congress previously enacted an omnibus spending bill that included a provision (the “Rohrabacher-Blumenauer Amendment”) prohibiting the DOJ from using funds to prevent states with medical cannabis laws from implementing such laws. This provision is renewed annually by Congress and is current through September 30, 2021. In August 2016, a Ninth Circuit federal appeals court ruled in United States v. McIntosh that the Rohrabacher-Blumenauer Amendment bars the DOJ from spending funds on the prosecution of conduct that is allowed by state medical cannabis laws, provided that such conduct is in strict compliance with applicable state law. In March 2015, bipartisan legislation titled the Compassionate Access, Research Expansion, and Respect States Act (the “CARERS Act”) was introduced, proposing to allow states to regulate the medical use of cannabis by changing applicable federal law, including by reclassifying cannabis under the Controlled Substances Act to a Schedule II controlled substance and thereby changing the plant from a federally-criminalized substance to one that has recognized medical uses. More recently, the Respect State Marijuana Laws Act of 2017 has been introduced in the U.S. House of Representatives, which proposes to exclude persons who produce, possess, distribute, dispense, administer, or deliver marijuana in compliance with state laws from the regulatory controls and administrative, civil, and criminal penalties of the CSA.

These developments previously were met with a certain amount of optimism in the cannabis industry, but (i) neither the CARERS Act nor the Respect State Marijuana Laws Act of 2017 have yet been adopted, (ii) the Rohrabacher-Blumenauer Amendment, being an amendment to an appropriations bill that must be renewed annually, has not currently been renewed beyond September 30, 2021, and (iii) the ruling in United States v. McIntosh is only applicable precedent in the Ninth Circuit, which does not include Colorado, the state where we currently primarily operate.

Furthermore, on January 4, 2018, the former U.S. Attorney General, Jeff Sessions, issued a memorandum for all U.S. Attorneys (the “Sessions Memo”) stating that the Cole Memo was rescinded effectively immediately. In particular, Mr. Sessions stated that “prosecutors should follow the well-established principles that govern all federal prosecutions,” which require “federal prosecutors deciding which cases to prosecute to weigh all relevant considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community.” The Sessions Memo went on to state that given the DOJ’s well-established general principles, “previous nationwide guidance specific to marijuana is unnecessary and is rescinded, effective immediately.”

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In response to the Sessions Memo, U.S. Attorney Bob Troy for the District of Colorado, the state in which our principal business operations are presently located, issued a statement on January 4, 2018, stating that the United States Attorney’s Office in Colorado is already guided by the well-established principles referenced in the Sessions Memo, “focusing in particular on identifying and prosecuting those who create the greatest safety threats to our communities around the state. We will, consistent with the Attorney General’s latest guidance, continue to take this approach in all our work with our law enforcement partners throughout Colorado.”

It is unclear at this time whether the Sessions Memo will be rescinded by the Biden administration; nor is it clear whether the Biden administration will strongly enforce the federal laws applicable to cannabis or what types of activities will be targeted for enforcement. However, a significant change in the federal government’s enforcement policy with respect to current federal laws applicable to cannabis could cause significant financial damage to us. We currently cultivate, distribute, and sell cannabis. We may be irreparably harmed by a change in enforcement policies of the federal government depending on the nature of such change. As of the date of this Report, we have provided products and services to state-approved cannabis cultivators and dispensary facilities. Accordingly, we could be subject to criminal prosecution, which could lead to imprisonment and/or the imposition of penalties, fines, or forfeiture.

Recent legislative proposals have been introduced:

●

SAFER Banking Act. This would protect financial institutions that offer services to state-legal cannabis-related business. Originally called the ‘SAFE Banking Act’, it was reintroduced as the Secure and Fair Enforcement Regulation Banking Act (SAFER) in 2023.

●

Capital Lending and Investment for Marijuana Businesses Act (CLIMB Act) – introduced June 2022 – would:

●

Permit public agencies to provide financial support to the cannabis industry;

●

Provide protection to service providers (investment banks, law firms, accounting firms); and

●

Provide access to public capital markets by amending the Exchange Act to create a ‘safe harbor’ for the listing of cannabis businesses on a national securities exchange, such as the NYSE and Nasdaq.

● SAFE Banking Act. This would protect financial institutions that offer services to state-legal cannabis-related business.

●

Marijuana Opportunity Reinvestment & Expungement Act (MORE Act). Reintroduced in 2021, the MORE Act aims to end criminalization of cannabis related past criminal penalties and convictions, and provide criminal justice reform, social justice, and economic development for those affected by the ‘war on drugs.’ The MORE Act would also tax cannabis products starting at 5% to 8% (increasing by 1% over five years).

●

States Reform Act. This also seeks to decriminalize cannabis and provide retroactive expungement for non-violent federal cannabis offenses (except for persons involved in a drug cartel).

●

Sensible Enforcement of Cannabis Act. This would protect cannabis businesses and consumers in states where cannabis has been legalized, while continuing the federal cannabis prohibition to remain in place in states where cannabis has not been legalized.

● Marijuana Revenue and Regulation Act. This would create a nationwide regulatory structure for legalizing cannabis and removing it from the CSA.

None of the above proposals have been enacted; and while the Biden administration appears to have a more friendly position toward legalization of cannabis generally than the Trump administration, it cannot presently be determined what position the current administration will take on either of these proposals.

9Further, the US Drug Enforcement Administration is currently weighing whether to revise marijuana to a ‘Schedule 3’ controlled substance (rather than Schedule 1). Such a move would end Internal Revenue Code 280E’s application to the cannabis industry, and would then permit state-regulated companies to deduct, for federal income tax purposes, all their ordinary and necessary business expenses, rather than only ‘cost of goods sold.’

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The Cole Memo

Because of the discrepancy between the laws in some states, which permit the distribution and sale of medical and recreational cannabis, from federal law that prohibits any such activities, DOJ Deputy Attorney General James M. Cole issued the Cole Memo concerning cannabis enforcement under the CSA.

At the time of its issuance, the Cole Memo reiterated Congress’s determination that cannabis is a dangerous drug and that the illegal distribution and sale of cannabis is a serious crime that provides a significant source of revenue to large-scale criminal enterprises, gangs, and cartels. The Cole Memo noted that the DOJ was committed to enforcement of the CSA consistent with those determinations. It also noted that the DOJ was committed to using its investigative and prosecutorial resources to address the most significant threats in the most effective, consistent, and rational way. In furtherance of those objectives, the Cole Memo provided guidance to DOJ attorneys and law enforcement to focus their enforcement resources on persons or organizations whose conduct interferes with any one or more of the following important priorities (the “Enforcement Priorities”) in preventing:

●

the distribution of cannabis to minors;

●

revenue from the sale of cannabis from going to criminal enterprises, gangs, and cartels;

●

the diversion of cannabis from states where it is legal under state law to other states;

●

state-authorized cannabis activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;

●

violence and the use of firearms in the cultivation and distribution of cannabis;

●

drugged driving and the exacerbation of other adverse public health consequences associated with cannabis use;

●

the growing of cannabis on public lands and the attendant public safety and environmental dangers posed by cannabis production on public lands; and

●

cannabis possession or use on federal property.

Although the Sessions Memo has rescinded the Cole Memo and it is unclear at this time what the ultimate impact of that rescission will have on our business, if any, we intend to continue to conduct rigorous due diligence to verify the legality of all activities that we engage in and ensure that our activities do not interfere with any of the Enforcement Priorities set forth in the Cole Memo.

FinCEN

FinCEN provided guidance regarding how financial institutions can provide services to cannabis-related businesses consistent with their BSA obligations. For purposes of the FinCEN guidelines, a “financial institution” includes any person doing business in one or more of the following capacities:

●

bank (except bank credit card systems);

●

broker or dealer in securities;

●

money services business;

●

telegraph company;

●

card club; and

●

a person subject to supervision by any state or federal bank supervisory authority.

In general, the decision to open, close, or refuse any particular account or relationship should be made by each financial institution based on several factors specific to that institution. These factors may include its particular business objectives, an evaluation of the risks associated with offering a particular product or service, and its capacity to manage those risks effectively. Thorough customer due diligence is a critical aspect of making this assessment.

In assessing the risk of providing services to a cannabis-related business, a financial institution should conduct customer due diligence that includes: (i) verifying with the appropriate state authorities whether the business is duly licensed and registered; (ii) reviewing the license application (and related documentation) submitted by the business for obtaining a state license to operate its cannabis-related business; (iii) requesting from state licensing and enforcement authorities available information about the business and related parties; (iv) developing an understanding of the normal and expected activity for the business, including the types of products to be sold and the type of customers to be served (e.g., medical versus recreational customers); (v) ongoing monitoring of publicly available sources for adverse information about the business and related parties; (vi) ongoing monitoring for suspicious activity, including for any of the red flags described in this guidance; and (vii) refreshing information obtained as part of customer due diligence on a periodic basis and commensurate with the risk. With respect to information regarding state licensure obtained in connection with such customer due diligence, a financial institution may reasonably rely on the accuracy of information provided by state licensing authorities, where states make such information available.

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available information about the business and related parties; (iv) developing an understanding of the normal and expected activity for the business, including the types of products to be sold and the type of customers to be served (e.g., medical versus recreational customers); (v) ongoing monitoring of publicly available sources for adverse information about the business and related parties; (vi) ongoing monitoring for suspicious activity, including for any of the red flags described in this guidance; and (vii) refreshing information obtained as part of customer due diligence on a periodic basis and commensurate with the risk. With respect to information regarding state licensure obtained in connection with such customer due diligence, a financial institution may reasonably rely on the accuracy of information provided by state licensing authorities, where states make such information available.

As part of its customer due diligence, a financial institution should consider whether a cannabis-related business implicates one of the Cole Memo Enforcement Priorities or violates state law. This is a particularly important factor for a financial institution to consider when assessing the risk of providing financial services to a cannabis-related business. Considering this factor also enables the financial institution to provide information in BSA reports pertinent to law enforcement’s priorities. A financial institution that decides to provide financial services to a cannabis-related business would be required to file suspicious activity reports. It is unclear at this time what impact the Sessions Memo will have on customer due diligence by a financial institution.

While we believe we do not qualify as a financial institution in the United States, we cannot be certain that we do not fall under the scope of the FinCEN guidelines. We plan to use the FinCEN Guidelines, as may be amended, as a basis for assessing our relationships with potential tenants, clients, and customers. As such, as we engage in financing activities, we intend to adhere to the guidance of FinCEN in conducting and monitoring our financial transactions. Because this area of the law is uncertain and is expected to evolve rapidly, we believe that FinCEN’s guidelines will help us best operate in a prudent, reasonable, and acceptable manner. There is no assurance, however, that our activities will not violate some aspect of the CSA. If we are found to violate the federal statute or any other in connection with our activities, our company could face serious criminal and civil sanctions.

Moreover, since the use of cannabis is illegal under federal law, we may have difficulty acquiring or maintaining bank accounts and insurance, and our stockholders may find it difficult to deposit their stock with brokerage firms.

Licensing and Local Regulations

Where applicable, we apply for state licenses or similar approvals that are necessary to conduct our business in compliance with local laws. Our subsidiary, GC Corp., has been registered with the MED as an approved vendor since September 8, 2014. GCS, another subsidiary, has been registered as a MED approved vendor since March 11, 2015.

On May 1, 2020, the MED granted regulatory approval to the Company as a qualified and suitable buyer of licensed cannabis operations in the State. This authorization, known as a Suitability Approval, establishes the Company as one of the first public companies authorized to acquire licensed cultivation, manufacturing, and retail operations throughout Colorado.

Local laws at the county and municipal level add an additional layer of complexity to legalized cannabis. Despite a state’s adoption of legislation legalizing cannabis, counties and municipalities within the state may have the ability to otherwise restrict cannabis activities, including but not limited to cultivation, retail, distribution, manufacturing or consumption.

Zoning sets forth the approved use of land in any given city, county, or municipality. Zoning is set by local governments or local voter referendum and may otherwise be restricted by state laws. For example, under certain state laws a seller of liquor may not be allowed to operate within 1,000 feet of a school. There may be similar restrictions imposed on cannabis operators, which will restrict where cannabis operations may be located and the manner and size to which they can grow and operate. Zoning can be subject to change or withdrawal, discretionary approvals may be required for certain uses, and properties can be re-zoned. The zoning of our properties will have a direct impact on our business operations.

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Human Capital

As of December 31, ~~2022~~2023, we had approximately 91 ~~150~~ full-time employees. Executing our strategic vision requires that we attract and retain the best talent. The Company must appropriately reward high-performers and offer competitive benefits. The Company offers comprehensive benefits, including medical, dental and vision insurance for employees, their spouses or domestic partners, and their dependents. We also provide retirement programs, life insurance, family assistance, short-term disability and paid vacation and sick time. As a people-first company, our values help us achieve our purpose of cultivating an inclusive environment by hiring world-class individuals dedicated to fostering a culture that champions diversity, ensures equity, and celebrates inclusion. We provide opportunities for our employees to drive our strategy by creating programs that raise awareness, allowing courageous conversations and a more inclusive culture.

Corporate Contact Information

Our principal executive offices are located at 215 Union Boulevard, Suite 415, Lakewood, Colorado 80228; Telephone No.: (303) 759-1300. Our website is http://www.treescann.com. The content on our website is available for informational purposes only. It should not be relied upon for investment purposes, nor is it incorporated by reference into this Form 10-K.

Available Information

We maintain a website at www.treescann.com and make available, free of charge, on our website, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (including any amendments thereto), registration statements and other information filed with, or furnished to, the SEC, as soon as reasonably practicable after such documents are so filed or furnished, as well as our Code of Ethics. Any materials we file with the SEC, including our annual reports, quarterly reports, current reports, proxy statements, information statements and other information, are also available at the SEC’s Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.

ITEM 1A. RISK FACTORS.

Investing in our Common Stock involves a high degree of risk. You should carefully consider the following risks and all other information contained in this Form 10-K, including our consolidated financial statements and the related notes, before investing in our Common Stock. The risks and uncertainties described below are not the only ones we face, but include the most significant factors currently known by us that make investing in our Common Stock speculative or risky. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, also may become important factors that affect us. If any of the following risks materialize, our business, financial condition and results of operations could be materially harmed. In that case, the trading price of our Common Stock could decline, and you may lose some or all of your investment.

Risks Related to Our Business and Industry

We have a limited operating history in an evolving industry, which makes it difficult to accurately assess our future growth prospects.

We operate in an evolving industry that may not develop as expected. Furthermore, our operations continue to evolve under our business plan as we continually assess new strategic opportunities for our business within our industry. Assessing the future prospects of our business is challenging considering both known and unknown risks and difficulties we may encounter. Growth prospects in our industry can be affected by a wide variety of factors including:

● Competition from other similar companies;

● ~~Competition~~Regulatory ~~from~~limitations ~~other~~on ~~similar~~the ~~companies~~products we can offer and markets we can serve;

● ~~Regulatory~~Other ~~limitations~~changes onin the ~~products~~regulation weof ~~can~~medical ~~offer~~ and ~~markets~~recreational wecannabis ~~can serve~~use;

● ~~Other~~Changes ~~changes~~ in ~~the~~underlying ~~regulation~~consumer ofbehavior, ~~medical~~which ~~and~~may ~~recreational~~affect ~~cannabis~~the ~~use~~business of our customers;

● ~~Changes~~Our inability ~~underlying~~to ~~consumer~~access ~~behavior,~~adequate ~~which~~financing ~~may~~on ~~affect~~reasonable ~~the~~terms ~~business~~and ofour ability to raise additional capital to fund our ~~customers~~operations;

12● Challenges with new products, services, and markets; and

~~Table~~● ofFluctuations ~~Contents~~in the credit markets and demand for credit.

●We ~~Our~~may ~~ability~~not be able to ~~access~~successfully ~~adequate~~address ~~financing~~these factors, onwhich ~~reasonable~~could ~~terms~~negatively ~~and~~impact our ~~ability~~growth, toharm ~~raise~~our ~~additional~~business, ~~capital~~and cause our operating results to ~~fund~~be ~~our~~worse ~~operations;~~than expected.

●We ~~Challenges~~have ~~with~~a ~~new~~history ~~products,~~of ~~services,~~losses and ~~markets;~~may ~~and~~not achieve profitability in the future.

●We ~~Fluctuations~~generated net losses of approximately $7.1 million and $9.5 million, respectively, in the ~~credit~~years ~~markets~~ended December 31, 2023 and ~~demand~~2022. ~~for~~As ~~credit~~of December 31, 2023, we had an accumulated deficit of approximately $100.5 million. We will need to generate and sustain increased revenues in future periods to become profitable, and, even if we do, we may not be able to maintain or increase any such level of profitability.

WeAs ~~may~~we ~~not~~grow, bewe ~~able~~expect to ~~successfully~~continue ~~address~~to ~~these~~expend ~~factors,~~substantial financial ~~which could negatively impact our growth, harm our business,~~ and ~~cause~~other ~~our~~resources ~~operating results to be worse than expected.~~on:

We● ~~have~~personnel, aincluding ~~history~~significant ofincreases ~~losses~~to ~~and~~the ~~may~~total ~~not~~compensation ~~achieve~~we ~~profitability~~pay inour ~~the~~employees ~~future.~~as we grow our employee headcount;

We● ~~generated~~expenses ~~net~~relating losses of approximately $9.5 million and $8.9 million, respectively, in the years ended December 31, 2022 and 2021. As of December 31, 2022, we had an accumulated deficit of approximately $93.4 million. We will need to ~~generate and sustain~~ increased ~~revenues~~marketing ~~in future periods to become profitable, and, even if we do, we may not be able to maintain or increase any such level of profitability.~~efforts;

As● westrategic ~~grow,~~acquisitions weof ~~expect~~businesses ~~to continue to expend substantial financial~~ and ~~other~~real ~~resources~~estate; ~~on:~~and

● ~~personnel~~general administration, including ~~significant~~legal, ~~increases~~accounting, toand ~~the~~other ~~total~~compliance ~~compensation~~expenses werelated ~~pay~~to ~~our~~being ~~employees~~a aspublic ~~we grow our employee headcount;~~company.

●These ~~expenses~~expenditures ~~relating~~are expected to ~~increased~~increase ~~marketing~~and may adversely affect our ability to achieve and sustain profitability as we grow. Our efforts; to grow our business may also be more costly than we expect, and we may not be able to increase our revenues enough to offset our higher operating expenses. We may incur losses in the future for several reasons, including the other risks described in this Report, unforeseen expenses, difficulties, complications and delays, and other unknown events. If we are unable to achieve and sustain profitability, the market price of our Common Stock may significantly decrease.

~~● strategic acquisitions of businesses and real estate; and~~10

●Cannabis ~~general~~remains ~~administration,~~illegal ~~including~~under ~~legal,~~federal ~~accounting~~law, and ~~other~~any ~~compliance~~change ~~expenses~~in ~~related~~the toenforcement ~~being~~priorities aof ~~public~~the ~~company~~federal government could render our current and planned future operations unprofitable or even prohibit such operations.

~~These~~The ~~expenditures~~cultivation, ~~are~~manufacture, ~~expected~~distribution, ~~to increase~~ and possession ~~may~~of ~~adversely~~marijuana ~~affect~~continues ~~our ability~~ to ~~achieve~~be ~~and~~illegal ~~sustain~~under ~~profitability~~U.S. asfederal ~~we grow~~law. ~~Our~~The ~~efforts~~Supremacy toClause ~~grow~~of ~~our~~the ~~business~~United ~~may~~States ~~also~~Constitution beestablishes that ~~more~~the ~~costly~~US ~~than~~Constitution ~~we expect,~~ and wefederal ~~may~~laws ~~not~~made bepursuant ~~able~~ to ~~increase~~it ~~our~~are ~~revenues~~paramount ~~enough~~and, toin ~~offset~~case ~~our~~of ~~higher~~conflict ~~operating~~between ~~expenses.~~federal Weand ~~may~~state ~~incur~~law, ~~losses in~~ the federal ~~future~~law ~~for~~must ~~several~~be ~~reasons~~applied. Accordingly, ~~including~~federal ~~the~~law ~~other~~applies ~~risks~~even ~~described~~ in ~~this~~those ~~Report,~~states ~~unforeseen~~in ~~expenses,~~which ~~difficulties,~~the ~~complications~~use ~~and~~of ~~delays,~~marijuana ~~and~~has ~~other~~been ~~unknown events~~legalized. IfEnforcement of wefederal ~~are~~law ~~unable~~regarding tomarijuana ~~achieve~~would ~~and~~harm ~~sustain~~our ~~profitability~~business, ~~the~~prospects, ~~market~~results ~~price~~ of ~~our~~operation, ~~Common~~and ~~Stock~~financial ~~may significantly decrease~~condition.

The United States federal government regulates drugs through the Controlled Substances Act (the “CSA”), which places controlled substances, including cannabis, on one of five schedules. Cannabis ~~remains~~is ~~illegal~~currently ~~under~~classified ~~federal~~as ~~law~~a Schedule I controlled substance, which is viewed as having a high potential for abuse and ~~any~~having ~~change~~no currently accepted medical use in treatment in the ~~enforcement~~United ~~priorities~~States. ofNo ~~the~~prescriptions ~~federal~~may ~~government~~be ~~could~~written ~~render~~for ~~our~~Schedule ~~current~~I substances, and ~~planned~~such ~~future~~substances ~~operations~~are ~~unprofitable~~subject orto ~~even~~production ~~prohibit~~quotas ~~such~~imposed ~~operations~~by the United States Drug Enforcement Administration (the “DEA”). Because of this, doctors may not prescribe cannabis for medical use under federal law, although they can recommend its use under the First Amendment.

~~The cultivation~~Currently, ~~manufacture,~~numerous ~~distribution~~U.S. states, the District of Columbia and ~~possession~~U.S. ofterritories ~~marijuana~~have ~~continues~~legalized tocannabis befor ~~illegal~~medical ~~under~~and/or ~~U.S.~~recreational ~~federal~~adult ~~law~~use. ~~The~~Such ~~Supremacy~~state ~~Clause~~and ofterritorial ~~the~~laws ~~United~~conflict with ~~States~~the ~~Constitution~~federal ~~establishes~~CSA, ~~that~~which ~~the~~makes UScannabis ~~Constitution~~use and possession illegal at the federal ~~laws~~level. ~~made~~Because ~~pursuant~~cannabis tois ita ~~are~~Schedule ~~paramount~~I ~~and~~controlled substance, inhowever, ~~case~~the development of ~~conflict~~a ~~between~~legal ~~federal~~cannabis ~~and~~industry ~~state~~under ~~law~~the laws of these states conflicts with the CSA, which makes cannabis use and possession illegal on a national level. The United States Supreme Court has confirmed that the federal ~~law~~government ~~must~~has bethe ~~applied.~~right to ~~Accordingly~~regulate and criminalize cannabis, ~~federal~~including ~~law~~for ~~applies~~medical ~~even~~purposes, inand ~~those~~that ~~states~~federal inlaw ~~which~~criminalizing the use of ~~marijuana~~cannabis ~~has~~preempts state ~~been~~laws ~~legalized.~~that ~~Enforcement~~legalize ofits ~~federal~~use. ~~law~~We ~~regarding~~would ~~marijuana~~likely ~~would~~be ~~harm~~unable to execute our business, ~~prospects,~~plan ~~results~~if ofthe ~~operation,~~federal ~~and~~government ~~financial~~were ~~condition~~to strictly enforce federal law regarding cannabis.

~~The~~Considering ~~United~~such ~~States~~conflict between federal ~~government~~laws and ~~regulates~~state ~~drugs~~laws ~~through~~regarding cannabis, the ~~Controlled~~administration ~~Substances~~under ~~Act~~President ~~(the~~Obama ~~“CSA”),~~had ~~which~~effectively ~~places~~stated ~~controlled~~that ~~substances,~~it ~~including~~was ~~cannabis,~~not onan ~~one~~efficient use of resources ~~five~~to ~~schedules.~~direct ~~Cannabis~~law isfederal ~~currently~~law ~~classified~~enforcement asagencies ato ~~Schedule~~prosecute Ithose ~~controlled~~lawfully ~~substance,~~abiding ~~which~~by isstate-designated ~~viewed~~laws asallowing ~~having~~the ause and ~~high~~distribution ~~potential~~of ~~for~~medical ~~abuse~~cannabis. ~~and~~For ~~having~~example, nothe ~~currently~~DOJ ~~accepted~~Deputy ~~medical~~Attorney ~~use~~General inof ~~treatment~~the inObama ~~the~~administration, ~~United~~James ~~States~~M. NoCole, ~~prescriptions~~issued a ~~may~~memorandum be(the ~~written~~“Cole ~~for~~Memo”) ~~Schedule~~to Iall ~~substances,~~United ~~and~~States ~~such~~Attorneys ~~substances~~providing ~~are~~updated ~~subject~~guidance to ~~production~~federal ~~quotas~~prosecutors ~~imposed~~concerning cannabis byenforcement under the ~~United~~CSA ~~States~~(see ~~Drug~~“Business—Government ~~Enforcement~~and ~~Administration~~Industry ~~(the~~Regulation—The ~~“DEA~~Cole Memo”). ~~Because~~In ~~of this~~addition, the ~~doctors~~Financial ~~may~~Crimes ~~not~~Enforcement ~~prescribe~~Network ~~cannabis~~(“FinCEN”) ~~for~~provided ~~medical~~guidelines ~~use~~on ~~under~~February ~~federal~~14, ~~law~~2014, ~~although~~regarding ~~they~~how financial institutions can ~~recommend~~provide ~~its~~services ~~use~~to ~~under~~cannabis-related ~~the~~businesses ~~First~~consistent ~~Amendment~~with their Bank Secrecy Act obligations (see “Business—Government and Industry Regulation—FinCEN”).

~~Currently,~~Congress ~~numerous~~previously ~~U.S.~~enacted ~~states,~~an omnibus spending bill that included a provision (the ~~District~~“Rohrabacher-Blumenauer ofAmendment”) ~~Columbia~~prohibiting ~~and~~the ~~U.S.~~DOJ ~~territories~~from ~~have~~using ~~legalized~~funds ~~cannabis~~to ~~for~~prevent states with medical cannabis laws from implementing such laws. This provision is renewed annually by Congress and~~/or~~ ~~recreational~~is ~~adult~~current ~~use~~through September 30, 2023. ~~Such~~ In August 2016, a Ninth Circuit federal appeals court ruled in United States v. McIntosh that the Rohrabacher-Blumenauer Amendment bars the DOJ from spending funds on the prosecution of conduct that is allowed by state ~~and~~medical ~~territorial~~cannabis laws, ~~conflict~~provided that such conduct is in strict compliance with ~~the~~applicable ~~federal~~state ~~CSA~~law. In March 2015, ~~which~~bipartisan ~~makes~~legislation ~~cannabis~~titled ~~use~~the Compassionate Access, Research Expansion, and ~~possession~~Respect ~~illegal~~States atAct (the “CARERS Act”) was introduced, proposing to allow states to regulate the medical use of cannabis by changing applicable federal ~~level.~~law, ~~Because~~including by reclassifying cannabis isunder the Controlled Substances Act to a Schedule II I controlled substance, ~~however,~~and thereby changing the ~~development~~plant offrom a ~~legal~~federally-criminalized ~~cannabis~~substance ~~industry~~to ~~under~~one that has recognized medical uses. More recently, the ~~laws~~Respect State Marijuana Laws Act of ~~these~~2017 ~~states~~has ~~conflicts~~been ~~with~~introduced in the ~~CSA~~U.S. House of Representatives, which ~~makes~~proposes ~~cannabis~~to exclude ~~use~~persons ~~and~~who ~~possession~~produce, ~~illegal~~possess, ondistribute, adispense, ~~national~~administer, ~~level.~~or ~~The~~deliver ~~United~~marijuana ~~States~~in ~~Supreme~~compliance ~~Court~~with ~~has~~state ~~confirmed~~laws ~~that~~from the ~~federal~~regulatory controls ~~government~~and ~~has~~administrative, civil, and criminal penalties of the CSA.

1311

~~Table~~These developments previously were met with a certain amount of ~~Contents~~optimism in the cannabis industry, but (i) neither the CARERS Act nor the Respect State Marijuana Laws Act of 2017 have yet been adopted, (ii) the Rohrabacher-Blumenauer Amendment, being an amendment to an appropriations bill that must be renewed annually, has not currently been renewed beyond March 11, 2022, and (iii) the ruling in United States v. McIntosh is only applicable precedent in the Ninth Circuit, which does not include Colorado, the state where we currently primarily operate.

~~the~~Furthermore, ~~right~~on toJanuary ~~regulate~~4, ~~and~~2018, ~~criminalize~~former ~~cannabis~~U.S. Attorney General, ~~including~~Jeff Sessions, issued a memorandum for ~~medical~~all ~~purposes~~U.S. Attorneys (the “Sessions Memo”) stating that the Cole Memo was rescinded effectively immediately. In particular, ~~and~~Mr. Sessions stated that “prosecutors should follow the well-established principles that govern all federal prosecutions,” which require “federal prosecutors deciding which cases to prosecute to weigh all relevant considerations, including federal law ~~criminalizing~~enforcement priorities set by the ~~use~~Attorney General, the seriousness of ~~cannabis~~the ~~preempts~~crime, ~~state~~the ~~laws~~deterrent effect ~~that~~of ~~legalize~~criminal ~~its~~prosecution, ~~use~~and the cumulative impact of particular crimes on the community. We” ~~would~~The ~~likely~~Sessions beMemo ~~unable~~went on to ~~execute~~state that ~~our~~given ~~business~~the ~~plan~~DOJ’s ifwell-established ~~the~~general ~~federal~~principles, ~~government~~“previous ~~were~~nationwide guidance specific to ~~strictly~~marijuana ~~enforce~~is ~~federal~~unnecessary and ~~law~~is ~~regarding~~rescinded, ~~cannabis~~effective immediately.”

~~Considering~~In ~~such~~response ~~conflict~~to ~~between~~the ~~federal~~Sessions ~~laws~~Memo, ~~and~~U.S. ~~state~~Attorney Bob ~~laws~~Troy ~~regarding~~for ~~cannabis,~~ the ~~administration~~District ~~under President Obama had effectively stated that it was not an efficient use~~ of ~~resources~~Colorado, tothe ~~direct~~state ~~law~~in ~~federal~~which ~~law~~our ~~enforcement~~principal ~~agencies~~business tooperations ~~prosecute~~are ~~those~~presently ~~lawfully~~located, ~~abiding~~issued bya ~~state-designated~~statement on ~~laws~~January ~~allowing~~4, ~~the~~2018, ~~use~~stating ~~and~~that ~~distribution of medical cannabis. For example,~~ the ~~DOJ~~United ~~Deputy~~States Attorney’s ~~General~~Office ofin ~~the~~Colorado ~~Obama~~is ~~administration,~~already ~~James~~guided M.by ~~Cole,~~the ~~issued~~well-established aprinciples referenced ~~memorandum~~in (the ~~“Cole~~Sessions Memo”), to“focusing ~~all~~in ~~United~~particular ~~States~~on ~~Attorneys~~identifying ~~providing~~and ~~updated~~prosecuting ~~guidance~~those towho ~~federal~~create ~~prosecutors concerning cannabis enforcement under~~ the ~~CSA~~greatest ~~(see~~safety ~~“Business—Government~~threats to ~~and~~our ~~Industry~~communities ~~Regulation—The~~around ~~Cole~~the ~~Memo”)~~state. InWe ~~addition~~will, ~~the~~consistent ~~Financial~~with ~~Crimes~~the ~~Enforcement~~Attorney ~~Network~~General’s ~~(“FinCEN”)~~latest ~~provided guidelines on February 14~~guidance, ~~2014,~~continue ~~regarding~~to ~~how~~take ~~financial~~this ~~institutions~~approach in ~~can~~all ~~provide~~our ~~services~~work ~~to cannabis-related businesses consistent~~ with ~~their~~our ~~Bank~~law ~~Secrecy~~enforcement ~~Act~~partners ~~obligations~~throughout ~~(see “Business—Government and Industry Regulation—FinCEN”)~~Colorado.”

~~Congress~~It ~~previously~~is ~~enacted~~unclear anat ~~omnibus~~this ~~spending~~time ~~bill~~whether ~~that~~the ~~included~~Sessions Memo awill ~~provision~~be ~~(the~~rescinded ~~“Rohrabacher-Blumenauer~~by ~~Amendment”) prohibiting~~ the ~~DOJ~~Biden ~~from~~administration, ~~using~~and/or ~~funds~~the toCole ~~prevent~~Memo ~~states~~reinstated; ~~with~~nor ~~medical cannabis laws from implementing such laws. This provision~~ is ~~renewed~~it ~~annually~~clear bywhether ~~Congress~~the ~~and~~Biden isadministration will ~~current~~strongly ~~through~~enforce ~~September~~the ~~30,~~federal ~~2023. In~~laws ~~August~~applicable ~~2016,~~to acannabis ~~Ninth~~or ~~Circuit~~what ~~federal~~types ~~appeals~~of ~~court~~activities ~~ruled~~will inbe ~~United~~targeted ~~States~~for venforcement. ~~McIntosh~~US ~~that~~Attorney General ~~the~~Merrick ~~Rohrabacher-Blumenauer~~Garland ~~Amendment~~has ~~bars~~indicated ~~the~~his ~~DOJ~~desire ~~from~~to ~~spending~~reinstitute ~~funds~~a onversion ~~the prosecution~~ of ~~conduct~~the ~~that~~Cole isMemo; ~~allowed by state medical cannabis laws~~however, ~~provided~~this ~~that~~has ~~such~~not ~~conduct~~yet ~~is in strict compliance with applicable state law~~occurred. InAny ~~March~~significant change ~~2015,~~in ~~bipartisan legislation titled~~ the ~~Compassionate~~federal ~~Access,~~government’s ~~Research~~enforcement ~~Expansion,~~policy ~~and~~with ~~Respect~~respect ~~States~~to ~~Act~~current ~~(the~~federal ~~“CARERS~~laws ~~Act”)~~applicable ~~was~~to ~~introduced,~~cannabis ~~proposing~~could tocause ~~allow~~significant financial ~~states~~damage to ~~regulate~~us. ~~the~~We ~~medical~~may ~~use~~be ofirreparably ~~cannabis~~harmed by ~~changing~~a ~~applicable~~change ~~federal~~in ~~law,~~enforcement ~~including~~policies byof ~~reclassifying cannabis under~~ the ~~Controlled~~federal ~~Substances~~government ~~Act~~depending toon ~~a Schedule II controlled substance and thereby changing~~ the ~~plant~~nature of ~~from~~such ~~a federally-criminalized substance to one that has recognized medical uses~~change. As ~~More~~of ~~recently,~~ the ~~Respect~~date ~~State Marijuana Laws Act~~ of ~~2017~~this ~~has~~Report, ~~been~~we ~~introduced~~have inprovided ~~the~~products ~~U.S.~~and ~~House~~services ~~of Representatives, which proposes~~ to ~~exclude~~state-approved ~~persons~~cannabis ~~who~~cultivators ~~produce,~~and dispensary ~~possess,~~facilities. ~~distribute,~~As ~~dispense,~~a ~~administer~~result, orstrict ~~deliver~~enforcement ~~marijuana~~of infederal ~~compliance~~prohibitions ~~with~~regarding ~~state~~cannabis ~~laws~~could ~~from~~subject the ~~regulatory~~Company ~~controls~~to ~~and administrative, civil, and~~ criminal ~~penalties of the CSA~~ prosecution.

~~These~~Additionally, ~~developments~~financial ~~previously~~transactions ~~were~~involving proceeds ~~met~~generated ~~with~~by acannabis-related ~~certain~~conduct ~~amount~~can ofform ~~optimism~~the inbasis for prosecution under the ~~cannabis~~federal ~~industry~~money laundering statutes, ~~but~~unlicensed money ~~(i)~~transmitter ~~neither~~statutes and the ~~CARERS~~Bank Secrecy Act. ~~nor~~Prior to the ~~Respect~~DOJ’s ~~State~~rescission ~~Marijuana~~of ~~Laws~~the ~~Act~~“Cole ofMemo”, ~~2017~~supplemental ~~have~~guidance from ~~yet~~the ~~been~~DOJ ~~adopted,~~issued ~~(ii)~~under the ~~Rohrabacher-Blumenauer~~Obama ~~Amendment,~~administration ~~being~~directed anfederal ~~amendment~~prosecutors to anconsider ~~appropriations~~the ~~bill~~federal ~~that~~enforcement ~~must~~priorities beenumerated in ~~renewed~~the ~~annually,~~“Cole ~~has~~Memo” ~~not~~when ~~currently~~determining ~~been~~whether ~~renewed~~to ~~beyond~~charge ~~March~~institutions ~~11,~~or ~~2022,~~individuals ~~and~~with ~~(iii)~~any of the ~~ruling~~financial incrimes ~~United~~described above ~~States~~based vupon cannabis-related activity. ~~McIntosh~~It is ~~only~~unclear ~~applicable~~what ~~precedent~~impact inthe recent rescission of the ~~Ninth~~“Cole ~~Circuit~~Memo” will have, but ~~which~~federal ~~does~~prosecutors ~~not~~may ~~include~~increase ~~Colorado,~~enforcement ~~the~~activities ~~state~~against ~~where~~institutions weor ~~currently~~individuals ~~primarily~~that ~~operate~~are conducting financial transactions related to cannabis activities.

~~Furthermore~~Additionally, onas ~~January~~we 4,are ~~2018,~~always ~~former~~assessing ~~U.S.~~potential strategic ~~Attorney~~acquisitions ~~General,~~of ~~Jeff~~new ~~Sessions~~businesses, ~~issued~~we amay ~~memorandum~~in ~~for all U.S. Attorneys (~~the ~~“Sessions~~future ~~Memo”)~~also ~~stating~~pursue opportunities that ~~the~~include ~~Cole~~growing ~~Memo~~and/or ~~was~~distributing ~~rescinded~~medical or ~~effectively~~recreational ~~immediately. In particular~~cannabis, ~~Mr. Sessions stated that “prosecutors~~ should ~~follow~~we ~~the~~determine ~~well-established principles~~ that ~~govern~~such ~~all~~activities ~~federal~~are ~~prosecutions,”~~in ~~which require “federal prosecutors deciding which cases to prosecute to weigh all relevant considerations, including federal law enforcement priorities set by~~ the ~~Attorney~~best ~~General,~~interest ~~the seriousness~~ of the ~~crime,~~Company ~~the deterrent effect of criminal prosecution,~~ and ~~the~~our ~~cumulative~~stockholders. ~~impact~~Any ofsuch pursuit ~~particular~~would ~~crimes~~involve onadditional ~~the~~risks ~~community.”~~with ~~The~~respect ~~Sessions Memo went on~~ to ~~state that given~~ the ~~DOJ’s~~regulation ~~well-established~~of ~~general principles~~cannabis, ~~“previous~~particularly ~~nationwide~~if ~~guidance~~the ~~specific~~federal togovernment ~~marijuana~~determines isto strictly ~~unnecessary~~enforce ~~and~~all isfederal ~~rescinded,~~laws ~~effective~~applicable ~~immediately~~to cannabis.”

InFederal ~~response~~prosecutors tohave ~~the~~significant ~~Sessions Memo~~discretion, and ~~U.S.~~no ~~Attorney~~assurance ~~Bob~~can ~~Troy~~be ~~for~~given that the ~~District~~federal ofprosecutor ~~Colorado,~~in ~~the~~each ~~state~~judicial indistrict ~~which~~where ~~our~~we ~~principal~~operate our business ~~operations~~will ~~are~~not ~~presently~~choose ~~located,~~to ~~issued~~strictly enforce athe ~~statement~~federal onlaws ~~January~~governing 4,cannabis ~~2018,~~production ~~stating~~or ~~that~~distribution. ~~the~~Any ~~United~~change ~~States~~in ~~Attorney~~the federal government’s ~~Office~~enforcement inposture ~~Colorado~~with respect isto ~~already~~state-licensed ~~guided~~cultivation byof medical-use cannabis, including the ~~well-established~~enforcement ~~principles~~postures ~~referenced~~of individual federal prosecutors in judicial ~~the~~districts ~~Sessions~~where ~~Memo~~we purchase properties, ~~“focusing~~would result in ~~particular~~our oninability ~~identifying~~to ~~and~~execute ~~prosecuting~~our ~~those~~business ~~who~~plan, ~~create~~and ~~the~~we ~~greatest~~would ~~safety~~likely ~~threats~~suffer significant tolosses, ~~our~~which ~~communities~~would ~~around~~adversely affect the ~~state.~~trading Weprice ~~will~~of our securities. Furthermore, ~~consistent~~following ~~with~~any ~~the~~such ~~Attorney~~change ~~General~~in the federal government’s ~~latest~~enforcement ~~guidance~~position, ~~continue~~we could be subject to ~~take~~criminal ~~this~~prosecution, ~~approach~~which incould ~~all~~lead ~~our~~to ~~work~~imprisonment ~~with~~and/or ~~our~~the ~~law~~imposition of ~~enforcement~~penalties, ~~partners~~fines, ~~throughout~~or ~~Colorado~~forfeiture.”

It is unclear at this time whether the Sessions Memo will be rescinded by the Biden administration, and/or the Cole Memo reinstated; nor is it clear whether the Biden administration will strongly enforce the federal laws applicable to cannabis or what types of activities will be targeted for enforcement. US Attorney General Merrick Garland has indicated his desire to reinstitute a version of the Cole Memo; however, this has not yet occurred. Any significant 12

14The potential regulation of cannabis by the US Food and Drug Administration could subject us to additional costs and regulatory requirements.

~~Table~~Should the federal government legalize cannabis, it is possible that the US Food and Drug Administration (FDA), would seek to regulate it under the Food, Drug and Cosmetics Act of 1938. ~~Contents~~Additionally, the FDA may issue rules and regulations including good manufacturing practices, related to the growth, cultivation, harvesting and processing of medical cannabis. Clinical trials may be needed to verify efficacy and safety. It is also possible that the FDA would require that facilities where medical-use cannabis is grown register with the FDA and comply with certain federally prescribed regulations. If some or all of these regulations are imposed, the impact they would have on the cannabis industry is unknown, including what costs, requirements and possible prohibitions may be enforced. If we are unable to comply with the regulations or registration as prescribed by the FDA it may have an adverse effect on our business, operating results, and financial condition.

~~change~~Any potential growth in the ~~federal government’s enforcement policy with respect to current federal laws applicable to~~ cannabis ~~could~~industry continues ~~cause significant financial damage~~ to ~~us. We may~~ be ~~irreparably~~subject ~~harmed~~to bynew ~~a change in enforcement policies of the federal government depending on the nature of such change. As of the date of this Report, we have provided products~~ and ~~services~~changing to state~~-approved~~ ~~cannabis cultivators~~ and ~~dispensary~~local ~~facilities.~~laws Asand ~~a result, strict enforcement of federal prohibitions regarding cannabis could subject the Company to criminal prosecution~~regulations.

~~Additionally,~~Continued ~~financial~~development ~~transactions~~of ~~involving~~the ~~proceeds~~cannabis ~~generated~~industry is bydependent ~~cannabis-related~~upon ~~conduct~~continued ~~can~~legislative ~~form~~legalization of cannabis at the ~~basis~~state ~~for~~level, ~~prosecution~~and ~~under~~a ~~the~~number ~~federal~~of ~~money~~factors ~~laundering~~could ~~statutes~~slow or halt progress in this area, ~~unlicensed~~even ~~money~~where ~~transmitter~~there ~~statutes~~is ~~and~~public ~~the~~support ~~Bank~~for ~~Secrecy~~legislative ~~Act~~action. ~~Prior~~Any todelay or halt in the ~~DOJ's~~passing ~~rescission~~or implementation of ~~the~~legislation legalizing ~~“Cole~~cannabis ~~Memo”~~use, ~~supplemental~~or ~~guidance~~its ~~from~~cultivation, ~~the~~sale ~~DOJ~~and ~~issued~~distribution, ~~under~~or the ~~Obama~~re-criminalization ~~administration~~or ~~directed~~restriction ~~federal~~of ~~prosecutors~~cannabis toat ~~consider~~ the ~~federal~~state level ~~enforcement~~could ~~priorities~~negatively ~~enumerated~~impact our business. Additionally, changes in applicable state and local laws or regulations, including zoning restrictions, permitting requirements, and fees, could restrict the ~~“Cole~~products ~~Memo”~~and ~~when~~services ~~determining~~we ~~whether~~offer toor ~~charge~~impose ~~institutions~~additional compliance costs on us or ~~individuals~~our ~~with~~customers ~~any~~and tenants. Violations of ~~the~~applicable ~~financial~~laws, ~~crimes~~or ~~described~~allegations ~~above~~of ~~based~~such ~~upon~~violations, ~~cannabis-related~~could ~~activity.~~disrupt Itour isbusiness ~~unclear~~and ~~what~~result in ~~impact~~a ~~the~~material ~~recent~~adverse ~~rescission~~effect ofon our operations. We cannot predict the ~~“Cole~~nature ~~Memo”~~of ~~will~~any ~~have~~future laws, ~~but~~regulations, ~~federal~~interpretations, ~~prosecutors~~or ~~may~~applications, and ~~increase~~it ~~enforcement~~is ~~activities~~possible ~~against~~that ~~institutions~~regulations ormay ~~individuals~~be enacted in the future that ~~are~~will ~~conducting~~have ~~financial~~be ~~transactions~~material ~~related~~adverse toeffects ~~cannabis~~on ~~activities~~our business.

~~Additionally,~~Our ~~as we are always assessing potential strategic acquisitions of new businesses~~business, weresults ~~may in the future also pursue opportunities that include growing and/or distributing medical or recreational cannabis, should we determine that such activities are in the best interest~~ of ~~the~~operations ~~Company~~ and financial ~~our~~condition ~~stockholders.~~may ~~Any~~be ~~such~~adversely ~~pursuit~~affected ~~would~~by ~~involve~~pandemic ~~additional~~infectious ~~risks with respect to the regulation of cannabis~~diseases, particularly ~~if the federal government determines to strictly enforce all federal laws applicable to cannabis~~COVID-19.

~~Federal~~Pandemic ~~prosecutors~~infectious ~~have~~diseases, ~~significant~~such ~~discretion~~as COVID-19 and its variants, such as Omicron, may adversely impact our business, consolidated results of operations and nofinancial ~~assurance~~condition. ~~can~~The global bespread ~~given~~of ~~that~~COVID-19 ~~the~~has ~~federal~~created ~~prosecutor~~significant involatility ~~each~~and ~~judicial~~uncertainty ~~district~~and ~~where~~economic wedisruption. ~~operate~~The extent to which COVID-19 impacts our business, operations and financial results will depend on numerous evolving factors that we may not ~~choose~~be able to ~~strictly~~accurately ~~enforce~~predict, including: the ~~federal~~duration ~~laws~~and ~~governing~~scope ~~cannabis~~of ~~production~~the orpandemic; ~~distribution.~~governmental, ~~Any~~business, ~~change~~and inindividuals’ ~~the~~actions ~~federal~~that ~~government's~~have ~~enforcement~~been ~~posture~~and ~~with~~continue to ~~respect~~be taken in response to ~~state-licensed~~the ~~cultivation~~pandemic; the impact of ~~medical-use~~the ~~cannabis,~~pandemic ~~including~~on economic activity and actions taken in response; the ~~enforcement~~effect ~~postures~~on our ofcustomers ~~individual~~and ~~federal~~customer ~~prosecutors~~demand inour ~~judicial~~services, ~~districts~~products, ~~where~~and wesolutions; ~~purchase~~our ~~properties~~ability to sell and provide its services and solutions, ~~would~~including as a result inof travel restrictions and people working from home; the ability of our ~~inability~~customers to ~~execute~~pay for our ~~business~~services ~~plan,~~and solutions; and any weclosures ~~would~~of ~~likely~~our ~~suffer~~offices ~~significant~~and ~~losses~~the offices and facilities of our customers. COVID-19, ~~which~~as ~~would~~well ~~adversely~~as ~~affect~~measures taken by governmental authorities to limit the ~~trading~~spread ~~price~~of this virus, may interfere with the ability of our ~~securities.~~employees, ~~Furthermore~~suppliers, ~~following~~and ~~any~~other ~~such~~business ~~change~~providers to incarry ~~the~~out ~~federal~~their ~~government's~~assigned ~~enforcement~~tasks ~~position,~~or wesupply ~~could~~materials beor ~~subject~~services at ordinary levels of performance relative to ~~criminal~~the ~~prosecution~~requirements of our business, which ~~could~~may ~~lead~~cause us to ~~imprisonment~~materially curtail certain of our business operations. We require additional funding and~~/or~~ such funding, may not be available to us because of contracting capital markets resulting from the ~~imposition~~COVID-19 pandemic. Any of ~~penalties~~these events could materially adversely affect our business, ~~fines~~financial condition, results of operations and/or ~~forfeiture~~stock price.

The ~~potential regulation of~~ cannabis byindustry ~~the~~faces USsignificant opposition, ~~Food~~ and ~~Drug~~any ~~Administration~~negative ~~could~~trends ~~subject~~will usadversely toaffect ~~additional~~our ~~costs~~business ~~and regulatory requirements~~operations.

~~Should~~We ~~the~~are ~~federal~~substantially ~~government~~dependent ~~legalize~~on ~~cannabis, it is possible that~~ the UScontinued market ~~Food~~acceptance, and ~~Drug Administration (FDA), would seek to regulate it under~~ the ~~Food,~~proliferation ~~Drug and Cosmetics Act~~ of ~~1938. Additionally~~consumers, ~~the~~of ~~FDA~~medical ~~may issue rules~~ and ~~regulations~~recreational ~~including~~cannabis. ~~good~~We ~~manufacturing~~believe ~~practices,~~that ~~related~~with tofurther ~~the growth~~legalization, ~~cultivation, harvesting and processing of medical~~ cannabis. ~~Clinical~~will ~~trials~~become ~~may~~more beaccepted, ~~needed~~resulting toin ~~verify~~growth ~~efficacy~~in ~~and~~consumer ~~safety~~demand. ItHowever, iswe ~~also~~cannot ~~possible~~predict ~~that~~ the ~~FDA~~future ~~would~~growth ~~require~~rate ~~that facilities where medical-use cannabis is grown register with the FDA and comply with certain federally prescribed regulations. If some~~ or ~~all~~future market ~~of these regulations are imposed~~potential, ~~the~~and ~~impact~~any ~~they~~negative ~~would~~outlook ~~have~~ on the cannabis industry ~~is unknown, including what costs, requirements and possible prohibitions~~ may beadversely ~~enforced.~~affect ~~If we are unable to comply with the regulations or registration as prescribed by the FDA it may have an adverse effect on~~ our business, ~~operating results, and financial condition~~operations.

~~Any potential growth in the cannabis industry continues to be subject to new and changing state and local laws and regulations.~~13

~~Continued~~The ~~development~~recreational ~~of the~~ cannabis industry is ~~dependent~~highly dependent upon ~~continued~~consumer ~~legislative~~perception ~~legalization~~regarding the safety, efficacy and quality of the recreational cannabis atproduced. ~~the~~Cannabis ~~state~~is ~~level~~a controversial topic, and aconsumer ~~number~~perception of ~~factors~~our ~~could~~products ~~slow~~may orbe ~~halt~~significantly ~~progress~~influenced inby ~~this~~scientific ~~area~~research or findings, ~~even~~regulatory ~~where~~investigations, litigation, ~~there~~media isattention ~~public~~and ~~support~~other ~~for~~publicity ~~legislative~~regarding ~~action~~the consumption of recreational cannabis products. ~~Any~~There ~~delay~~can orbe ~~halt~~no inassurance that ~~the~~future ~~passing~~scientific research, findings, regulatory proceedings, litigation, media attention or ~~implementation~~other ofresearch ~~legislation~~findings ~~legalizing~~or publicity will be favorable to the recreational cannabis ~~use~~market or any particular product, or ~~its~~consistent ~~cultivation~~with earlier publicity. Future research reports, ~~sale~~findings, ~~and~~regulatory ~~distribution~~proceedings, litigation, media attention or ~~the~~other ~~re-criminalization~~publicity that are perceived as less favorable than, or that ~~restriction~~question, ofearlier ~~cannabis~~research atreports, ~~the~~findings ~~state~~or ~~level~~publicity could ~~negatively~~have ~~impact~~a material adverse effect on the demand for our ~~business.~~products ~~Additionally~~and our business, ~~changes~~results inof ~~applicable~~operations, ~~state~~financial condition, and ~~local~~cash ~~laws~~flows. orDependence ~~regulations,~~upon ~~including~~consumer ~~zoning~~perceptions ~~restrictions,~~means ~~permitting~~that ~~requirements~~adverse scientific research reports, ~~and~~findings, ~~fees~~regulatory proceedings, ~~could~~litigation, ~~restrict~~media ~~the~~attention ~~products~~or ~~and~~other ~~services~~publicity, weregardless ~~offer~~of accuracy or ~~impose~~merit, ~~additional~~could have ~~compliance~~a ~~costs~~material onadverse useffect oron our ~~customers~~business and ~~tenants~~results of operations. ~~Violations~~Further, adverse publicity reports or other media attention regarding the safety, efficacy, and quality of ~~applicable~~recreational ~~laws~~cannabis in general, or ~~allegations~~our products specifically, or associating the consumption of ~~such~~recreational ~~violations,~~cannabis ~~could~~with ~~disrupt~~illness ~~our~~or ~~business~~other ~~and~~negative ~~result~~effects inor events, could have such a material adverse effect. onSuch ~~our~~adverse ~~operations.~~publicity reports Weor ~~cannot~~other ~~predict~~media attention could arise even if the ~~nature~~adverse ofeffects ~~any~~associated with such products resulted from consumers’ failure to consume such products appropriately or as directed.

15Large, well-funded business sectors may have strong economic reasons to oppose the development of the cannabis industry. For example, medical cannabis may adversely impact the existing market for the current “cannabis pill” sold by mainstream pharmaceutical companies. Should cannabis displace other drugs or products, the medical cannabis industry could face a material threat from the pharmaceutical industry, which is well-funded and possesses a strong and experienced lobby. Any inroads the pharmaceutical, or any other potentially displaced, industry or sector could make in halting or impeding the cannabis industry could have a detrimental impact on our business.

~~Table~~We ofoperate ~~Contents~~an agricultural business and retail stores and are subject to weather and climate conditions.

~~future~~Our ~~laws,~~business ~~regulations~~involves the growing of recreational cannabis, ~~interpretations~~an agricultural product. Such business will be subject to the risks inherent in the agricultural business, orsuch ~~applications~~as insects, plant diseases and itsimilar isagricultural ~~possible~~risks. Further, to the extent that ~~regulations~~our ~~may~~products beare ~~enacted~~grown inoutside, ~~the~~we ~~future~~are subject to weather and climate conditions. Extended cold streaks, rain or snow, or generally cold weather or climate, could materially adversely affect our cannabis plants. Accordingly, there can be no assurance that natural elements will not have bea material adverse ~~effects~~effect on any future production of our ~~business~~products. Further, weather events can impact the ability of our retail stores to remain open and the ability of retail customers to visit our retail locations.

~~Our~~We ~~business,~~operate ~~results~~in ofa ~~operations~~highly ~~and~~competitive ~~financial condition may be adversely affected by pandemic infectious diseases, particularly COVID-19~~industry.

~~Pandemic~~The ~~infectious~~markets ~~diseases,~~for ~~such~~ancillary asbusinesses ~~COVID-19~~in ~~and~~the ~~its~~medical marijuana ~~variants, such as Omicron, may adversely impact our business, consolidated results of operations~~ and ~~financial~~recreational ~~condition.~~marijuana ~~The~~industries ~~global~~are ~~spread~~competitive ~~of COVID-19 has created significant volatility~~ and ~~uncertainty and economic disruption~~evolving. ~~The~~There ~~extent~~is tono ~~which~~material ~~COVID-19~~aspect ~~impacts~~of our business, ~~operations and financial results will depend on numerous evolving factors~~ that weis ~~may~~protected by ~~not be able to accurately predict~~patents, ~~including: the duration and scope of the pandemic; governmental~~copyrights, ~~business~~trademarks, ~~and~~or ~~individuals’~~trade ~~actions~~names, ~~that have been~~ and ~~continue~~we toface bestrong ~~taken~~competition infrom ~~response~~larger tocompanies ~~the~~that ~~pandemic;~~may ~~the~~offer ~~impact~~similar ~~of the pandemic on economic activity and actions taken in response; the effect on our customers and customer demand our services,~~ products, and ~~solutions; our ability to sell and provide its~~ services ~~and solutions, including as a result of travel restrictions and people working from home; the ability of our customers~~ to ~~pay~~ours. ~~for~~Many ~~our services and solutions; and any closures~~ of our ~~offices~~current and ~~the~~potential ~~offices~~competitors ~~and~~have ~~facilities~~longer ofoperating ~~our customers. COVID-19~~histories, assignificantly ~~well~~greater ~~as measures taken by governmental authorities to limit the spread of this virus~~financial, marketing ~~may~~and ~~interfere~~other ~~with the ability of our employees~~resources, ~~suppliers,~~ and ~~other~~larger ~~business~~client ~~providers~~bases tothan ~~carry out their assigned tasks or supply materials or services at ordinary levels of performance relative to the requirements of our business~~us, ~~which~~and ~~may~~there ~~cause~~can usbe tono ~~materially~~assurance ~~curtail~~that ~~certain~~we ofwill ~~our business operations. We require additional funding and such funding, may not~~ be ~~available~~able to ussuccessfully ~~because~~compete against ~~of contracting capital markets resulting from the COVID-19 pandemic. Any of~~ these ~~events could materially adversely affect our business, financial condition, results of operations and/~~or ~~stock~~other ~~price~~competitors.

~~The~~Given ~~cannabis~~the ~~industry~~rapid ~~faces~~changes ~~significant~~affecting ~~opposition~~the global, national, and regional economies generally and the medical marijuana and recreational marijuana industries, specifically, we may not be able to create and maintain a competitive advantage in the marketplace. Our success will depend on our ability to keep pace with any ~~negative~~changes in ~~trends~~our markets, particularly, legal, and regulatory changes. Our success will ~~adversely~~also ~~affect~~depend on our ~~business~~ability ~~operations~~to respond to, among other things, changes in the economy, market conditions, and competitive pressures. Any failure by us to anticipate or respond adequately to such changes could have a material adverse effect on our financial condition and results of operations.

We are substantially dependent on the continued market acceptance, and the proliferation of consumers, of medical and recreational cannabis. We believe that with further legalization, cannabis will become more accepted, resulting in growth in consumer demand. However, we cannot predict the future growth rate or future market potential, and any negative outlook on the cannabis industry may adversely affect our business operations.14

~~The~~Unfavorable ~~recreational~~tax ~~cannabis~~treatment ~~industry is highly dependent upon consumer perception regarding the safety, efficacy and quality~~ of ~~the recreational~~ cannabis produced. Cannabis is a controversial topic, and consumer perception of our products may be significantly influenced by scientific research or findings, regulatory investigations, litigation, media attention and other publicity regarding the consumption of recreational cannabis products. There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favorable to the recreational cannabis market or any particular product, or consistent with earlier publicity. Future research reports, findings, regulatory proceedings, litigation, media attention or other publicity that are perceived as less favorable than, or that question, earlier research reports, findings or publicity could have a material adverse effect on the demand for our products and our business, results of operations, financial condition, and cash flows. Dependence upon consumer perceptions means that adverse scientific research reports, findings, regulatory proceedings, litigation, media attention or other publicity, regardless of accuracy or merit, could have a material adverse effect on our business and results of operations. Further, adverse publicity reports or other media attention regarding the safety, efficacy, and quality of recreational cannabis in general, or our products specifically, or associating the consumption of recreational cannabis with illness or other negative effects or events, could have such a material adverse effect. Such adverse publicity reports or other media attention could arise even if the adverse effects associated with such products resulted from consumers’ failure to consume such products appropriately or as directed.businesses

~~Large~~Under Section 280E of the United States Internal Revenue Code of 1986 as amended (“Section 280E”), ~~well-funded~~“no deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business ~~sectors~~if ~~may~~such ~~have~~trade ~~strong~~or ~~economic~~business ~~reasons~~(or tothe ~~oppose~~activities which comprise such trade or business) consists of trafficking in controlled substances (within the ~~development~~meaning of schedule I and II of the ~~cannabis~~Controlled ~~industry.~~Substances Act) ~~For~~which ~~example,~~is ~~medical~~prohibited ~~cannabis~~by ~~may~~Federal ~~adversely~~law ~~impact~~or the ~~existing~~law ~~market~~of ~~for~~any ~~the~~state ~~current~~in ~~“cannabis~~which ~~pill~~such trade or business is conducted.” ~~sold~~This byprovision ~~mainstream~~has been ~~pharmaceutical~~applied ~~companies~~by the U.S. ~~Should~~Internal Revenue Service to cannabis ~~displace~~operations, ~~other~~prohibiting ~~drugs~~them orfrom ~~products,~~deducting expenses directly associated with the ~~medical~~sale of cannabis. ~~industry~~Although ~~could~~the ~~face~~IRS issued a ~~material~~clarification ~~threat~~allowing ~~from~~ the ~~pharmaceutical~~deduction ~~industry~~of certain expenses that can be categorized as cost of sales, ~~which~~the scope of such items is ~~well-funded~~interpreted very narrowly and ~~possesses~~include athe ~~strong~~cost of seeds, plants, and ~~experienced~~labor ~~lobby.~~related ~~Any~~to ~~inroads~~cultivation, while the ~~pharmaceutical,~~bulk orof ~~any~~operating ~~other~~costs ~~potentially~~and ~~displaced,~~general ~~industry~~administrative orcosts ~~sector~~are ~~could~~not ~~make~~permitted into ~~halting~~be ordeducted. ~~impeding~~Section 280E therefore has a significant impact on the ~~cannabis~~retail ~~industry~~side ~~could~~of ~~have~~cannabis, but a ~~detrimental~~lesser impact on ~~our~~cultivation, processing, production, and packaging operations. A result of Section 280E is that an otherwise profitable business may, in fact, operate at a loss, after taking into account its U.S. income tax expenses.

16We may be limited in our ability to utilize, or may not be able to utilize, net operating loss carryforwards to reduce our future tax liability.

~~Table~~We ofhave ~~Contents~~federal and state net operating loss carryforwards that may be limited or expire unused. Any such limitation or expiration could materially affect our ability to offset future tax liabilities with net operating losses.

We ~~operate~~may anbe ~~agricultural~~unable ~~business~~to ~~and~~obtain ~~are~~capital ~~subject~~ to ~~weather~~execute ~~and~~our ~~climate~~business ~~conditions~~plan.

~~Our~~To execute on our business ~~involves~~plan, ~~the~~we ~~growing~~will ofneed additional ~~recreational~~capital. ~~cannabis~~However, anthere ~~agricultural~~can ~~product.~~be ~~Such~~no ~~business~~assurance that we will be ~~subject~~able to ~~the~~obtain ~~risks~~financing ~~inherent~~on inagreeable ~~the agricultural business~~terms, ~~such~~if asat ~~insects~~all, ~~plant diseases~~ and ~~similar~~any future ~~agricultural~~sale ~~risks. Further,~~of ~~to the extent that~~ our ~~products~~equity ~~are~~securities ~~grown~~will ~~outside,~~dilute wethe ~~are~~ownership ~~subject~~of toour ~~weather~~existing stockholders and ~~climate~~could ~~conditions. Extended~~be ~~cold~~at ~~streaks,~~prices ~~rain~~substantially orbelow the ~~snow,~~price orof ~~generally~~the ~~cold~~shares ~~weather~~of orCommon ~~climate,~~Stock ~~could~~sold ~~materially~~in ~~adversely~~the ~~affect our cannabis plants~~past. ~~Accordingly,~~ ~~there~~If ~~can~~we beare nounable ~~assurance~~to ~~that~~obtain ~~natural~~the ~~elements~~necessary ~~will~~capital, ~~not~~we ~~have~~may aneed ~~material~~to ~~adverse~~delay ~~effect~~the onimplementation of ~~any~~or ~~future~~curtail ~~production of~~ our ~~products~~business plan.

We ~~operate~~face inrisks aassociated ~~highly~~with ~~competitive~~strategic acquisitions ~~industry~~and our business strategy.

~~The~~As ~~markets~~an ~~for~~important ~~ancillary~~part ~~businesses in the medical marijuana and recreational marijuana industries are competitive and evolving. There is no material aspect~~ of our roll-up business ~~that is protected by patents~~strategy, we ~~copyrights,~~strategically ~~trademarks,~~acquire orbusinesses ~~trade names,~~ and wereal ~~face~~property, ~~strong~~some ~~competition~~of ~~from~~which ~~larger companies that~~ may ~~offer~~be ~~similar~~material. ~~products~~These ~~and~~acquisitions ~~services~~involve toa ~~ours.~~number ~~Many~~ of ~~our~~financial, accounting, ~~current~~managerial, ~~and potential competitors have longer operating histories~~operational, ~~significantly greater financial~~legal, ~~marketing~~compliance and other ~~resources,~~risks and ~~larger~~challenges, ~~client~~including ~~bases~~the ~~than us~~following, ~~and~~any ~~there~~of ~~can~~which becould noadversely affect ~~assurance~~our ~~that~~results weof ~~will be able to successfully compete against these or other competitors.~~operations:

~~Given~~● ~~the~~The ~~rapid~~applicable ~~changes~~restrictions ~~affecting~~on the ~~global,~~cannabis ~~national,~~industry and ~~regional~~its ~~economies~~participants ~~generally~~limit ~~and~~ the ~~medical~~number ~~marijuana~~of ~~and~~available ~~recreational~~suitable ~~marijuana~~businesses ~~industries, specifically, we may not be able to create~~ and ~~maintain~~real aproperties ~~competitive~~that ~~advantage~~we incan the marketplace. Our success will depend on our ability to keep pace with any changes in our markets, particularly, legal, and regulatory changes. Our success will also depend on our ability to respond to, among other things, changes in the economy, market conditions, and competitive pressures. Any failure by us to anticipate or respond adequately to such changes could have a material adverse effect on our financial condition and results of operations.acquire;

~~Unfavorable~~● ~~tax~~Any ~~treatment~~acquired ofbusiness ~~cannabis~~or ~~businesses~~real property could under-perform relative to our expectations and the price that we paid for it, or not perform in accordance with our anticipated timetable;

~~Under~~● ~~Section~~We ~~280E~~may ofincur ~~the United States Internal Revenue Code of 1986 as amended (“Section 280E”), “no deduction~~ or ~~credit~~assume ~~shall~~significant bedebt ~~allowed for any amount paid or incurred during the taxable year~~ in ~~carrying~~connection on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any state in which such trade or business is conducted.” This provision has been applied by the U.S. Internal Revenue Service to cannabis operations, prohibiting them from deducting expenses directly associated with ~~the~~our sale of cannabis. Although the IRS issued a clarification allowing the deduction of certain expenses that can be categorized as cost of sales, the scope of such items is interpreted very narrowly and include the cost of seeds, plants, and labor related to cultivation, while the bulk of operating costs and general administrative costs are not permitted to be deducted. Section 280E therefore has a significant impact on the retail side of cannabis, but a lesser impact on cultivation, processing, production, and packaging operations. A result of Section 280E is that an otherwise profitable business may, in fact, operate at a loss, after taking into account its U.S. income tax expenses.acquisitions;

We● ~~may~~Acquisitions becould ~~limited~~cause in our ~~ability~~results of operations to ~~utilize,~~differ orfrom ~~may~~our ~~not~~own beor ~~able~~the toinvestment ~~utilize,~~community’s ~~net~~expectations ~~operating~~in ~~loss~~any ~~carryforwards~~given toperiod, ~~reduce~~or ~~our~~over ~~future~~the ~~tax~~long ~~liability.~~term; and

We● ~~have~~Acquisitions ~~federal~~could ~~and~~create ~~state~~demands ~~net~~on ~~operating~~our ~~loss~~management ~~carryforwards~~ that we may be ~~limited~~unable orto ~~expire~~effectively ~~unused. The~~address, ~~Company is currently evaluating whether there have been one~~ or ~~more~~for ~~ownership~~which ~~changes pursuant to IRC 382 and 383. If~~ we ~~determine there were one or more ownership changes under these rules, the use of our U.S. federal and state net operating loss carryforwards~~ may beincur ~~limited~~additional ~~and/or otherwise expired unused~~costs. ~~Any such limitation or expiration could materially affect our ability to offset future tax liabilities with net operating losses.~~

Additionally, following any business acquisition, we could experience difficulty in integrating personnel, operations, financial and other systems, and in retaining key employees and customers.

We may record goodwill and other intangible assets on our consolidated balance sheet in connection with our acquisitions. If we are not able to realize the value of these assets, we may be ~~unable~~required to ~~obtain~~incur ~~capital~~charges relating to ~~execute~~the impairment of these assets, which could materially impact our ~~business~~results ~~plan.~~of operations.

To execute on our business plan, we will need additional capital. However, there can be no assurance that we will be able to obtain financing on agreeable terms, if at all, and any future sale of our equity securities will dilute the ownership of our existing stockholders and could be at prices substantially below the price of the shares of Common Stock sold in 15

17Our ability to grow our business depends on state laws pertaining to the cannabis industry.

~~Table~~Continued development of ~~Contents~~the cannabis industry depends upon continued legislative authorization of cannabis at the state level. The status quo of, or progress in, the cannabis industry is not assured, and any number of factors could slow or halt further progress in this area. While there may be ample public support for legislative action permitting the manufacture and use of cannabis, numerous factors impact the legislative process. For example, many states that voted to legalize medical and/or adult-use cannabis have seen significant delays in the drafting and implementation of industry regulations and issuance of licenses. In addition, burdensome regulation at the state level could slow or stop further development of the medical-use cannabis industry, such as limiting the medical conditions for which medical cannabis can be recommended by physicians for treatment, restricting the form in which medical cannabis can be consumed, imposing significant registration requirements on physicians and patients or imposing significant taxes on the growth, processing and/or retail sales of cannabis, which could have the impact of dampening growth of the cannabis industry and making it difficult for cannabis businesses, including our tenants, to operate profitably in those states. Any one of these factors could slow or halt additional legislative authorization of cannabis, which could harm our results of operations, business, and prospects.

~~the~~Applicable ~~past.~~state Iflaws ~~we are unable to obtain the necessary capital, we~~ may ~~need~~prevent tous ~~delay~~from maximizing ~~the implementation of or curtail~~ our ~~business~~potential ~~plan~~income.

WeDepending ~~face~~on ~~risks~~the ~~associated~~laws of each particular state, we may not be able to fully realize our potential to generate profit. For example, some states have residency requirements for those directly involved in the cannabis industry, which may impede our ability to contract with ~~strategic~~cannabis ~~acquisitions~~businesses in those states. Furthermore, cities and ~~our~~counties ~~business~~are ~~strategy~~being given broad discretion to ban certain cannabis activities. Even if these activities are legal under state law, specific cities and counties may ban them.

AsAssets anused ~~important~~in ~~part~~conjunction ofwith ~~our~~cannabis ~~roll-up business strategy, we strategically acquire~~ businesses ~~and real property, some of which~~ may be ~~material.~~forfeited to ~~These acquisitions involve a number of financial, accounting, managerial, operational, legal, compliance and other risks and challenges, including~~ the ~~following,~~federal ~~any of which could adversely affect our results of operations:~~government.

●Any ~~The~~assets ~~applicable~~used ~~restrictions~~in onconjunction with the violation of federal law are potentially subject to federal forfeiture, even in states where cannabis ~~industry~~is legal. In July 2017, the U.S. Department of Justice issued a new policy directive regarding asset forfeiture, referred to as the “equitable sharing program.” Under this new policy directive, federal authorities may adopt state and ~~its~~local ~~participants~~forfeiture ~~limit~~cases and prosecute them at the ~~number~~federal level, allowing for state and local agencies to keep up to 80% of ~~available~~any ~~suitable~~forfeiture ~~businesses~~revenue. This policy directive represents a reversal of the U.S. Department of Justice’s policy under the Obama administration and ~~real~~allows ~~properties~~for forfeitures to proceed that weare ~~can~~not ~~acquire;~~in accord with the limitations imposed by state-specific forfeiture laws. This new policy directive may lead to increased use of asset forfeitures by local, state, and federal enforcement agencies. If the federal government decides to initiate forfeiture proceedings against cannabis businesses, our investment in those businesses may be lost.

●Our ~~Any~~operating ~~acquired~~locations ~~business or real property~~ could ~~under-perform~~be ~~relative~~targets tofor ~~our~~theft ~~expectations~~ and ~~the~~our ~~price~~physical security ~~that~~measures wemay ~~paid for it, or~~ not ~~perform~~prevent inall ~~accordance~~security ~~with our anticipated timetable;~~breaches

●Our Weoperating ~~may~~locations ~~incur~~could orbe ~~assume~~targets ~~significant~~for ~~debt~~theft. While we have implemented security measures at our operating locations and we continue to monitor and improve security measures, our cultivation and processing facilities could be subject to break-ins, robberies, and other breaches in ~~connection~~security. ~~with~~If there is a breach in security and we fall victim to a robbery or theft, the loss of cannabis plants, cannabis oils, cannabis flowers and cultivation and processing equipment could have a material adverse impact on our ~~acquisitions;~~business, financial condition, and results of operations.

●To ~~Acquisitions~~the ~~could~~extent ~~cause~~that our ~~results~~business involves the movement and transfer of ~~operations~~cash towhich ~~differ~~is collected from ~~our~~locations ~~own~~and deposited into financial institutions, there is a risk of theft or robbery during the ~~investment~~transport ~~community’s~~of ~~expectations~~cash. We may engage a security firm to provide security in ~~any~~the ~~given~~transport ~~period,~~and movement of large amounts of cash. While we have taken steps to prevent theft or ~~over~~robbery ~~the~~of ~~long~~cash ~~term;~~during transport, there can be no assurance that there will not be a security breach during the transport and the movement of cash involving the theft of product or cash.

~~● Acquisitions could create demands on our management that we may be unable to effectively address, or for which we may incur additional costs.~~16

~~Additionally,~~Our ~~following~~future ~~any~~success ~~business~~depends ~~acquisition,~~on weour ~~could~~ability to ~~experience~~grow ~~difficulty in integrating personnel, operations, financial~~ and ~~other~~expand ~~systems,~~our ~~and~~customer inbase ~~retaining key employees~~ and ~~customers~~operational territory.

WeOur ~~may~~success ~~record~~and ~~goodwill~~the planned growth and ~~other~~expansion of ~~intangible~~our ~~assets~~business depend on our ~~consolidated~~products ~~balance~~and ~~sheet~~services achieving greater and broader acceptance, resulting in ~~connection~~a ~~with~~larger customer base, and on the expansion of our ~~acquisitions~~operations into new markets. IfHowever, wethere ~~are~~can ~~not~~be ~~able~~no toassurance ~~realize~~that ~~the~~customers ~~value~~will ofpurchase ~~these~~our ~~assets~~products and/or services, or that we ~~may~~will be ~~required~~able to ~~incur~~continually ~~charges~~expand ~~relating~~our customer base. Additionally, if we are unable to ~~the~~effectively ~~impairment~~market ofor ~~these~~expand our ~~assets~~product and/or service offerings, ~~which~~we ~~could~~will ~~materially~~be ~~impact~~unable to grow and expand our ~~results~~business ofor ~~operations~~implement our business strategy.

~~Our~~Operating ~~ability~~in new markets may expose us to ~~grow~~new operational, regulatory, or legal risks and subject us to increased compliance costs. We may need to modify our existing business ~~depends~~model and oncost ~~state~~structure ~~laws~~to ~~pertaining~~comply with local regulatory or other requirements. Facilities we open in new markets may take longer to reach expected revenue and profit levels on a consistent basis, may have higher construction, occupancy, or operating costs, and may present different competitive conditions, consumer preferences and spending patterns than we anticipate. Any of the ~~cannabis~~above ~~industry~~could materially impair our ability to increase sales and revenue.

~~Continued~~We ~~development of the cannabis industry depends upon continued legislative authorization of cannabis at the state level. The status quo of, or progress in, the cannabis industry is not assured,~~ and ~~any~~our ~~number~~existing ~~of factors could slow or halt further progress in this area. While there may be ample public support for legislative action permitting the manufacture~~ and ~~use~~potential ~~of cannabis~~customers, ~~numerous factors impact the legislative process. For example~~ clients, ~~many states that voted to legalize medical~~ and~~/or~~ ~~adult-use~~tenants ~~cannabis~~ have ~~seen~~difficulty ~~significant~~accessing ~~delays in~~ the ~~drafting~~service ~~and implementation~~ of ~~industry regulations and issuance of licenses. In addition~~banks, ~~burdensome regulation at the state level could slow or stop further development of the medical-use cannabis industry, such as limiting the medical conditions for~~ which ~~medical~~may ~~cannabis~~make can be recommended by physicians for treatment, restricting the form in which medical cannabis can be consumed, imposing significant registration requirements on physicians and patients or imposing significant taxes on the growth, processing and/or retail sales of cannabis, which could have the impact of dampening growth of the cannabis industry and making it difficult for ~~cannabis~~them ~~businesses, including our tenants,~~ to operate ~~profitably in those states~~. ~~Any one of these factors could slow or halt additional legislative authorization of cannabis, which could harm our results of operations, business, and prospects.~~

Financial transactions involving proceeds generated by cannabis-related conduct can form the basis for prosecution under the federal money laundering statutes, unlicensed money transmitter statute and the Bank Secrecy Act. Previous guidance issued by the FinCen, a division of the U.S. Department of the Treasury, clarifies how financial institutions can provide services to cannabis-related businesses consistent with their obligations under the Bank Secrecy Act. Prior to the DOJ’s announcement in January 2018 of the rescission of the Cole Memo and related memoranda, supplemental guidance from the DOJ directed federal prosecutors to consider the federal enforcement priorities enumerated in the Cole Memo when determining whether to charge institutions or individuals with any of the financial crimes described above based upon cannabis-related activity. It is unclear what impact the recent rescission of the “Cole Memo” will have, but federal prosecutors may increase enforcement activities against institutions or individuals that are conducting financial transactions related to cannabis activities. The increased uncertainty surrounding financial transactions related to cannabis activities may also result in financial institutions discontinuing services to the cannabis industry.

~~Applicable~~Because ~~state~~the ~~laws~~use, sale, and distribution of cannabis remains illegal under federal law, many banks will not accept deposits from or provide other bank services to businesses involved with cannabis. Consequently, those businesses involved in the cannabis industry continue to encounter difficulty establishing banking relationships, which may ~~prevent~~increase over time. Our inability to maintain our current bank accounts would make it difficult for us ~~from~~to ~~maximizing~~operate our business, increase our operating costs, and pose additional operational, logistical and security challenges and could result in our inability to implement our business plan. Furthermore, the inability to open bank accounts may make it difficult for our existing and potential ~~income~~customers, clients, and tenants to operate and may make it difficult for them to contract with us.

~~Depending~~Conditions onin the ~~laws of each particular state~~economy, wethe ~~may~~markets ~~not be able to fully realize our potential to generate profit. For example~~we serve, ~~some~~and ~~states have residency requirements for those directly involved in~~ the ~~cannabis~~financial ~~industry,~~markets ~~which~~generally may ~~impede~~adversely affect our ~~ability~~business ~~to contract with cannabis businesses in those states. Furthermore, cities~~ and ~~counties~~results ~~are~~of ~~being given broad discretion to ban certain cannabis activities~~operations. ~~Even if these activities are legal under state law, specific cities and counties may ban them.~~

18Our business is sensitive to general economic conditions. We believe that the state of global economic conditions is particularly uncertain due to recent and expected shifts in political, legislative, and regulatory conditions concerning, among other matters, international trade and taxation, and the impact of recent or future natural disasters and/or health and safety epidemics, including the outbreak of COVID-19. An uneven recovery or a renewed global downturn may put pressure on our sales due to reductions in customer demand as well as customers deferring purchases. Slower economic growth, volatility in the credit markets, high levels of unemployment, and other challenges that affect the economy adversely could affect us and our customers and suppliers. If growth in the economy or in any of the markets we serve slows for a significant period, if there is a significant deterioration in the economy or such markets or if improvements in the economy do not benefit the markets we serve, our business and results of operations could be adversely affected.

~~Table of Contents~~17

~~Assets~~We ~~used~~depend inon ~~conjunction~~our ~~with~~management, ~~cannabis~~certain ~~businesses~~key personnel, ~~may~~and beboard ~~forfeited~~of directors, as well as our ability to ~~the~~attract, ~~federal~~retain ~~government~~and motivate qualified personnel.

~~Any~~Our ~~assets~~future ~~used~~success independs ~~conjunction~~largely ~~with~~upon the ~~violation~~experience, skill, ofand ~~federal~~contacts ~~law~~of ~~are~~our ~~potentially~~key ~~subject~~personnel, toofficers ~~federal~~and ~~forfeiture~~directors, ~~even~~and inthe ~~states~~loss ~~where~~of ~~cannabis is legal. In July 2017,~~ the ~~U.S.~~services ~~Department~~ of ~~Justice~~these ~~issued~~key apersonnel, ~~new~~officers, ~~policy~~or ~~directive regarding asset forfeiture~~directors, particularly ~~referred~~our tochief asexecutive ~~the~~officer ~~"equitable~~and ~~sharing~~chairman ~~program."~~of ~~Under~~our ~~this~~board ~~new~~of ~~policy directive~~directors, ~~federal authorities~~ may ~~adopt~~have ~~state~~a ~~and~~material ~~local~~adverse ~~forfeiture~~effect ~~cases~~upon ~~and~~our ~~prosecute~~business. Additionally, ~~them~~our atrevenues ~~the~~are ~~federal~~largely ~~level,~~driven ~~allowing~~by ~~for~~several ~~state~~employees ~~and~~with ~~local~~particular ~~agencies~~expertise toin ~~keep~~cannabis upretail toand ~~80%~~operations. If one of ~~any~~these ~~forfeiture~~key ~~revenue.~~employees ~~This~~were ~~policy~~to ~~directive~~leave, ~~represents~~it awould ~~reversal~~negatively ofimpact ~~the~~our ~~U.S.~~short ~~Department~~and oflong-term ~~Justice's~~results ~~policy~~from ~~under~~operations. ~~the~~Shortages ~~Obama~~in ~~administration~~qualified personnel ~~and~~could ~~allows~~also ~~for~~limit ~~forfeitures~~our ability to ~~proceed~~successfully ~~that~~implement ~~are~~our ~~not~~growth inplan. ~~accord~~As ~~with~~we ~~the~~grow, ~~limitations~~we ~~imposed~~will byneed ~~state-specific~~to ~~forfeiture~~attract ~~laws.~~and ~~This~~retain ~~new~~highly skilled ~~policy~~experts ~~directive~~in ~~may~~the ~~lead~~cannabis toindustry, ~~increased~~as ~~use~~well ofas ~~asset~~managerial, ~~forfeitures~~sales byand ~~local~~marketing, ~~state,~~ and ~~federal~~finance ~~enforcement agencies~~personnel. IfThere ~~the~~can ~~federal~~be ~~government~~no ~~decides~~assurance, however, tothat ~~initiate~~we ~~forfeiture~~will ~~proceedings~~be ~~against~~able ~~cannabis~~to ~~businesses,~~attract ~~our~~and ~~investment~~retain insuch ~~those businesses may be lost~~personnel.

Our ~~operating~~reputation ~~locations~~and ~~could~~ability to do business may be ~~targets~~negatively ~~for~~impacted ~~theft~~by ~~and~~the ~~our~~improper ~~physical~~conduct ~~security~~by ~~measures~~our ~~may~~business ~~not~~partners, ~~prevent~~employees, ~~all~~or ~~security~~agents. ~~breaches~~

~~Our~~We ~~operating~~depend ~~locations~~on ~~could~~third beparty ~~targets~~suppliers ~~for~~to ~~theft.~~produce and ~~While~~timely weship ~~have~~our ~~implemented~~orders. ~~security~~Products ~~measures~~purchased atfrom our ~~operating~~suppliers ~~locations~~are ~~and~~resold ~~we continue~~ to ~~monitor and improve security measures,~~ our ~~cultivation~~customers. ~~and~~These ~~processing~~suppliers ~~facilities~~ could befail ~~subject~~to produce products to ~~break-ins,~~our ~~robberies,~~specifications ~~and~~or ~~other~~quality ~~breaches~~standards inand ~~security.~~may Ifnot ~~there~~deliver isunits on a ~~breach~~timely inbasis. ~~security~~Any ~~and~~changes wein ~~fall~~our ~~victim~~suppliers to aresolve ~~robbery~~production issues orcould ~~theft,~~disrupt ~~the~~our ~~loss~~ability ofto ~~cannabis~~fulfill ~~plants,~~orders. ~~cannabis~~Any ~~oils,~~changes ~~cannabis~~in ~~flowers~~our ~~and~~suppliers ~~cultivation~~to ~~and~~resolve ~~processing~~production ~~equipment~~issues could ~~have~~also adisrupt ~~material adverse impact on~~ our business, due ~~financial~~to ~~condition,~~delays ~~and~~in ~~results~~finding ofnew ~~operations~~suppliers.

ToFurthermore, ~~the~~we ~~extent~~cannot ~~that~~provide assurance that our ~~business~~internal ~~involves~~controls ~~the movement~~ and ~~transfer~~compliance ofsystems ~~cash~~will ~~which~~always isprotect ~~collected~~us from ~~locations~~acts ~~and~~committed ~~deposited~~by ~~into~~our ~~financial~~employees, ~~institutions~~agents, ~~there is a risk of theft~~ or ~~robbery~~business ~~during~~partners in ~~the~~violation ~~transport~~ of ~~cash~~U.S. Wefederal ~~may~~or ~~engage~~state alaws. ~~security~~Any ~~firm~~improper toacts ~~provide~~or ~~security~~allegations incould ~~the~~damage ~~transport~~our reputation and ~~movement~~subject ofus ~~large amounts of cash. While we have taken steps~~ to ~~prevent~~civil ~~theft~~ or ~~robbery~~criminal investigations ofand ~~cash~~related ~~during~~shareholder ~~transport~~lawsuits, ~~there~~could ~~can~~lead beto nosubstantial ~~assurance~~civil ~~that~~and ~~there~~criminal ~~will~~monetary ~~not~~and benon-monetary apenalties, ~~security breach during the transport~~ and could ~~the~~cause ~~movement~~us ofto ~~cash~~incur ~~involving~~significant ~~the~~legal ~~theft~~and ofinvestigatory ~~product or cash~~fees.

~~Our~~Due ~~future~~to ~~success~~our ~~depends~~involvement onin ~~our~~the ~~ability~~cannabis toindustry, ~~grow~~we ~~and~~may ~~expand~~have difficulty obtaining various insurance policies that are desired to operate our ~~customer~~business, ~~base~~which ~~and~~may ~~operational~~expose ~~territory.~~us to additional risks and financial liabilities.

~~Our~~Insurance ~~success~~that ~~and~~is ~~the~~otherwise ~~planned~~readily ~~growth~~available, ~~and~~such ~~expansion~~as ofworkers’ compensation, ~~our~~general ~~business~~liability, ~~depend~~and ondirectors’ ~~our~~and ~~products~~officers’ ~~and~~insurance, ~~services~~is ~~achieving~~more ~~greater~~difficult for us to find and ~~broader~~more ~~acceptance~~expensive, because ~~resulting~~of our involvement in athe ~~larger~~cannabis ~~customer~~industry. ~~base,~~There ~~and~~are onno guarantees that we will be able to find such insurance in the ~~expansion~~future, or ofthat ~~our~~the ~~operations~~cost ~~into~~will ~~new~~be ~~markets~~affordable to us. ~~However~~If we are forced to go without such insurance, ~~there~~it ~~can~~may beprevent nous ~~assurance~~from ~~that~~entering ~~customers~~certain ~~will~~business sectors, ~~purchase~~may inhibit our ~~products~~growth, and~~/or~~ ~~services~~may expose us to additional risk and financial liabilities. Moreover, orinsurance ~~that~~against werisks ~~will~~such as beenvironmental ~~able~~pollution toor ~~continually~~other ~~expand~~hazards encountered in our ~~customer~~operations ~~base.~~is ~~Additionally,~~not ifgenerally weavailable ~~are~~on ~~unable~~acceptable terms. We might also become subject to ~~effectively~~liability ~~market~~for pollution or ~~expand~~other ~~our~~hazards ~~product~~which ~~and/or~~may ~~service~~not ~~offerings,~~be insured against or which we ~~will~~may beelect ~~unable~~not to ~~grow~~insure ~~and~~against because ~~expand~~of ~~our~~premium ~~business~~costs or ~~implement~~other ~~our~~reasons. ~~business~~Losses ~~strategy~~from these events may cause us to incur significant costs that could have a material adverse effect upon its financial performance and results of operations.

~~Operating~~We ~~in new markets~~ may ~~expose~~be ~~us to new operational, regulatory, or legal risks and~~ subject us to ~~increased~~product ~~compliance~~liability costs. We may need to modify our existing business model and cost structure to comply with local regulatory or other requirements. Facilities we open in new markets may take longer to reach expected revenue and profit levels on a consistent basis, may have higher construction, occupancy, or operating costs, and may present different competitive conditions, consumer preferences and spending patterns than we anticipate. Any of the above could materially impair our ability to increase sales and revenue.claims

We ~~and~~face ~~our~~an ~~existing~~inherent ~~and~~risk ~~potential~~of ~~customers~~exposure to product liability claims, ~~clients~~regulatory action, and ~~tenants~~litigation if its products are alleged to have ~~difficulty~~caused ~~accessing~~significant loss or injury. In addition, the ~~service~~sale of ~~banks,~~our ~~which~~products would involve the risk of injury to consumers due to tampering by unauthorized third parties or product contamination. Previously unknown adverse reactions resulting from human consumption of marijuana alone or in combination with other medications or substances could occur. We may be ~~make~~subject itto ~~difficult~~various product liability claims, including, among others, that our products caused injury or illness or death, include inadequate instructions for ~~them~~use or include inadequate warnings concerning possible side effects or interactions with other substances. A product liability claim or regulatory action against us could result in increased costs, could adversely affect our reputation with its clients and consumers generally, and could have a material adverse effect on our business, results of operations and financial condition. There can be no assurances that we will be able to ~~operate~~obtain or maintain product liability insurance on acceptable terms or with adequate coverage against potential liabilities. Such insurance is expensive and may not be available in the future on acceptable terms, or at all. The inability to obtain sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of our current or potential products.

19A cybersecurity incident and other technology disruptions could result in a violation of law or negatively impact our reputation and relationships, our business operations, and our financial condition.

~~Table~~Information and security risks have generally increased in recent years due to the rise in new technologies and the increased sophistication and activities of ~~Contents~~perpetrators of cyber-attacks. We use computers in substantially all aspects of our business operations, and we also use mobile devices and other online activities to connect with our employees, customers, tenants, suppliers, and other parties. Such uses give rise to cybersecurity risks, including the risk of security breaches, espionage, system disruption, theft, and inadvertent release of information. Our business involves the storage and transmission of numerous classes of sensitive and/or confidential information and intellectual property, including employees’, customers’, tenants’ and suppliers’ personally identifiable information and financial and strategic information about us.

~~financial~~If ~~transactions~~we ~~related~~fail to ~~cannabis~~adequately ~~activities~~assess and identify cybersecurity risks associated with our business operations, we may become increasingly vulnerable to such risks. ~~The~~Even ~~increased~~the ~~uncertainty~~most ~~surrounding~~well ~~financial~~protected ~~transactions~~information, networks, ~~related~~systems, and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to ~~cannabis~~be ~~activities~~detected and, in fact, may not ~~also~~be ~~result~~detected. Accordingly, we, our customers and our suppliers may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us, our customers, and our suppliers to entirely mitigate this risk. Further, in ~~financial~~the ~~institutions~~future ~~discontinuing~~we ~~services~~may be required to expend additional resources to continue to enhance information security measures and/or to investigate and remediate any information security vulnerabilities. We can provide no assurances that the ~~cannabis~~measures ~~industry~~we have implemented to prevent security breaches and cyber incidents will be effective in the event of a cyber-attack.

~~Because~~The ~~the~~theft, ~~use~~destruction, ~~sale~~loss, ~~and~~misappropriation or ~~distribution~~release of ~~cannabis~~sensitive ~~remains~~and/or ~~illegal~~confidential ~~under~~information ~~federal~~or ~~law~~intellectual property, ~~many banks will not accept deposits from~~ or ~~provide~~interference ~~other bank services to businesses involved~~ with ~~cannabis.~~our ~~Consequently,~~information ~~those~~technology ~~businesses~~systems or ~~involved in~~ the ~~cannabis~~technology ~~industry~~systems ~~continue~~of tothird-parties ~~encounter~~on ~~difficulty establishing banking relationships,~~ which ~~may~~we ~~increase over time. Our inability to maintain our current bank accounts would make it difficult for us to operate our business~~rely, ~~increase our operating costs, and pose additional operational, logistical and security challenges and~~ could result in ~~our inability to implement our~~ business ~~plan. Furthermore~~disruption, ~~the~~negative ~~inability~~publicity, toviolation ~~open~~of ~~bank~~privacy laws, ~~accounts~~loss ~~may~~of ~~make~~tenants, itloss ~~difficult~~of ~~for~~customers, ~~our~~potential ~~existing~~liability and ~~potential~~competitive ~~customers~~disadvantage, ~~clients,~~any ~~and~~of ~~tenants~~which tocould ~~operate~~result ~~and~~in ~~may~~a ~~make~~material itadverse effect ~~difficult~~on ~~for~~financial ~~them~~condition toor ~~contract~~results ~~with~~of usoperations.

~~Conditions~~We inmay ~~the~~be ~~economy,~~required ~~the~~to ~~markets~~recognize weimpairment charges ~~serve,~~that ~~and~~could ~~the~~materially ~~financial markets generally may adversely~~ affect our ~~business and~~ results of operations.

~~Our business is sensitive to general economic conditions.~~ We ~~believe~~assess ~~that~~our ~~the~~intangible ~~state of global economic conditions is particularly uncertain due to recent and expected shifts in political~~assets, ~~legislative,~~ and ~~regulatory~~our ~~conditions concerning, among~~ other long-lived ~~matters,~~assets ~~international~~as ~~trade~~ and ~~taxation,~~when ~~and~~required ~~the~~by ~~impact~~GAAP ofto ~~recent~~determine orwhether ~~future~~they ~~natural~~are ~~disasters~~impaired. ~~and/or~~If ~~health~~they ~~and~~are ~~safety epidemics~~impaired, ~~including~~we ~~the~~would ~~outbreak~~record ofappropriate impairment ~~COVID-19~~charges. An ~~uneven~~It ~~recovery~~is orpossible athat ~~renewed~~we ~~global downturn~~ may ~~put~~be ~~pressure~~required ~~on our sales due~~ to ~~reductions~~record insignificant ~~customer~~impairment ~~demand~~charges ~~as well as customers deferring purchases. Slower economic growth, volatility~~ in the ~~credit~~future ~~markets, high levels of unemployment,~~ and ~~other challenges that affect the economy adversely could affect us and our customers and suppliers. If growth in the economy or in any of the markets we serve slows for a significant period~~, if ~~there~~we ~~is a significant deterioration in the economy or such markets or if improvements in the economy~~ do ~~not benefit the markets we serve~~so, our ~~business and~~ results of operations could be materially adversely affected.

WeChanges ~~depend~~in onaccounting ~~our~~standards ~~management,~~could ~~certain key personnel, and board of directors, as well as~~ affect our ~~ability~~reported tofinancial ~~attract, retain and motivate qualified personnel~~results.

Our ~~future~~management ~~success~~uses ~~depends~~significant ~~largely upon the experience~~judgment, ~~skill~~estimates, and ~~contacts~~assumptions ofin ~~our~~applying ~~key~~GAAP. ~~personnel,~~New ~~officers~~accounting ~~and~~standards ~~directors,~~that ~~and~~may ~~the~~be ~~loss~~applicable ofto ~~the~~our ~~services~~financial ~~of these key personnel~~statements, ~~officers,~~ or ~~directors,~~changes ~~particularly~~in ~~our~~the ~~chief executive officer and chairman~~ interpretation of ~~our~~existing ~~board of directors~~standards, ~~may~~could have a ~~material~~significant ~~adverse~~ effect ~~upon~~on our ~~business.~~reported ~~Additionally,~~results ~~our revenues are largely driven by several employees with particular expertise in cannabis retail and operations. If one~~ of ~~these key employees were to leave, it would negatively impact our short and long-term results from~~ operations. ~~Shortages~~for ~~in qualified personnel could also limit our ability to successfully implement our growth plan. As we grow, we will need to attract and retain highly skilled experts in~~ the ~~cannabis~~affected ~~industry, as well as managerial, sales and marketing, and finance personnel~~periods. ~~There can be no assurance, however, that we will be able to attract and retain such personnel.~~

~~Our reputation and ability to do business may be negatively impacted by the improper conduct by our business partners, employees, or agents.~~ 19

WeRisks ~~depend~~Related ~~on third party suppliers~~ to ~~produce~~the ~~and~~Securities ~~timely~~Markets ~~ship our orders. Products purchased from our suppliers are resold to our customers. These suppliers could fail to produce products to our specifications or quality standards~~ and ~~may~~Ownership ~~not~~of ~~deliver~~Our units on a timely basis. Any changes in our suppliers to resolve production issues could disrupt our ability to fulfill orders. Any changes in our suppliers to resolve production issues could also disrupt our business due to delays in finding new suppliers.Common Stock

~~Furthermore,~~The weprice ~~cannot provide assurance that our internal controls and compliance systems will always protect us from acts committed by our employees, agents, or business partners in violation~~ of ~~U.S. federal or state laws. Any improper acts or allegations could damage~~ our ~~reputation~~Common ~~and~~Stock ~~subject~~is usvolatile ~~to civil or criminal investigations~~ and ~~related~~the ~~shareholder~~value ~~lawsuits,~~of ~~could~~your investment ~~lead to substantial civil and criminal monetary and non-monetary penalties, and~~ could ~~cause us to incur significant legal and investigatory fees~~decline.

20The market price of our Common Stock has been, and may in the future, be volatile. Between January 1, 2015, and December 31, 2023, the closing price of our Common Stock has ranged from a low of $ 0.05 per share to a high of $10.35 per share. Accordingly, it is difficult to forecast the future performance of our Common Stock. The market price of our Common Stock may be higher or lower than the price you pay, depending on many factors, some of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment in our Common Stock. Factors that could cause fluctuations in the trading price of our Common Stock include the following:

~~Table~~● ofregulatory ~~Contents~~developments at the federal, state or local level;

~~Due~~● toannouncements ~~our~~of ~~involvement~~new inproducts, ~~the cannabis industry~~services, werelationships ~~may~~with ~~have~~strategic ~~difficulty~~partners, ~~obtaining~~acquisitions, ~~various~~or ~~insurance~~other ~~policies~~events ~~that~~by ~~are~~us ~~desired~~or ~~to operate~~ our ~~business, which may expose us to additional risks and financial liabilities.~~competitors;

~~Insurance~~● ~~that~~changes isin ~~otherwise readily available, such as workers’ compensation,~~ general ~~liability,~~economic and directors’ and officers’ insurance, is more difficult for us to find and more expensive, because of our involvement in the cannabis industry. There are no guarantees that we will be able to find such insurance in the future, or that the cost will be affordable to us. If we are forced to go without such insurance, it may prevent us from entering certain business sectors, may inhibit our growth, and may expose us to additional risk and financial liabilities. Moreover, insurance against risks such as environmental pollution or other hazards encountered in our operations is not generally available on acceptable terms. We might also become subject to liability for pollution or other hazards which may not be insured against or which we may elect not to insure against because of premium costs or other reasons. Losses from these events may cause us to incur significant costs that could have a material adverse effect upon its financial performance and results of operations.conditions;

We● ~~may~~price beand ~~subject~~volume tofluctuations ~~product~~in ~~liability~~the ~~claims~~overall stock market from time to time;

We● ~~face an inherent risk of exposure to product liability claims, regulatory action, and litigation if its products are alleged to have caused~~ significant ~~loss~~volatility orin ~~injury. In addition,~~ the ~~sale~~market ofprice our products would involve the risk of injury to consumers due to tampering by unauthorized third parties or product contamination. Previously unknown adverse reactions resulting from human consumption of marijuana alone or in combination with other medications or substances could occur. We may be subject to various product liability claims, including, among others, that our products caused injury or illness or death, include inadequate instructions for use or include inadequate warnings concerning possible side effects or interactions with other substances. A product liability claim or regulatory action against us could result in increased costs, could adversely affect our reputation with its clients and ~~consumers~~trading ~~generally,~~volume ~~and could have a material adverse effect on our business, results~~ of ~~operations~~similar ~~and~~companies financial condition. There can be no assurances that we will be able to obtain or maintain product liability insurance on acceptable terms or with adequate coverage against potential liabilities. Such insurance is expensive and may not be available in the future on acceptable terms, or at all. The inability to obtain sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of our ~~current or potential products.~~industry;

A● ~~cybersecurity~~fluctuations ~~incident and other technology disruptions could result~~ in athe ~~violation~~trading volume of ~~law or negatively impact~~ our ~~reputation~~shares ~~and~~or ~~relationships,~~the ~~our~~size ~~business~~of ~~operations, and~~ our ~~financial~~public ~~condition.~~float;

~~Information~~● ~~and~~actual ~~security~~or ~~risks~~anticipated ~~have~~changes ~~generally increased~~ in ~~recent~~our ~~years~~operating ~~due~~results toor ~~the~~fluctuations ~~rise~~ in ~~new technologies and the increased sophistication and activities of perpetrators of cyber-attacks. We use computers in substantially all aspects of~~ our ~~business~~operating operations, and we also use mobile devices and other online activities to connect with our employees, customers, tenants, suppliers, and other parties. Such uses give rise to cybersecurity risks, including the risk of security breaches, espionage, system disruption, theft, and inadvertent release of information. Our business involves the storage and transmission of numerous classes of sensitive and/or confidential information and intellectual property, including employees’, customers’, tenants’ and suppliers’ personally identifiable information and financial and strategic information about us. results;

If● wemajor ~~fail~~catastrophic to adequately assess and identify cybersecurity risks associated with our business operations, we may become increasingly vulnerable to such risks. Even the most well protected information, networks, systems, and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected. Accordingly, we, our customers and our suppliers may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us, our customers, and our suppliers to entirely mitigate this risk. Further, in the future we may be required to expend additional resources to continue to enhance information security measures and/or to investigate and remediate any information security vulnerabilities. We can provide no assurances that the measures we have implemented to prevent security breaches and cyber incidents will be effective in the event of a cyber-attack. events;

21● sales of large blocks of our stock; or

~~Table~~● ofchanges ~~Contents~~in senior management or key personnel.

~~The~~In ~~theft~~addition, ~~destruction,~~if ~~loss,~~the ~~misappropriation~~market for cannabis company stocks or ~~release~~the ofstock ~~sensitive~~market ~~and/or~~in ~~confidential~~general ~~information~~experiences orloss ~~intellectual~~of ~~property~~investor confidence, orthe ~~interference~~trading ~~with~~price of our ~~information~~Common ~~technology~~Stock ~~systems~~could decline for reasons unrelated to our business, operating results, or ~~the~~financial ~~technology~~condition. ~~systems~~The trading price of ~~third-parties~~our onCommon ~~which~~Stock wemight ~~rely,~~decline ~~could~~in ~~result~~reaction to events that affect other companies in ~~business~~our ~~disruption~~industry, ~~negative~~even ~~publicity,~~if ~~violation~~these ofevents ~~privacy~~do ~~laws~~not directly affect us. In the past, ~~loss~~following periods of ~~tenants,~~volatility ~~loss~~in the market price of ~~customers~~a company’s securities, ~~potential~~securities ~~liability~~class ~~and~~action ~~competitive~~litigation ~~disadvantage~~has often been brought against that company. If our stock price continues to be volatile, ~~any~~we may become the target of securities litigation, which could result in substantial costs and divert our management’s attention and resources from our business. This could have a material adverse effect on ~~financial~~our ~~condition~~business, operating or results, ofand ~~operations~~financial condition.

WeTrading ~~may~~and belisting ~~required~~of tosecurities ~~recognize~~of ~~impairment~~cannabis related ~~charges~~businesses, ~~that~~including ~~could~~our ~~materially~~Common ~~affect~~Stock, ~~our~~may ~~results~~be ofsubject ~~operations.~~to restrictions.

WeIn ~~assess~~the ~~our~~United ~~intangible assets~~States, ~~and~~many ~~our~~clearing ~~other~~houses ~~long~~for major broker-~~lived~~dealer ~~assets~~firms, asincluding Pershing LLC, the largest clearing, custody, and ~~when~~settlement ~~required~~firm byin ~~GAAP~~the United States, have refused to ~~determine~~handle ~~whether~~securities ~~they~~or ~~are~~settle ~~impaired~~transactions of companies engaged in cannabis related business. IfThis ~~they~~means ~~are~~that ~~impaired,~~certain webroker-dealers cannot ~~would~~accept ~~record~~for ~~appropriate~~deposit ~~impairment~~or ~~charges~~settle transactions in the securities of cannabis related businesses. Further, Itnational securities exchanges in the United States, including Nasdaq and the New York Stock Exchange, have historically refused to list cannabis related businesses, including cannabis retailers, that operate primarily in the United States; there is ~~possible~~no indication that this proscription will change any time soon. Accordingly, we ~~may~~continue to be ~~required~~listed on the OTCQB, which as an over-the-counter market, is subject to ~~record~~greater ~~significant~~volatility and ~~impairment~~less ~~charges~~stability inthan would be the case on a national securities exchange. Our existing operations, and any future operations or investments, may become the subject of heightened scrutiny by clearing houses and stock exchanges, ifin weaddition doto soregulators and other authorities in the United States. Any existing or future restrictions imposed by Pershing LLC, ~~our~~or ~~results~~any ofother ~~operations~~applicable clearing house, stock exchange or other authority, on trading in our Common Stock could have bea ~~materially~~material ~~adversely~~adverse ~~affected~~effect on the liquidity of our Common Stock.

~~Changes in accounting standards could affect our reported financial results.~~ 20

~~Our~~We ~~management~~do ~~uses~~not ~~significant~~intend ~~judgment, estimates, and assumptions in applying GAAP. New accounting standards that may be applicable~~ to ~~our~~pay ~~financial~~dividends ~~statements, or changes in the interpretation of existing standards, could have a significant effect on our reported results of operations~~ for the ~~affected~~foreseeable ~~periods~~future.

We do not currently anticipate paying dividends in the foreseeable future. The payment of dividends on our Common Stock will depend on our earnings and financial condition, as well as on other business and economic factors affecting our business, as our board of directors may consider relevant. Our current intention in the foreseeable future is to apply net earnings, if any, to increasing our capital base and our development and marketing efforts. There can be no assurance that we will ever have sufficient earnings to declare and pay dividends to the holders of our Common Stock and, in any event, a decision to declare and pay dividends is at the sole discretion of our board of directors. As a result, you may only receive a return on your investment in our Common Stock if the market price of our Common Stock increases compared to the price at which you purchased our Common Stock, which may never occur.

~~Risks~~Were ~~Related~~our Common Stock to ~~the~~be ~~Securities~~considered ~~Markets~~penny stock, and ~~Ownership~~therefore become subject to the penny stock rules, U.S. broker-dealers may be discouraged from effecting transactions in shares of ~~Our~~our Common Stock.

~~The~~Broker-dealers ~~price~~are generally prohibited from effecting transactions in “penny stocks” unless they comply with the requirements of Section 15(h) of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules promulgated thereunder. These rules apply to the stock of companies whose shares are not traded on a national stock exchange, trade at less than $5.00 per share or who do not meet certain other financial requirements specified by the Securities and Exchange Commission (the “SEC”). Trades in our Common Stock isare ~~volatile~~subject to these rules, which include Rule 15g-9 under the Exchange Act, which imposes certain requirements on broker/dealers who sell securities subject to the rule to persons other than established customers and accredited investors. For transactions covered by the ~~value~~rule, ofbrokers/dealers ~~your~~must make a special written determination that the penny stock is a suitable investment ~~could~~for ~~decline~~purchasers of the securities and receive the purchaser’s written agreement to the transaction prior to sale.

The ~~market~~penny ~~price~~stock ofrules ~~our~~also ~~Common~~require ~~Stock~~a ~~has been~~broker/dealer, prior ~~and~~to ~~may~~effecting a transaction in ~~the~~a ~~future,~~penny bestock ~~volatile.~~not ~~Between~~otherwise ~~January~~exempt 1,from ~~2015~~the rules, ~~and~~to ~~December~~deliver ~~31,~~a ~~2022,~~standardized risk disclosure document prepared by the ~~closing~~SEC ~~price~~that ofprovides ~~our~~information ~~Common~~about ~~Stock~~penny ~~has~~stocks ~~ranged~~and ~~from~~the anature ~~low~~and level of $risks ~~0.12~~in ~~per~~the ~~share~~penny tostock amarket. ~~high~~A ofbroker/dealer also ~~$10.35~~must ~~per~~provide ~~share.~~the ~~Accordingly,~~customer itwith iscurrent ~~difficult~~bid toand ~~forecast~~offer ~~the~~quotations ~~future~~for ~~performance~~the ofrelevant ~~our~~penny ~~Common~~stock ~~Stock.~~and ~~The~~information ~~market~~on ~~price~~the compensation of ~~our~~the ~~Common~~broker/dealer ~~Stock~~and ~~may~~its besalesperson ~~higher~~in orthe ~~lower~~transaction. ~~than~~A ~~the~~broker/dealer ~~price~~must ~~you~~also ~~pay,~~provide ~~depending~~monthly onaccount ~~many~~statements ~~factors,~~showing ~~some~~the market value of ~~which~~each ~~are~~penny ~~beyond~~stock ~~our~~held ~~control~~in ~~and~~a ~~may~~customer’s ~~not~~account. beThe ~~related~~bid toand ~~our~~offer ~~operating~~quotations, ~~performance.~~and ~~These~~the ~~fluctuations~~broker/dealer ~~could~~and ~~cause~~salesperson compensation ~~you~~information, tomust ~~lose~~be ~~all~~given orto ~~part~~the ofcustomer ~~your~~orally ~~investment~~or in ~~our~~writing ~~Common~~prior ~~Stock.~~to ~~Factors~~effecting ~~that~~the ~~could~~transaction ~~cause~~and ~~fluctuations~~must inbe ~~the~~given ~~trading~~to ~~price~~the customer ofin ~~our~~writing ~~Common~~before ~~Stock~~or ~~include~~with the ~~following:~~customer’s confirmation.

●Our ~~regulatory~~securities ~~developments~~have atin the ~~federal~~past constituted “penny stock” within the meaning of the rules. Were our Common Stock to again be considered penny stock, ~~state~~and ortherefore ~~local~~become ~~level;~~subject to the penny stock rules, the additional sales practice and disclosure requirements imposed upon U.S. broker-dealers may discourage such broker-dealers from effecting transactions in shares of our Common Stock, which could severely limit the market liquidity of such shares and impede their sale in the secondary market.

●Our ~~announcements~~stockholders ofmay ~~new~~experience ~~products,~~significant dilution. ~~services, relationships with strategic partners, acquisitions, or other events by us or our competitors;~~

●We ~~changes~~have a significant number of warrants and options to purchase our Common Stock outstanding, the exercise of which would be dilutive to stockholders. In certain instances, the exercise prices are subject to adjustment if we issue or sell shares of our Common Stock or equity-based instruments at a price per share less than the exercise price then in ~~general~~effect. ~~economic~~In ~~conditions;~~such case, both the issuance and the adjustment would be dilutive to stockholders.

●We ~~price~~may from time to time finance our future operations or acquisitions through the issuance of equity securities, which securities may also have rights and ~~volume~~preferences ~~fluctuations~~senior into the ~~overall~~rights and ~~stock~~preferences ~~market~~of ~~from~~our ~~time~~Common Stock. We may also grant options to ~~time;~~purchase shares of our Common Stock to our directors, employees, and consultants, the exercise of which would also result in dilution to our stockholders.

●We ~~significant~~have ~~volatility~~incurred inand ~~the~~will ~~market~~continue ~~price~~to ~~and~~incur increased ~~trading~~costs ~~volume~~due ofto operating ~~similar~~as ~~companies~~a inpublic company, and our ~~industry;~~management will be required to devote substantial time to new compliance initiatives and corporate governance practices.

●As ~~fluctuations~~a inpublic ~~the~~company ~~trading~~we ~~volume~~have incurred, and particularly after we are no longer a smaller reporting company, we will continue to incur significant legal, accounting, and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of ~~our~~2002, ~~shares~~the orDodd-Frank Wall Street Reform and Consumer Protection Act, the listing ~~size~~requirements of the OTCQB Market and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs, particularly as we hire additional financial and accounting employees to meet public ~~float;~~company internal control and financial reporting requirements and will make some activities more time-consuming and costly.

~~● actual or anticipated changes in our operating results or fluctuations in our operating results;~~21

●We ~~major~~are ~~catastrophic~~evaluating ~~events;~~these rules and regulations and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

●Pursuant ~~sales~~to ofSection 404, ~~large~~we ~~blocks~~will be required to furnish a report by our management on our internal control over financial reporting. However, while we remain a smaller reporting company with less than $100 million in revenue, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, including through hiring additional financial and accounting personnel, potentially engage outside consultants, and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, ~~stock;~~there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses in our internal control over financial reporting, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

● changes in senior management or key personnel.

In addition, if the market for cannabis company stocks or the stock market in general experiences loss of investor confidence, the trading price of our Common Stock could decline for reasons unrelated to our business, operating results, or financial condition. The trading price of our Common Stock might decline in reaction to events that affect other companies in our industry, even if these events do not directly affect us. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. If our stock price continues to be volatile, we may become the target of securities litigation, which could result in substantial costs and divert our management’s attention and resources from our business. This could have a material adverse effect on our business, operating results, and financial condition.

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Trading and listing of securities of cannabis related businesses, including our Common Stock, may be subject to restrictions.

In the United States, many clearing houses for major broker-dealer firms, including Pershing LLC, the largest clearing, custody, and settlement firm in the United States, have refused to handle securities or settle transactions of companies engaged in cannabis related business. This means that certain broker-dealers cannot accept for deposit or settle transactions in the securities of cannabis related businesses. Further, national securities exchanges in the United States, including Nasdaq and the New York Stock Exchange, have historically refused to list cannabis related businesses, including cannabis retailers, that operate primarily in the United States; there is no indication that this proscription will change any time soon. Accordingly, we continue to be listed on the OTCQB, which as an over-the-counter market, is subject to greater volatility and less stability than would be the case on a national securities exchange. Our existing operations, and any future operations or investments, may become the subject of heightened scrutiny by clearing houses and stock exchanges, in addition to regulators and other authorities in the United States. Any existing or future restrictions imposed by Pershing LLC, or any other applicable clearing house, stock exchange or other authority, on trading in our Common Stock could have a material adverse effect on the liquidity of our Common Stock.

We do not intend to pay dividends for the foreseeable future.

Were our Common Stock to be considered penny stock, and therefore become subject to the penny stock rules, U.S. broker-dealers may be discouraged from effecting transactions in shares of our Common Stock.

Broker-dealers are generally prohibited from effecting transactions in “penny stocks” unless they comply with the requirements of Section 15(h) of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules promulgated thereunder. These rules apply to the stock of companies whose shares are not traded on a national stock exchange, trade at less than $5.00 per share or who do not meet certain other financial requirements specified by the Securities and Exchange Commission (the “SEC”). Trades in our Common Stock are subject to these rules, which include Rule 15g-9 under the Exchange Act, which imposes certain requirements on broker/dealers who sell securities subject to the rule to persons other than established customers and accredited investors. For transactions covered by the rule, brokers/dealers must make a special written determination that the penny stock is a suitable investment for purchasers of the securities and receive the purchaser’s written agreement to the transaction prior to sale.

The penny stock rules also require a broker/dealer, prior to effecting a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market. A broker/dealer also must provide the customer with current bid and offer quotations for the relevant penny stock and information on the compensation of the broker/dealer and its salesperson in the transaction. A broker/dealer must also provide monthly account statements showing the market value of each penny stock held in a customer’s account. The bid and offer quotations, and the broker/dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation.

Our securities have in the past constituted “penny stock” within the meaning of the rules. Were our Common Stock to again be considered penny stock, and therefore become subject to the penny stock rules, the additional sales practice and disclosure requirements imposed upon U.S. broker-dealers may discourage such broker-dealers from effecting transactions in shares of our Common Stock, which could severely limit the market liquidity of such shares and impede their sale in the secondary market.

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Our stockholders may experience significant dilution.

We have a significant number of warrants and options to purchase our Common Stock outstanding, the exercise of which would be dilutive to stockholders. In certain instances, the exercise prices are subject to adjustment if we issue or sell shares of our Common Stock or equity-based instruments at a price per share less than the exercise price then in effect. In such case, both the issuance and the adjustment would be dilutive to stockholders.

We may from time to time finance our future operations or acquisitions through the issuance of equity securities, which securities may also have rights and preferences senior to the rights and preferences of our Common Stock. We may also grant options to purchase shares of our Common Stock to our directors, employees, and consultants, the exercise of which would also result in dilution to our stockholders.

We have incurred and will continue to incur increased costs due to operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.

As a public company we have incurred, and particularly after we are no longer a smaller reporting company, we will continue to incur significant legal, accounting, and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the OTCQB Market and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs, particularly as we hire additional financial and accounting employees to meet public company internal control and financial reporting requirements and will make some activities more time-consuming and costly.

We are evaluating these rules and regulations and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

Pursuant to Section 404, we will be required to furnish a report by our management on our internal control over financial reporting. However, while we remain a smaller reporting company with less than $100 million in revenue, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, including through hiring additional financial and accounting personnel, potentially engage outside consultants, and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses in our internal control over financial reporting, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 1C. CYBERSECURITY.

24Cybersecurity Risk Management and Strategy

~~Table~~The Company has processes in place to identify, assess, and monitor material risks from cybersecurity threats, which are part of ~~Contents~~the Company’s overall cybersecurity risk management strategy and have been embedded in the information systems operating procedures and internal controls.

Our information technology (“IT”) function manages IT operations and continually evolves our systems to meet the constantly changing digital environment. We enhanced our workstation, server, email security, and network monitoring with managed detection and response and alerting capabilities. We perform periodic cybersecurity risk assessments to identify, assess, and prioritize potential risks to information, data assets, and infrastructure. The Company addresses identified risks and develops and implements controls to mitigate issues. The Company engages third parties in connection with its cybersecurity processes as appropriate. The Company has established processes to identify risks from cybersecurity threats associated with its third-party service providers.

Employees with access to the Company’s network receive annual training information and updates on topics such as phishing, malware, and other cybersecurity risks.

We work to continually evolve our systems to meet the constantly changing digital environment and continue to invest in the cybersecurity and resiliency of our networks and to enhance our internal controls and processes, which are designed to help protect our systems and infrastructure, and the information they contain. There have been no risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations or financial condition. The nature of potential cybersecurity risks and threats are uncertain, and any future incidents, outages or breaches could have a material adverse effect on the Company’s business, financial conditions or results of operations. For more information about the cybersecurity risks we face, refer to the Risk Factors in section “Information Technology and Cybersecurity Risks” in Part I, Item 1A, “Risk Factors”.

Cybersecurity Governance

The Company’s Board of Directors, as a whole, has oversight responsibility for our strategic and operational risks. The Audit Committee of the Board of Directors is responsible for board-level oversight of cybersecurity risk, and the Audit Committee regularly reports risks and compliance actions to the Board. As part of its’ oversight role, the Audit Committee receives reporting about the Company’s strategy, programs, incidents and threats, and other developments and action items related to cybersecurity regularly throughout the year, including through periodic updates from the IT Administrator.

Our cybersecurity program is managed by our IT Administrator who reports directly to our Chief Executive Officer. Our IT Administrator and the IT function monitor the prevention, mitigation, detection, and remediation of cybersecurity incidents through their management of, and participation in, the processes described above, including the operation of the Company’s incident response plans, which include appropriate escalation to the executive team and the Audit Committee. As discussed above, the IT Administrator reports at least semiannually to the Audit Committee about cybersecurity threat risks, among other cybersecurity related matters.

ITEM 2. PROPERTIES

The Company’s corporate headquarters are located in Lakewood, Colorado, pursuant to an operating lease. As of April 61, ~~2023~~2024, the Company also leases 86 retail dispensary locations, 2 5 cultivation facilities, and one production facility.

The following table sets forth the Company’s significant properties within each reporting segment:


Description	Location	Segment	Leased / Owned	Initial lease date
Description	Location	Segment	Leased / Owned	Initial lease date
Corporate Headquarters	215 Union Boulevard, Suite 415, Lakewood, CO 80228	NA	Operating lease	January 2023
Corporate Headquarters	215 Union Boulevard, Suite 415,Lakewood, CO 80228	NA	Operating lease	January 2023
Englewood Dispensary	5005 S. Federal Blvd., Englewood, CO 80110	Retail	Operating lease	September 2021
Englewood Dispensary	5005 S. Federal Blvd.,Englewood, CO 80110	Retail	Operating lease	September 2021
Longmont Dispensary	12626 N. 107th Street, Longmont, CO 80504	Retail	Operating lease	December 2022
Berthoud Dispensary	1090 N. 2nd Street,Berthoud, CO 80513	Retail	Operating lease	December 2022
Hampden Dispensary	7289 East Hampden Avenue, Denver, CO 80224	Retail	Finance lease	December 2022
Longmont Dispensary	12626 N. 107th Street,Longmont, CO 80504	Retail	Operating lease	December 2022
102nd Street Dispensary	1244 NE 102nd Avenue, Portland, OR 97220	Retail	Operating lease	December 2021
Hampden Dispensary	7289 East Hampden Avenue,Denver, CO 80224	Retail	Finance lease	December 2022
Waterfront Dispensary	3605 and 3607 SW Corbett Avenue, Portland, OR 97239	Retail	Operating lease	December 2021
468 Dispensary	468 S. Federal Boulevard,Denver, CO 80219	Retail	Operating lease	February 2023
MLK Dispensary	7048 - 7050 NE MLK Blvd., Portland, OR 97239	Retail	Operating lease	January 2022
102nd Street Dispensary	1244 NE 102nd Avenue,Portland, OR 97220	Retail	Operating lease	December 2021
SevenFive Cultivation Facility	3705 75th Street, Boulder, CO 80301	Cultivation	Operating lease	May 2020
Waterfront Dispensary	3605 and 3607 SW Corbett Avenue,Portland, OR 97239	Retail	Operating lease	December 2021
Hillside Cultivation Facility	6859 North Foothills Highway, Building E, Unit 100, Boulder, CO 80302	Cultivation	Operating lease	December 2022
MLK Dispensary	7048 - 7050 NE MLK Blvd.,Portland, OR 97239	Retail	Operating lease	January 2022
SevenFive Cultivatiion Facility	3705 75th Street,Boulder,CO 80301	Cultivation	Operating lease	May 2020
Hillside Cultivation Facility	6859 North Foothills Highway, Building E,Unit 100, Boulder, CO 80302	Cultivation	Operating lease	December 2022
Mountainside Cultivation Facility	6859 North Foothills Highway, Building C,Unit C100, Boulder, CO 80302	Cultivation	Operating lease	December 2022
Ancient Alternatives Cultivation Facility	6859 North Foothills Highway, Building D,Unit D300, Boulder, CO 80302	Cultivation	Operating lease	December 2022
2nd Street Cultivation Facility	1090 N. 2nd Street,Berthoud, CO 80513	Cultivation	Operating lease	December 2022
Marijuana Infused Products Production	6859 North Foothills Highway,Building E,Unit 500, Boulder, CO 80302	Retail	Operating lease	December 2022

ITEM 3. LEGAL PROCEEDINGS

From time to time, we may be involved in various claims and legal actions in the ordinary course of business. ~~Other~~We ~~than as set forth below, we~~ are not currently ~~involved~~subject into any material legal proceedings outside the ordinary course of our business.

In July 2021, we were served with a Complaint in the District Court, County of Denver, Colorado, by plaintiff 2353 SB, LLC (“Plaintiff”). We entered into a lease with Plaintiff for the premises at 2353 South Broadway, Denver, CO with a term of three (3) years to commence on November 1, 2020. Monthly lease payments were to be $12,866.66. In 2020, we made initial payments (first month’s rent, last month’s rent, and security deposit) of $39,633.32; but subsequently did not take possession of the premises and have made no further payments in respect thereof, as a direct result of the COVID-19 pandemic. The lease contains a ‘force majeure’ clause which includes a provision that neither party is liable for failure to perform its obligations under the lease which have become practicably impossible because of circumstances beyond the reasonable control of the applicable party, including ‘pandemics or outbreak of communicable disease.

We have taken the position that our failure to take possession and make any further payments under the lease is directly related to the COVID-19 pandemic. We are vigorously defending this action and believe that the above-referenced force majeure clause presents a complete defense to Plaintiff’s claims.

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We filed a motion to dismiss or a motion for summary judgment in the alternative. Plaintiff filed a response and cross-motion for summary judgment thereafter. In October 2022, the court denied the motion to dismiss on the basis that Plaintiff sufficiently pled facts that raise a plausible claim for relief, notwithstanding our possible defenses, but has not specifically made any rulings on either party’s motion for summary judgment. On November 14, 2022, we timely filed a formal answer to the complaint, denying each of Plaintiff’s substantive claims. We also asserted appropriate affirmative defenses, including the force majeure clause of the lease, which provides that we are not liable under the lease in the event of a variety of events outside our control, including “pandemics.” In addition, we have asserted a counterclaim against Plaintiff for breach of contract to recover the initial payments made under the lease as well as attorneys’ fees and costs. The trial is currently scheduled for September 2023.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

Market Information

TREES Corporation Common Stock (CANN) is listed for trading on the OTC Market’s OTCQB.

Holders

As of April 15, 2023, we had approximately 81 holders of record of our Common Stock. A substantially greater number of holders of the Company’s Common Stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions. In addition, our Articles of Incorporation authorize the Board to issue up to 5,000,000 shares of preferred stock. The provisions in the Articles of Incorporation relating to the preferred stock allow directors to issue preferred stock with multiple votes per share and dividend rights, which would have priority over any dividends paid with respect to the holders of Common Stock. The issuance of preferred stock with these rights may make the removal of management difficult even if the removal would be considered beneficial to stockholders, generally, and will have the effect of limiting stockholder participation in certain transactions such as mergers or tender offers if these transactions are not favored by management.

Dividend Policy

Holders of our Common Stock are entitled to receive dividends as may be declared by the Board. The Board is not restricted from paying any dividends but is not obligated to declare a dividend. No cash dividends have ever been declared and it is not anticipated that cash dividends will be paid in the near future. We currently intend to retain any future earnings to finance future growth. Any future determination to pay dividends will be at the discretion of the Board and will depend on our financial condition, results of operations, capital requirements, and other factors the Board considers relevant.

ITEM 6. RESERVED

26ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Table~~Management’s discussion and analysis (“MD&A”) should be read in conjunction with the consolidated financial statements and accompanying notes included in Item 8 of ~~Contents~~this Annual Report on Form 10-K (annual report), which include additional information about our accounting policies, practices, and the transactions underlying our financial results. The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires us to make estimates and assumptions that affect the reported amounts in our consolidated financial statements and the accompanying notes, including various claims and contingencies related to lawsuits, taxes, environmental and other matters arising during the normal course of business. We apply our best judgment, our knowledge of existing facts, circumstances, and actions that we may undertake in the future in determining the estimates that affect our consolidated financial statements. We evaluate our estimates on an ongoing basis using our historical experience, as well as other factors we believe appropriate under the circumstances, such as current economic conditions, and adjust or revise our estimates as circumstances change. As future events and their effects cannot be determined with precision, actual results may differ from these estimates. Our MD&A contains forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations, and financial condition. All forward-looking statements are based on management’s existing beliefs about present and future events outside of management’s control and on assumptions that may prove to be incorrect. If any underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected, or intended. We undertake no obligation to publicly update or revise any forward-looking statements to reflect actual results, changes in expectations, events or circumstances after the date of this Report is filed. TREES Corporation and its subsidiaries are referred to collectively as “TREES” “the Company,” “we, “us” or “our” in the following discussion and analysis.

~~ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~Going Concern

~~Management’s~~We ~~discussion~~incurred ~~and~~net ~~analysis~~losses ~~(“MD&A”) should be read in conjunction with the consolidated financial statements and accompanying notes included in Item 8~~ of ~~this Annual Report on Form 10-K (annual report)~~$7, ~~which include additional information about our accounting policies~~082,258 ~~practices,~~ and the transactions underlying our financial results. The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires us to make estimates and assumptions that affect the reported amounts in our consolidated financial statements and the accompanying notes$9, ~~including various claims and contingencies related to lawsuits~~475, ~~taxes, environmental and other matters arising~~ 067 during the ~~normal~~years ~~course~~ended ofDecember ~~business. We apply our best judgment~~31, ~~our~~2023 ~~knowledge~~and ~~of existing facts~~2022, ~~circumstances~~respectively, and ~~actions~~had ~~that we may undertake in the future in determining the estimates that affect our consolidated financial statements. We evaluate our estimates on~~ an ~~ongoing~~accumulated ~~basis~~deficit of ~~using our historical experience~~$100, ~~as well as other factors we believe appropriate under the circumstances~~484,340 ~~such as current economic conditions,~~ and ~~adjust or revise our estimates as circumstances change. As future events and their effects cannot be determined with precision~~$93, ~~actual results may differ from these estimates. Our MD&A contains forward-looking statements that discuss~~384,382 ~~among~~as ~~other~~of ~~things~~December 31, ~~future~~2023 ~~expectations~~ and ~~projections~~December ~~regarding future developments~~31, ~~operations, and financial condition~~2022. ~~All~~ ~~forward-looking~~We ~~statements~~had cash ~~are based on management’s existing beliefs about present~~ and ~~future~~cash ~~events~~equivalents ~~outside~~ of ~~management’s~~$969,676 ~~control~~ and ~~on assumptions that may prove to be incorrect. If any underlying assumptions prove incorrect~~$2, ~~our actual results may vary materially from those anticipated~~583,833 ~~estimated,~~as ~~projected,~~of ~~or intended. We undertake no obligation to publicly update or revise any forward-looking statements to reflect actual results~~December 31, ~~changes in expectations~~2023, ~~events or circumstances after the date of this Report is filed. TREES Corporation~~ and ~~its subsidiaries are referred to collectively as “TREES” “the Company~~December 31,” ~~“we~~2022, ~~“us” or “our” in the following discussion and analysis~~respectively.

The consolidated financial statements included elsewhere in this Form 10-K, have been prepared on the basis of continuity of operations, realization of assets, and the satisfaction of liabilities and commitments in the ordinary course of business. We have incurred recurring losses and negative cash flows from operations since inception and have primarily funded our operations with proceeds from the issuance of debt and equity. We expect our operating losses to continue into the foreseeable future as we continue to execute our acquisition and growth strategy. As a result, we have concluded that there is substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Going~~Our ~~Concern~~ability to continue as a going concern is dependent upon our ability to raise additional capital to fund operations, support our planned investing activities, and repay our debt obligations as they become due. If we are unable to obtain additional funding, we would be forced to delay, reduce, or eliminate some or all of our acquisition efforts, which could adversely affect our growth plans.

Results of Operations

The ~~consolidated~~following ~~financial~~tables ~~statements~~set ~~included elsewhere in this Form 10-K~~forth, ~~have been prepared on a going concern basis, which assumes we will be able to realize our assets and discharge our liabilities in the normal course of business~~ for the ~~foreseeable future. Our cash of $2~~periods indicated,~~583,833~~ asare ofstatements ~~December 31, 2022 is not sufficient to absorb our operating losses and retire our notes payable~~ of ~~$17,802,932~~operations ~~and other obligations as they come due~~data. ~~Our~~ ~~ability~~The totables ~~continue as a going concern is dependent upon our generating profitable operations in the future~~ and~~/or~~ ~~obtaining~~ the ~~necessary~~discussion ~~financing~~below toshould ~~meet our obligations and repay our liabilities arising from normal business operations when they come due. Management believes that (a) we will~~ be ~~successful~~read in ~~obtaining~~conjunction ~~additional~~with ~~capital and (b) actions presently being taken to further implement our business plan to reduce costs and generate additional revenues provide~~ the opportunity for the Company to continue as a going concern. While we believe in the viability of our strategy to generate additional revenues and our ability to raise additional funds, there can be no assurances to that effect. Accordingly, there is substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements doand ~~not~~the ~~include~~notes ~~any~~thereto ~~adjustments~~appearing ~~that~~in ~~might~~Item be8 ~~necessary~~in ifthis ~~we are unable to continue as a going concern~~Report.

~~Results~~Consolidated ~~of Operations~~Results

The following tables set forth, for the periods indicated, are statements of operations data. The tables and the discussion below should be read in conjunction with the accompanying consolidated financial statements and the notes thereto appearing in Item 8 in this Report.

	Year Ended December 31,									Percent
	2023			2022			Change			Change
Revenues	$	18,136,880		$	13,444,542		$	4,692,338			35	%
Costs and expenses		(22,111,538	)		(16,619,467	)		(5,492,071	)		33	%
Other expense		(2,919,752	)		(6,100,703	)		3,180,951			(52	)%
Net loss from continuing operations before income taxes		(6,894,410	)		(9,275,628	)		2,381,218			(26	)%
Gain (loss) from discontinued operations		—			5,478			(5,478	)		(100	)%
Loss from operations before income taxes	$	(6,894,410	)	$	(9,270,150	)	$	2,375,740			(26	)%

27Revenues

~~Table~~The ofsales ~~Contents~~generated by Green Tree and Green Man, which we acquired in Q4 2022, contributed to the increase in revenues for the year ended December 31, 2023 compared to December 31, 2022.

~~Consolidated~~Costs ~~Results~~and expenses

	Year Ended December 31,							Percent
	2023		2022		Change			Change
Cost of sales	$	11,564,386	$	8,577,487	$	2,986,899			35	%
Selling, general and administrative		8,223,102		6,557,992		1,665,110			25	%
Stock-based compensation		69,071		188,330		(119,259	)		(63	)%
Professional fees		1,380,567		964,282		416,285			43	%
Depreciation and amortization		874,412		331,376		543,036			164	%
	$	22,111,538	$	16,619,467	$	5,492,071			33	%


	Year ended December 31,						Percent
	2022		2021		Change		Change
Revenues	$	13,444,542	$	5,927,199	$	7,517,343	127	%
Costs and expenses		(16,619,467)		(8,940,185)		(7,679,282)	86	%
Other expense		(6,100,703)		(5,414,165)		(686,538)	13	%
Net loss from continuing operations before income taxes		(9,275,628)		(8,427,151)		(848,477)	10	%
Gain (loss) from discontinued operations		5,478		(442,228)		447,706	(101)	%
Loss from operations before income taxes	$	(9,270,150)	$	(8,869,379)	$	(400,771)	5	%

Cost of sales increased for the year ended December 31, 2023, as compared to December 31, 2022 due to the additional sales from the Green Tree and Green Man acquisitions.

Selling, general and administrative expense increased for the year ended December 31, 2023, as compared to December 31, 2022, due to the increased expenses resulting from the acquisition of three dispensaries in the fourth quarter of 2022 and one additional dispensary license in the first quarter of 2023. This resulted in an increase in employees and an increase in rent expense.

~~The~~Professional ~~following~~fees ~~discussion~~consist primarily of ~~our~~accounting and ~~results~~legal ofexpenses. ~~operations~~Professional ~~relates~~fees toincreased ~~our~~for ~~continuing~~the ~~operations. See~~year ~~Note~~ended 3December 31, 2023 as compared to December 31, 2022 due to the ~~consolidated~~acquisition activity ~~financial~~in ~~statements~~the first quarter of 2023, as well as the accrued legal expenses for ~~information~~the ~~concerning~~settlement ~~discontinued~~reached ~~operations~~in the second quarter of 2023.

~~Revenues~~Stock-based compensation included the following:

The full year impact of the retail operations acquired in the Trees Acquisition acquired at the end of 2021 resulted in the significant increase in revenues for the year ended December 31, 2022. The increase in retail revenue was partially offset by lower revenue in the Cultivation segment due primarily to a significant decline in the wholesale prices of marijuana flower. See Segment discussions below for further details.

	Year Ended December 31,							Percent
	2023		2022		Change			Change
Employee awards	$	69,071	$	188,330	$	(119,259	)		(63	)%

~~Costs and expenses~~26

Stock-based awards are issued under our 2020 Omnibus Incentive Plan, which was approved by shareholders on November 23, 2020 and our 2014 Equity Incentive Plan, which was approved by shareholders on June 26, 2015. Expense varies primarily due to the number of stock awards granted and the share price on the date of grant. The decrease in expense for the year ended December 31, 2023 as compared to December 31, 2022 is due to the decrease in the number of stock-based awards granted.


	Year ended December 31,						Percent
	2022		2021		Change		Change
Cost of sales	$	8,577,487	$	4,439,478	$	4,138,009	93	%
Selling, general and administrative		6,557,992		2,764,780		3,793,212	137	%
Stock-based compensation		188,330		307,963		(119,633)	(39)	%
Professional fees		964,282		927,390		36,892	4	%
Depreciation and amortization		331,376		500,574		(169,198)	(34)	%
	$	16,619,467	$	8,940,185	$	7,679,282	86	%

Depreciation and amortization expense increased in 2023 due to amortization related to the intangible assets acquired in the Green Man and Green Tree acquisitions in December 2022, which had useful lives of one year and two years, respectively.

Other Expense

Cost of sales and selling, general and administrative expenses both increased year over year primarily due to the full year impact of the retail operations acquired in the Trees Transaction acquired at the end of 2022. See Segment discussions below for further details. One-time bonus payments of $767,000 as part of employment agreements for two former owners of the Green Tree Entities also contributed to the increase in selling, general and administrative costs.

	Year Ended December 31,									Percent
	2023			2022			Change			Change
Amortization of debt discount	$	811,722		$	1,817,334		$	(1,005,612	)		(55	)%
Interest expense		1,763,413			983,181			780,232			79	%
Loss on extinguishment of debt		218,237			310,622			(92,385	)		(30	)%
Loss on impairment of assets		1,516,000			3,004,319			(1,488,319	)		(50	)%
Gain on derivative liability		(792	)		(22,809	)		22,017			(97	)%
Gain on change in fair value of contingent earnout		(492,148	)		—			(492,148	)		(100	)%
Other income		(896,680	)		8,056			(904,736	)		(11,231	)%
	$	2,919,752		$	6,100,703		$	(3,180,951	)		(52	)%

~~Stock-based~~Amortization ~~compensation~~of debt discount decreased during the year ended December 31, 2023 as compared to December 31, 2022 due to the rollover and repayment of the 10% Notes in 2022. Interest expense increased during the year ended December 31, 2023 as compared to December 31, 2022 due to the additional borrowings from the issuance of the 12% Notes held until they were restructured in Q4 2023. The loss on extinguishment of debt during the year ended December 31, 2023 relates to the extinguishment of the 468 debt in October 2023. The loss on extinguishment of debt during the year ended December 31, 2022 relates to the rollover and repayment of the 10% Notes. The loss on impairment of assets during the years ended December 31, 2023 and December 31, 2022 is due primarily to goodwill impairments at our Trees Oregon locations included in our Retail segment in 2023 and goodwill and intangible impairments at out Trees Oregon locations included in our Retail segment. The gain on warrant derivative liability reflects the ~~following:~~change in the fair value of the 2019 Warrants. The gain on change in the fair value of contingent earnout during the year ended December 31, 2023 is due to changes in the fair value of the contingent earnout liability related to the Green Tree Acquisition. Other income during the year ended December 31, 2023 increased as compared to December 31, 2022 due to the Company applying for employee retention credits through the CARES Act.

Retail


	Year Ended December 31,											Percent
	Year ended December 31,									Percent
	2023				2022				Change			Change
	2022			2021			Change			Change
Revenues	$	17,722,565			$	12,934,904			$	4,787,661			37	%
Stock-based awards	$	188,330		$	307,963		$	(119,633)		(39)	%
Costs and expenses		(17,568,330	)			(13,117,039	)			(4,451,291	)		34	%
	$	188,330		$	307,963		$	(119,633)		(39)	%
	$	154,235			$	(182,135	)		$	336,370			(185	)%

~~Stock-based~~With ~~awards~~the ~~are~~acquisition ~~issued~~of ~~under~~Green ~~our~~Tree ~~2020~~on ~~Omnibus Incentive Plan~~December 12, ~~which was approved by shareholders on November 23~~2022, ~~2020~~ and ~~our~~the ~~2014~~acquisition ~~Equity~~of ~~Incentive~~Green ~~Plan,~~Man ~~which~~on ~~was~~December ~~approved~~19, ~~by shareholders on June 26~~2022, ~~2015.~~as ~~Expense~~well ~~varies~~as ~~primarily due to~~ the ~~number~~acquisition of ~~stock awards granted and~~ the ~~share~~dispensary ~~price~~license onfor ~~the~~468 ~~date~~Federal Street, ofretail ~~grant.~~revenue ~~The~~increased ~~decrease in expense~~ for the year ended December 31, ~~2022~~2023, as compared to December 31, ~~2021~~2022. isCosts ~~due~~and toexpenses ~~the~~also ~~decrease~~increased as ina ~~the~~result ~~number~~ of ~~stock-based~~the ~~awards granted~~acquisitions.

28Cultivation

Table of Contents

	Year Ended December 31,									Percent
	2023			2022			Change			Change
Revenues	$	2,531,399		$	1,693,762		$	837,637			49	%
Costs and expenses		(4,468,658	)		(2,643,457	)		(1,825,201	)		69	%
	$	(1,937,259	)	$	(949,695	)	$	(987,564	)		104	%

~~Professional~~The ~~fees~~increase ~~consist~~in ~~primarily~~revenues offor ~~accounting~~the year ended December 31, ~~consulting~~2023 ~~and~~compared to ~~legal~~December 31, ~~expenses~~2022 is attributed to the increase in sales made to our dispensaries which are eliminated in consolidation. The increase in cost and ~~have~~expenses ~~remained~~for ~~consistent~~the ~~from~~year ~~2021~~ended December 31, 2023 compared to December 31, 2022 is attributed to the acquisitions of Green Tree and Green Man that occurred during December of 2022, as well as the increase in sales made to our dispensaries. The costs and expense incurred between our dispensaries and cultivation locations are eliminated in consolidation.

~~Depreciation~~Non-GAAP ~~and~~Financial amortization expense increased in 2022 due to an impairment of intangible assets in the Cultivation segment in 2021. As a result of the impairment, the depreciable base of the intangible asset was significantly reduced resulting in the lower amortization. Measures

~~Other~~Adjusted ~~Expense~~EBITDA is a non-GAAP financial measure. We define Adjusted EBITDA as net loss calculated in accordance with GAAP, adjusted for discontinued operations, the impact of stock-based compensation expense, acquisition related expenses, non-recurring professional fees in relation to litigation and other non-recurring expenses, depreciation and amortization, amortization of debt discounts and equity issuance costs, loss on extinguishment of debt, interest expense, income taxes and certain other non-cash items. Below we have provided a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, which is net loss.

We believe that the disclosure of Adjusted EBITDA provides investors with a better comparison of our period-to-period operating results. We exclude the effects of certain items when we evaluate key measures of our performance internally and in assessing the impact of known trends and uncertainties on our business. We also believe that excluding the effects of these items provides a more comparable view of the underlying dynamics of our operations. We believe such information provides additional meaningful methods of evaluating certain aspects of our operating performance from period to period on a basis that may not be otherwise apparent on a GAAP basis. This supplemental financial information should be considered in addition to, not in lieu of, our consolidated financial statements.


	Year Ended December 31,
	Year ended December 31,								Percent
	2023				2022
	2022			2021			Change		Change
Net loss from continuing operations	$	(7,082,258	)		$	(9,480,545	)
Amortization of debt discount	$	1,817,334		$	689,348		$	1,127,986	164	%
Adjustment for loss from discontinued operations		—				5,478
Interest expense		983,181			622,469			360,712	58	%
Net loss		(7,082,258	)			(9,475,067	)
Loss on extinguishment of debt		310,622			233,374			77,248	33	%
Adjustments:
Loss on impairment of assets		3,004,319			3,010,420			(6,101)	(0)	%
Stock-based compensation		69,071				188,330
Gain (loss) on derivative liability		(22,809)			990,066			(1,012,875)	(102)	%
Depreciation and amortization		874,412				331,376
Other expense (income), net		8,056			(131,512)			139,568	(106)	%
Amortization of debt discount		811,722				1,817,334
	$	6,100,703		$	5,414,165		$	686,538	13	%
Loss on extinguishment of debt		218,237				310,622
Loss on impairment of assets		1,516,000				3,004,319
Interest expense		1,763,413				983,181
Loss on sale of assets		—				8,056
Gain on derivative liability		(792	)			(22,809	)
Gain on change in fair value of contingent earnout		(492,148	)			—
Severance		—				4,731
Acquisition related expenses		—				1,027,099
Provision for income taxes		187,848				204,917
Other (income) expense		(896,680	)			—
Total adjustments		4,051,083				7,857,156
Adjusted EBITDA	$	(3,031,175	)		$	(1,617,911	)

Amortization of debt discount increased during the year ended December 31, 2022 as compared to December 31, 2021 due to the senior convertible promissory notes with warrants (“12% Notes”) issued in September 2022 and the rollover and repayment of the 10% Notes. Interest expense increased during the year ended December 31, 2022 as compared to December 31, 2021 due to the additional borrowings from the issuance of the 12% Notes. The gain (loss) on warrant derivative liability reflects the change in the fair value of the 2019 Warrants. The loss on extinguishment of debt during 2022 relates to the rollover and repayment of the 10% Notes. The loss on extinguishment of debt for the year ended December 31, 2021 was due to the modification of warrants that occurred on the 15% Warrants during the third quarter of 2021. The loss on impairment of assets in 2022 is due primarily to goodwill and intangible impairments at our Trees Oregon locations included in our Retail Segment. The loss on impairment of assets in 2021 is due to goodwill and intangible impairments in our Cultivation Segment.Liquidity

Sources of liquidity

~~Retail~~Our sources of liquidity historically have included the issuance of debt, common stock, or other equity-based instruments and the cash exercise of common stock options and warrants. We anticipate our significant uses of resources will include funding operations.


	Year ended December 31,						Percent
	2022		2021		Change		Change
Revenues	$	12,934,904	$	3,515,761	$	9,419,143	268	%
Costs and expenses		(13,117,039)		(3,112,595)		(10,004,444)	321	%
Segment operating income	$	(182,135)	$	403,166	$	(585,301)	(145)	%

In December 2023, we restructured our debt obligations with the Green Tree entities to eliminate these obligations. Subsequent to this restructuring we received $500,000 from the issuance of a working capital loan in full in December 2023.

In September 2022, we received $10,587,250 in cash in a private placement with certain accredited investors pursuant to the 12% Notes to be used for acquisition of dispensaries and operating capital.

~~With~~Sources ~~the addition of the Trees Englewood dispensary on September 2, 2021~~ and ~~the~~uses ~~addition~~ of Treees Portland and Trees Waterfront on December 30, 2021, we have established our retail footprint in the Colorado and Oregon markets and have become a vertically integrated company. We continued to expand our retail footprint in Oregon with the addition of the Trees MLK dispensary in January 2022 and in Colorado with the Green Man Acquisition and Green Tree Acquisition in December 2022. The dispensaries acquired in the Green Man Acquisition and Green Tree Acquisition did not have a material impact on the Retail segment results in 2022. cash

~~The~~We ~~increase~~had incash ~~revenue~~of inapproximately ~~the~~$969,676 ~~year~~and ~~ended~~$2,583,833, ~~December 31~~respectively, on ~~2022 compared to the year ended~~ December 31, ~~2021~~2023 ~~is due to the full year impact of the Trees retail locations. The increased costs~~ and ~~expenses in~~ 2022 ~~include $2~~.7 ~~million~~Our ~~of non-~~cash ~~goodwill and intangible asset impairment charges. The Retail Segment is expected to provide consistent positive cash~~ flows ~~which~~from ~~will~~operating, ~~significantly~~investing, ~~contribute~~and tofinancing ~~our~~activities ~~working~~were ~~capital~~as ~~position.~~ follows:

	Year Ended December 31,
	2023			2022
Net cash used in operating activities	$	(1,125,482	)	$	(2,049,857	)
Net cash used in investing activities	$	(304,420	)	$	(1,945,586	)
Net cash (used in) provided by financing activities	$	(184,255	)	$	4,525,226

~~Table~~Net ofcash ~~Contents~~used in operating activities decreased in 2023 due to the decreased net loss driven from the expenses described above as well as changes in working capital components, primarily larger reductions in inventory and increases in payables in 2023 compared to 2022.

~~Cultivation~~Net cash used in investing activities decreased in 2023 due to the decreased level of acquisitions compared to 2022.

Net cash used in financing activities increased in 2023 due to an increase in payments on notes payable and finance leases, and less debt raised.


	Year ended December 31,						Percent
	2022		2021		Change		Change
Revenues	$	1,693,762	$	2,722,059	$	(1,028,297)	(38)	%
Costs and expenses		(2,643,457)		(6,273,162)		3,629,705	(58)	%
	$	(949,695)	$	(3,551,103)	$	2,601,408	(73)	%

Capital Resources

We have no material commitments for capital expenditures as of December 31, 2023. Part of our growth strategy, however, is to acquire businesses. We would anticipate funding such activity through cash on hand, the issuance of debt, Common Stock, and warrants for our Common Stock or a combination thereof.

This decrease in revenues for the year ended December 31, 2022 as compared to December 31, 2021, is due to significant declines in the wholesale price of marijuana flower. The costs and expenses include nonOff-~~cash~~Balance ~~goodwill~~Sheet ~~and intangible asset impairment charges of $0.3 million and $3.0 million for the years ended December 31, 2022 and 2021, respectively.~~ Arrangements

~~Non~~We currently have no off-~~GAAP~~balance ~~Financial~~sheet ~~Measures~~arrangements.

~~Adjusted~~Critical ~~EBITDA~~Accounting is a non-GAAP financial measure. We define Adjusted EBITDA as net loss calculated in accordance with GAAP, adjusted for discontinued operations, the impact of stock-based compensation expense, acquisition related expenses, non-recurring professional fees in relation to litigation and other non-recurring expenses, depreciation and amortization, amortization of debt discounts and equity issuance costs, loss on extinguishment of debt, interest expense, income taxes and certain other non-cash items. Below we have provided a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, which is net loss.Policies

WeThe ~~believe~~preparation ~~that~~of ~~the~~financial ~~disclosure~~statements ofin ~~Adjusted~~conformity with ~~EBITDA~~accounting ~~provides~~principles ~~investors~~generally ~~with~~accepted ain ~~better~~the ~~comparison~~United States of ~~our~~America ~~period-~~requires management to~~-period~~ ~~operating~~make ~~results.~~estimates Weand ~~exclude~~assumptions that affect the ~~effects~~reported amounts of ~~certain~~assets ~~items~~and ~~when~~liabilities, wethe ~~evaluate~~disclosure ~~key measures~~ of ~~our~~contingent ~~performance~~assets ~~internally~~ and inliabilities, ~~assessing~~and the ~~impact~~amounts of ~~known trends~~ revenues and ~~uncertainties~~expenses. onCritical ~~our~~accounting ~~business.~~policies Weare ~~also~~those ~~believe~~ that ~~excluding~~require the ~~effects~~application of ~~these~~management’s ~~items~~most ~~provides~~difficult, asubjective, ~~more~~or complex ~~comparable~~judgments, ~~view~~often because of the ~~underlying~~need ~~dynamics~~to make estimates about the effect of ~~our~~matters ~~operations~~that are inherently uncertain and that may change in subsequent periods. WeIn ~~believe~~applying ~~such~~these ~~information~~critical ~~provides~~accounting ~~additional~~policies, ~~meaningful~~our ~~methods~~management ofuses ~~evaluating~~its judgment to determine the appropriate assumptions to be used in making certain ~~aspects~~estimates. ofActual ~~our~~results ~~operating~~may ~~performance~~differ from these estimates.

30We define critical accounting policies as those that are reflective of significant judgments and uncertainties, and which may potentially result in materially different results under different assumptions and conditions. In applying these critical accounting policies, our management uses its judgment to determine the appropriate assumptions to be used in making certain estimates. These estimates are subject to an inherent degree of uncertainty.

~~Table~~Business ofCombinations ~~Contents~~

~~period~~Amounts paid for acquisitions are allocated to the ~~period~~assets acquired and liabilities assumed based on atheir ~~basis~~estimated ~~that~~fair ~~may~~value ~~not~~at bethe ~~otherwise~~date ~~apparent~~of acquisition. The fair value of identifiable intangible assets is based on adetailed ~~GAAP~~valuations ~~basis~~that use information and assumptions provided by management, including expected future cash flows. ~~This~~We ~~supplemental~~allocate ~~financial~~any ~~information~~excess ~~should~~purchase beprice ~~considered~~over inthe ~~addition~~fair value of the net assets and liabilities acquired to goodwill. Identifiable intangible assets with finite lives are amortized over their useful lives. Acquisition-related costs, ~~not~~including advisory, legal, accounting, valuation, and other costs, are expensed in ~~lieu~~the periods in which the costs are incurred. The results of, ~~our~~operations of acquired businesses are included in the consolidated financial statements from the acquisition date.


	Year ended December 31,
	2022		2021
Net loss from continuing operations	$	(9,480,545)	$	(8,427,151)
Adjustment for loss from discontinued operations		5,478		(442,228)
Net loss		(9,475,067)		(8,869,379)
Adjustments:
Stock-based compensation		188,330		307,963
Depreciation and amortization		331,376		500,574
Amortization of debt discount and equity issuance costs		1,817,334		689,348
Loss on extinguishment of debt		310,622		233,374
Loss on impairment of assets		3,004,319		3,010,420
Interest expense		983,181		622,469
Gain on sale of assets		8,056		(131,512)
(Gain) loss on derivative liability		(22,809)		990,066
Severance		4,731		40,962
Acquisition related expenses		1,027,099		264,312
Nonrecurring professional services		—		115,054
Provision for income taxes		204,917		—
Total adjustments		7,857,156		6,643,030
Adjusted EBITDA	$	(1,617,911)	$	(2,226,349)

Goodwill and Intangibles

Goodwill represents the excess of purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill and long-lived intangible assets are tested for impairment at least annually in accordance with the provisions of ASC No. 350, Intangibles-Goodwill and Other (“ASC No. 350”). ASC No. 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carry value. Application of the goodwill impairment test requires judgement, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. We test goodwill annually in December, unless an event occurs that would cause us to believe the value is impaired at an interim date. See Notes 1 and 10 to our consolidated financial statements for a description of our goodwill and intangible asset valuation and impairment policies and associated impacts for the reported periods.

~~Liquidity~~Intangible assets with finite useful lives are amortized over their respective estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

~~Sources~~Impairment of ~~liquidity~~Long-lived Assets

~~Our~~We ~~primary~~periodically ~~sources~~evaluate ofwhether ~~liquidity~~the ~~include~~carrying value ~~cash~~of ~~proceeds~~property ~~from~~and ~~debt,~~equipment ~~cash~~has ~~generated~~been ~~from~~impaired ~~operations,~~when circumstances indicate the ~~cash~~carrying ~~exercise~~value of ~~Common~~those ~~Stock~~assets ~~options~~may ~~and~~not ~~warrants,~~be ~~and~~recoverable. The carrying amount is not recoverable if it exceeds the ~~issuance~~sum of ~~Common~~the ~~Stock~~undiscounted orcash ~~other~~flows ~~equity-based~~expected ~~instruments.~~to Weresult ~~anticipate~~from ~~our~~the ~~more~~use ~~significant~~and ~~uses~~eventual disposition of ~~resources~~the ~~will~~asset. ~~include~~If ~~funding~~the ~~operations~~carrying ~~and~~value ~~additional~~is ~~business~~not ~~acquisitions~~recoverable, the impairment loss is measured as the excess of the asset’s carrying value over its fair value.

InOur ~~September~~impairment ~~2022,~~analyses werequire ~~received~~management ~~$9,912,250~~to apply judgment in estimating future cash flows as well as asset fair values, ~~net~~including forecasting useful lives of ~~debt~~the ~~issue~~assets, ~~costs.~~assessing the Weprobability ~~received~~of different outcomes, and selecting the ~~cash~~discount inrate athat ~~private~~reflects ~~placement~~the ~~with~~risk ~~certain~~inherent ~~accredited~~in ~~investors~~future ~~pursuant~~cash toflows. If the ~~12%~~carrying value ~~Notes~~is ~~and~~not ~~was~~recoverable, ~~used~~we toassess ~~repay~~the afair ~~portion~~value of ~~the~~long-lived ~~10%~~assets ~~Notes~~using commonly accepted techniques, and tomay ~~fund~~use ~~the~~more ~~acquisition~~than ofone method, ~~the~~including, ~~Green~~but ~~Tree~~not ~~Entities~~limited to, recent third-party comparable sales and ~~Green~~undiscounted ~~Man~~cash flow models. If actual results are not consistent with our assumptions and estimates, or our assumptions and estimates change due to ~~fund~~new ~~operations~~information, we may be exposed to an impairment charge in the future.

InAccounting ~~September~~for ~~2021,~~Discontinued ~~we received $1,180,000 in cash by issuing 1,180 shares of our preferred stock and 354,000 warrants to purchase Common Stock.~~Operations

InWe ~~February~~regularly ~~and~~review ~~April~~underperforming ~~2021,~~assets weto determine ~~received~~if $3a sale or disposal might be a better way to monetize the assets. When an asset group is considered for sale or disposal,~~960,000~~ we inreview ~~cash~~the intransaction to determine if or when the entity qualifies as a ~~private~~discontinued ~~placement~~operation in accordance with ~~certain~~the ~~accredited~~criteria ~~investors~~of FASB ~~pursuant~~ASC toTopic ~~which~~205-20, weDiscontinued Operations. The FASB has issued authoritative guidance that raises the threshold for disposals to qualify as discontinued operations. Under this guidance, a discontinued operation is (1) a component of an entity or group of components that have been disposed of or are classified as held for sale and ~~sold~~represent ~~10%~~a ~~senior~~strategic ~~convertible~~shift ~~promissory~~that ~~notes~~has or will have a major effect on an entity’s operations and financial results, or (2) an acquired business that is classified as held for sale on the acquisition date.

~~Sources~~Debt ~~and~~with ~~uses~~Equity-linked ~~of cash~~Features

We ~~had~~may ~~cash~~issue ofdebt ~~approximately~~that ~~$2,583,833~~has ~~and~~separate 2warrants,~~054,050,~~ conversion ~~respectively~~features, onor ~~December~~other ~~31,~~equity-linked ~~2022 and 2021~~attributes. ~~Our cash flows from operating, investing, and financing activities were as follows:~~

Debt with warrants – When we issue debt with warrants, we treat the warrants as a debt discount, record as a contra-liability against the debt, and amortize the balance over the life of the underlying debt as amortization of debt discount expense in the consolidated statements of operations. The offset to the contra-liability is recorded as additional paid in capital in our consolidated balance sheets. If the debt is retired early, the associated debt discount is then recognized immediately as amortization of debt discount expense in the consolidated statement of operations. The debt is treated as conventional debt.


	Year ended December 31,
	2022		2021
Net cash used in operating activities	$	(2,049,857)	$	(2,651,889)
Net cash used in investing activities	$	(1,945,586)	$	(978,739)
Net cash provided by financing activities	$	4,525,226	$	4,928,909

We determine the value of the non-complex warrants using the Black-Scholes Option Pricing Model (“Black-Scholes”) using the stock price on the date of issuance, the risk-free interest rate associated with the life of the debt, and the volatility of our stock. For warrants with complex terms, we use the binomial lattice model to estimate their fair value.

31Convertible Debt - When we issue debt with a conversion feature, we must first assess whether the conversion feature meets the requirements to be treated as a derivative. If the conversion feature within convertible debt meets the requirements to be treated as a derivative, we estimate the fair value of the convertible debt derivative using Black-Scholes upon the date of issuance, using the stock price on the date of issuance, the risk-free interest rate associated with the life of the debt, and the estimated volatility of our stock.

~~Table~~Modification of ~~Contents~~Debt

~~Net~~When ~~cash~~we ~~used~~change inthe ~~operating~~terms ~~activities~~of ~~decreased~~existing innotes ~~2022~~payable, we ~~due~~evaluate tothe ~~due~~amendments ~~cash~~under ~~generated~~ASC ~~from~~470-50, ~~the~~Debt ~~full~~Modification ~~year~~and ~~operations~~Extinguishment ofto determine whether the ~~dispensaries~~change ~~acquired~~should inbe ~~the~~treated as ~~Trees~~a ~~Transaction~~modification or as a debt extinguishment. ~~The~~This ~~decrease~~evaluation ~~was~~includes ~~partially~~analyzing ~~offset~~whether bythere ~~additional~~are ~~costs~~significant ~~associated~~and ~~with~~consequential changes to the ~~completion~~economic substance of the ~~Green~~note. ~~Man~~If ~~Acquisition~~the ~~and~~change ~~Green~~is ~~Tree~~deemed ~~Acquisition.~~insignificant then the change is considered a debt modification, whereas if the change is substantial the change is reflected as a debt extinguishment.

~~Net~~Equity-based cash used in investing activities for the year ended December 31, 2022 consisted primarily of $1,971,975 for the purchase Trees MLK, Green Man, and the Green Tree Entities. Net cash used in investing activities for the year ended December 31, 2021 consisted primarily of $1,439,027 for the acquisition of the first three dispensaries of the Trees Transaction. This is offset by the sale of our investment for $208,761, the sale of Next Big Crop in the amount of $150,000 and collection of notes receivables in the amount of $591,717.Payments

~~Net~~We ~~cash~~estimate ~~provided~~the byfair ~~financing~~value ~~activities~~of ~~are~~equity-based ~~primarily~~instruments issued ~~related~~ to ~~the~~employees ~~issuance~~or ofto ~~the~~third ~~12%~~parties ~~Notes,~~for ~~partially~~services ~~offset~~or bygoods ~~repayment~~using ofBlack-Scholes aor ~~portion of~~ the ~~10%~~Binomial ~~Notes~~Model, ~~and~~which ~~payments~~requires onus ~~the notes payable~~ to estimate the ~~sellers~~volatility inof ~~the~~our ~~Trees~~stock ~~Transaction~~and forfeiture rate.

~~Capital~~Revenue ~~Resources~~Recognition

WeASC ~~have~~Topic no606, ~~material~~“Revenue ~~commitments~~from ~~for~~Contracts ~~capital~~with Customers” ~~expenditures~~(“ASC as606”) requires that an entity recognize revenue to depict the transfer of ~~December~~promised ~~31,~~goods ~~2022~~or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ~~Part of~~ ASC ~~our~~606 ~~growth~~defines ~~strategy~~a five-step process to achieve this core principle and, ~~however~~in doing so, isjudgment toand ~~acquire~~estimates ~~businesses. We~~may ~~would~~be ~~anticipate~~required ~~funding~~within ~~such~~the revenue ~~activity~~recognition process ~~through~~including ~~cash~~identifying onperformance ~~hand~~obligations in the contract, estimating the ~~issuance~~amount of ~~debt,~~variable ~~Common~~consideration to ~~Stock,~~include in the transaction price and ~~warrants~~allocating ~~for~~the ~~our~~transaction ~~Common~~price ~~Stock~~to oreach aseparate ~~combination~~performance ~~thereof~~obligation.

~~Off-Balance~~The ~~Sheet~~following ~~Arrangements~~five steps are applied to achieve that core principle:

We● ~~currently~~Step ~~have~~1: noIdentify ~~off-balance~~the ~~sheet~~contract ~~arrangements.~~with the customer;

~~Critical~~● ~~Accounting~~Step ~~Policies~~2: Identify the performance obligations in the contract;

~~The~~● ~~preparation~~Step of3: ~~financial~~Determine ~~statements in conformity with accounting principles generally accepted in~~ the ~~United~~transaction States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the amounts of revenues and expenses. Critical accounting policies are those that require the application of management’s most difficult, subjective, or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. In applying these critical accounting policies, our management uses its judgment to determine the appropriate assumptions to be used in making certain estimates. Actual results may differ from these estimates.price;

We● ~~define~~Step ~~critical~~4: ~~accounting~~Allocate ~~policies~~the astransaction ~~those~~price that are reflective of significant judgments and uncertainties, and which may potentially result in materially different results under different assumptions and conditions. In applying these critical accounting policies, our management uses its judgment to ~~determine~~ the ~~appropriate~~performance ~~assumptions~~obligations ~~to be used~~ in ~~making~~the ~~certain~~contract; ~~estimates. These estimates are subject to an inherent degree of uncertainty.~~and

~~Business~~● ~~Combinations~~Step 5: Recognize revenue when the company satisfies a performance obligation.

~~Amounts~~ITEM ~~paid for acquisitions are allocated to the assets acquired and liabilities assumed based on their estimated fair value at the date of acquisition~~7A. ~~The~~QUANTITATIVE ~~fair~~AND ~~value~~QUALITATIVE ofDISCLOSURE ~~identifiable~~ABOUT ~~intangible~~MARKET assets is based on detailed valuations that use information and assumptions provided by management, including expected future cash flows. We allocate any excess purchase price over the fair value of the net assets and liabilities acquired to goodwill. Identifiable intangible assets with finite lives are amortized over their useful lives. Acquisition-related costs, including advisory, legal, accounting, valuation, and other costs, are expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date.RISKS

~~Goodwill~~As ~~and~~a ~~Intangibles~~“smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

32ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

~~Table~~REPORT ofOF ~~Contents~~INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

beTo ~~tested for impairment at~~ the ~~reporting~~Board unit level (operating segment or on level below an operating segment) on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of aDirectors ~~reporting unit below its carry value. Application of the goodwill impairment test requires judgement, including the identification of reporting units, assignment of assets~~ and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. We test goodwill annually in December, unless an event occurs that would cause us to believe the value is impaired at an interim date. See Notes 1 and 9 to our consolidated financial statements for a description of our goodwill and intangible asset valuation and impairment policies and associated impacts for the reported periods.

Intangible assets with finite useful lives are amortized over their respective estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount Stockholders of ~~the~~TREES ~~asset may not be recoverable.~~Corporation

~~Impairment~~Opinion ofon ~~Long-lived~~the ~~Assets~~Financial Statements

We ~~periodically~~have ~~evaluate~~audited ~~whether~~ the ~~carrying~~accompanying ~~value~~consolidated balance sheets of ~~property~~TREES ~~and~~Corporation ~~equipment~~(the ~~has~~Company) ~~been~~as ~~impaired~~of ~~when~~December ~~circumstances~~31, ~~indicate~~2023 and 2022, and the ~~carrying~~related ~~value~~consolidated statements of ~~those~~operations, stockholders’ ~~assets~~equity, ~~may~~and ~~not~~cash beflows ~~recoverable.~~for ~~The~~each ~~carrying~~of ~~amount~~the isyears ~~not~~ended ~~recoverable~~December if31, it2023 ~~exceeds~~and 2022, and the ~~sum~~related ofnotes ~~the~~(collectively referred ~~undiscounted~~to ~~cash~~as ~~flows~~the ~~expected~~financial tostatements). ~~result~~In ~~from~~our opinion, the ~~use~~financial ~~and~~statements ~~eventual~~present ~~disposition~~fairly, ofin all material respects, the ~~asset.~~financial position Ifof the ~~carrying~~Company ~~value~~as isof ~~not~~December ~~recoverable~~31, 2023 and 2022, and the ~~impairment~~results ~~loss~~of isits ~~measured~~operations asand ~~the~~its ~~excess~~cash flows for each of the ~~asset’s~~years ~~carrying~~ended December ~~value~~31, ~~over~~2023 ~~its~~and ~~fair~~2022, ~~value~~in conformity with accounting principles generally accepted in the United States of America.

~~Our~~Substantial ~~impairment~~Doubt ~~analyses~~about ~~require~~the ~~management~~Company’s Ability to ~~apply~~Continue ~~judgment in estimating future cash flows~~ as ~~well~~a asGoing asset fair values, including forecasting useful lives of the assets, assessing the probability of different outcomes, and selecting the discount rate that reflects the risk inherent in future cash flows. If the carrying value is not recoverable, we assess the fair value of long-lived assets using commonly accepted techniques, and may use more than one method, including, but not limited to, recent third-party comparable sales and undiscounted cash flow models. If actual results are not consistent with our assumptions and estimates, or our assumptions and estimates change due to new information, we may be exposed to an impairment charge in the future.Concern

~~Accounting~~The ~~for~~accompanying ~~Discontinued~~financial ~~Operations~~statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a negative working capital that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

WeBasis ~~regularly review underperforming assets to determine if a sale or disposal might be a better way to monetize the assets. When an asset group is considered~~ for sale or disposal, we review the transaction to determine if or when the entity qualifies as a discontinued operation in accordance with the criteria of FASB ASC Topic 205-20, Discontinued Operations. The FASB has issued authoritative guidance that raises the threshold for disposals to qualify as discontinued operations. Under this guidance, a discontinued operation is (1) a component of an entity or group of components that have been disposed of or are classified as held for sale and represent a strategic shift that has or will have a major effect on an entity’s operations and financial results, or (2) an acquired business that is classified as held for sale on the acquisition date.Opinion

~~Debt~~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 ~~Equity-linked~~the ~~Features~~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 ~~may~~conducted ~~issue~~our ~~debt~~audits in accordance with the standards of the PCAOB. Those standards require that ~~has~~we ~~separate~~plan ~~warrants,~~and ~~conversion~~perform ~~features~~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 ~~equity-linked~~such ~~attributes~~opinion.

~~Debt~~Our ~~with~~audits ~~warrants –~~included ~~When~~performing weprocedures to ~~issue~~assess ~~debt~~the ~~with~~risks ~~warrants,~~of wematerial ~~treat~~misstatement of the ~~warrants~~financial ~~as a debt discount~~statements, ~~record~~whether asdue ato ~~contra-liability~~error ~~against~~or ~~the debt~~fraud, and ~~amortize~~performing ~~the~~procedures ~~balance~~that respond ~~over~~to ~~the~~those ~~life~~risks. ofSuch ~~the~~procedures ~~underlying~~included ~~debt~~examining, ason ~~amortization~~a oftest ~~debt~~basis, ~~discount~~evidence ~~expense~~regarding in the ~~consolidated~~amounts ~~statements~~and ofdisclosures ~~operations.~~in ~~The offset to~~ the ~~contra-liability~~financial statements. isOur ~~recorded~~audits asalso ~~additional~~included ~~paid~~evaluating inthe ~~capital~~accounting inprinciples ~~our~~used ~~consolidated~~and ~~balance~~significant ~~sheets.~~estimates Ifmade ~~the~~by ~~debt~~management, isas ~~retired~~well ~~early,~~as evaluating the ~~associated~~overall ~~debt~~presentation ~~discount is then recognized immediately as amortization~~ of ~~debt~~the ~~discount~~financial ~~expense~~statements. inWe ~~the~~believe ~~consolidated~~that ~~statement~~our ofaudits ~~operations.~~provide ~~The~~a ~~debt~~reasonable isbasis ~~treated~~for asour ~~conventional debt~~opinion.

WeCritical ~~determine~~Audit the value of the non-complex warrants using the Black-Scholes Option Pricing Model (“Black-Scholes”) using the stock price on the date of issuance, the risk-free interest rate associated with the life of the debt, and the volatility of our stock. For warrants with complex terms, we use the binomial lattice model to estimate their fair value.Matters

33The 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.

~~Table of Contents~~F-1

~~Modification~~Business ofCombination ~~Debt -~~– ~~When we change the terms of existing notes payable, we evaluate the amendments under ASC 470-50, Debt Modification and Extinguishment~~ Refer to ~~determine~~Note ~~whether~~2 ~~the change should be treated as a modification or as a debt extinguishment. This evaluation includes analyzing whether there are significant and consequential changes~~ to the ~~economic~~consolidated ~~substance~~financial ~~of the note. If the change is deemed insignificant then the change is considered a debt modification, whereas if the change is substantial the change is reflected as a debt extinguishment.~~statements

~~Convertible~~As ~~Debt~~discussed -in ~~When~~Note we2 ~~issue~~to ~~debt~~the ~~with~~consolidated ~~a conversion feature~~financial statements, ~~we must first assess whether~~ the ~~conversion~~Company ~~feature~~acquired ~~meets~~several ~~the~~entities ~~requirements~~as tofollows: beTrees ~~treated~~MLK ~~as a derivative~~Inc. If ~~the~~on ~~conversion~~January ~~feature within convertible debt meets the requirements to be treated as a derivative~~5, ~~we estimate the fair value of the convertible debt derivative using Black-Scholes upon the date of issuance~~2022, ~~using~~Green ~~the~~Tree ~~stock~~entities ~~price~~ on ~~the~~December ~~date of issuance~~12, ~~the risk-free interest rate associated with the life of the debt~~2022, and ~~the~~Green ~~estimated~~Man ~~volatility~~Cannabis ofon ~~our~~December ~~stock. If~~19, ~~the conversion feature is not treated as a derivative~~2022, wein ~~assess~~separate ~~whether~~business ~~it is a beneficial conversion feature (“BCF”)~~combinations. A ~~BCF~~Management ~~exists if the effective conversion price~~ of the ~~convertible~~Company ~~debt~~estimated ~~instrument is less than~~ the ~~stock~~allocation ~~price on~~ of the ~~commitment~~purchase ~~date. This typically occurs when the effective conversion~~ price isto ~~less~~cash, ~~than~~fixed ~~the~~assets, ~~fair~~inventory, ~~value~~trade ofnames, ~~the~~and ~~stock~~goodwill based on ~~the~~formal ~~date~~valuation ~~the~~prepared ~~instrument~~by ~~was~~a ~~issued~~third-party. The accounting ~~value~~for ofthe apurchase ~~BCF~~price allocation is ~~equal~~complex due to the ~~intrinsic~~significant ~~value~~estimation ofuncertainty ~~the~~in ~~feature,~~determining the ~~difference between the effective conversion price and the~~ fair ~~value~~values of identified ~~the Common Stock into which it is convertible~~intangibles.

~~Equity-based~~We ~~Payments~~deem the purchase price allocation as a significant audit matter because of the significant estimates and assumptions made by management to estimate the fair value of trade names and allocation to goodwill. These estimates include the impact of forecasted growth and the consideration of comparable transactions in their industry. This required a high degree of auditor judgment and an increased extent of effort, including the use of valuation specialists.

WeAddressing ~~estimate~~the matter involved obtaining the ~~fair~~purchase ~~value~~agreements ofand ~~equity-based~~interpreting ~~instruments~~the ~~issued~~terms toare ~~employees~~in oragreement towith ~~third~~the ~~parties~~assumptions ~~for~~used ~~services~~by orthe ~~goods~~Company. ~~using~~For ~~Black~~valuations completed by the third-~~Scholes~~party orspecialist, we evaluated the ~~Binomial~~expertise, ~~Model~~qualifications, ~~which~~and ~~requires~~independence usof the management’s specialist engaged to ~~estimate~~complete the ~~volatility~~evaluation. ofFinally, we used professionals inside our ~~stock~~firm with specialized skills and ~~forfeiture~~knowledge ~~rate~~to assess the Company’s methodology.

~~Revenue~~Goodwill ~~Recognition~~— Refer to Note 10 to the consolidated financial statements

OnAs ~~January 1,~~discussed ~~2018,~~in weNote ~~adopted~~10 ~~ASC~~to ~~Topic~~the ~~606~~consolidated financial statements, ~~“Revenue~~the ~~from~~Company ~~Contracts~~has ~~with~~goodwill ~~Customers” (“ASC 606”). The core principle~~ of ~~ASC~~$15,880,097 ~~606~~on ~~requires~~December ~~that~~31, an2023, ~~entity~~after ~~recognize~~recognizing ~~revenue~~impairment toexpense ~~depict the transfer~~ of ~~promised~~$1,516,000 during ~~goods~~the oryear ~~services~~then toended. ~~customers~~The inCompany anevaluates ~~amount~~its ~~that~~goodwill ~~reflects~~at ~~the~~least ~~consideration~~annually toor ~~which~~more ~~the~~frequently ~~company~~when ~~expects~~events toor bechanges ~~entitled~~ in ~~exchange~~circumstances indicate ~~for~~the ~~those~~carrying ~~goods~~value ormay ~~services~~not be recoverable. ~~ASC~~The ~~606~~Company ~~defines~~performed a ~~five-step~~goodwill ~~process~~analysis toby ~~achieve~~calculating ~~this~~the ~~core~~fair ~~principle~~value ~~and,~~by inoperating segment ~~doing~~using ~~so,~~primarily itan isincome ~~possible~~approach ~~more judgment~~ and ~~estimates~~comparing ~~may~~it beto ~~required~~the ~~within~~carrying ~~the~~amount ~~revenue~~of ~~recognition process~~its ~~than~~goodwill. ~~required~~The ~~under~~income ~~existing~~approach ~~U.S.~~employed ~~GAAP~~a ~~including~~discounted cash ~~identifying~~flow ~~performance~~using ~~obligations~~a inforecast ~~the~~developed ~~contract,~~by ~~estimating~~management. ~~the~~This ~~amount~~valuation ofmethod ~~variable~~requires ~~consideration~~management to ~~include~~make insignificant ~~the~~estimates ~~transaction price~~ and ~~allocating~~assumptions related ~~the transaction price~~ to ~~each~~projected ~~separate~~cash ~~performance obligation~~flows.

~~The~~We ~~following~~identified ~~five~~goodwill ~~steps~~as ~~are~~a ~~applied~~critical audit matter because of the significant estimates and assumptions made by management to ~~achieve~~estimate ~~that~~fair ~~core~~value, ~~principle:~~including the impact of forecasted growth, and the difference between the fair values and the carrying values as of December 31, 2023. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialist, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to certain assumptions within the projected cash flows.

●Addressing ~~Step~~the 1:matter ~~Identify~~involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the ~~contract~~consolidated financial statements. These procedures included, among others, gaining an understanding of management's process for developing the fair value estimate. We also evaluated the expertise, qualifications, and independence of the management’s specialist engaged to complete the evaluation. We used professionals inside our firm with specialized skills and knowledge to assess the ~~customer;~~Company’s methodology and assumptions used such as discount rate used. In evaluating the Company’s assumptions, we compared them to historical results.

●/s/ ~~Step~~Haynie 2:& ~~Identify the performance obligations in the contract;~~Company

●Haynie ~~Step~~& ~~3: Determine the transaction price;~~Company

●Salt ~~Step~~Lake City, ~~4: Allocate the transaction price to the performance obligations in the contract; and~~Utah

●April ~~Step~~10, ~~5: Recognize revenue when the company satisfies a performance obligation.~~2024

PCAOB ID 457

~~ITEM~~We ~~7A.~~have ~~QUANTITATIVE~~served ~~AND~~as ~~QUALITATIVE~~the ~~DISCLOSURE~~Company’s auditor ~~ABOUT~~since ~~MARKET RISKS~~2021.

~~As a "smaller reporting company" as defined by Item 10 of Regulation S~~F-~~K, we are not required to provide information required by this Item.~~2

TREES CORPORATION

34CONSOLIDATED BALANCE SHEETS

Table of Contents

	December 31, 2023			December 31, 2022
Assets
Current assets
Cash and cash equivalents	$	969,676		$	2,583,833
Accounts receivable, net of allowance for credit losses of $41,000 and $42,000, respectively		111,863			41,373
Inventories		860,918			2,066,662
Prepaid expenses and other current assets		411,911			259,598
Total current assets		2,354,368			4,951,466

Right-of-use operating lease asset		1,979,833			3,866,406
Property and equipment, net		1,395,104			1,947,969
Intangible assets, net		1,637,491			2,543,898
Goodwill		15,880,097			18,384,974
Total assets	$	23,246,893		$	31,694,713

Liabilities and Stockholders’ Equity

Current liabilities
Accounts payable and accrued expenses	$	2,617,536		$	1,899,450
Interest payable		1,570,077			488,813
Income tax payable		392,765			204,917
Operating lease liability, current		846,201			1,433,184
Finance lease liability, current		205,400			55,777
Accrued stock payable		60,900			60,900
Accrued dividends		106,200			88,500
Warrant derivative liability		4,716			5,508
Accrued legal fees		102,000			—
Notes payable - current		1,092,382			1,903,344
Contingent Earnout Liability		367,056			—
Total current liabilities		7,365,233			6,140,393

Operating lease liability, non-current		1,218,392			2,541,590
Finance lease liability, non-current		501,248			706,653
Notes payable - non-current (net of unamortized discount)		14,013,861			15,899,588
Total liabilities		23,098,734			25,288,224

Commitments and contingencies (Note 17)

Stockholders’ equity
Preferred stock, no par value; 5,000,000 shares authorized; 1,180 issued and outstanding		1,073,446			1,073,446
Common stock, $0.001 par value; 200,000,000 shares authorized; 108,746,520 and 118,664,094 shares issued and outstanding, respectively		108,746			118,664
Additional paid-in capital		99,450,307			98,598,761
Accumulated deficit		(100,484,340	)		(93,384,382	)
Total stockholders’ equity		148,159			6,406,489
Total liabilities and stockholders’ equity	$	23,246,893		$	31,694,713

~~ITEM~~The 8.accompanying ~~FINANCIAL~~notes ~~STATEMENTS~~are ~~AND~~an ~~SUPPLEMENTARY~~integral ~~DATA~~part of these consolidated financial statements.

F-3

~~REPORT~~TREES ~~OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

To the Board of Directors andStockholders of TREES Corporation

	Year ended December 31,
	2023			2022
Revenue
Retail sales	$	17,722,565		$	12,934,904
Cultivation sales		414,315			509,638
Total revenue		18,136,880			13,444,542

Costs and expenses
Cost of sales		11,564,386			8,577,487
Selling, general and administrative		8,223,102			6,557,992
Stock-based compensation		69,071			188,330
Professional fees		1,380,567			964,282
Depreciation and amortization		874,412			331,376
Total costs and expenses		22,111,538			16,619,467

Operating loss		(3,974,658	)		(3,174,925	)

Other expenses (income)
Amortization of debt discount		811,722			1,817,334
Interest expense		1,763,413			983,181
Loss on extinguishment of debt		218,237			310,622
Loss on impairment of assets		1,516,000			3,004,319
Gain on derivative liability		(792	)		(22,809	)
Gain on change in fair value of contingent earnout		(492,148	)		—
Other (income) expense, net		(896,680	)		8,056
Total other expenses, net		2,919,752			6,100,703

Net loss from continuing operations before income taxes		(6,894,410	)		(9,275,628	)

Provision for income taxes		187,848			204,917
Loss from continuing operations		(7,082,258	)		(9,480,545	)

Income from discontinued operations, net of tax		—			5,478
Net loss	$	(7,082,258	)	$	(9,475,067	)

Accrued preferred stock dividend		(17,700	)		(88,500	)

Net loss attributable to common stockholders	$	(7,099,958	)	$	(9,563,567	)

Per share data - basic and diluted
Net loss from continuing operations per share	$	(0.06	)	$	(0.10	)
Net loss from discontinued operations per share	$	—		$	—
Net loss attributable to common stockholders per share	$	(0.06	)	$	(0.10	)
Weighted average number of common shares outstanding		117,196,836			97,166,607

~~Opinion~~The onaccompanying ~~the~~notes ~~Financial~~are ~~Statements~~an integral part of these consolidated financial statements.

We have audited the accompanying consolidated balance sheets of TREES Corporation (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 ended December 31, 2022 and 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, 2022 and 2021, and the results of its operations and its cash flows for each of the years ended, in conformity with accounting principles generally accepted in the United States of America. F-4

~~Substantial~~TREES ~~Doubt about the Company’s Ability to Continue as a Going Concern~~CORPORATION

~~The~~CONSOLIDATED ~~accompanying~~STATEMENTS ~~financial~~OF ~~statements~~CASH have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a negative working capital that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.FLOWS

Basis for Opinion

	December 31,
	2023			2022
Cash flows from operating activities
Net loss	$	(7,082,258	)	$	(9,475,067	)
Adjustments to reconcile net loss to net cash used in provided by operating activities:
Amortization of debt discount		811,722			1,817,334
Depreciation and amortization		874,412			331,376
Amortization of right-of-use lease assets		1,806,918			774,353
Loss on extinguishment of debt		218,237			310,622
Provision for credit losses		(114	)		(6,280	)
Impairment of assets		1,516,000			3,004,319
Loss (gain) on disposal of property and equipment		—			8,056
Gain on derivative liability		(792	)		(22,809	)
Gain on change in fair value of contingent earnout		(492,148	)		—
Stock-based compensation		69,071			188,330
Changes in operating assets and liabilities, net of acquisitions
Accounts receivable		(70,376	)		43,095
Prepaid expenses and other assets		(152,313	)		(16,523	)
Inventories		1,040,527			753,419
Income taxes		187,848			204,917
Accounts payable, accrued liabilities, and interest payable		1,901,350			785,405
Operating lease liabilities		(1,753,566	)		(750,404	)
Net cash used in operating activities		(1,125,482	)		(2,049,857	)

Cash flows from investing activities
Purchase of property and equipment		(47,839	)		(61,611	)
Acquisition of Station 2 assets		(256,581	)		—
Proceeds for sale of equipment		—			13,000
Proceeds on notes receivable		—			75,000
Acquisition of Trees MLK		—			(256,582	)
Acquisition of Green Tree Entities, net of cash acquired		—			(498,987	)
Acquisition of Green Man Corp, net of cash acquired		—			(1,216,406	)
Net cash used in investing activities		(304,420	)		(1,945,586	)

Cash flows from financing activities
Proceeds from notes payable		500,000			6,423,320
Payments on notes payable and finance lease		(684,255	)		(1,898,094	)
Net cash (used in) provided by financing activities		(184,255	)		4,525,226

Net (decrease) increase in cash and cash equivalents		(1,614,157	)		529,783
Cash and cash equivalents, beginning of period		2,583,833			2,054,050
Cash and cash equivalents, end of period	$	969,676		$	2,583,833

Supplemental schedule of cash flow information
Cash paid for interest	$	—		$	589,023
Cash paid for taxes	$	6		$	—

Non-cash investing & financing activities
Non-cash settlement of notes payable netted against proceeds from new notes issuance	$	—		$	3,300,000
Operating lease right-of-use asset obtained in exchange for new operating lease liabilities	$	219,438		$	1,575,607
Reduction of operating lease liabilities and right-of-use assets related to lease modifications	$	(376,053	)	$	—
Issuance of accrued stock	$	—		$	383,994
Non-cash debt issuance for acquisition of Station 2 assets	$	333,953		$	—
Non-cash extinguishment of debt for the surrender of Station 2 assets	$	(356,152	)	$	—
Accrued dividends on preferred stock	$	17,700		$	—
12% Warrants recorded as a debt discount and additional paid-in capital	$	177,991		$	569,223
12% Warrants recorded as a loss on extinguishment of debt and additional paid-in capital	$	—		$	103,577
Cashless warrant exercise	$	—		$	88,500

~~These~~The ~~financial~~accompanying ~~statements~~notes are ~~the responsibility of the Company’s management. Our responsibility is to express~~ an ~~opinion~~integral onpart ~~the~~of these ~~Company’s~~consolidated 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.F-5

~~Our~~TREES 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.CORPORATION

~~Critical~~CONSOLIDATED ~~Audit~~STATEMENTS ~~Matters~~OF STOCKHOLDERS’ EQUITY

~~The~~FOR ~~critical~~THE ~~audit~~YEARS ~~matters~~ENDED ~~communicated~~DECEMBER 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 challenging31, ~~subjective,~~2023 orAND 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.2022

Business Combination – Refer to Note 2 to the financial statements

											Additional
	Preferred Stock				Common Stock						Paid-in			Accumulated
	Shares		Amount		Shares			Amount			Capital			Deficit			Total
January 1, 2022		1,180	$	1,073,446		89,551,993		$	89,550		$	92,265,392		$	(83,820,815	)	$	9,607,573
Common stock issued for acquisition of Trees Waterfront LLC		—		—		1,669,537			1,670			382,324			—			383,994
Common stock issued for acquisition of Trees MLK LLC		—		—		4,970,654			4,971			1,337,105			—			1,342,076
Common stock issued for Green Tree Acquisition		—		—		17,977,528			17,978			2,948,314			—			2,966,292
Common stock issued Green Man Acquisition		—		—		4,494,382			4,495			804,495			—			808,990
Warrants issued with 12% Notes		—		—		—			—			672,801			—			672,801
Share-based compensation		—		—		—			—			188,330			—			188,330
Dividends on preferred stock		—		—		—			—			—			(88,500	)		(88,500	)
Net loss		—		—		—			—			—			(9,475,067	)		(9,475,067	)
December 31, 2022		1,180		1,073,446		118,664,094			118,664			98,598,761			(93,384,382	)		6,406,489
Share-based compensation		—		—		—			—			69,071			—			69,071
Redeemed shares related to Green Tree settlement		—		—		(9,917,574	)		(9,918	)		(1,626,482	)		—			(1,636,400	)
Capital transaction related to the Green Tree Note restructuring		—		—		—			—			1,974,384			—			1,974,384
Capital transaction related to the forgiveness of the Trees Englewood Note												256,582			—			256,582
Modification of warrants issued with 12% Notes		—		—		—			—			177,991			—			177,991
Dividends on preferred stock		—		—		—			—			—			(17,700	)		(17,700	)
Net loss		—		—		—			—			—			(7,082,258	)		(7,082,258	)
December 31, 2023		1,180	$	1,073,446		108,746,520		$	108,746		$	99,450,307		$	(100,484,340	)	$	148,159

AsThe ~~discussed~~accompanying innotes ~~Note~~are 2an tointegral ~~the~~part of these consolidated financial statements~~, the Company acquired several entities as follows: Trees Englewood on September 2, 2021, Trees Portland, LLC and Trees Waterfront, LLC on December 30, 2021, Trees MLK~~ .

35F-6

~~Table~~TREES ~~of Contents~~CORPORATION

~~Inc.~~NOTES onTO ~~January~~CONSOLIDATED 5,FINANCIAL 2022, Green Tree entities on December 12, 2022, and Green Man Cannabis on December 19, 2022, in separate business combinations. Management of the Company estimated the preliminary allocation of the purchase price to cash, fixed assets, inventory, trade names, and goodwill based on the industry experience and values until the formal third-party valuation is completed. The accounting for the purchase price allocation is complex due to the significant estimation uncertainty in determining the fair values of identified intangibles. The Company’s third-party valuation was completed for Trees Englewood, Trees Portland, LLC, Trees Waterfront, LLC, and Trees MLK Inc. as of the year ended December 31, 2022. The Company’s third-party valuation of the rest of the entities is yet to be completed.STATEMENTS

We deem the purchase price allocation as a significant audit matter because of the significant estimates and assumptions made by management to estimate the fair value of trade names and allocation to goodwillNOTE 1. NATURE ~~These~~OF ~~estimates include the impact of forecasted growth and the consideration of comparable transactions in their industry. This required a high degree of auditor judgment and an increased extent of effort~~OPERATIONS, ~~including~~HISTORY ~~the~~AND ~~use of valuation specialists.~~PRESENTATION

~~Addressing~~Nature the matter involved obtaining the purchase agreements and interpreting the terms are in agreement with the assumptions used by the Company. We obtained the Company’s purchase price allocation and tested the inputs used in their calculation. In evaluating the Company’s assumptions, we compared them to other similar transactions in their industry. For valuations completed by the third-party specialist, we evaluated the expertise, qualifications, and independence of ~~the management’s specialist engaged to complete the evaluation. Finally, we used professionals inside our firm with specialized skills and knowledge to assess the Company’s methodology.~~ Operations

~~Goodwill~~TREES —Corporation, ~~Refer~~a toColorado ~~Note~~Corporation 9(the “Company,” “we,” “us,” “our,” or “TREES”) (formerly, General Cannabis Corp), was incorporated on June 3, 2013, and provides services and products to the ~~consolidated~~regulated ~~financial~~cannabis ~~statements~~industry. We currently trade on the OTCQB® Market under the trading symbol CANN. As of December 31, 2023, our operations are segregated into the following segments:

AsRetail ~~discussed~~(“Retail in Note 9 to the financial statements, the Company has goodwill of $18,384,974 on December 31, 2022, after recognizing impairment expense of $2,450,941 during the year then ended. The Company evaluates its goodwill at least annually or more frequently when events or changes in circumstances indicate the carrying value may not be recoverable. The Company performed a goodwill analysis by calculating the fair value by operating segment using primarily an income approach and comparing it to the carrying amount of its goodwill. The income approach employed a discounted cash flow using a forecast developed by management. This valuation method requires management to make significant estimates and assumptions related to projected cash flows. Segment”)

WeThrough ~~identified goodwill as~~ a ~~critical~~series ~~audit matter because~~ of ~~the~~acquisitions ~~significant~~in ~~estimates~~2021 and ~~assumptions made by management to estimate fair value~~2022, we ~~including~~operated ~~the~~three ~~impact~~retail ofdispensaries ~~forecasted~~in ~~growth,~~Colorado and ~~the~~three ~~difference~~retail ~~between~~dispensaries ~~the~~in ~~fair~~Oregon ~~values and the carrying values~~ as of December 31, ~~2022~~2023. ~~This~~See ~~required~~Note a2 ~~high~~for ~~degree~~ details of ~~auditor judgment and an increased extent of effort, including~~ the need to involve our fair value specialist, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to certain assumptions within the projected cash flowsacquisitions.

~~Addressing~~Cultivation ~~the~~(“Cultivation matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included, among others, gaining an understanding of management's process for developing the fair value estimate. We also evaluated the expertise, qualifications, and independence of the management’s specialist engaged to complete the evaluation. We used professionals inside our firm with specialized skills and knowledge to assess the Company’s methodology and assumptions used such as discount rate used. In evaluating the Company’s assumptions, we compared them to historical results. Segment”)



Haynie & CompanySalt Lake City, UtahApril 17, 2023
We have served as the Company’s auditor since 2021.(PCAOB ID 457)

Through our acquisition of SevenFive Farm in May 2020, we operate a licensed 17,000 square foot light deprivation greenhouse cultivation facility. During 2023, there was one customer that accounted for over 10% of our third-party cultivation revenue, and during 2022 there was one customer that accounted for over 10% of third -party cultivation revenue.

Discontinued Operations

Through Next Big Crop, LLC (“NBC”), we delivered comprehensive consulting services to the cannabis industry that included obtaining licenses, compliance, cultivation, retail operations, logistical support, facility design and construction, and expansion of existing operations.

NBC oversaw our wholesale equipment and supply business, operating under the name “GC Supply,” which provided turnkey sourcing and stocking services to cultivation, retail, and infused products manufacturing facilities. Our products included building materials, equipment, consumables, and compliance packaging. NBC also provided operational support for our internal cultivation. On July 16, 2021, we entered into an Asset Purchase Agreement with an individual to sell substantially all the assets of NBC for a total of $150,000 and 10% of profits generated by the buyer in the states of Michigan, Mississippi, and Massachusetts for a period of twelve months from the closing. On August 2, 2021, the sale of NBC was completed. Pursuant to an amendment to the Asset Purchase Agreement, the buyer paid an additional $75,000 in March 2022, and the 10% profit share described above was eliminated.

36Basis of Presentation

~~Table~~The accompanying consolidated financial statements include the results of ~~Contents~~TREES and its nine wholly-owned (direct and indirect) subsidiary companies, each a Colorado corporation or limited liability company:

● 6565 E. Evans Owner ~~ ~~LLC

~~TREES~~● ~~CORPORATION~~GC Corp

~~CONSOLIDATED~~● ~~BALANCE~~GC ~~SHEETS~~Capital Corp, LLC


	December 31, 2022		December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	2,583,833	$	2,054,050
Accounts receivable, net of allowance of $42,000 and $61,000, respectively		41,373		80,188
Current portion of notes receivable, net of allowance of nil and $43,108, respectively		—		73,000
Inventories		2,066,662		1,123,083
Prepaid expenses and other current assets		259,598		149,075
Total current assets		4,951,466		3,479,396

Right-of-use operating lease asset		3,866,406		3,065,152
Property and equipment, net		1,947,969		680,327
Intangible assets, net		2,543,898		5,999,813
Goodwill		18,384,974		8,799,657
Total assets	$	31,694,713	$	22,024,345

Liabilities and Stockholders' Equity

Current liabilities
Accounts payable and accrued expenses	$	1,899,450	$	1,170,708
Interest payable		488,813		621,085
Income tax payable		204,917		—
Operating lease liability, current		1,433,184		721,809
Finance lease liability, current		55,777		—
Accrued stock payable		60,900		444,894
Accrued dividends		88,500		—
Warrant derivative liability		5,508		28,317
Notes payable - current		1,903,344		1,094,398
Total current liabilities		6,140,393		4,081,211

Operating lease liability, non-current		2,541,590		2,427,762
Finance lease liability, non-current		706,653		—
Notes payable - non-current (net of unamortized discount)		15,899,588		5,907,799
Total liabilities		25,288,224		12,416,772

Commitments and contingencies (Note 9)

Stockholders’ equity
Preferred stock, no par value; 5,000,000 shares authorized; 1,180 issued and outstanding, respectively		1,073,446		1,073,446
Common stock, $0.001 par value; 200,000,000 shares authorized; 118,664,094 shares and 89,551,993 shares issued and outstanding, respectively		118,664		89,550
Additional paid-in capital		98,598,761		92,265,392
Accumulated deficit		(93,384,382)		(83,820,815)
Total stockholders’ equity		6,406,489		9,607,573
Total liabilities and stockholders’ equity	$	31,694,713	$	22,024,345

●

GC Security LLC

● General Cannabis Capital Corporation

● Standard Cann, Inc.

~~The~~● ~~accompanying~~SevenFive ~~notes~~Farms ~~are~~Cultivation, ~~an integral part of these consolidated financial statements.~~LLC

● SevenFive Farms, LLC

37● Trees Colorado LLC

~~Table~~● ofTrees ~~Contents~~Oregon LLC

~~TREES~~● ~~CORPORATION~~Green Tree Colorado LLC

~~CONSOLIDATED STATEMENTS OF OPERATIONS~~F-7


	Year ended December 31,
	2022		2021
Revenue
Retail sales	$	12,934,904	$	3,515,761
Cultivation sales		509,638		2,396,966
Interest		—		14,472
Total revenue		13,444,542		5,927,199

Costs and expenses
Cost of sales		8,577,487		4,439,478
Selling, general and administrative		6,557,992		2,764,780
Stock-based compensation		188,330		307,963
Professional fees		964,282		927,390
Depreciation and amortization		331,376		500,574
Total costs and expenses		16,619,467		8,940,185

Operating loss		(3,174,925)		(3,012,986)

Other expenses (income)
Amortization of debt discount		1,817,334		689,348
Interest expense		983,181		622,469
Loss on extinguishment of debt		310,622		233,374
Loss on impairment of assets		3,004,319		3,010,420
(Gain) loss on derivative liability		(22,809)		990,066
Other expense (income), net		8,056		(131,512)
Total other expenses, net		6,100,703		5,414,165

Net loss from continuing operations before income taxes		(9,275,628)		(8,427,151)

Provision for income taxes		204,917		—
Loss from continuing operations		(9,480,545)		(8,427,151)

Income (loss) from discontinued operations, net of tax		5,478		(442,228)
Net loss	$	(9,475,067)	$	(8,869,379)

Accrued preferred stock dividend		(88,500)		—

Net loss attributable to Common Stockholders	$	(9,563,567)	$	(8,869,379)


Per share data - basic and diluted
Net loss from continuing operations per share	$	(0.10)	$	(0.12)
Net loss from discontinued operations per share	$	0.00	$	(0.01)
Net loss attributable to common stockholders per share	$	(0.10)	$	(0.13)
Weighted average number of common shares outstanding		97,166,607		69,537,731

●

GT Cultivation LLC

● GT Retail LLC

● GT MIP LLC

~~The~~● ~~accompanying~~Green ~~notes~~Man ~~are~~Cannabis, ~~an integral part of these consolidated financial statements.~~LLC

Intercompany accounts and transactions have been eliminated.

38The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from these estimates and assumptions. Furthermore, when testing assets for impairment in future periods, if management uses different assumptions or if different conditions occur, impairment charges may result.

~~Table~~Going ~~of Contents~~Concern

~~TREES~~We ~~CORPORATION~~incurred net losses of $7.1 million and $9.5 million during the years ended December 31, 2023 and 2022, respectively, and had an accumulated deficit of $100.5 million and $93.4 million as of December 31, 2023 and December 31, 2022. We had cash and cash equivalents of $1.0 million and $2.6 million as of December 31, 2023, and December 31, 2022, respectively.

~~CONSOLIDATED~~The ~~STATEMENTS~~consolidated OFfinancial ~~CASH~~statements, ~~FLOWS~~have been prepared on the basis of continuity of operations, realization of assets, and the satisfaction of liabilities and commitments in the ordinary course of business. We have incurred recurring losses and negative cash flows from operations since inception and have primarily funded our operations with proceeds from the issuance of debt and equity. We expect our operating losses to continue into the foreseeable future as we continue to execute our acquisition and growth strategy. As a result, we have concluded that there is substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.


	Year ended December 31,
	2022		2021
Cash flows from operating activities
Net loss	$	(9,475,067)	$	(8,869,379)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount and equity issuance costs		1,817,334		689,348
Depreciation and amortization		331,376		511,933
Loss on extinguishment of debt		310,622		233,374
Lease expense in excess of lease payments		23,949		50,794
Provision for bad debt		(6,280)		45,837
Impairment of assets		3,004,319		3,010,420
Loss on disposal of property and equipment		8,056		1,467
(Gain) loss on warrant derivative liability		(22,809)		990,066
Stock-based compensation		188,330		307,963
Gain on investment		—		(132,979)
Changes in operating assets and liabilities, net of acquisitions
Accounts receivable		43,095		45,402
Prepaid expenses and other assets		(16,523)		595,324
Inventories		753,419		37,257
Income taxes		204,917		—
Accounts payable and accrued liabilities		785,405		(168,716)
Net cash used in operating activities:		(2,049,857)		(2,651,889)

Cash flows from investing activities
Purchase of property and equipment		(61,611)		(331,834)
Proceeds for sale of equipment		13,000		—
Lending on note receivable		—		(158,356)
Proceeds on notes receivable		75,000		591,717
Acquisition of TDM, LLC		—		(1,122,015)
Acquisition of Trees MLK		(256,582)		—
Acquisition of Trees Portland, net of cash acquired		—		(238,187)
Acquisition of Trees Waterfront, net of cash acquired		—		(78,825)
Acquisition of Green Tree Entities, net of cash acquired		(498,987)		—
Acquisition of Green Man Corp, net of cash acquired		(1,216,406)		—
Net proceeds from sale of Next Big Crop		—		150,000
Proceeds from sale of investment		—		208,761
Net cash used in investing activities		(1,945,586)		(978,739)

Cash flows from financing activities
Proceeds from exercise of stock options		—		205,519
Proceeds from preferred stock offering		—		1,180,000
Proceeds from notes payable		6,423,320		3,960,000
Payments on notes payable and finance lease		(1,898,094)		(416,610)
Net cash provided by financing activities		4,525,226		4,928,909

Net increase in cash and cash equivalents		529,783		1,298,281
Cash and cash equivalents, beginning of period		2,054,050		755,769
Cash and cash equivalents, end of period	$	2,583,833	$	2,054,050

Supplemental schedule of cash flow information
Cash paid for interest	$	589,023	$	18,174

Non-cash investing & financing activities
Non-cash settlement of notes payable netted against proceeds from new notes issuance	$	3,300,000	$	—
Issuance of accrued stock	$	383,994
12% Warrants recorded as a debt discount and additional paid-in capital	$	569,223	$	—
12% Warrants recorded as a loss on extinguishment of debt and additional paid-in capital	$	103,577	$	—
Accrued dividends on preferred stock	$	88,500	$	—
Cashless warrant exercise	$	—	$	1,557,078
Beneficial conversion feature	$	—	$	1,110,039
10% Warrants recorded as a loss on extinguishment of debt and additional paid-in capital	$	—	$	1,239,300
Issuance of Common Stock to a consultant	$	—	$	142,614

Our ability to continue as a going concern is dependent upon our ability to raise additional capital to fund operations, support our planned investing activities, and repay our debt obligations as they become due. If we are unable to obtain additional funding, we would be forced to delay, reduce, or eliminate some or all of our acquisition efforts, which could adversely affect our growth plans.

~~The accompanying notes are an integral part of these consolidated financial statements.~~Liquidity

The Company incurred net losses of $7.1 million and $9.5 million in the years ended December 31, 2023 and 2022, respectively, and had an accumulated deficit of $100.5 million as of December 31, 2023. The Company had cash and cash equivalents of $1.0 million as of December 31, 2023.

39The Company believes that its cash and cash equivalents as of December 31, 2023 will not be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the date of filing this Annual Report on Form 10-K. The Company will need additional funding to support its planned investing activities. If the Company is unable to obtain additional funding, it would be forced to delay, reduce, or eliminate some or all of its planned operations and acquisition efforts, which could adversely affect its business prospects.

~~Table of Contents~~Reclassifications

~~TREES~~Certain prior ~~CORPORATION~~year amounts have been reclassified for consistency with current year presentation. These reclassifications had no effect on the reported results of operations.

~~CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY~~F-8

~~FOR~~Significant ~~THE~~Accounting ~~YEARS ENDED DECEMBER 31, 2022 AND 2021~~Policies

Cash and Cash Equivalents


							Additional
	Preferred Stock			Common Stock			Paid-in		Accumulated
	Shares	Amount		Shares	Amount		Capital		Deficit		Total
January 1, 2021	—	$	—	60,813,673	$	60,813	$	75,891,414	$	(74,951,436)	$	1,000,791
Common Stock issued to consultants	—		—	202,679		203		142,412		—		142,615
Common Stock issued upon exercise of stock options	—		—	394,670		395		205,124		—		205,519
Common Stock issued for acquisition of Trees Englewood	—		—	22,380,310		22,380		10,384,464		—		10,406,844
Common Stock issued for acquisition of Trees Portland	—		—	4,754,038		4,754		1,088,675		—		1,093,429
Warrants issued with 10% Notes	—		—	—		—		1,239,300		—		1,239,300
Beneficial conversion feature	—		—	—		—		1,110,039		—		1,110,039
Cashless exercise of warrants	—		—	1,006,623		1,005		1,556,073		—		1,557,078
Stock-based compensation	—		—	—		—		286,438		—		286,438
Preferred shares issued	1,180		1,073,446	—		—		—		—		1,073,446
Warrants issued with preferred stock	—		—	—		—		106,554		—		106,554
Modification of Warrants	—		—	—		—		233,374		—		233,374
Modification of Options	—		—	—		—		21,525				21,525
Net loss	—		—	—		—		—		(8,869,379)		(8,869,379)
December 31, 2021	1,180		1,073,446	89,551,993		89,550		92,265,392		(83,820,815)		9,607,573
Common Stock issued for acquisition of Trees Waterfront LLC	—		—	1,669,537		1,670		382,324		—		383,994
Common Stock issued for acquisition of Trees MLK LLC	—		—	4,970,654		4,971		1,337,105		—		1,342,076
Common Stock issued for Green Tree Acquisition	—		—	17,977,528		17,978		2,948,314		—		2,966,292
Common Stock issued Green Man Acquisition	—		—	4,494,382		4,495		804,495		—		808,990
Warrants issued with 12% Notes	—		—	—		—		672,801		—		672,801
Share-based compensation	—		—	—		—		188,330		—		188,330
Dividends on preferred stock	—		—	—		—		—		(88,500)		(88,500)
Net loss	—		—	—		—		—		(9,475,067)		(9,475,067)
December 31, 2022	1,180	$	1,073,446	118,664,094	$	118,664	$	98,598,761	$	(93,384,382)	$	6,406,489

Cash and cash equivalents include cash on hand, deposits with banks, and investments that are highly liquid and have maturities of three months or less at the date of purchase.

Inventories

~~The~~Inventories ~~accompanying~~consist ~~notes~~of raw materials, supplies, growing and harvested plants (work-in-process), and finished goods, and are anstated ~~integral~~at ~~part~~the lower of ~~these~~cost ~~consolidated~~or ~~financial~~net ~~statements~~realizable value. All direct and indirect costs of growing plants are accumulated until the time of harvest and allocated to the plants during the growing process. All direct and indirect costs of finished goods are accumulated and allocated to the products between the harvest and completion stages. The Company uses an average costing method to allocate costs.

Net realizable value is determined as the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale. The Company periodically reviews physical inventory for excess, obsolete, and potentially impaired items. Write-downs and write-offs are charged to cost of sales.

Accounts Receivable, net

40Accounts receivable are recorded at the original invoiced amount due from our customers less an allowance for any potential uncollectible amounts. We control credit risk related to accounts receivable through credit approvals, credit limits, and monitoring processes. In making the determination of the appropriate allowance for credit losses, management considers prior experience with customers, analysis of accounts receivable aging reports, changes in customer payment patterns, and historical write-offs.

~~Table~~ Right-of-use ~~Contents~~Asset / Lease Liability

~~TREES~~Right ~~CORPORATION~~of use (“ROU”) assets represent our right to use an underlying asset in which we obtain substantially all the economic benefits and the right to direct the use of the asset during the lease term. Lease liabilities represent our obligation to make lease payments arising from the lease. We recognize ROU assets and lease liabilities on the balance sheet for leases with a lease term of greater than one year. The Company elected to combine the lease and related non-lease components (common area maintenance and operating costs) and treat them as a single lease component. ROU assets and lease liabilities are recognized at the commencement date of the lease based on the present value of the fixed lease payments over the lease term. The Company’s operating leases include options to extend or terminate the lease, which are not included in the determination of the ROU asset or lease liability unless reasonably certain to be exercised. Payments that are not fixed at the commencement of the lease are considered variable and are excluded from the measurement of the ROU asset and lease liability and are expensed as incurred in the statement of operations. Variable payments typically included payment for common area maintenance and reimbursement of the landlords operating costs as the amounts change from year to year based on actual costs incurred. In the measurement of our ROU assets and lease liabilities, the fixed lease payments in the agreement are discounted using a secured incremental borrowing rate for a term similar to the duration of the lease, as our leases do not provide implicit rates. Operating lease expense is recognized on a straight-line basis over the lease term. For the Company’s finance lease, interest expense is recognized on the lease liability using the effective interest method and depreciation of the finance lease ROU asset is recognized on a straight-line basis over the lease term.

~~NOTES TO~~Property ~~CONSOLIDATED~~and ~~FINANCIAL~~Equipment, ~~STATEMENTS~~net

~~NOTE 1~~Property and equipment are recorded at historical cost, less accumulated depreciation. ~~NATURE~~ OFMajor ~~OPERATIONS~~additions and improvements are capitalized, ~~HISTORY~~while ~~AND~~replacements, ~~PRESENTATION~~maintenance, and repairs, which do not improve or extend the life of the respective assets, are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets: thirty years for buildings, the lesser of ten years or the life of the lease for leasehold improvements, and one to fifteen years for furniture, fixtures and equipment, software, vehicles, and biological assets. Land is not depreciated. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations.

~~Nature of Operations~~F-9

~~TREES~~Business ~~Corporation,~~Combinations a Colorado Corporation (the “Company,” “we,” “us,” “our,” or “TREES”) (formerly, General Cannabis Corp), was incorporated on June 3, 2013, and provides services and products to the regulated cannabis industry. We currently trade on the OTCQB® Market under the trading symbol CANN. As of December 31, 2022, our operations are segregated into the following segments:

~~Retail~~Amounts ~~(“Retail~~paid ~~Segment”)~~for acquisitions are allocated to the assets acquired and liabilities assumed based on their estimated fair value at the date of acquisition. The fair value of identifiable intangible assets is based on detailed valuations that use information and assumptions provided by management, including expected future cash flows. We allocate any excess purchase price over the fair value of the net assets and liabilities acquired to goodwill. Identifiable intangible assets with finite lives are amortized over their useful lives. Acquisition-related costs, including advisory, legal, accounting, valuation, and other costs, are expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date.

~~Through~~Goodwill ~~a series of acquisitions in 2021~~ and 2022, we operated four retail dispensaries in Colorado and three retail dispensaries in Oregon as of December 31, 2022. See Note 2 for details of the acquisitions. We acquired the license for an additional dispensary in Colorado in February of 2023, and opened that location in April 2023. Intangibles

~~Cultivation~~Goodwill represents the excess of purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill and long-lived intangible assets are tested for impairment at least annually in accordance with the provisions of ASC No. 350, Intangibles-Goodwill and Other (“~~Cultivation~~ASC ~~Segment~~No. 350”). ASC No. 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carry value. Application of the goodwill impairment test requires judgement, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. We test goodwill and long-lived intangible assets annually in December, unless an event occurs that would cause us to believe the value is impaired at an interim date.

~~Through~~Intangible ~~our~~assets ~~acquisition~~with offinite ~~SevenFive~~useful ~~Farm~~lives inare amortized ~~May~~over ~~2020,~~their werespective ~~operate~~estimated auseful ~~licensed~~lives ~~17,000~~and ~~square~~reviewed ~~foot~~for ~~light~~impairment ~~deprivation~~whenever ~~greenhouse~~events ~~cultivation~~or ~~facility.~~changes ~~We acquired additional cultivation facilities~~ in ~~December~~circumstances ~~2022~~indicate that ~~through~~ the ~~Green~~carrying ~~Tree~~amount ~~acquisition. During 2022, there was one customer that accounted for over 10%~~ of ~~our~~the ~~third-party~~asset ~~cultivation~~may ~~revenue,~~not ~~and~~be ~~during 2021 there were two customers that each accounted for over 10% of , of third -party cultivation revenue~~recoverable.

~~Discontinued Operations~~ Debt

~~Through~~We ~~Next~~issue ~~Big~~debt ~~Crop, LLC (“NBC”), we delivered comprehensive consulting services to the cannabis industry~~ that ~~included~~may ~~obtaining~~have ~~licenses,~~separate ~~compliance~~warrants, conversion ~~cultivation~~features, ~~retail~~or ~~operations,~~no ~~logistical~~equity-linked ~~support, facility design and construction, and expansion of existing operations~~attributes.

~~NBC~~Debt ~~oversaw~~with ~~our~~warrants – ~~wholesale~~When ~~equipment~~we issue ~~and~~debt ~~supply~~with ~~business~~warrants, ~~operating~~we ~~under~~treat the ~~name~~warrants ~~“GC~~as ~~Supply,”~~a ~~which~~debt ~~provided~~discount, ~~turnkey~~record ~~sourcing~~as ~~and~~a ~~stocking~~contra-liability ~~services~~against tothe ~~cultivation~~debt, ~~retail,~~ and ~~infused~~amortize ~~products~~the ~~manufacturing~~balance over ~~facilities.~~the ~~Our~~life ~~products~~of ~~included~~the ~~building~~underlying ~~materials,~~debt ~~equipment,~~as ~~consumables,~~amortization ~~and~~of ~~compliance~~debt ~~packaging.~~discount ~~NBC~~expense ~~also~~in ~~provided~~the ~~operational~~consolidated ~~support~~statements ~~for~~of ~~our internal cultivation~~operations. OnThe ~~July~~offset to ~~16,~~the ~~2021,~~contra-liability weis ~~entered~~recorded ~~into~~as anadditional ~~Asset~~paid ~~Purchase~~in ~~Agreement~~capital ~~with~~in anour ~~individual~~consolidated tobalance ~~sell~~sheets. ~~substantially~~If ~~all~~ the ~~assets~~debt ofis ~~NBC~~retired ~~for a total of $150~~early,~~000 and 10%~~ ofthe associated ~~profits~~debt ~~generated~~discount byis ~~the~~then ~~buyer~~recognized inimmediately ~~the~~as ~~states~~amortization of ~~Michigan,~~debt ~~Mississippi,~~discount ~~and~~expense ~~Massachusetts~~in ~~for~~the aconsolidated ~~period~~statement of ~~twelve~~ ~~months from the closing~~operations. The Ondebt ~~August~~is 2,treated ~~2021,~~as ~~the~~conventional ~~sale of NBC was completed~~debt.

~~Basis~~We determine the value of ~~Presentation~~the non-complex warrants using the Black-Scholes Option Pricing Model (“Black-Scholes”) using the stock price on the date of issuance, the risk-free interest rate associated with the life of the debt, and the volatility of our stock. For warrants with complex terms, we use the binomial lattice model to estimate their fair value.

~~The~~Modification ~~accompanying~~and ~~consolidated~~Extinguishment ~~financial~~of ~~statements~~Debt - When ~~include~~we change the ~~results~~terms of ~~TREES~~existing ~~and~~notes ~~its~~payable, ~~nine~~we ~~wholly~~evaluate the amendments under ASC 470-~~owned~~50, ~~(direct~~Debt Modification and ~~indirect)~~Extinguishment to ~~subsidiary~~determine ~~companies,~~whether ~~each~~the achange ~~Colorado~~should ~~corporation~~be treated as a modification or ~~limited~~as ~~liability~~a ~~company:~~debt extinguishment. This evaluation includes analyzing whether there are significant and consequential changes to the economic substance of the note. If the change is deemed insignificant then the change is considered a debt modification, whereas if the change is substantial the change is reflected as a debt extinguishment.

●Convertible ~~6565~~Debt E- When we issue debt with a conversion feature, we must first assess whether the conversion feature meets the requirements to be treated as a derivative. ~~Evans~~If ~~Owner~~the conversion ~~LLC~~feature within convertible debt meets the requirements to be treated as a derivative, we estimate the fair value of the convertible debt derivative using Black-Scholes upon the date of issuance, using the stock price on the date of issuance, the risk-free interest rate associated with the life of the debt, and the estimated volatility of our stock.

~~● GC Corp~~F-10

●Fair GCValue ~~Capital~~of ~~Corp,~~Financial ~~LLC~~Instruments

●U.S. GCgenerally ~~Security~~accepted ~~LLC~~accounting principles (“GAAP”) requires disclosing the fair value of financial instruments to the extent practicable for financial instruments which are recognized or unrecognized in the consolidated balance sheet. The fair value of the financial instruments disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement.

●In ~~General~~assessing ~~Cannabis~~the ~~Capital~~fair ~~Corporation~~value of financial instruments, the Company uses a variety of methods and assumptions, which are based on estimates of market conditions and risks existing at the time. For certain instruments, including accounts receivable and accounts payable, the Company estimated that the carrying amount approximated fair value because of the short maturities of these instruments. All debt is based on current rates at which the Company could borrow funds with similar remaining maturities and approximates fair value.

●GAAP ~~Standard~~establishes ~~Cann,~~a ~~Inc~~hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use on unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs consist of items that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is described below:

●Level ~~SevenFive~~1 – ~~Farms~~Quoted ~~Cultivation~~prices in active markets for identical assets or liabilities. There are no fair valued assets or liabilities classified under Level 1 as of December 31, ~~LLC~~2023.

●Level ~~SevenFive~~2 – ~~Farms~~Observable prices that are based on inputs not quoted on active markets but corroborated by market data. There are no fair valued assets or liabilities classified under Level 2 as of December 31, ~~LLC~~2023.

●Level ~~Trees~~3 – ~~Colorado~~Unobservable ~~LLC~~inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs (see Note 15).

41Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s accounting, and finance department, which reports to the Chief Financial Officer, determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s accounting and finance department and are approved by the Chief Financial Officer.

~~Table~~Level of3 ~~Contents~~Valuation Techniques

●Level ~~Trees~~3 ~~Oregon~~financial ~~LLC~~liabilities consist of the derivative liabilities for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. The Company deems financial instruments which do not have fixed settlement provisions to be derivative instruments. In accordance with GAAP the fair value of these warrants is classified as a liability on the Company’s consolidated balance sheets because, according to the terms of the warrants, a fundamental transaction (as defined) could give rise to an obligation of the Company to pay cash to its warrant holders. Corresponding changes in the fair value of the derivative liabilities are recognized in earnings on the Company’s consolidated statements of operations in each subsequent period.

●The ~~Green~~Company’s ~~Tree~~derivative ~~Colorado~~liabilities ~~LLC~~are carried at fair value and were classified as Level 3 in the fair value hierarchy due to the use of significant unobservable inputs.

~~● GT Cultivation LLC~~F-11

●Warrant ~~GT Retail LLC~~Instruments

●Warrants GTwith ~~MIP~~derivative ~~LLC~~features – When we raise capital by issuing warrants that do not have complex terms, they are recorded as additional paid in capital in our consolidated balance sheet. When we issue warrants that have complex terms, such as a clause in which the warrant agreements contain a cash settlement provision whereby the holders could settle the warrants for cash upon a fundamental transaction that is considered outside of the control of management, such as a change of control, the warrants are considered to be a derivative that is recorded as a liability at fair value. The warrant derivative liability is adjusted to its fair value at the end of each reporting period, with the change being recorded as a loss or gain.

●Revenue ~~Green Man Cannabis, LLC~~Recognition

We have two main revenue streams: (i) retail product sales; and (ii) wholesale cultivation sales.

~~Intercompany~~Product ~~accounts~~sales are recorded at the time that control of the product is transferred to customers. In evaluating the timing of the transfer of control of products to customers, we consider several indicators, including significant risks and ~~transactions~~rewards ~~have~~of ~~been~~products, ~~eliminated~~our right to payment, and the legal title of the products. Based on the assessment of control indicators, sales are generally recognized when products are delivered to customers.

~~The~~Revenue ~~preparation~~from ofcultivation ~~our~~sales ~~consolidated~~is ~~financial~~recognized ~~statements requires us to make estimates and assumptions that affect~~ when the ~~reported~~products ~~amounts of assets, liabilities, revenues, and expenses. Although these estimates~~ are ~~based~~delivered onto ~~our knowledge of current events and actions we may undertake in~~ the ~~future, actual results may ultimately differ from these estimates and assumptions~~customer. ~~Furthermore, when testing assets for impairment in future periods, if management uses different assumptions or if different conditions occur, impairment charges may result.~~

~~Going~~ASU ~~Concern~~2014-09, Revenue from Contracts with Customers (“ASC Topic 606”) is a comprehensive revenue recognition model that requires revenue to be recognized when control of the promised goods or services are transferred to our customers at an amount that reflects the consideration that we expect to receive. Application of ASC Topic 606 requires us to use more judgment and make more estimates than under former guidance. Application of ASC Topic 606 requires a five-step model applicable to all product offerings revenue streams as follows:

~~The~~Identification ~~consolidated financial statements have been prepared on a going concern basis, which assumes we will be able to realize our assets and discharge our liabilities in the normal course~~ of ~~business for~~ the ~~foreseeable future. Our cash of $2~~contract,~~583,833~~ as of December 31, 2022 is not sufficient to absorb our operating losses and retire our debt and lease obligations of $22,540,136 and other obligations as they come due. Our ability to continue as a going concern is dependent upon our generating profitable operations in the future and/or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management believes that (a) we will be successful in obtaining additional capital and (b) actions presently being taken to further implement our business plan and generate additional revenues provide the opportunity for the Company to continue as a going concern. While we believe in the viability of our strategy to generate additional revenues and our ability to raise additional fundscontracts, with ~~there can be no assurances to that effect. Accordingly, there is substantial doubt about our ability to continue as~~ a ~~going concern. The accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.~~customer

A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance, and (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration.

~~Liquidity~~We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit or financial information pertaining to the customer.

~~The~~Identification ~~Company incurred net losses~~ of ~~$9.5 million~~the ~~and~~performance ~~$8.9 million~~ obligations in the years ended December 31, 2022 and 2021, respectively, and had an accumulated deficit of $93.4 million as of December 31, 2022. The Company had cash and cash equivalents of $2.6 million and $2.1 million as of December 31, 2022 and 2021, respectively.contract

~~The~~Performance ~~accompanying~~obligations ~~consolidated~~promised ~~financial~~in ~~statements~~a ~~have~~contract are ~~been~~identified ~~prepared~~based on the ~~basis~~goods ofor ~~continuity~~services ofthat ~~operations,~~will ~~realization~~be oftransferred ~~assets,~~to ~~and~~ the ~~satisfaction~~customer ofthat ~~liabilities~~are ~~and commitments~~both incapable ~~the~~of ~~ordinary~~being ~~course~~distinct, ofwhereby the ~~business. The~~customer ~~Company~~can ~~has~~benefit ~~incurred~~from ~~recurring~~the ~~losses~~goods ~~and~~or ~~negative~~service ~~cash~~either ~~flows~~on ~~from~~its ~~operations~~own ~~since~~or ~~inception~~together ~~and~~with ~~has~~other ~~primarily~~resources ~~funded~~that ~~its~~are ~~operations~~readily ~~with proceeds~~available from third ~~the~~parties ~~issuance~~or offrom ~~convertible~~us, ~~debt.~~and ~~The~~are ~~Company~~distinct ~~expects~~in ~~its~~the ~~operating~~context ~~losses~~of ~~and~~the ~~negative~~contract, ~~operating~~whereby ~~cash flows~~the totransfer ~~continue~~of ~~into~~ the ~~foreseeable~~goods ~~future~~or asservices itis ~~continues~~separately identifiable tofrom ~~execute~~other ~~its~~promises ~~acquisition~~in ~~and~~the ~~growth strategy~~contract.

~~The~~When ~~Company~~a ~~believes~~contract ~~that~~includes ~~its~~multiple ~~cash~~promised ~~and~~goods or ~~cash equivalents as of December 31~~services, ~~2022~~we ~~will~~apply bejudgment ~~sufficient~~ to ~~fund~~determine ~~its~~whether ~~operating~~the ~~expenses~~promised ~~and~~goods ~~capital~~or ~~expenditure~~services ~~requirements~~are ~~for~~capable atof ~~least~~being ~~twelve~~distinct ~~months~~and ~~from~~are distinct within the ~~date~~context of ~~filing~~the ~~this Annual Report on Form 10-K~~contract. ~~The Company may need additional funding to support its planned investing activities.~~ If ~~the~~these ~~Company~~criteria isare ~~unable~~not ~~to obtain additional funding~~met, itthe ~~would~~promised begoods ~~forced to delay, reduce,~~ or ~~eliminate~~services ~~some~~are oraccounted ~~all~~for ofas ~~its~~a ~~acquisition~~combined ~~efforts, which could adversely affect its business prospects~~performance obligation.

Determination of the transaction price

~~Reclassifications~~The transaction price is determined based on the consideration to which we will be entitled to receive in exchange for transferring goods or services to our customer. We estimate any variable consideration included in the transaction price using the expected value method that requires the use of significant estimates for discounts, cancellation periods, refunds and returns. Variable consideration is described in detail below.

~~Certain prior year amounts have been reclassified for consistency with current year presentation. These reclassifications had no effect on the reported results of operations.~~F-12

42Allocation of the transaction price to the performance obligations in the contract

~~Table~~If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of ~~Contents~~the transaction price to each performance obligation based on a relative Stand-Alone Selling Price (“SSP,”) basis. We determine SSP based on the price at which the performance obligation would be sold separately. If the SSP is not observable, we estimate the SSP based on available information, including market conditions and any applicable internally approved pricing guidelines.

~~Significant~~Recognition ~~Accounting~~of ~~Policies~~revenue when, or as, we satisfy a performance obligation

~~Cash~~We ~~and~~recognize ~~Cash~~revenue ~~Equivalents~~at the point in time that the related performance obligation is satisfied by transferring the promised goods or services to our customer.

~~Cash~~Principal ~~and~~versus ~~cash~~Agent ~~equivalents include cash on hand, deposits with banks, and investments that are highly liquid and have maturities of three months or less at the date of purchase.~~ Considerations

~~Inventories~~When another party is involved in providing goods or services to our customer, we apply the principal versus agent guidance in ASC Topic 606 to determine if we are the principal or an agent to the transaction. When we control the specified goods or services before they are transferred to our customer, we report revenue gross, as principal. If we do not control the goods or services before they are transferred to our customer, revenue is reported net of the fees paid to the other party, as agent. Our evaluation to determine if we control the goods or services within ASC Topic 606 includes the following indicators:

~~Inventories~~We ~~consist of raw materials, supplies, growing and harvested plants (work-in-process), and finished goods, and~~ are ~~stated~~primarily atresponsible ~~the~~for ~~lower of cost or net realizable value. All direct and indirect costs of growing plants are accumulated until~~ fulfilling the ~~time~~promise ~~of harvest and allocated~~ to ~~the~~provide ~~plants during~~ the ~~growing~~specified ~~process.~~good ~~All~~or ~~direct and indirect costs of finished goods are accumulated and allocated to the products between the harvest and completion stages~~service. ~~The Company uses an average costing method to allocate costs.~~

~~Net~~When ~~realizable~~we ~~value~~are isprimarily ~~determined~~responsible asfor providing the ~~estimated~~goods ~~selling~~and ~~price~~services, insuch as when the ~~ordinary~~other ~~course~~party ofis ~~business~~acting ~~less~~on ~~the~~our ~~estimated~~behalf, ~~costs~~we ofhave ~~completion~~indication ~~and~~that ~~estimated~~we ~~costs~~are ~~necessary~~the principal to ~~make~~ the ~~sale~~transaction. We ~~The~~consider ~~Company~~if ~~periodically~~we ~~reviews~~may ~~physical~~terminate ~~inventory~~our ~~for~~relationship ~~excess,~~with ~~obsolete,~~the ~~and~~other ~~potentially~~party ~~impaired~~at ~~items.~~any ~~Write-downs~~time ~~and~~without ~~write-offs~~penalty ~~are~~or ~~charged~~without topermission ~~cost~~from ofour ~~sales~~customer.

~~Accounts~~We ~~Receivable,~~have ~~net~~risk before the specified good or service have been transferred to a customer or after transfer of control to the customer.

~~Accounts~~We ~~receivable~~may ~~are~~commit ~~recorded~~to atobtaining the ~~original~~services ~~invoiced~~of ~~amount~~another party ~~due~~with ~~from~~or ~~our~~without ~~customers less~~ an ~~allowance~~existing ~~for~~contract ~~any~~with ~~potential~~our ~~uncollectible amounts~~customer. WeIn ~~control~~these ~~credit risk related to accounts receivable through credit approvals~~situations, ~~credit~~we ~~limits,~~have ~~and~~risk ~~monitoring processes. In making the determination~~ of ~~the~~loss ~~appropriate~~as ~~allowance~~principal for ~~doubtful~~any ~~accounts,~~amount ~~management~~due to ~~considers~~the ~~prior~~other ~~experience~~party ~~with~~regardless ~~customers, analysis~~ of ~~accounts~~the ~~receivable~~amount(s) we ~~aging~~earn ~~reports,~~as ~~changes~~revenue infrom ~~customer~~our ~~payment patterns, and historical write-offs~~customer.

~~Right-of-use~~The ~~Asset~~entity /has ~~Lease~~discretion ~~Liability~~in establishing the price for the specified good or service.

~~Right~~We ofhave ~~use~~discretion ~~(“ROU”) assets represent our right to use an underlying asset~~ in ~~which~~establishing ~~we obtain substantially all~~ the ~~economic~~price ~~benefits and the right to direct the use of the asset during the lease term. Lease liabilities represent~~ our customer ~~obligation~~pays ~~to make lease payments arising from the lease. We recognize ROU assets and lease liabilities on the balance sheet~~ for ~~leases with a lease term of greater than one year. The Company elected to combine~~ the ~~lease~~specified ~~and~~goods related non-lease components (common area maintenance and operating costs) and treat them as a single lease component. ROU assets and lease liabilities are recognized at the commencement date of the lease based on the present value of the fixed lease payments over the lease term. The Company’s operating leases include options to extend or ~~terminate the lease, which are not included in the determination of the ROU asset or lease liability unless reasonably certain to be exercised~~services. Payments that are not fixed at the commencement of the lease are considered variable and are excluded from the measurement of the ROU asset and lease liability and are expensed as incurred in the statement of operations. Variable payments typically included payment for common area maintenance and reimbursement of the landlords operating costs as the amounts change from year to year based on actual costs incurred. In the measurement of our ROU assets and lease liabilities, the fixed lease payments in the agreement are discounted using a secured incremental borrowing rate for a term similar to the duration of the lease, as our leases do not provide implicit rates. Operating lease expense is recognized on a straight-line basis over the lease term. For the Company’s finance lease, interest expense is recognized on the lease liability using the effective interest method and depreciation of the finance lease ROU asset is recognized on a straight-line basis over the lease term.

~~Property~~Shipping and ~~Equipment, net~~Handling

~~Property~~Payments ~~and~~by ~~equipment~~customers ~~are~~to ~~recorded~~us atfor ~~historical~~shipping ~~cost, less accumulated depreciation. Major additions~~ and ~~improvements~~handling costs are ~~capitalized,~~included ~~while~~in ~~replacements,~~revenue ~~maintenance,~~on ~~and repairs, which do not improve or extend~~ the ~~life~~consolidated statements of ~~the respective assets~~operations, ~~are~~while ~~expensed~~our asexpense ~~incurred. Depreciation~~ is ~~computed~~included ~~using~~in ~~the~~cost ~~straight-line method over the estimated useful lives~~ of ~~the~~sales. ~~assets:~~Shipping ~~thirty~~and handling ~~years~~ for ~~buildings,~~inventory ~~the~~are ~~lesser~~included ofas ~~ten~~a ~~years~~component orof ~~the~~inventory ~~life~~on of the ~~lease~~consolidated ~~for~~balance ~~leasehold improvements~~sheets, and ~~one~~in tocost ~~fifteen~~of ~~years~~sales ~~for~~in ~~furniture,~~the ~~fixtures~~consolidated statements ~~and~~of ~~equipment,~~operations ~~software,~~when ~~vehicles,~~the ~~and~~product ~~biological~~is ~~assets~~sold.

43Advertising

~~Table~~Advertising costs are expensed as incurred and are included in selling, general and administrative expenses in the consolidated statements of ~~Contents~~operations. The Company did not incur any significant advertising costs for the years ended December 31, 2023 and 2022.

Land is not depreciated. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations.F-13

~~Business~~Stock-based ~~Combinations~~ Payments

~~Amounts~~Employee ~~paid~~and ~~for~~non-employee ~~acquisitions~~awards – We ~~are~~account ~~allocated~~for tostock-based ~~the~~compensation ~~assets~~in ~~acquired~~accordance ~~and~~with ~~liabilities~~the ~~assumed~~fair ~~based~~value onrecognition ~~their~~provisions ~~estimated~~of ~~fair~~ASC 718, Compensation – Stock ~~value~~Compensation, atand ~~the~~ASC 505, Equity, ~~date~~which ofrequire ~~acquisition.~~all ~~The~~stock-based ~~fair~~compensation to ~~value~~employees ofand non-employees, ~~identifiable~~including ~~intangible~~grants ~~assets~~of isemployee ~~based~~stock onoptions, ~~detailed~~to ~~valuations~~be ~~that~~recognized ~~use~~as ~~information~~an ~~and~~expense ~~assumptions~~in ~~provided~~the byconsolidated ~~management,~~financial ~~including~~statements ~~expected~~based on ~~future~~their ~~cash~~fair ~~flows~~values. WeThe ~~allocate~~fair ~~any~~value ~~excess~~of ~~purchase~~stock ~~price~~options ~~over~~is ~~the~~estimated ~~fair~~using ~~value~~the ofBlack-Scholes ~~the~~option ~~net~~pricing ~~assets~~formula ~~and~~that ~~liabilities~~requires ~~acquired~~assumptions for toexpected ~~goodwill.~~volatility, ~~Identifiable~~expected ~~intangible~~dividends, ~~assets~~the ~~with~~risk-free ~~finite~~interest ~~lives~~rate, ~~are~~and ~~amortized~~the ~~over~~expected ~~their~~term ~~useful~~of ~~lives~~the option. ~~Acquisition-related~~The ~~costs,~~Company ~~including~~accounts ~~advisory,~~for forfeitures ~~legal,~~of ~~accounting,~~stock-based ~~valuation,~~grants ~~and~~as ~~other~~they ~~costs,~~occur. ~~are~~If ~~expensed~~any inof the ~~periods~~assumptions used in ~~which~~ the ~~costs~~Black-Scholes ~~are~~model ~~incurred.~~or ~~The~~the ~~results~~anticipated number of shares ~~operations~~to ofbe ~~acquired~~awarded ~~businesses~~change ~~are~~significantly, ~~included~~stock-based compensation expense may differ materially in the ~~consolidated~~future ~~financial~~from that ~~statements~~recorded ~~from~~in the ~~acquisition~~current ~~date~~period.

~~Goodwill~~Market price-based awards – We may issue stock-based payments that vest when certain market conditions are met, such as our Common Stock trading above a certain value for a specific number of days. We recognize expense for market price-based options at the estimated fair value of the options using the binomial lattice model over the estimated life of the options used in the model, or immediately upon the market conditions being met. We use historical data to estimate the expected price volatility, the expected stock option life and ~~Intangibles~~expected forfeiture rate. The risk-free interest rate is based on the United States Treasury yield curve in effect at the time of grant for the estimated life of the stock option.

~~Goodwill~~Income represents the excess of purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill and long-lived intangible assets are tested for impairment at least annually in accordance with the provisions of ASC No. 350, Intangibles-Goodwill and Other (“ASC No. 350”). ASC No. 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or on level below an operating segment) on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carry value. Application of the goodwill impairment test requires judgement, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. We test goodwill and long-lived intangible assets annually in December, unless an event occurs that would cause us to believe the value is impaired at an interim date. Taxes

~~Intangible~~We recognize deferred income tax assets ~~with~~and ~~finite~~liabilities for ~~useful~~the ~~lives~~expected ~~are~~future ~~amortized~~tax ~~over~~consequences ~~their~~of ~~respective~~temporary ~~estimated~~differences ~~useful~~between ~~lives~~the income tax and ~~reviewed~~financial ~~for~~reporting ~~impairment~~carrying ~~whenever~~amount ~~events~~of orour assets ~~changes~~and inliabilities. ~~circumstances~~We ~~indicate~~monitor ~~that~~our deferred tax assets and evaluate the ~~carrying~~need for a valuation allowance based on the estimate of the amount of such deferred tax assets that we believe do not meet the ~~asset~~more-likely-than-not ~~may~~recognition criteria. We also evaluate whether we have any uncertain tax positions and would record a reserve if we believe it is more-likely-than-not our position would not prevail with the applicable tax authorities and would be ~~recoverable~~recorded in income tax expense. Our assessment of tax positions as of December 31, 2023 and 2022, determined that there were no material uncertain tax positions.

~~Debt~~Tax returns for the years ending December 31, 2020 through 2022 are open to examination by federal and state authorities.

~~We issue debt that may have separate warrants, conversion features, or no equity-linked attributes.~~Segments

~~Debt~~ASC ~~with~~280, ~~warrants –~~Segment ~~When~~Reporting we(“ASC 280”), ~~issue~~establishes ~~debt~~standards ~~with~~for ~~warrants,~~reporting weinformation ~~treat~~about ~~the~~operating ~~warrants~~segments. asOperating asegments ~~debt~~are ~~discount,~~defined ~~record~~ as acomponents ~~contra-liability~~of an ~~against~~enterprise ~~the~~about ~~debt,~~which ~~and~~separate ~~amortize~~financial ~~the~~information ~~balance~~is ~~over~~available ~~the~~that ~~life~~is ofevaluated ~~the~~regularly ~~underlying~~by ~~debt~~the aschief ~~amortization~~operating ofdecision ~~debt~~maker, or ~~discount~~decision-making ~~expense~~group, in ~~the~~deciding ~~consolidated~~how ~~statements of operations. The offset~~ to ~~the~~allocate ~~contra-liability~~resources isand ~~recorded as additional paid~~ in ~~capital~~assessing ~~in our consolidated balance sheets~~performance. IfOur ~~the~~Chief ~~debt~~Executive isOfficer ~~retired~~has ~~early,~~been identified as the ~~associated~~chief ~~debt~~decision ~~discount~~maker. isOur ~~then~~reporting ~~recognized~~segments ~~immediately~~consist ~~as amortization~~ of: ~~debt~~a) ~~discount~~Retail; ~~expense~~and inb) ~~the~~Cultivation. ~~consolidated~~Our ~~statement of~~ operations. ~~The~~are ~~debt~~conducted iswithin ~~treated~~the United asStates ~~conventional~~of ~~debt~~America.

WeRecently ~~determine~~Issued ~~the~~Accounting value of the non-complex warrants using the Black-Scholes Option Pricing Model (“Black-Scholes”) using the stock price on the date of issuance, the risk-free interest rate associated with the life of the debt, and the volatility of our stock. For warrants with complex terms, we use the binomial lattice model to estimate their fair value.Standards

~~Modification~~FASB ~~and~~ASU ~~Extinguishment~~2020-06 of– “Debt -Debt ~~When~~with Conversion weand ~~change~~Other ~~the~~Options ~~terms~~(Subtopic of470-20) ~~existing~~and ~~notes~~Derivatives ~~payable,~~and weHedging-Contracts ~~evaluate~~in ~~the~~Entity’s ~~amendments~~Own ~~under~~Equity ~~ASC~~(Subtopic ~~470~~815-~~50,~~40): ~~Debt~~Accounting for ~~Modification~~Convertible Instruments and ~~Extinguishment~~Contracts toin ~~determine~~an ~~whether~~Entity’s Own Equity”- In June 2020, the ~~change~~Financial ~~should~~Accounting beStandards Board ~~treated~~(“FASB”) asissued aguidance ~~modification~~which orsimplifies asaccounting afor ~~debt~~convertible ~~extinguishment~~instruments by removing major separation models required under current GAAP. This ~~evaluation~~Accounting ~~includes~~Standards ~~analyzing~~Update ~~whether~~(“ASU”) ~~there~~also ~~are~~removes ~~significant~~certain ~~and~~settlement ~~consequential~~conditions ~~changes~~that are required for equity contracts to qualify for the ~~economic~~derivative ~~substance~~scope ofexception and simplifies the ~~note~~diluted earnings per share calculation in certain areas. IfThe ~~the~~amendments ~~change~~in isthis ~~deemed~~ASU ~~insignificant~~are ~~then~~effective ~~the~~for ~~change~~annual isand ~~considered~~interim aperiods ~~debt~~beginning ~~modification~~after December 15, ~~whereas~~2021, ifalthough early adoption is permitted. We adopted this ASU in the ~~change~~first isquarter ~~substantial~~of 2022, and the ~~change~~adoption isdid ~~reflected~~not ashave a ~~debt~~material ~~extinguishment~~effect on our consolidated financial statements.

~~Convertible Debt~~ F- When we issue debt with a conversion feature, we must first assess whether the conversion feature meets the requirements to be treated as a derivative. If the conversion feature within convertible debt meets the requirements to be treated as a derivative, we estimate the fair value of the convertible debt derivative using Black-14

44FASB ASU 2016-13 – “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”– In June 2016, the FASB issued guidance that replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credits, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842 on leases. ASC 326 requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses as well as the credit quality and underwriting standards of a company’s portfolio. In addition, ASC 326 made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities the Company does not intend to sell or believes that it is more likely than not they will be required to sell. The ASU can be adopted no later than January 1, 2020 for SEC filers and January 1, 2023 for private companies and smaller reporting companies. The adoption of the new standard did not have a material effect on our consolidated financial statements.

~~Table~~FASB ASU 2017-04 – “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” – In January 2017, the FASB issued ASU No. 2017-04, which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Under ASU 2017-04, goodwill impairment will be tested by comparing the fair value of ~~Contents~~a reporting unit with its carrying amount, and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The new guidance must be applied on a prospective basis and is effective for periods beginning after December 15, 2022, with early adoption permitted. The adoption of the new standard did not have a material effect on our consolidated financial statements.

~~Scholes~~Recent ~~upon~~Accounting the date of issuance, using the stock price on the date of issuance, the risk-free interest rate associated with the life of the debt, and the estimated volatility of our stock. If the conversion feature is not treated as a derivative, we assess whether it is a beneficial conversion feature (“BCF”). A BCF exists if the effective conversion price of the convertible debt instrument is less than the stock price on the commitment date. This typically occurs when the effective conversion price is less than the fair value of the stock on the date the instrument was issued. The value of a BCF is equal to the intrinsic value of the feature, the difference between the effective conversion price and the fair value of the Common Stock into which it is convertible.Pronouncements

~~Fair~~FASB ~~Value~~ASU 2023-07 – “Segment Reporting – Improvements to Reportable Segment Disclosures” - In November 2023, the FASB issued ASU No. 2023-07, which requires disclosure of ~~Financial~~more ~~Instruments~~detailed information about a reportable segment’s expenses. The new standard is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024. The amendments must be applied retrospectively, and early adoption is permitted. The Company is currently assessing the effects of adoption on its consolidated financial statements.

UNOTE 2.S. ~~generally~~BUSINESS accepted accounting principles (“GAAP”) requires disclosing the fair value of financial instruments to the extent practicable for financial instruments which are recognized or unrecognized in the consolidated balance sheet. The fair value of the financial instruments disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement.ACQUISITIONS

In assessing the fair value of financial instruments, the Company uses a variety of methods and assumptions, which are based on estimates of market conditions and risks existing at the time. For certain instruments, including accounts receivable and accounts payable, the Company estimated that the carrying amount approximated fair value because of the short maturities of these instruments. All debt is based on current rates at which the Company could borrow funds with similar remaining maturities and approximates fair value.Trees

~~GAAP~~On ~~establishes~~January a5, ~~hierarchy~~2022, ~~for~~we ~~inputs~~completed ~~used~~the inacquisition of ~~measuring~~substantially ~~fair~~all ~~value~~of ~~that maximizes~~ the ~~use~~assets of ~~observable~~Trees ~~inputs~~MLK ~~and~~Inc. ~~minimizes~~(“MLK”), representing the ~~use~~remaining onOregon ~~unobservable~~dispensary ~~inputs~~in byconnection ~~requiring~~with the ~~that~~overall ~~the~~Trees ~~most~~transaction. ~~observable~~We ~~inputs~~paid becash ~~used~~in ~~when~~the ~~available.~~amount ~~Observable~~of ~~inputs~~$256,582 ~~consist~~and stock consideration of ~~items~~4,970,654 ~~that~~shares ~~market~~of ~~participants~~our ~~would~~Common ~~use~~Stock. The inclosing ~~pricing~~price of our Common Stock on January 5, 2022, the ~~asset~~date orof ~~liability~~license ~~developed~~transfer, ~~based~~was on$0.27 ~~market~~per ~~data~~share, ~~obtained~~as ~~from~~such, ~~sources~~fair ~~independent~~value of the equity ~~Company~~consideration is $1,346,076. ~~Unobservable~~Further, ~~inputs~~cash ~~are~~equal ~~inputs~~to ~~that~~$384,873 ~~reflect~~will be paid to the ~~Company’s~~sellers ~~assumptions~~in ~~about~~equal ~~the~~monthly ~~assumptions~~installments ~~market~~over ~~participants~~a ~~would~~period of ~~use~~24 inmonths ~~pricing~~beginning ~~the~~on ~~asset~~June or15, ~~liability~~2022. ~~developed~~When ~~based~~we closed on ~~the~~MLK ~~best~~it ~~information~~was ~~available~~a innon-operating dispensary. We opened the ~~circumstances.~~dispensary ~~The~~in ~~hierarchy~~the issecond quarter ~~described~~of ~~below:~~2022.

~~Level~~The ~~1 –~~table ~~Quoted~~below ~~prices~~reflects inthe ~~active~~Company’s ~~markets~~final estimates ~~for~~of ~~identical~~the ~~assets~~acquisition ordate ~~liabilities. There are no~~ fair ~~valued~~values ~~assets or liabilities classified under Level 1 as~~ of ~~December~~the ~~31,~~assets ~~2022 and 2021.~~acquired:

Level 2 – Observable prices that are based on inputs not quoted on active markets but corroborated by market data. There are no fair valued assets or liabilities classified under Level 2 as of December 31, 2022 and 2021.

Fixed assets	$	25,150
Tradename		88,000
Goodwill		1,870,381
	$	1,983,531

~~Level 3 – Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs (see Note 14).~~F-15

~~Level~~As ~~3 liabilities are valued using unobservable inputs to~~ the ~~valuation~~MLK ~~methodology~~dispensary ~~that~~was ~~are~~not ~~significant~~operating to until the ~~measurement~~second ofquarter ~~the fair value~~ of ~~the liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy~~2022, the ~~Company’s~~were ~~accounting,~~no ~~and~~material ~~finance~~results ~~department,~~of ~~which~~operations ~~reports~~prior to the ~~Chief~~acquisition ~~Financial Officer, determines its valuation policies and procedures~~date. ~~The~~As ~~development~~such, ~~and~~there ~~determination~~would ofbe ~~the~~no ~~unobservable~~material proforma ~~inputs~~impact ~~for~~on ~~Level 3 fair value measurements and fair value calculations are~~ the ~~responsibility of the~~ Company’s ~~accounting~~operating ~~and finance department and are approved by the Chief Financial Officer~~results.

~~Level~~On December 12, 2022, we completed the Green Tree Acquisition which consisted of the acquisition of substantially all of the assets of Ancient Alternatives LLC, Natural Alternatives For Life, LLC, Mountainside Industries, LLC, Hillside Enterprises, LLC, and GT Creations, LLC, each a Colorado limited liability company (collectively, the “Green Tree Entities”). We paid cash in the amount of $500,000 and stock consideration of 17,977,528 shares of our Common Stock. Additionally, we had a potential obligation to issue additional stock consideration up to 4,879,615 shares of our Common Stock on the achievement of certain performance indicators on or before June 12, 2024. The closing price of our Common Stock on December 12, 2022, the date of license transfer, was $0.165 per share, as such, fair value of the equity consideration is $2,966,292. An additional $3,500,000 ~~Valuation~~in ~~Techniques~~cash was to be paid to the sellers in fifteen (15) equal monthly payments commencing on the 9-month anniversary of the closing, which based on a discount rate of 12%, resulted in the fair value of these additional monthly payments to be approximately $3,017,510. In November 2023, the Company transferred a majority of the Green Tree Entities back to the original owners (see Note 6). Subsequent to this transfer, the aforementioned debt was modified. This liability is included in Notes payable- current and Notes payable- non-current in the accompanying consolidated balance sheets. See Note 14 for additional details.

Level 3 financial liabilities consist of the derivative liabilities for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. The ~~Company~~table ~~deems~~below ~~financial~~reflects ~~instruments which do not have fixed settlement provisions to be derivative instruments. In accordance with GAAP~~ the ~~fair value of these warrants is classified as a liability on the~~ Company’s ~~consolidated~~final ~~balance~~estimates ~~sheets because, according to the terms~~ of the acquisition ~~warrants,~~date afair ~~fundamental~~values ~~transaction could give rise to an obligation~~ of the ~~Company~~assets ~~to pay cash to its warrant holders. Such instruments do not have fixed settlement provisions and have also been recorded as derivative liabilities. Corresponding changes in the fair~~ acquired:

Cash	$	3,928
Inventory		1,588,455
Fixed assets		688,655
Tradename		677,000
Goodwill		4,248,000
	$	7,206,038

~~Table~~Compared to the estimated purchase price allocation reported in our financial statements included in Item 8 of ~~Contents~~our Form 10-K year ended December 31, 2022 filed with the SEC on April 17, 2023, the final purchase price allocation resulted in a reduction of tradename intangible assets of $273,000 and an increase in goodwill of $995,702. Additionally, as part of the measurement adjustments, the fair value of the installment payments was remeasured using a 16% discount rate, resulting in a decrease of debt of $136,502 for the purchase consideration. Additionally, a contingent earnout liability with a fair value of $859,204 was recognized which increased the purchase consideration and resulting goodwill. The fair value of the contingent earnout liability decreased to $367,056 at December 31, 2023, resulting in a gain on change in fair value of $492,148.

~~value~~The accompanying consolidated financial statements include the results of the ~~derivative~~Green ~~liabilities~~Tree ~~are~~Entities ~~recognized~~from inthe ~~earnings~~date onof acquisition for financial reporting purposes, December 12, 2022. The pro forma effects of the ~~Company’s~~acquisition ~~consolidated~~on ~~statements~~the results of operations inas ~~each~~if ~~subsequent~~the ~~period.~~transaction had been completed on January 1, 2022, are as follows:

The Company’s derivative liabilities are carried at fair value and were classified as Level 3 in the fair value hierarchy due to the use of significant unobservable inputs.

	Year ended December 31,
	2022 (unaudited)
Total revenues	$	22,556,789
Net income (loss) attributable to Common Stockholders	$	(9,558,189	)
Net income (loss) per common share	$	(0.08	)
Weighted average number of basic and diluted common shares outstanding		114,159,065

~~Warrant Instruments~~F-16

~~Warrants~~The ~~with~~unaudited ~~derivative~~pro-forma ~~features –~~results ~~When~~of weoperations are ~~raise~~presented ~~capital~~for byinformation ~~issuing~~purpose ~~warrants~~only. ~~that~~The dounaudited ~~not~~pro-forma ~~have~~results ~~complex terms, they~~ are ~~recorded~~not asintended ~~additional~~to ~~paid~~present inactual ~~capital~~results ~~in our consolidated balance sheet. When we issue warrants~~ that would have been ~~complex~~attained ~~terms,~~had ~~such as a clause in which~~ the ~~warrant~~acquisition ~~agreements~~been ~~contain~~completed aas ~~cash~~of ~~settlement~~January ~~provision~~1, ~~whereby~~2022, ~~the~~or ~~holders~~to ~~could~~project ~~settle~~potential ~~the~~operating ~~warrants~~results ~~for~~as ~~cash upon a fundamental transaction that is considered outside~~ of ~~the~~any ~~control~~future ofdate or ~~management,~~for ~~such~~any asfuture aperiods. ~~change~~In ofJuly ~~control~~2023, the ~~warrants~~Company ~~are~~entered ~~considered~~into toan beagreement ato ~~derivative~~transfer ~~that~~the ~~are~~Green ~~recorded~~Tree asEntities aback ~~liability at fair value. The warrant derivative liability is adjusted~~ to ~~its fair value at~~ the ~~end~~original owners of ~~each~~these ~~reporting~~entities ~~period,~~(see ~~with~~Note ~~the change being recorded as other expense or gain~~6).

~~Revenue~~On ~~Recognition~~December 19, 2022, we completed the Green Man Acquisition, consisting of the acquisition of substantially all of the assets of Green Man. We paid cash in the amount of $1,225,000 and stock consideration of 4,494,382 shares of Common Stock. The closing price of our Common Stock on December 19, 2022, the date of license transfer, was $0.18 per share, as such, fair value of the equity consideration is $808,989. An additional $1,500,000 in cash will be paid to the sellers in eighteen (18) equal monthly payments commencing on the 12-month anniversary of the closing. Based on a discount rate of 12%, the fair value of these additional monthly payments is approximately $1,224,846. This liability is included in Notes payable-current and Notes payable-non-current in the accompanying consolidated balance sheets. See Note 14 for additional details.

WeThe ~~have~~table ~~two~~below ~~main~~reflects ~~revenue~~the ~~streams:~~Company’s ~~(i) retail~~final estimates ~~product~~of ~~sales;~~the ~~and~~acquisition ~~(ii)~~date ~~wholesale~~fair ~~cultivation~~values ~~sales.~~of the assets acquired:

Product sales are recorded at the time that control of the product is transferred to customers. In evaluating the timing of the transfer of control of products to customers, we consider several indicators, including significant risks and rewards of products, our right to payment, and the legal title of the products. Based on the assessment of control indicators, sales are generally recognized when products are delivered to customers.

Cash	$	8,594
Inventory		108,543
Fixed assets		23,500
Tradename		273,000
Goodwill		2,741,000
	$	3,154,637

~~Revenue~~Compared ~~from~~to ~~cultivation~~the ~~sales~~estimated ispurchase ~~recognized~~price ~~when~~allocation reported in our financial statements included in Item 8 of our Form 10-K year ended December 31, 2022 filed with the ~~products~~SEC ~~are~~on ~~delivered~~April to17, 2023, the ~~customer~~final purchase price allocation resulted in an increase of tradename intangible assets of $123,000 and a decrease in goodwill of $227,198. Additionally, as part of the measurement adjustments, the fair value of the installment payments was remeasured using a 16% discount rate, resulting in a decrease of debt of $104,198 for the purchase consideration.

~~ASU~~The ~~2014-09, Revenue~~accompanying ~~from~~consolidated ~~Contracts~~financial ~~with~~statements include ~~Customers~~the ~~(“ASC~~results ~~Topic 606”) is a comprehensive revenue recognition model that requires revenue to be recognized when control~~ of ~~the~~Green ~~promised~~Man ~~goods~~from ~~or services are transferred to our customers at an amount that reflects~~ the ~~consideration~~date ~~that we expect to receive. Application~~ of ~~ASC~~acquisition ~~Topic~~for ~~606~~financial ~~requires~~reporting uspurposes, toDecember ~~use~~19, ~~more~~2022. ~~judgment~~The ~~and~~pro ~~make~~forma ~~more~~effects of ~~estimates~~the ~~than~~acquisition ~~under~~on ~~former~~the ~~guidance.~~results ~~Application~~ of ~~ASC~~operations ~~Topic~~as ~~606~~if ~~requires~~the atransaction ~~five-step~~had ~~model~~been ~~applicable~~completed toon ~~all~~January ~~product~~1, ~~offerings~~2022, ~~revenue~~are ~~streams~~ as follows:

Identification of the contract, or contracts, with a customer

	Year ended December 31,
	2022 (unaudited)
Total revenues	$	19,002,698
Net income (loss) attributable to Common Stockholders	$	(9,641,205	)
Net income (loss) per common share	$	(0.09	)
Weighted average number of basic and diluted common shares outstanding		101,500,915

AThe ~~contract~~unaudited ~~with~~pro-forma aresults ~~customer~~of ~~exists~~operations are ~~when~~presented ~~(i) we~~for ~~enter~~information ~~into~~purpose anonly. ~~enforceable~~The ~~contract~~unaudited ~~with~~pro-forma aresults ~~customer~~are ~~that~~not ~~defines~~intended ~~each~~to ~~party’s~~present ~~rights~~actual ~~regarding~~results ~~the~~that ~~goods~~would orhave been ~~services~~attained tohad ~~be transferred and identifies~~ the ~~payment~~acquisition ~~terms~~been ~~related~~completed toas ~~these~~of ~~goods~~January or1, ~~services~~2022, ~~(ii) the~~or ~~contract~~to ~~has~~project ~~commercial~~potential ~~substance,~~operating ~~and~~results ~~(iii) we~~as ~~determine that collection~~ of ~~substantially~~any ~~all~~future ~~consideration~~date or for ~~goods~~any orfuture ~~services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration~~periods.

We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit or financial information pertaining to the customer.F-17

~~Identification~~NOTE of3. ~~the~~ASSET ~~performance obligations in the contract~~ACQUISITION

~~Performance~~In ~~obligations~~February ~~promised~~2023, inwe acompleted ~~contract~~the ~~are~~acquisition of ~~identified~~the ~~based~~assets onof ~~the~~Station ~~goods~~2, orLLC ~~services~~(“Station ~~that~~2”). ~~will~~The beassets ~~transferred~~consist toof ~~the~~a ~~customer~~medical ~~that~~and ~~are~~retail ~~both~~cannabis ~~capable~~license offor ~~being~~a ~~distinct~~dispensary located in Denver, ~~whereby~~CO. ~~the~~We ~~customer~~also ~~can~~assumed ~~benefit~~responsibility ~~from~~of the ~~goods~~operating orlease ~~service~~for ~~either~~the ondispensary ~~its~~and ~~own~~recorded orthe ~~together~~relating ~~with~~ROU ~~other~~asset ~~resources~~which is ~~that~~disclosed ~~are~~separately ~~readily~~on ~~available~~the ~~from~~accompanying ~~third~~consolidated ~~parties~~balance orsheets. ~~from~~The ~~us,~~consideration ~~and~~paid ~~are~~by ~~distinct in~~ the ~~context~~Company consists of ~~the~~cash ~~contract~~at closing equal to $256,582 ~~whereby~~plus ~~the~~an ~~transfer~~additional ofnote ~~the~~equal ~~goods~~to or$384,873. ~~services~~The isrelative ~~separately~~fair ~~identifiable~~value ~~from~~of ~~other~~the ~~promises~~note issued resulted in ~~the~~a ~~contract~~debt discount of $50,918.

46As the dispensary was not in operation and there was no assembled workforce at the time of acquisition, the acquisition was accounted for as an asset acquisition of a license. Subsequently, during the year ended December 31, 2023, the license was transferred as part of a settlement agreement and was derecognized (see Note 6).

~~Table~~Timothy Brown, a current member of ~~Contents~~the Company’s Board of Directors and its Chief Visionary Officer, is the sole owner of Station 2.

When a contract includes multiple promised goods or services, we apply judgment to determine whether the promised goods or services are capable of being distinct and are distinct within the context of the contractNOTE 4. IfDISCONTINUED ~~these criteria are not met, the promised goods or services are accounted for as a combined performance obligation.~~OPERATIONS

~~Determination~~On July 16, 2021, we entered into an Asset Purchase Agreement with an individual to sell substantially all the assets of NBC for a total of $150,000 and 10% of profits generated by the ~~transaction~~buyer ~~price~~in the states of Michigan, Mississippi, and Massachusetts for a period of twelve months from the closing. On August 2, 2021, the sale of NBC was completed. Pursuant to amendment, the buyer paid the additional $75,000 in March 2022, and the 10% profit share described above was eliminated.

~~The~~A ~~transaction~~breakdown ~~price~~of ~~is determined based on~~ the ~~consideration~~results toof ~~which~~discontinued weoperations related ~~will be entitled~~ to ~~receive in exchange for transferring goods or services to our customer. We estimate any variable consideration included in~~ the ~~transaction~~sale ~~price using the expected value method that requires the use~~ of ~~significant~~NBC ~~estimates~~are ~~for~~presented ~~discounts,~~as ~~cancellation periods, refunds and returns. Variable consideration is described in detail below.~~follows:

Allocation of the transaction price to the performance obligations in the contract

	Year Ended December 31,  2022
Product revenues	$	3,438
Service revenues		—
Total revenues		3,438

Selling, general and administrative		(2,040	)
Total costs and expenses		(2,040	)
Income from discontinued operations	$	5,478

~~If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation~~NOTE 5. ~~Contracts~~ACCOUNTS ~~that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative Stand-Alone Selling Price (“SSP~~RECEIVABLE,”) basis. We determine SSP based on the price at which the performance obligation would be sold separately. If the SSP is not observable, we estimate the SSP based on available information, including market conditions and any applicable internally approved pricing guidelines.NET

~~Recognition~~Our ofaccounts ~~revenue~~receivable ~~when,~~consisted orof ~~as,~~the ~~we satisfy a performance obligation~~following:

We recognize revenue at the point in time that the related performance obligation is satisfied by transferring the promised goods or services to our customer.

	December 31,
	2023			2022
Accounts receivable	$	152,863		$	83,373
Less: Allowance for credit losses		(41,000	)		(42,000	)
Total	$	111,863		$	41,373

~~Principal~~We ~~versus~~record ~~Agent~~credit ~~Considerations~~loss expense when we conclude the credit risk of a customer indicates the amount due under the contract is not collectible. We recorded credit loss expense of $114 and $6,280 during the years ended December 31, 2023 and 2022, respectively.

When another party is involved in providing goods or services to our customer, we apply the principal versus agent guidance in ASC Topic 606 to determine if we are the principal or an agent to the transaction. When we control the specified goods or services before they are transferred to our customer, we report revenue gross, as principal. If we do not control the goods or services before they are transferred to our customer, revenue is reported net of the fees paid to the other party, as agent. Our evaluation to determine if we control the goods or services within ASC Topic 606 includes the following indicators:F-18

WeNOTE ~~are~~6. ~~primarily~~LICENSE ~~responsible~~TRANSFER ~~for~~AGREEMENTS ~~fulfilling the promise to provide the specified good or service.~~

~~When~~In August 2023, we ~~are~~entered ~~primarily~~into ~~responsible~~an Assignment of Assets (“Assignment”), pursuant to which we agreed to transfer and assign to Station 2 and Timothy Brown (“Brown” and collectively with Station 2, “Assignees”), a board member, shareholder, and executive level employee of the Company, a State of Colorado and corresponding City and County of Denver retail marijuana store cannabis license and related assets owned related to the licensed cannabis dispensary located at 468 S. Federal Boulevard. Timothy Brown is the sole owner of Station 2. In exchange for the ~~providing~~transfer to Assignees of the ~~goods~~transferred assets, the Assignees agreed to extinguishment and ~~services~~satisfaction of, ~~such~~and asunconditional ~~when~~waiver by ~~the~~each of Station 2 and Brown of any claims in respect of, any and all debt or other ~~party~~obligations isof ~~acting~~the onCompany, ~~our~~Trees ~~behalf~~Colorado, weand any ~~have~~of ~~indication~~their respective affiliates, directors, officers or agents, pursuant to that wecertain ~~are~~Asset Purchase Agreement dated October 14, 2022, as amended, by and among the ~~principal~~Company, toTrees Colorado and Assignees, which was issued upon closing of the transaction. Wein ~~consider~~February 2023 if(“468 weDebt”). ~~may~~This ~~terminate~~transaction ~~our~~closed ~~relationship~~in ~~with~~October 2023, and the ~~other~~Company ~~party~~recognized ata ~~any~~loss ~~time~~on ~~without~~this ~~penalty~~transfer orof ~~without~~$202,397, located ~~permission~~in ~~from~~loss ~~our~~on ~~customer~~extinguishment of debt on the consolidated statements of operations.

WeA ~~have~~summary ~~risk~~of ~~before~~ the ~~specified~~license ~~good or service have been transferred to a customer or after~~ transfer ofis ~~control~~presented toas ~~the customer.~~follows:

We may commit to obtaining the services of another party with or without an existing contract with our customer. In these situations, we have risk of loss as principal for any amount due to the other party regardless of the amount(s) we earn as revenue from our customer.

	Balance as of August 17, 2023
Asset to be transferred:
Intangible assets - License	$	590,536
Accumulated amortization - License		(31,987	)

Consideration:
Extinguishment of 468 debt	$	356,152

In July 2023, we and our subsidiaries Green Tree Colorado, LLC, Green Tree Cultivation LLC, GT Retail LLC, and Green Tree MIP LLC, entered into a settlement agreement (“Settlement Agreement”), (“GT Retail”), (“GT MIP”), with Allyson Feiler Downing (“Downing”) and Loree Schwartz (“Schwartz” and together with Downing, “Green Tree Parties”), pursuant to which the Company and the Green Tree Parties agreed to transfer and assign to new entities controlled by the Green Tree Parties, cannabis licenses and related assets owned by (i) GT Retail relating to a cultivation facility and a retail dispensary located in Berthoud, Colorado; (ii) GT MIP relating to a ‘marijuana infused product’ dispensary located in Boulder County, Colorado; and (iii) certain intellectual property in respect thereof. The Company ~~entity~~retained ~~has~~accounts ~~discretion~~payable and certain cannabis inventory in ~~establishing~~respect of the ~~price~~transferred ~~for~~assets. Closing of the ~~specified~~transaction ~~good~~is orsubject to ~~service~~approval of the license transfers by the Colorado Marijuana Enforcement Division as well as local regulatory authorities. In November 2023, the transfer was approved. As the transfer represented a non-reciprocal transfer between the Company and certain of its shareholders in connection with the settlement of a prior business combination, we recognized the difference between the carrying values of the assets transferred, equity redeemed, and debt exchanged as a capital contribution to the Company. See Note 14 for additional information.

WeIn ~~have~~exchange ~~discretion~~for inthe ~~establishing~~transfer to the ~~price~~Green ~~our~~Tree Parties ~~customer~~of ~~pays~~the ~~for~~transferred assets, the ~~specified~~Company ~~goods~~and orthe ~~services~~Green Tree Parties agreed that upon closing, the Green Tree Parties shall transfer and assign to the Company, and the Company shall redeem, 9,917,574 shares of the Company’s Common Stock owned by the Green Tree Parties and originally issued to the Green Tree Parties in the acquisition consummated in December 2022 pursuant to that certain Asset Purchase Agreement dated September 13, 2022, as amended, by and among the Company, Downing, Schwartz and various other parties thereto (the “APA”).

~~Stock-based~~The ~~Payments~~asset transfers disclosed herein did not qualify for reporting as discontinued operations, as each of these transactions did not represent a strategic shift that had a major effect on the Company’s operations and financial results.

~~Employee and non~~F-employee awards – We account for stock-based compensation in accordance with the fair value recognition provisions of ASC 718, Compensation – Stock Compensation, and ASC 505, Equity, which require all stock-19

47NOTE 7. INVENTORIES

~~Table~~Our inventories consist of ~~Contents~~the following:

based compensation to employees and non-employees, including grants of employee stock options, to be recognized as an expense in the consolidated financial statements based on their fair values. The fair value of stock options is estimated using the Black-Scholes option pricing formula that requires assumptions for expected volatility, expected dividends, the risk-free interest rate, and the expected term of the option. The Company accounts for forfeitures of stock-based grants as they occur. If any of the assumptions used in the Black-Scholes model or the anticipated number of shares to be awarded change significantly, stock-based compensation expense may differ materially in the future from that recorded in the current period.

	December 31		December 31,
	2023		2022
Raw materials	$	351,241	$	8,883
Work-in-progress and finished goods		509,677		2,057,779
Inventories	$	860,918	$	2,066,662

~~Market price-based awards~~NOTE ~~– We may issue stock-based payments that vest when certain market conditions are met, such as our Common Stock trading above a certain value for a specific number of days~~8. WePREPAIDS ~~recognize~~AND ~~expense~~OTHER ~~for~~CURRENT market price-based options at the estimated fair value of the options using the binomial lattice model over the estimated life of the options used in the model, or immediately upon the market conditions being met. We use historical data to estimate the expected price volatility, the expected stock option life and expected forfeiture rate. The risk-free interest rate is based on the United States Treasury yield curve in effect at the time of grant for the estimated life of the stock option.ASSETS

~~Shipping~~Our prepaids and ~~Handling~~other current assets consist of the following:

Payments by customers to us for shipping and handling costs are included in revenue on the consolidated statements of operations, while our expense is included in cost of sales. Shipping and handling for inventory are included as a component of inventory on the consolidated balance sheets, and in cost of sales in the consolidated statements of operations when the product is sold.

	December 31,
	2023		2022
Security deposits	$	107,921	$	140,628
Prepaid insurance		106,124		86,071
ERC Receivable		176,657		—
Other current assets		21,209		32,899
Total prepaids and other current assets	$	411,911	$	259,598

~~Income~~NOTE 9. ~~Taxes~~PROPERTY AND EQUIPMENT, NET

WeProperty ~~recognize deferred income tax assets~~ and ~~liabilities~~equipment ~~for~~consisted ~~the expected future tax consequences~~ of ~~temporary differences between~~ the income tax and financial reporting carrying amount of our assets and liabilities. We monitor our deferred tax assets and evaluate the need for a valuation allowance based on the estimate of the amount of such deferred tax assets that we believe do not meet the more-likely-than-not recognition criteria. We also evaluate whether we have any uncertain tax positions and would record a reserve if we believe it is more-likely-than-not our position would not prevail with the applicable tax authorities and would be recorded in income tax expense. Our assessment of tax positions as of December 31, 2022 and 2021, determined that there were no material uncertain tax positions.following:

In general, the tax returns for the years ending December 31, 2019 through 2021 are open to examination by federal and state authorities.

	December 31,
	2023			2022
Furniture, fixtures and equipment	$	1,647,010		$	1,484,432
Finance lease ROU -building		316,902			766,623
Software		103,817			103,817
Biological assets		13,000			13,000
Total		2,080,729			2,367,872
Less: Accumulated depreciation		(685,625	)		(419,903	)
Total property and equipment, net	$	1,395,104		$	1,947,969

~~Reportable~~Depreciation ~~Segments~~expense was $221,940 and $182,838, respectively, for the years ended December 31, 2023 and 2022.

Our reporting segments consist of: a) Retail; and b) Cultivation. Our Chief Executive Officer has been identified as the chief decision maker. Our operations are conducted within the United States of America.F-20

~~Recently~~NOTE ~~Issued~~10. ~~Accounting~~INTANGIBLE ~~Standards~~ASSETS AND GOODWILL

~~FASB~~Intangible ASU 2020-06 – “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”- In June 2020assets, the Financial Accounting Standards Board (“FASB”) issued guidance which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. This Accounting Standards Update (“ASU”) also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation in certain areas. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2021, although early adoption is permitted. We adopted this ASU in the first quarter of 2022, and the adoption did not have a material effect on our financial statements. net

During the years ended December 31, 2023 and 2022, the Company acquired tradename intangible assets through several acquisitions. See Note 2 for further details of these acquisitions. The amount of tradename intangible assets acquired in each transaction is shown in the table below.

				Useful life
Transaction	Acquisition Date	Amount		(in years)
Green Man Acquisition	December 2022		150,000	1
Green Tree Acquisition	December 2022		950,000	2
Trees MLK Acquisition (1)	January 2022		88,000	10
Trees Portland Acquisition	December 2021		292,000	10
Trees Waterfront Acquisition (1)	December 2021		217,000	10
Trees Englewood Acquisition	September 2021		1,399,000	10

~~Table~~(1) The trade name intangible asset for these acquisitions was fully impaired in 2022. See discussion of ~~Contents~~impairment charges below in this footnote.

~~NOTE~~The following table summarizes the change in the Company’s tradename intangible assets from December 31, 2022 to December 2.31, ~~ACQUISITIONS~~2023:

Trees

	Gross Intangible Assets			Accumulated Amortization			Net Intangible Assets
Balance as of December 31, 2021	$	6,323,780		$	(323,967	)	$	5,999,813
Purchase price allocation adjustments (see Note 2)		(3,942,000	)		—			(3,942,000	)
Tradename intangibles acquired		1,188,000			—			1,188,000
Amortization		—			(148,538	)		(148,538	)
Impairment		(553,377	)		—			(553,377	)
Balance as of December 31, 2022		3,016,403			(472,505	)		2,543,898
Purchase price allocation adjustments (see Note 2)		(150,000	)		—			(150,000	)
Station 2 license intangibles acquired		590,536			(31,987	)		558,549
Transfer of Station 2 license		(558,549	)		—			(558,549	)
Transfer of Green Tree assets		(135,922	)		—			(135,922	)
Amortization		—			(620,485	)		(620,485	)
Balance as of December 31, 2023	$	2,762,468		$	(1,124,977	)	$	1,637,491

On September 2, 2021, we completed the acquisition of substantially all of the assets of Trees Englewood, representing a portion of the overall Trees transaction (“Trees Transaction”) previously disclosed pursuant to that certain First Amended and Restated Agreement and Plan of Reorganization and Liquidation dated May 28, 2021 by and among the Company, seller and certain other sellers party thereto, that consists of the assets relating to the Trees dispensary located in Englewood, Colorado (“Englewood Closing”). We paid $1,155,256 in cash in connection with the Englewood Closing and stock consideration of 22,380,310 shares of our Common Stock. The closing price of our Common Stock on September 2, 2021, the date of license transfer, was $0.47 per share, as such, fair value of the equity consideration is $10,518,746. Further, cash equal to $1,732,884 will be paid to the seller in equal monthly installments over a period of 24 months from the Englewood Closing.F-21

~~The~~Estimated ~~table~~amortization ~~below~~expense ~~reflects~~for the ~~Company’s~~next ~~final~~five ~~estimates~~years ofis ~~the~~as ~~acquisition date fair values of the assets acquired~~follows:

Year Ended December 31,	Amount
2024	$	500,425
2025		169,100
2026		169,100
2027		169,100
2028		169,100
Thereafter		460,666
Total	$	1,637,491


Cash	$	32,941
Fixed assets		59,335
Inventory		586,495
Tradename		1,399,000
Goodwill		11,216,913
	$	13,294,684

Amortization expense was $652,472 and $148,538 for the years ended December 31, 2023 and 2022, respectively.

Goodwill

~~Compared~~The tofollowing ~~the~~represents ~~estimated~~a ~~purchase~~summary ~~price~~of ~~allocation~~changes ~~reported~~ in ~~our~~the ~~financial~~carrying ~~statements included in Item 8~~ amount of ~~our~~goodwill ~~Form 10-K~~ for the ~~year~~years ended December 31, ~~2021~~2023 ~~filed~~and ~~with~~2022 ~~the SEC~~ on ~~March 25, 2022, the final purchase price estimate resulted in~~ a ~~reduction~~consolidated ofbasis ~~tradename intangible assets~~ and aby ~~corresponding increase to goodwill of $3.6 million.~~ segment:

The accompanying consolidated financial statements include the results of Trees Englewood from the date of acquisition for financial reporting purposes, September 2, 2021. The pro forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2021, are as follows:Consolidated

	Gross Goodwill			Accumulated Impairment			Net Goodwill
Balance as of December 31, 2021	$	11,283,857		$	(2,484,200	)	$	8,799,657
Goodwill acquired		8,094,258			—			8,094,258
Purchase price allocation adjustment		3,942,000			—			3,942,000
Impairment		—			(2,450,941	)		(2,450,941	)
Balance as of December 31, 2022		23,320,115			(4,935,141	)		18,384,974
Transfer of Green Tree assets		(1,757,381	)					(1,757,381	)
Purchase price allocation adjustment		768,504			—			768,504
Impairment		—			(1,516,000	)		(1,516,000	)
Balance as of December 31, 2023	$	22,331,238		$	(6,451,141	)	$	15,880,097


	Year ended
	December 31,
	2021
Total revenues	$	13,918,865
Net income (loss) attributable to Common Stockholders	$	(8,110,671)
Net income (loss) per common share	$	(0.10)
Weighted average number of basic and diluted common shares outstanding		84,560,130

F-22

Retail Segment

The unaudited proforma results of operations are presented for information purposes only. The unaudited pro-forma results are not intended to present actual results that would have been attained had the acquisition been completed as of January 1, 2020, or to project potential operating results as of any future date or for any future periods.

	Gross Goodwill			Accumulated Impairment			Net Goodwill
Balance as of December 31, 2021	$	8,799,657		$	—		$	8,799,657
Goodwill acquired		8,094,258			—			8,094,258
Purchase price allocation adjustment		3,942,000			—			3,942,000
Impairment		—			(2,450,941	)		(2,450,941	)
Balance as of December 31, 2022		20,835,915			(2,450,941	)		18,384,974
Transfer of Green Tree assets		(1,757,381	)		—			(1,757,381	)
Purchase price allocation adjustment		768,504			—			768,504
Impairment		—			(1,516,000	)		(1,516,000	)
Balance as of December 31, 2023	$	19,847,038		$	(3,966,941	)	$	15,880,097

OnCultivation December 30, 2021, we completed the acquisition of substantially all the assets of Trees Portland, LLC and Trees Waterfront, LLC (together “Trees Oregon”), representing a portion of the overall Trees Transaction, that consists of the assets relating to certain Trees dispensaries located in Portland, Oregon ("Oregon Closing”). We paid cash in the amount of $331,581 in connection with the Oregon Closing and stock consideration of 6,423,575 shares of our Common Stock. The closing price of our Common Stock on December 30, 2021, the date of license transfer, was $0.23 per share, as such, the fair value of the equity consideration is $1,477,422. Further, cash equal to $497,371 will be paid to the sellers in equal monthly installments over a period of 24 months from the Oregon Closing.Segment

	Gross Goodwill		Accumulated Impairment			Net Goodwill
Balance as of December 31, 2021		2,484,200	$	(2,484,200	)	$	—
Goodwill acquired		—		—			—
Impairment		—		—			—
Balance as of December 31, 2022		2,484,200		(2,484,200	)		—
Goodwill acquired		—		—			—
Balance as of December 31, 2023	$	2,484,200	$	(2,484,200	)	$	—

~~Table~~Cultivation ofSegment ~~Contents~~Impairments

~~The~~As ~~table~~of ~~below~~December ~~reflects~~31, 2022, due to the ~~Company’s~~continued declines ~~final~~in ~~estimates~~the wholesale price of marijuana flower in Colorado, the ~~acquisition~~Company ~~date~~determined ~~fair~~that ~~values~~the remaining intangible asset balance in the Cultivation segment was not recoverable based on current cash flow projections and that there was no longer value in the tradename given the economic conditions in the cultivation sector. Therefore, an impairment of the ~~assets~~remaining ~~acquired:~~balance of $278,878 was recorded during the year ended December 31, 2022.

Retail Segment Impairments


Cash	$	14,568
Fixed assets		56,015
Inventory		202,046
Tradename		509,000
Goodwill		1,524,744
	$	2,306,373

As of annual testing date on December 31, 2022, the Company utilized a third-party valuation firm to estimate the fair value of the intangible assets with finite lives and, subsequently, the fair value of each reporting unit within the Retail segment using a combination of a discounted cash flow approach and market multiple approach. The resulting fair value estimates indicated that the fair value of the tradename intangible was less than the carrying value for the Trees MLK and Trees Waterfront dispensaries in Oregon. Therefore, the Company recognized an impairment of $274,500 during the year ended December 31, 2022.

For goodwill, each dispensary location is considered a separate reporting unit. As a result, the Company determined that the fair value of each of the dispensary locations in Oregon was less than its carrying value. Therefore, the Company recognized goodwill impairments in the Retail segment in the amount of $2,450,941 during the year ended December 31, 2022.

~~Compared~~As toof ~~the~~annual ~~estimated~~testing ~~purchase~~date ~~price~~on ~~allocation~~December 31, 2023, ~~reported~~the inCompany ~~our~~utilized ~~financial~~a ~~statements~~third-party ~~included~~valuation infirm ~~Item~~to 8estimate the fair value of ~~our~~each ~~Form~~reporting ~~10-K~~unit ~~for~~within the ~~year~~Retail ~~ended~~segment ~~December~~using a ~~31,~~combination ~~2021~~of ~~filed~~a ~~with~~discounted ~~the~~cash ~~SEC~~flow onapproach ~~March~~and ~~25,~~market ~~2022~~multiple approach. Each dispensary location is considered a separate reporting unit. As a result, the ~~final~~Company ~~purchase~~determined ~~price~~that ~~estimate~~the ~~resulted~~fair invalue aof ~~reduction~~each of ~~tradename~~the ~~intangible~~dispensary ~~assets~~locations ~~and~~in aOregon ~~corresponding~~was ~~increase~~less tothan its carrying value. Therefore, the Company recognized goodwill impairments in the Retail segment in the amount of $~~341~~1,516,000. during the year ended December 31, 2023.

The accompanying consolidated financial statements include the results of Trees Oregon from the date of acquisition for financial reporting purposes, December 30, 2021. The pro forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2020, are as follows:F-23

NOTE 11. LEASES


	Year ended
	December 31,
	2021
Total revenues	$	10,606,719
Net income (loss) attributable to Common Stockholders	$	(8,664,841)
Net income (loss) per common share	$	(0.11)
Weighted average number of basic and diluted common shares outstanding		75,948,281

The Company’s leases consist primarily of real estate leases for retail, cultivation, and manufacturing facilities. All but one of the Company’s leases are classified as operating leases. The lease for the retail dispensary acquired in the Green Man transaction is classified as a finance lease. The current and non-current portions of the operating lease liabilities and finance lease liabilities are disclosed separately on the accompanying consolidated balance sheets. The finance lease ROU asset is included in property and equipment, net (see Note 9) and the operating lease ROU asset is disclosed separately on the accompanying consolidated balance sheets. As the rate implicit in the Company’s leases is not readily determinable, we used an estimated incremental borrowing rate of 20% in determining the present value of lease payments.

The operating lease expense for the years ended December 31, 2023 and December 31, 2022 is as follows:

	December 31,
For the year ended December 31,	2023		2022
Straight-line operating lease expense	$	1,265,837	$	743,156
Variable lease cost		445,982		133,689
Total operating lease expense	$	1,711,819	$	876,845

The ~~unaudited~~finance ~~proforma~~lease ~~results~~expense ~~of operations are presented~~ for ~~information purposes only. The unaudited pro-forma results are not intended to present actual results that would have been attained had~~ the ~~acquisition~~year ~~been~~ended ~~completed~~December 31, as2023 ofand ~~January~~December 131, ~~2020~~2022, orwas toapproximately ~~project~~$167,293 ~~potential~~and ~~operating results as of any future date or for any future periods~~$5,846, respectively.

OnRelated ~~January~~party 5, 2022, we completed the acquisition of substantially all of the assets of Trees MLK Inc. (“MLK”), representing the remaining Oregon dispensary in connection with the overall Trees transaction. We paid cash in the amount of $256,582 and stock consideration of 4,970,654 shares of our Common Stock. The closing price of our Common Stock on January 5, 2022, the date of license transfer, was $0.27 per share, as such, fair value of the equity consideration is $1,346,076. Further, cash equal to $384,873 will be paid to the sellers in equal monthly installments over a period of 24 months beginning on June 15, 2022. When we closed on MLK it was a non-operating dispensary. We opened the dispensary in the second quarter of 2022. leases

~~The~~As ~~table~~of ~~below~~December ~~reflects~~31, 2023, one of the Company’s operating ~~final~~leases, ~~estimates~~a cultivation facility lease, is a related party lease as the landlord is a principal shareholder and former board member of the ~~acquisition~~Company. ~~date~~A ~~fair~~retail ~~values~~dispensary lease and a lease that included both cultivation and retail were with related parties until November 2023, when these leases were transferred to the Green Tree parties (see Note 6). Prior to the transfer of these leases to the ~~assets~~Green ~~acquired:~~Tree Parties, the Green Tree Parties had consisted of a board member and executive level employee of the Company. During the year ended December 31, 2022, the related party operating leases consisted of one retail dispensary lease, one cultivation facility lease, and one lease that included both cultivation and retail. Another retail dispensary lease was with a related party through May 2022 when the building was sold to an unaffiliated third-party. As of December 31, 2023, the ROU asset, operating lease liability, current, and operating lease liability, non-current for the related party leases are $142,080, $120,000, and $26,683, respectively. For the years ended December 31, 2023 and December 31, 2022, the total lease expense for related party leases was $390,884 and $434,437, respectively.

F-24


Fixed assets	$	25,150
Tradename		88,000
Goodwill		1,870,381
	$	1,983,531

Lease Maturities

Future remaining minimum lease payments on our operating leases and finance lease are as follows:

As the MLK dispensary was not operating until the second quarter of 2022, the were no material results of operations prior to the acquisition date. As such, there would be no material proforma impact on the Company’s operating results.

Year Ended December 31,	Operating leases			Finance lease
2024	$	846,201		$	205,400
2025		708,439			171,043
2026		452,948			136,940
2027		302,095			143,102
Thereafter		914,910			818,100
Total		3,296,593			1,474,585
Less: Present value adjustment		(1,232,000	)		(767,937	)
Lease liability		2,064,593			706,648
Less: Lease liability, current		(846,201	)		(205,400	)
Lease liability, non-current	$	1,218,392		$	501,248

OnThe ~~December~~total ~~12,~~remaining ~~2022,~~lease wepayments ~~completed~~in the ~~Green~~table above ~~Tree~~include ~~Acquisition~~$772,051 ~~which~~related ~~consisted~~to ofrenewal ~~the~~option ~~acquisition~~periods ofthat ~~substantially~~management ~~all~~is ofreasonably ~~the~~certain ~~assets~~will ofbe ~~Ancient~~exercised. ~~Alternatives~~The ~~LLC,~~majority ~~Natural~~of ~~Alternatives~~this amount ~~For~~relates ~~Life,~~to ~~LLC,~~the ~~Mountainside~~flagship ~~Industries,~~Trees ~~LLC,~~location ~~Hillside~~in ~~Enterprises~~Englewood, ~~LLC,~~Colorado and GTthe ~~Creations,~~retail ~~LLC,~~and ~~each~~certain acultivation ~~Colorado~~facilities ~~limited~~that ~~liability~~were ~~company~~acquired in ~~(collectively,~~ the "Green Tree ~~Entities”).~~Acquisition ~~We paid cash in the amount of $500,000~~ and ~~stock~~are ~~consideration~~eligible offor ~~17,977,528~~renewal ~~shares~~in ~~of our Common Stock~~2023. ~~The closing price of our Common Stock on December 12, 2022, the date of license transfer, was $0.165 per share, as~~

50As of December 31, 2023, the weighted average remaining term of the Company’s operating leases is 4.98 years and the remaining term on the finance lease is 9 years.

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

~~such,~~Supplemental ~~fair value of the equity consideration is $2,966,292. An additional $3,500,000 in~~ cash ~~will~~flow be paid to the sellers in fifteen (15) equal monthly payments commencing on the 9-month anniversary of the closing. Based on a discount rate of 12%, the fair value of these additional monthly payments is approximately $3,017,510. This liability is included in Notes payable- current and Notes payable- non-current in the accompanying consolidated balance sheets. See Note 13 for additional details. information

The table below reflects the Company’s preliminary estimates of the acquisition date fair values of the assets acquired:

	December 31,
For the Year Ended December 31, 2023	2023		2022
Supplemental cash flow information
Cash paid for amounts included in operating lease liability	$	1,098,544	$	685,214
Cash paid for amounts included in finance lease liability	$	167,293	$	4,194
Supplemental lease disclosures of non-cash transactions:
ROU assets obtained in exchange for operating lease liabilities	$	219,438	$	2,235,798
ROU assets obtained in exchange for finance lease liabilities	$	—	$	766,623
Reduction of operating lease ROU asset and operating lease liabilities from remeasurement (1)	$	—	$	(1,097,651	)

(1) In April 2022, the lease for Seven-Five Farm, a cultivation facility, was amended and the remaining lease payments were reduced. Upon modification, management reassessed the lease term and concluded that it was not reasonably certain that any of the renewal option periods in the lease would be exercised. This conclusion was different than the conclusion reached at the initial commencement of the lease in 2020. The significant drop in the wholesale cost of marijuana flower and the current economic environment in the cannabis industry, particularly in the cultivation sector, is the primary driver of this change. As a result, the measurement of the ROU asset and operating lease liability no longer includes the payments associated with the renewal option periods.


Cash	$	3,928
Inventory		1,588,454
Fixed assets		688,655
Tradename		950,000
Goodwill		3,255,679
	$	6,486,716

F-25

NOTE 12. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

WeOur ~~have~~accounts ~~not~~payable ~~completed~~and ~~the~~accrued ~~allocation~~expenses ofconsist ~~the purchase price for the Green Tree Acquisition. As~~ of ~~December 31, 2022,~~ the consolidated balance sheet includes a preliminary allocation of fixed assets, inventory, intangible assets, and goodwill. Management anticipates completing the purchase price allocation as soon as possible, but no later than one year from the acquisition date.following:

The accompanying consolidated financial statements include the results of the Green Tree Entities from the date of acquisition for financial reporting purposes, December 12, 2022. The pro forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2021, are as follows:

	December 31,
	2023		2022
Accounts payable	$	1,562,225	$	1,108,956
Accrued payroll, taxes, and vacation		942,233		683,134
Other		113,078		107,360
Total accounts payable and accrued expenses	$	2,617,536	$	1,899,450

NOTE 13. ACCRUED STOCK PAYABLE


	Year ended
	December 31,
	2022		2021
Total revenues	$	22,556,789	$	16,090,839
Net income (loss) attributable to Common Stockholders	$	(9,558,189)	$	(8,957,542)
Net income (loss) per common share	$	(0.08)	$	(0.10)
Weighted average number of basic and diluted common shares outstanding		114,159,065		87,515,259

The following tables summarize the changes in accrued Common Stock payable:

				Number of
	Amount			Shares
Balance as of December 31, 2021	$	444,894			1,769,537
Stock issued		(383,994	)		(1,669,537	)
Balance as of December 31, 2022	$	60,900			100,000
Stock issued		—			—
Balance as of December 31, 2023	$	60,900			100,000

~~The~~In ~~unaudited~~December ~~pro-forma~~2021, ~~results~~we ofcompleted ~~operations~~the ~~are~~acquisition ~~presented~~of ~~for~~Trees ~~information purpose only~~Waterfront. As ~~The~~part ~~unaudited~~of ~~pro-forma results are not intended to present actual results that would have been attained had~~ the ~~acquisition~~transaction, ~~been~~we ~~completed~~granted ~~as of January~~ 1, ~~2021~~669,537 orshares toof ~~project~~our ~~potential~~Common ~~operating~~Stock. ~~results~~The asstock ofwas ~~any~~subsequently ~~future~~issued ~~date~~on orJanuary ~~for~~6, ~~any future periods~~2022.

OnThe ~~December~~outstanding ~~19,~~balance ~~2022, we completed the Green Man Acquisition, consisting~~ of ~~the~~accrued ~~acquisition~~stock ofpayable ~~substantially~~as ~~all~~ of ~~the~~December ~~assets~~31, 2023 ofrelates ~~Green~~to ~~Man.~~a WeFebruary ~~paid~~18, ~~cash~~2020 ingrant ~~the amount~~ of $1100,~~225,~~000 ~~and~~fully ~~stock~~vested ~~consideration of 4,494,382~~ shares offor ~~Common~~consulting ~~Stock~~services. Based ~~The~~on ~~closing~~a stock price of ~~our Common Stock~~ $0.61 on ~~December 19, 2022,~~ the date of ~~license transfer~~grant, ~~was~~the ~~$0.18~~consultant ~~per~~will ~~share,~~receive ~~as such~~$60,900 ~~fair~~worth ~~value~~ of ~~the~~our ~~equity~~Common ~~consideration is $808,989~~Stock. As Anof ~~additional~~December $131,~~500,000~~ ~~in cash will be paid to the sellers in eighteen (18) equal monthly payments commencing on the 12-month anniversary of the closing. Based on a discount rate of 12%~~2023, ~~the~~none ~~fair value~~ of ~~these additional monthly payments is approximately $1,224,846. This liability is included in Notes payable-current and Notes payable-non-current in~~ the ~~accompanying~~stock had ~~consolidated~~been ~~balance sheets~~issued. ~~See Note 13 for additional details.~~

NOTE 14. NOTES PAYABLE

~~The~~Our ~~table~~notes ~~below~~payable ~~reflects~~consisted ~~the Company’s preliminary estimates~~ of the ~~acquisition date fair values of the assets acquired~~following:

	December 31, 2023									December 31, 2022
	Third-party			Related-party			Total			Third-party			Related-party			Total
2022 12% Notes	$	13,167,796		$	332,204		$	13,500,000		$	13,167,796		$	332,204		$	13,500,000
Trees Transaction Notes		—			326,811			326,811			—			1,191,865			1,191,865
Green Tree Acquisition Notes		—			562,000			562,000			774,750			2,725,250			3,500,000
Green Man Acquisition Notes		1,555,000			—			1,555,000			1,500,000			—			1,500,000
Working Capital Note		500,000			—			500,000			—			—			—
Unamortized debt discount		(1,312,427	)		(25,141	)		(1,337,568	)		(1,527,346	)		(361,587	)		(1,888,933	)
Total debt		13,910,369			1,195,874			15,106,243			13,915,200			3,887,732			17,802,932
Less: Current portion		(605,000	)		(487,382	)		(1,092,382	)		(179,827	)		(1,723,517	)		(1,903,344	)
Long-term portion	$	13,305,369		$	708,492		$	14,013,861		$	13,735,373		$	2,164,215		$	15,899,588


Cash	$	8,594
Inventory		108,543
Fixed assets		23,500
Tradename		150,000
Goodwill		2,968,198
	$	3,258,835

F-26

Aggregate Maturities

51As of December 31, 2023, aggregate future contractual maturities of long-term debt (excluding issue discounts) are as follows:

Table of Contents

Year ended December 31, 2023	Amount
2024	$	1,092,382
2025		970,571
2026		14,380,858
	$	16,443,811

WeTrees ~~have~~Transaction not completed the allocation of the purchase price for the Green Man Acquisition. As of December 31, 2022, the consolidated balance sheet includes a preliminary allocation of fixed assets, inventory, intangible assets, and goodwill. Management anticipates completing the purchase price allocation as soon as possible, but no later than one year from the acquisition date.Notes

~~The~~In ~~accompanying~~January ~~consolidated~~2022, ~~financial~~with ~~statements~~the ~~include~~completion of the ~~results~~Trees MLK ofacquisition, ~~Green~~we ~~Man~~are ~~from~~obligated ~~the~~to ~~date~~pay ofthe ~~acquisition~~Seller ~~for~~cash ~~financial~~equal ~~reporting~~to ~~purposes~~$384,873 ~~December~~in ~~19,~~equal ~~2022. The~~month ~~pro~~installments ~~forma~~over ~~effects~~a period of ~~the~~24 ~~acquisition~~months. The payments began on June 15, 2022 and the ~~results~~payment ofis ~~operations~~equal asto if$16,036 ~~the~~per ~~transaction~~month. ~~had~~As ~~been~~of ~~completed~~December on31, ~~January~~2023 1and 2022, ~~2021~~the debt balance of this note was $200,495 ~~are~~and as$272,618, ~~follows:~~respectively.

In December 2021, with the completion of the TREES Portland and TREES Waterfront acquisitions, we are obligated to pay the Seller cash equal to $497,371. This note calls for monthly payments of $20,724, which began on February 15, 2022. As of December 31, 2023 and 2022, the debt balance of this note was $126,316 and $269,409, respectively.


	Year ended
	December 31,
	2022		2021
Total revenues	$	19,002,698	$	14,295,386
Net income (loss) attributable to Common Stockholders	$	(9,641,205)	$	(10,307,060)
Net income (loss) per common share	$	(0.09)	$	(0.14)
Weighted average number of basic and diluted common shares outstanding		101,500,915		74,032,113

In September 2021, with the completion of the Englewood acquisition, we are obligated to pay the Seller cash equal to $1,732,884. This note calls for monthly payments of $72,204, which began on October 15, 2021. There is no interest associated with this note. As of December 31, 2022, the debt balance of this note was $649,838. During the year, the Englewood Seller forgave the remaining principal balance $256,582 owed from the Englewood acquisition. As the debt holder is also a shareholder of the Company, the effect of this debt forgiveness was accounted for as a capital contribution in paid-in capital.

Green Man Acquisition Notes

~~The~~In ~~unaudited~~December ~~pro-forma~~2022, ~~results~~with the completion of ~~operations~~the Green Man Acquisition, we are ~~presented~~obligated ~~for~~to ~~information~~pay ~~purpose~~the ~~only~~Seller cash equal to $1,500,000 in equal month installments over a period of 18 months. The payments ~~unaudited~~begin ~~pro-forma~~in ~~results~~December ~~are~~2023 ~~not~~and ~~intended~~the payment is equal to ~~present~~$83,333 ~~actual~~per ~~results~~month. ~~that~~The ~~would~~relative ~~have~~fair ~~been~~value ~~attained~~of ~~had~~this ~~the~~obligation ~~acquisition~~resulted ~~been~~in a ~~completed~~debt asdiscount of ~~January~~$275,154. 1We recorded amortization of debt discount expense from this obligation of $133,970 ~~2021~~and nil for the years ended December 31, or2023 toand ~~project~~2022, ~~potential~~respectively. ~~operating~~In ~~results~~December 2023, as part of ~~any~~the ~~future~~remeasurement ~~date~~of orthe ~~for~~Green ~~any~~Man ~~future~~acquisition, ~~periods.~~the fair value of the installment payments were remeasured (see Note 2), resulting in a decrease of the fair value of the debt of $104,198.

~~NOTE 3.~~Green ~~DISCONTINUED~~Tree ~~OPERATIONS~~Acquisition Notes

OnIn ~~July~~December 162022, ~~2021~~with the completion of the Green Tree Acquisition, we ~~entered~~were ~~into~~obligated anto ~~Asset~~pay ~~Purchase~~the ~~Agreement~~Sellers ~~with~~cash anequal ~~individual~~ to ~~sell~~$3,500,000 ~~substantially~~in ~~all~~equal ~~the~~month ~~assets~~installments ofover ~~our~~a ~~NBC~~period ~~for~~of a15 ~~total~~months. Payments of $~~150~~233,~~000 and 10%~~333 ofwere ~~profits~~due ~~generated~~monthly byand ~~the~~were ~~buyer~~set into ~~the~~begin ~~states~~in ofSeptember ~~Michigan~~2023, ~~Mississippi~~however, this debt was restructured as part of the settlement with the Green Tree entities (see Note 6 for the transfer and ~~Massachusetts~~below for details of the restructuring). The relative fair value of the original obligation resulted in a ~~period~~debt discount of ~~twelve~~ ~~months~~ $482,490. We recorded amortization of debt discount from this obligation of $345,354 and nil for the ~~closing.~~years Onended ~~August~~December 231, ~~2021~~2023 and 2022, ~~the~~respectively. ~~sale~~In December 2023, as part of the ~~NBC~~final ~~was~~determination ~~completed. Pursuant~~of topurchase accounting ~~amendment~~for the Green Tree acquisition, the ~~buyer~~fair ~~paid~~value of the ~~additional~~installment ~~$75,000~~payments inwere ~~March~~remeasured ~~2022~~(see Note 2), ~~and~~resulting in a decrease of the ~~10%~~fair ~~profit~~value ~~share~~of ~~described~~the ~~above~~debt ~~was~~of ~~eliminated~~$136,502.

AGreen ~~breakdown~~Tree ofAcquisition ~~the~~Notes ~~results of discontinued operations related to the sale of NBC are presented as follows:~~Restructuring

Upon the transfer of the Green Tree assets to the Green Tree entities (see Note 6), we signed a settlement agreement with the Sellers to eliminate the amounts due and payable under the Green Tree Acquisition Notes, with the exception certain amounts due to one of the Sellers. As part of this settlement, we signed a letter amendment with this seller, who is a shareholder of the Company, to modify the terms of the monthly installments due to this seller. Pursuant to the amended terms, we shall make (i) thirty-three (33) equal monthly installments (“Installment Payments”), totaling $441,571, commencing within five (5) business days of January 4, 2024 and continuing on or before the 15th day of each successive month thereafter; plus (ii) a single balloon payment equal to $120,429 (“Balloon Payment”) on or before September 15, 2026 (“Balloon Payment Date”), for a total of $562,000. The Balloon Payment may be paid in cash or, at the sole option of the Company, common stock of the Company, the per share of which to be determined utilizing the “volume weighted average price” of the common stock for the five-trading day period immediately preceding the Balloon Payment Date.


	Year ended
	December 31,
	2022		2021
Product revenues	$	3,438	$	614,764
Service revenues		—		523,994
Total revenues		3,438		1,138,758

Cost of sales		—		1,157,035
Selling, general and administrative		(2,040)		407,648
Professional fees		—		4,944
Depreciation and amortization		—		11,359
Total costs and expenses		(2,040)		1,580,986
Income (loss) from discontinued operations	$	5,478	$	(442,228)

F-27

Upon agreement of these amended terms, we and the Sellers acknowledged that we lacked the financial means to make the remaining installment payments previously due, forecasting that we would default on the installment payments due to the Sellers. Additionally, we determined the effective interest rate for the amounts due under the amended installment payments was lower than the effective interest rate of the previous installment payments, evidencing that the Sellers have granted a concession related to this amendment. These factors resulted in the amendment of the debt being considered a troubled debt restructuring under ASC 470. Further, as the parties to the amendment were shareholders of the Company, this transaction is considered a non-reciprocal transfer with owners and is accounted for within equity (with no gain or loss recognized related to the restructuring). Accordingly, a capital contribution of $1,974,384 was recognized in paid-in capital as of December 31, 2023, calculated as 1) the forgiveness of amounts due under the original Green Tree Acquisition Notes totaling $3,244,467 and 2) the redemption of the Seller’s equity consideration by the Company of $1,636,400, offset by 3) the derecognition of Green Tree fixed assets, tradename intangible assets, goodwill, and inventory assets transferred from the Company to the Sellers totaling $2,344,483 and 4) assumption of new amounts due under the amended terms discussed above of $562,000.

5212% Notes - 2022 Modification

~~Table~~On September 15, 2022, we entered into a Securities Purchase Agreement with certain accredited investors (the “12% Investors”), pursuant to which we agreed to issue and sell senior secured convertible notes (the “12% Notes”) with an aggregate principal amount of ~~Contents~~$13,500,000 to such 12% Investors, in exchange for payment by certain 12% Investors of an aggregate amount of $10,587,250 in cash, as well as cancellation of outstanding indebtedness in the aggregate amount of $2,912,750 represented by the 10% Notes discussed below. On December 15, 2023, the 12% Notes were restructured, as discussed below.

In connection with the 12% Notes, the 12% Investors received warrants (the “12% Warrants”) to purchase shares of our Common Stock equal to 20% coverage of the aggregate principal amount with an exercise price of $0.70 per share, which equals an aggregate of warrants to purchase 3,857,150 shares of Common Stock. The Lead 12% Investor received an additional 10% warrant coverage on the aggregate principal amount of 12% Notes for total additional warrants to purchase 1,928,571 shares of our Common Stock. The Lead 12% Investor also received a five percent fee on the aggregate principal amount of the 12% Notes. This total fee in the amount of $675,000 was recorded as a debt discount and will be amortized over the life of the loan. The 12% Notes bear interest at an annual rate of 12% and will mature on September 16, 2026. The 12% Investors have the option to convert up to 50% of the outstanding unpaid principal and accrued interest of the 12% Notes into Common Stock at a fixed conversion price equal to $1.00 per share. the 12% Notes are treated as conventional debt.

The ~~cash~~fair ~~flows~~value ~~related~~of tothe ~~discontinued~~12% ~~operations~~Warrants ~~have~~was ~~not~~recorded as ~~been~~a ~~segregated~~debt discount and ~~are~~additional ~~included~~ paid-in ~~the~~capital ~~consolidated~~of ~~statements~~$569,223 ofwas ~~cash~~recorded ~~flows~~in 2022. The ~~following~~relative ~~table~~fair ~~provides~~value ~~selected~~of ~~information~~the oncancellation ~~cash~~of ~~flows~~the outstanding ~~related~~indebtedness towas ~~discontinued~~recorded ~~operations~~as ~~for~~an ~~the~~extinguishment ~~years~~of ~~ended~~debt ~~December~~and ~~31,~~additional ~~2022~~paid-in ~~and~~capital ~~2021~~of $103,577 in 2022.

For purposes of determining the debt discount, the underlying assumptions used in the Black-Scholes model to determine the fair value of the 12% Warrants as of September 15, 2022, were:


Current stock price	$	0.20
	Year ended
Exercise price	$	0.70
	December 31,
Risk-free interest rate		3.66	%
	2022			2021
Expected dividend yield		—
Accounts receivables	$	—		$	187,185
Expected term (in years)		5.0
Prepaid expenses and other current assets		—			519,274
Expected volatility		107	%
Depreciation and amortization		—			11,359
Capital expenditures		—			—
Accounts payable and accrued expenses		—			(169,492)
Customer deposits		—			(517,931)

On December 15, 2023, the 12% Warrants were modified to reduce the exercise price of the 12% Warrants to $0.40 per share, as discussed below.

12% Notes - 2023 Modification

On December 15, 2023, the Company entered into Amended and Restated Senior Secured Convertible Notes (“Amended Notes”) with certain accredited investors (“Investors”) to modify the original terms of the 12% Notes. The material terms of the Amended Notes include no changes to the aggregate principal amount, the maturity date, or the interest rate. Material changes to the Amended Notes are discussed in the following sections:

~~NOTE 4.~~Mandatory ~~ACCOUNTS~~Conversion ~~RECEIVABLE~~Feature

~~Our~~In ~~accounts~~accordance ~~receivable~~with ~~consisted~~the Amended Notes, up to $3,375,000 (the “Convertible Amount”) of the ~~following:~~principal balance will be mandatorily convertible at a price per share equal to $0.50. Additionally, the Convertible Amount contains different terms than the remaining principal balance, as discussed below.

The principal balance of the Convertible Amount is mandatorily convertible at any time during term upon occurrence of a trigger event.


	December 31,
	2022		2021
Accounts receivable	$	83,373	$	141,188
Less: Allowance for doubtful accounts		(42,000)		(61,000)
Total	$	41,373	$	80,188

F-28

Additionally, in the event a trigger event occurs, interest on the Convertible Amount is subject to optional conversion by the Company. The first 50% of the Convertible Amount, or $1,687,500, shall convert to common stock upon the occurrence of the 1) our common stock having a closing price equal to or greater than $0.50 per share for five (5) consecutive trading days as reported on the OTCQB Market; and 2) the aggregate dollar amount of the common tock traded, starting on the first day of the five (5) day span referred above and for up to ninety day thereafter (“Trading Value”) is equal to or greater than $1,687,500. The remaining 50% of the Convertible Amount, or $1,687,500, shall convert to common stock upon the occurrence of 1) our common stock having a closing price equal to or greater than $0.50 per share for five (5) consecutive trading days as reported on the OTCQB Market, 2) the aggregate Trading Value is equal to or greater than $1,687,000, and 3) the Common Stock converted upon the occurrence of the First Trigger Event has been registered with the SEC, by filing a registration statement on Form S-1 or otherwise.

WeOptional ~~record~~Conversion bad debt expense when we conclude the credit risk of a customer indicates the amount due under the contract is not collectible. We recorded bad debt expense of $6,280 and $53,386 during the years ended December 31, 2022 and 2021, respectively.Feature

In accordance with the Amended Notes, an additional $3,375,000 of the principal balance plus unpaid accrued interest on this principal will be convertible at Investors’ option at a price per share equal to $0.50.

Deferral of Interest Payments

~~NOTE 5~~Current interest payments on the entire principal balance are deferred until March 2024. ~~NOTES RECEIVABLE~~Further, the Company shall make ‘catch-up’ interest payments beginning in December 2024 for deferred interest.

OnAmendments ~~August 2, 2021, as part of the closing of the sale of NBC, we agreed~~ to ~~a note receivable of $75,000 due August 2, 2022. This note receivable was collected in full in 2022.~~ Warrants

The exercise price of previously granted warrants issued in connection with the 12% note offerings was reduced to $0.40 per share and the warrant expiration date was extended to September 15, 2029. We also recognized an increase to the debt discount of $128,447 related to the increase in fair value of the 12% Warrants resulting from the reduction in exercise price and the extension of the exercise period.

For purposes of determining the debt discount, the underlying assumptions used in the Black-Scholes model to determine the fair value of the amended 12% Warrants as of December 15, 2023 were:

NOTE 6. INVENTORIES, NET

Current stock price	$	0.09
Exercise price	$	0.40
Risk-free interest rate		3.91	%
Expected dividend yield		—
Expected term (in years)		5.8
Expected volatility		109	%

Working Capital Note

~~Our~~In ~~inventories~~addition ~~consistent~~to the Amended Notes, the Lead Investor agreed to provide an additional $250,000 in a separate note (the “Working Capital Note”) which includes a liquidation preference to recover 1.25x the original investment in the event that the Company commences any dissolution, liquidation, or winding up. At our option, the Lead Investor shall provide up to an additional $250,000, and, in such event, the Working Capital Note shall have a liquidation preference of 1.5x the ~~following:~~original investment, applicable to the full $500,000, in the event that the Company commences any dissolution, liquidation, or winding up. The Working Capital Note bears interest at 12% per annum and is due and payable on September 15, 2026. As of December 31, 2023, the balance of the Working Capital Note was $500,000, as the Company requested and received the additional $250,000 optional amount.

F-29


	December 31,		December 31,
	2022		2021
Raw materials	$	8,883	$	13,343
Work-in-progress and finished goods		2,057,779		1,109,740
Inventories	$	2,066,662	$	1,123,083

The restructuring was deemed to be a debt modification under ASC 470, as the change in the present value of the cash flows related to the 12% Notes before and after the restructuring was less than 10%. Therefore, we will record debt obligations using the new effective interest rate as of the date of the modification.

We recorded amortization of debt discount expense from the 12% Notes of $310,201 and nil for the years ended December 31, 2023 and 2022, respectively.

10% Notes

In December 2020, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement’) with certain accredited investors (the “10% Investors”), pursuant to which we issued and sold senior convertible promissory notes (the “10% Notes”) with an aggregate principal amount of $2,940,000 in exchange for payment to us by certain 10% Investors of an aggregate amount of $1,940,000 in cash, as well as cancellation of outstanding indebtedness of the 15% Notes (defined below) in the aggregate amount of $1,000,000. In connection with the issuance of the 10% Notes, the holders of the 10% notes received warrants (the “10% Warrants”) to purchase shares of our Common Stock equal to 20% coverage of the aggregate principal amount at $0.56 per share. In the aggregate, this equals 1,050,011 shares of our Common Stock. The 10% Notes will bear interest at an annual rate of 10% and matured on December 23, 2023. The 10% Investors have the option at any time to convert up to 50% of the outstanding unpaid principal and accrued interest of the Notes into Common Stock at a variable price of 80% of the market price but no less than $0.65 per share and no more than $1.00 per share. The 10% Warrants are exercisable at an exercise price of $0.56 per 10% Warrant.

53The fair value of the 10% Warrants issued in 2022 was recorded as a debt discount and additional paid-in capital of $254,400. The relative fair value of the cancellation of the outstanding indebtedness was recorded as an extinguishment of debt and additional paid-in capital of $131,000.

~~Table~~For the years ended December 31, 2023 and 2022, amortization of ~~Contents~~debt discount expense was nil and $84,375, respectively, from the 10% Notes. The 10% Notes are treated as conventional debt.

~~NOTE 7.~~For ~~PREPAIDS~~purposes ~~AND~~of ~~OTHER~~determining ~~CURRENT~~the ~~ASSETS~~debt discount, the underlying assumptions used in the binomial lattice model to determine the fair value of the 10% Warrants as of December 31, 2020, were:

Our prepaids and other current assets consist of the following:

Current stock price	0.53
Exercise price	0.56
Risk-free interest rate	0.38	%
Expected dividend yield	—
Expected term (in years)	5.0
Expected volatility	115	%

On February 8, 2021, we entered into a Securities Purchase Agreement with an accredited 10% Investor, pursuant to which we issued and sold 10% Notes with an aggregate principal amount of $1,660,000 to such 10% Investor. The 10% Notes are part of an over-allotment option exercised by us in connection with the convertible note offering consummated on December 23, 2020, as discussed above. In connection with the issuance of the 10% Notes, the holder received warrants to purchase shares of our Common Stock equal to 20% coverage of the aggregate principal amount at $0.56 per share. In the aggregate, this equals 592,858 shares of our Common Stock. The 10% Notes bear interest at an annual rate of 10% and will mature on February 8, 2024. The 10% Investor has the option to convert up to 50% of the outstanding unpaid principal and accrued interest of the 10% Notes into Common Stock at a variable price of 80% of the market price but no less than $0.65 per share and no more than $1.00 per share. The 10% Warrants are exercisable at an exercise price of $0.56 per warrant.


	December 31,
	2022		2021
Security deposits	$	140,628	$	45,000
Prepaid insurance		86,071		79,897
Other		32,899		24,178
Total prepaids and other current assets	$	259,598	$	149,075

The relative fair value of the new funding on the 10% Warrants was recorded as a debt discount and additional paid-in capital of $429,300. We determined that this 10% Note had a beneficial conversion feature and is calculated at its intrinsic value (that is, the difference between the effective conversion price of $0.66 at the date of the note issuance and the fair value of the Common Stock into which the debt is convertible at the commitment date, per share being $0.90, multiplied by the number of shares into which the debt is convertible). The valuation of the beneficial conversion feature recorded cannot be greater than the face value of the note issued. For the years ended December 31, 2023 and 2022, amortization of debt discount expense was nil and $594,721, respectively. The 10% Notes are treated as conventional debt.

F-30

For purposes of determining the debt discount, the underlying assumptions used in the binomial lattice model to determine the fair value of the 10% Warrants as of February 8, 2021, were:

NOTE 8. PROPERTY AND EQUIPMENT, NET

Current stock price	1.12
Exercise price	0.56
Risk-free interest rate	0.48	%
Expected dividend yield	—
Expected term (in years)	5.0
Expected volatility	118	%

~~Property~~On April 20, 2021, we entered into a Securities Purchase Agreement with accredited 10% Investors, pursuant to which we issued and ~~equipment~~sold 10% Notes ~~consisted~~with an aggregate principal amount of $2,300,000 to such 10% Investors. The 10% Notes are part of an over-allotment approved by the ~~following:~~existing noteholders in connection with the original convertible note offering of $4,600,000 consummated on December 23, 2020 and February 8, 2021. In connection with the issuance of the 10% Notes, each holder received warrants to purchase shares of our Common Stock equal to 20% coverage of the aggregate principal amount at $0.56 per share, except that the warrants coverage to one Investor acting as lead investor in the raise received approximately 35.5% of the aggregate principal amount invested. The 10% Notes bear interest at an annual rate of 10% and will mature on April 20, 2024. The 10% Investors have the option to convert up to 50% of the outstanding unpaid principal and accrued interest of the 10% Notes into Common Stock at a variable price of 80% of the market price but no less than $0.65 per share and no more than $1.00 per share. The 10% Warrants are exercisable at an exercise price of $0.56 per warrant. On December 15, 2023, the 10% Warrants were modified to reduce the exercise price of the 12% Warrants to $0.40 per share, as previously discussed.

The relative fair value of the new funding on the 10% Warrants was recorded as a debt discount and additional paid-in capital of $810,000. We determined that these 10% Notes had a beneficial conversion feature and is calculated at its intrinsic value (that is, the difference between the effective conversion price of $0.49 at the date of the note issuance and the fair value of the Common Stock into which the debt is convertible at the commitment date, per share being $0.83, multiplied by the number of shares into which the debt is convertible). The valuation of the beneficial conversion feature recorded cannot be greater than the face value of the note issued. We recorded $692,500 as additional paid in capital and a debt discount and included in our consolidated statement of operations. For the years ended December 31, 2023 and 2022, amortization of debt discount expense was nil and $1,024,442, respectively. The 10% Notes are treated as conventional debt.


	December 31,
	2022		2021
Furniture, fixtures and equipment	$	1,484,432	$	950,380
Finance lease ROU -building		766,623		—
Software		103,817		103,817
Biological assets		13,000		13,000
Total		2,367,872		1,067,197
Less: Accumulated depreciation		(419,903)		(386,870)
Total property and equipment, net	$	1,947,969	$	680,327

For purposes of determining the debt discount, the underlying assumptions used in the binomial lattice model to determine the fair value of the 10% Warrants as of April 20, 2021, were:

Current stock price			0.83
Exercise price			0.5

Filing Compare · TREES Corp (Colorado)