10-Q

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2022

OR

☐ 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 000-52102

LFTD PARTNERS INC.

(Exact name of registrant as specified in its charter)

Nevada	87-0479286
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

14155 Pine Island Drive, Jacksonville, FL 32224

(Address of principal executive offices)

(847) 915-2446

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12 of the Act:

Common Stock, $0.001 par value	LIFD	None
Title of each class	Trading symbol(s)	Name of exchange on which registered

Indicate by checkmark whether the registrant (1) filed all reports required 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒     No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, a 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 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐     No ☒

APPLICABLE ONLY TO CORPORATE ISSUERS

As of November 11, 2022, there were 14,102,578 shares of the registrant’s common stock outstanding.

LFTD PARTNERS INC. AND SUBSIDIARY LIFTED LIQUIDS, INC.

TABLE OF CONTENTS

Part I — Financial Information	F-1
Item 1. Financial Statements	F-1
Consolidated Balance Sheets, September 30, 2022 (Unaudited) and December 31, 2021	F-1
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)	F-2
Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)	F-3
Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (Unaudited)	F-4
Notes to the Consolidated Financial Statements (Unaudited)	F-5
Item 2. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations	3
Item 3. Quantitative And Qualitative Disclosures About Market Risk	7
Item 4. Controls And Procedures	7
PART II — OTHER INFORMATION	9
Item 1. Legal Proceedings.	9
Item 1A. Risk Factors.	9
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	9
Item 3. Defaults Upon Senior Securities.	11
Item 4. Mine Safety Disclosures.	11
Item 5. Other Information.	11
Item 6. Exhibits	12
SIGNATURES	13

2

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LFTD PARTNERS INC. AND SUBSIDIARY LIFTED LIQUIDS, INC.
CONSOLIDATED BALANCE SHEETS
	September 30, 2022 (Unaudited)			December 31, 2021
ASSETS
Current Assets
Cash and Cash Equivalents	$	4,350,959		$	1,602,731
Dividend Receivable from Bendistillery, Inc.		-			2,495
Prepaid Expenses		1,946,318			4,262,237
Accounts Receivable, net of allowance of $128,589 in 2022 and $239,101 in 2021		1,967,391			3,461,499
Inventory		6,344,677			3,809,944
Other Current Assets		7,254			13,790
Total Current Assets		14,616,599			13,152,696
Goodwill		22,292,767			22,292,767
Investment in Ablis		399,200			399,200
Investment in Bendistillery and Bend Spirits		1,497,000			1,497,000
Net Deferred Tax Asset		666,852			331,551
Fixed Assets, less accumulated depreciation of $164,384 in 2022 and $77,967 in 2021		989,688			433,213
Intangible Assets, less accumulated amortization of $4,098 in 2022 and $3,058 in 2021		347			1,386
Security and State Licensing Deposits		25,600			6,900
Finance Lease Right-of-Use Asset, net of Right-of-Use Asset Amortization of $195,208 in 2022 and $252,876 in 2021		1,285,200			1,227,532
Operating Lease Right-of-Use Asset, net of Right-of-Use Asset Amortization of $71,554 in 2022 and $6,807 in 2021		525,942			76,412
Total Assets	$	42,299,196		$	39,418,657
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Finance Lease Liability	$	(26,079	)	$	1,262,260
Operating Lease Liability		115,010			26,047
Deferred Revenue		784,047			2,174,393
Income Tax Payable		509,127			1,242,974
Management Bonuses Payable - Related Party
Management Bonus Payable - Related Party - Payable to William C. Jacobs		-			500,000
Management Bonus Payable - Related Party - Payable to Gerard M. Jacobs		-			441,562
Management Bonuses Payable - Related Party		-			941,562
Company-Wide Management Bonus Pool		-			1,556,055
Accounts Payable and Accrued Expenses		5,168,054			4,671,382
Accounts Payable - Related Party		16,101			4,607
Interest Payable - Related Party
Interest - Payable to William C. Jacobs		-			4,000
Interest - Payable to Gerard M. Jacobs		-			9,269
Interest Payable - Related Party		-			13,269
Preferred Stock Dividends Payable
Series A Convertible Preferred Stock Dividends Payable		5,838			11,926
Series B Convertible Preferred Stock Dividends Payable		1,783			1,796
Preferred Stock Dividends Payable		7,621			13,722
Total Current Liabilities	$	6,573,881		$	11,906,270
Non-Current Liabilities
Finance Lease Liability		1,376,439			-
Operating Lease Liability		414,875			50,583
Net Deferred Tax Liability		-			-
Total Non-Current Liabilities	$	1,791,314		$	50,583
Total Liabilities	$	8,365,195		$	11,956,853
Commitments and Contingencies		-			-
Shareholders' Equity
Preferred Stock, $0.001 par value; 10,000,000 total shares authorized; out of which 400,000 shares of Series A Convertible Preferred Stock are authorized, and 4,500 shares of Series A Convertible Preferred Stock shares were issued and outstanding at September 30, 2022, and 5,750 shares of Series A Convertible Preferred Stock shares were issued and outstanding at December 31, 2021; and out of which 5,000,000 shares of Series B Convertible Preferred Stock are authorized, and 40,000 shares of Series B Convertible Preferred Stock shares were issued and outstanding at September 30, 2022, and 40,000 shares of Series B Convertible Preferred Stock shares were issued and outstanding at December 31, 2021		45			46
Common Stock, $0.001 par value; 100,000,000 shares authorized; 14,102,578 shares issued and outstanding at September 30, 2022, and 14,027,578 shares issued and outstanding at December 31, 2021		14,103			14,028
Additional Paid-in Capital		38,762,260			38,862,333
Accumulated Deficit		(4,842,407	)		(11,414,602	)
Total Shareholders' Equity		33,934,000			27,461,804
Total Liabilities and Shareholders' Equity	$	42,299,196		$	39,418,657

Please see the accompanying notes to the consolidated financial statements for more information.

F-1

LFTD PARTNERS INC. AND SUBSIDIARY LIFTED LIQUIDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Net Sales	$	11,237,277		$	8,820,952		$	46,102,656		$	18,869,366
Cost of Goods Sold		10,423,533			4,720,057			29,241,016			9,463,210
Gross Profit		813,744			4,100,895			16,861,640			9,406,156
Operating Expenses:
Payroll, Consulting and Independent Contractor Expenses		1,482,455			803,796			5,148,284			1,902,320
Accrual for Company-Wide Management Bonus Pool		(2,121,532	)		400,000			-			1,559,335
Professional Fees		143,180			139,526			463,809			366,452
Bank Charges and Merchant Fees		106,845			104,485			372,351			289,111
Advertising and Marketing		334,215			86,438			550,612			236,598
Bad Debt (Income)/Expense		(11,898	)		61,449			(75,107	)		81,621
Depreciation and Amortization		7,793			16,344			17,202			84,342
Other Operating Expenses		377,416			170,820			1,288,486			350,985
Total Operating Expenses		318,474			1,782,858			7,765,637			4,870,764
Income From Operations		495,270			2,318,037			9,096,003			4,535,392
Other Income/(Expenses)
Income/(Loss) From 50% membership interest in SmplyLifted LLC (FR3SH)		-			(44,858	)		-			(95,399	)
Income from SmplyLifted for WCJ Labor		-			313			-			2,154
Interest Expense		(37,181	)		(35,368	)		(95,839	)		(107,113	)
Warehouse Buildout Credits		-			-			-			1,200
Penalties		(4,461	)		(2,162	)		(6,191	)		(2,612	)
Gain on Forgiveness of Debt		-			-			5,026			151,147
Settlement Income/Gain on Settlement		-			-			108,570			-
Gain(Loss) on Disposal of Fixed Assets		(8,243	)		-			(8,243	)		(4,750	)
Loss on Deposits		-			-			-			(30,000	)
Interest Income		2,127			217			3,139			671
Total Other Income/(Expenses)		(47,758	)		(81,859	)		6,462			(84,702	)
Income Before Provision for Income Taxes		447,513			2,236,178			9,102,465			4,450,690
Provision for Income Taxes		(24,027	)		-			(2,514,726	)		-
Net Income Attributable to LFTD Partners Inc. common stockholders	$	423,486		$	2,236,178		$	6,587,739		$	4,450,690
Basic Net Income per Common Share	$	0.03		$	0.17		$	0.47		$	0.42
Diluted Net Income per Common Share	$	0.03		$	0.14		$	0.41		$	0.32
Weighted average number of common shares outstanding:
Basic		14,102,578			13,015,717			14,073,366			10,525,461
Diluted		15,884,776			16,257,915			15,855,564			13,767,659

Please see the accompanying notes to the consolidated financial statements for more information.

F-2

LFTD PARTNERS INC. AND SUBSIDIARY LIFTED LIQUIDS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
																			Additional						Total
	Preferred Stock						Common Stock						Treasury Stock						Paid-in			Accumulated			Shareholders'
	Shares			Amount			Shares			Amount			Shares			Amount			Capital			Deficit			Equity
Balance, December 31, 2020		166,150		$	166			6,485,236		$	6,485			36,000		$	(34,200	)	$	38,787,444		$	(17,141,175	)	$	21,618,720
Series A Preferred Stock dividend payable																						$	(24,855	)	$	(24,855	)
Series B Preferred Stock dividend payable																						$	(3,316	)	$	(3,316	)
LIFD's January 8, 2021 purchase of 36,000 shares of common stock at $0.95 per share, for a total of $34,200, from an unrelated shareholder														36,000		$	(34,200	)							$	(34,200	)
Conversions of Series A Convertible Preferred Stock to Common Stock		(32,900	)	$	(33	)		3,290,000			3,290									(3,257	)					-
Conversions of Series B Convertible Preferred Stock to Common Stock		(60,000	)	$	(60	)		60,000			60														$	-
Net Income																						$	618,359		$	618,359
Balance, March 31, 2021		73,250		$	73			9,835,236		$	9,835			72,000		$	(68,400	)	$	38,784,187		$	(16,550,988	)	$	22,174,708
Series A Preferred Stock dividend payable																							(33,521	)		(33,521	)
Series B Preferred Stock dividend payable																							(1,496	)		(1,496	)
Exercise of warrants								143,090			143									6,878						7,021
Conversions of Series A Convertible Preferred Stock to Common Stock		(27,500	)		(28	)		2,750,000			2,750									(2,723	)					-
Net Income																							1,596,154			1,596,154
Balance, June 30, 2021		45,750		$	46			12,728,326		$	12,728			72,000		$	(68,400	)	$	38,788,342		$	(14,989,850	)	$	23,742,866
Series A Preferred Stock dividend payable																							(2,829	)		(2,829	)
Series B Preferred Stock dividend payable																							(1,533	)		(1,533	)
Cancellation of Common Stock held in treasury								(72,000	)		(72	)		(72,000	)	$	68,400			(68,328	)					-
Exercise of warrants and options								1,346,250			1,346									142,093						143,439
Net Income																							2,236,179			2,236,178
Balance, September 30, 2021		45,750		$	46			14,002,576		$	14,002			-		$	-		$	38,862,107		$	(12,758,033	)	$	26,118,122
Balance, December 31, 2021		45,750		$	46			14,027,576		$	14,028			-		$	-		$	38,862,333		$	(11,414,602	)	$	27,461,804
Series A Preferred Stock dividend payable																							(4,253	)		(4,253	)
Series B Preferred Stock dividend payable																							(1,476	)		(1,476	)
Issuance of Common Stock Upon Exercise of Warrant								50,000			50									49,950						50,000
Repurchase and cancellation of Common Stock								(100,000	)		(100	)								(149,900	)					(150,000	)
Net Income																							2,944,793			2,944,793
Balance, March 31, 2022		45,750		$	46			13,977,576		$	13,978			-		$	-		$	38,762,383		$	(8,475,539	)	$	30,300,868
Series A Preferred Stock dividend payable																							(3,403	)		(3,403	)
Series B Preferred Stock dividend payable																							(1,496	)		(1,496	)
Conversions of Series A Convertible Preferred Stock to Common Stock		(1,250	)		(1	)		125,000			125									(124	)					-
Net Income																							3,219,460			3,219,460
Balance, June 30, 2022		44,500		$	45			14,102,576		$	14,103			-		$	-		$	38,762,260		$	(5,260,978	)	$	33,515,429
Series A Preferred Stock dividend payable																							(3,402	)		(3,402	)
Series B Preferred Stock dividend payable																							(1,512	)		(1,512	)
Net Income																							423,486			423,486
Balance, September 30, 2022		44,500		$	45			14,102,576		$	14,103			-		$	-		$	38,762,260		$	(4,842,407	)	$	33,934,000

Please see the accompanying notes to the consolidated financial statements for more information

F-3

LFTD PARTNERS INC. AND SUBSIDIARY LIFTED LIQUIDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
	For the Nine Months Ended
	September 30,
	2022			2021
Cash Flows From Operating Activities
Net Income	$	6,587,739		$	4,450,690
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities:
Lifted Made's Portion of SmplyLifted's Net Loss		-			95,399
Bad Debt (Income)/Expense		(75,107	)		81,621
Depreciation and Amortization		128,176			100,435
Gain on Forgiveness of Debt		(5,026	)		(151,147	)
Loss (Gain) on Disposal of Fixed Assets		8,243			4,750
Loss on Deposits		-			30,000
Spoiled and Written Off Inventory		3,279,262			234,351
Sales Allowance		841,269			-
Deferred Income Taxes		(335,301	)		-
Effect on Cash of Changes in Operating Assets and Liabilities
Accounts Receivable		727,946			(598,935	)
Prepaid Expenses		2,315,918			(190,737	)
Dividend Receivable from Bendistillery, Inc.		2,495			2,495
Income Tax Receivable and Payable		(733,847	)		2,715
Management Bonuses Payable		(941,562	)		(50,000	)
Company-wide Management Bonus Pool		(1,556,055	)		1,559,335
Interest Receivable		-			1,676
Inventory		(5,813,995	)		(1,690,562	)
Other Current Assets		(12,161	)		(9,475	)
Trade Accounts Payable and Accrued Expenses		501,698			827,789
Accounts Payable and Interest Payable to Related Parties		(1,774	)		65,897
Change in ROU Asset		(28,394	)		-
Change in Finance & Operating Lease Liabilities		37,418			4,442
Deferred Revenue		(1,390,346	)		(420,381	)
Net Cash Provided by Operating Activities		3,536,595			4,350,358
Cash Flows From Investing Activities
Reduction of CBD Lion Note Receivable		-			15,318
Net Purchase of Fixed Assets		(656,381	)		(288,332	)
Loans to SmplyLifted LLC		-			(93,750	)
Net Cash Used in Investing Activities		(656,381	)		(366,764	)
Cash Flows From Financing Activities
Proceeds from Exercise of Warrants		-			142,024
Issuance of Common Stock		50,000			-
Payments of Dividends to Series A Convertible Preferred Stockholders		(17,147	)		(199,188	)
Payments of Dividends to Series B Convertible Preferred Stockholders		(4,500	)		(10,344	)
Financing Cost - Net Proceeds from Borrowing Under Notes Payable to Related Party - Nick Warrender		1,833,334			-
Financing Cost - Repayment of Borrowings Under Notes Payable to Related Party - Nick Warrender		(1,833,334	)		-
Purchase of Shares of Common Stock		(150,000	)		(34,200	)
Repayment of Finance Lease Liability		(10,340	)		(16,386	)
Net Cash Used In Financing Activities		(131,987	)		(118,094	)
Net Increase in Cash		2,748,228			3,865,500
Cash and Cash Equivalents at Beginning of Period		1,602,731			439,080
Cash and Cash Equivalents at End of Period	$	4,350,959		$	4,304,580
	For the Nine Months Ended
	September 30,
	2022			2021
Supplemental Cash Flow Information
Cash Paid For Interest	$	61,257		$	-
Cash Paid for Interest - Related Party	$	47,851		$	-
Cash Paid For Income Taxes	$	3,526,509		$	-
Non-Cash Activities:
Right-of-Use assets acquired from inception of Finance Leases	$	-		$	1,480,408
Right-of-Use assets acquired from inception of Operating Leases	$	514,278		$	-
Conversion of Series A and Series B Preferred Stock to Common Stock	$	125		$	6,100
Cashless exercise of Warrants	$	-		$	136
Cancellation of Common Stock held in Treasury	$	-		$	68,400
Reduction in bonus payable to Gerard M. Jacobs by the cost of exercising warrants	$	-		$	8,439

Please see the accompanying notes to the consolidated financial statements for more information.

F-4

LFTD Partners Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE 1 – DESCRIPTION OF THE BUSINESS OF LFTD PARTNERS INC.

Description of the Business of LFTD Partners Inc. – LFTD Partners Inc. (hereinafter sometimes referred to as “LFTD Partners”, the “Company”, “LIFD”, the “Company”, “we”, “us”, “our”, etc.) was organized under the laws of the State of Nevada on January 2, 1986. Shares of the Company’s common stock are traded on the OTCQB Venture Market under the trading symbol LIFD.

On May 18, 2021, the Company changed its name to LFTD Partners Inc. from Acquired Sales Corp. On March 15, 2022, the Company changed its stock trading symbol to LIFD.

After acquiring, operating and then selling businesses involved in the defense sector, our business is currently involved in developing, manufacturing and selling a wide variety of branded products containing hemp-derived cannabinoids and non-hemp-derived psychedelic products. We are interested in acquiring rapidly growing, profitable companies that are also involved in manufacturing and selling branded products containing hemp-derived cannabinoids, and in acquiring companies that manufacture and sell branded products containing kratom, kava and non-hemp-derived psychedelic products (a “Canna-Infused Products Company”).

Management of the Company is open-minded to the concept of also acquiring operating businesses and/or assets involving products containing marijuana, distilled spirits, beer, wine, and real estate. In addition, management of the Company is open-minded to the concept of acquiring all or a portion of one or more operating businesses and/or assets that are considered to be “essential” businesses which are unlikely to be shut down by the government during pandemics such as COVID-19. We are currently engaged in discussions with potential acquisition targets, both within and outside the hemp-derived cannabinoid industry.

On February 24, 2020, we acquired 100% of the ownership interests in one Canna-Infused Products Company called Lifted Liquids, Inc. d/b/a Lifted Made (formerly Warrender Enterprise Inc. d/b/a Lifted Liquids) (www.LiftedMade.com), Kenosha, Wisconsin (“Lifted Made” or “Lifted”).

On April 30, 2019, we also closed on the acquisition of 4.99% of the common stock of each of CBD-infused beverages maker Ablis Holding Company (“Ablis”) (www.AblisCBD.com), and of distilled spirits manufacturers Bendistillery Inc. (“Bendistillery”) and Bend Spirits, Inc. (“Bend Spirits”), all located in Bend, Oregon.

Prior to February 9, 2022, Lifted Made had a 50% membership interest in SmplyLifted LLC, which sells tobacco-free nicotine pouches under the brand name FR3SH (www.GETFR3SH.com). On February 9, 2022, Lifted Made sold its 50% membership interest in SmplyLifted LLC to Corner Vapory LLC, an affiliate of Nicholas S. Warrender (“NWarrender”), CEO of Lifted, for $1, plus ninety-nine percent (99%) of any and all payments and other consideration received or owed to Corner Vapory LLC in regard to SmplyLifted’s existing inventory of FR3SH brand tobacco-free nicotine pouches. Lifted has the option to re-purchase the 50% membership interest in SmplyLifted LLC from Corner Vapory LLC for $1,000 in cash at any time on or before December 31, 2032.

Merger Related Promissory Note

On February 24, 2020, we acquired Lifted as a wholly-owned subsidiary for cash and stock paid to Lifted’s then owner NWarrender. The $7,500,000 money component of the purchase consideration was paid to NWarrender in the form of $3,750,000 in cash at closing and a $3,750,000 promissory note that accrued interest at the rate of 2% per annum (“$3.75M Note”).

F-5

The $3.75M Note was secured by (a) a first lien security interest in all of the assets of the Company and Lifted; and (b) a pledge of: (i) all of the capital stock of Lifted; (ii) all of the common stock of Bendistillery, Bend Spirits and Ablis that is owned by the Company; and (iii) all of the capital stock of any other entity owned by the Company, Lifted or any of their subsidiaries, pursuant to a Collateral Stock Pledge Agreement between NWarrender, as Secured Party, and the Company and Lifted, as Pledgors.

On December 30, 2021, the Company repaid all principal and interest due under the $3.75M Note.

NWarrender kept $1,000,000 of the repayment of the $3.75M Note, plus accrued interest, and on January 3, 2022, reloaned $2,750,000 to LIFD and Lifted (collectively “Payors”) at the rate of 2.5% (the “$2.75M Note”). The $2.75M Note payable jointly by the Company and Lifted to NWarrender was secured by a perfected first lien security interest (the “Security Interest”) that encumbers all of the assets of the Company and Lifted. The Company was obligated to pay off the principal of the $2.75M Note in five semi-annual payments to NWarrender of $458,333 and a sixth and final semi-annual payment to NWarrender of $458,335, in each case plus accrued interest, starting on June 30, 2022.

On June 7, 2022, LFTD Partners prepaid $916,666 of the principal of the $2.75M Note, and $29,384 of related accrued interest through that date, which left $1,833,334 remaining principal on the $2.75M Note. On July 5, 2022, we entered into an agreement (“Acceleration Agreement”) with NWarrender. Under the terms of the Acceleration Agreement, we were obligated to repay the remaining principal balance as follows: $1,374,999 on or before December 31, 2022, and $458,335 on or before December 31, 2024. Then, on July 8, 2022, we prepaid $916,666, along with accrued interest, and then, on July 25, 2022, we prepaid the remaining principal balance of $916,668 and accrued interest in full, and all collateral securing the $2.75M Note was released.

Obligation to Purchase Headquarters Building

Toward the end of 2020, NWarrender, through his assigned entity 95th Holdings, LLC, purchased a building located at 5511 95th Avenue in Kenosha, Wisconsin (“5511 Building”) that was immediately leased to us to conduct our expanded operations. The 5511 Building includes office, laboratory and warehouse space. As part of the lease agreement with 95th Holdings, LLC, the parties agreed that our wholly owned subsidiary Lifted would eventually purchase the 5511 Building. The purchase price for the 5511 Building was originally subject to variation based on a formula agreed upon by the parties. Pursuant to an agreement with Warrender on December 30, 2021, the parties agreed to set the purchase price for the 5511 Building at $1,375,000. Prior to the Acceleration Agreement, Lifted had an obligation to complete the purchase of the 5511 Building on or before December 31, 2022. Pursuant to the Acceleration Agreement, the deadline to purchase the 5511 Building has been extended by one year to December 31, 2023. In addition, the Acceleration Agreement contains a provision that if we raise $5,000,000 of debt or equity capital, then Lifted or our designee shall purchase the 5511 Building from 95th Holdings, LLC at the agreed upon $1,375,000 purchase price within two days.

Sublease For Commuter Employees 

On July 6, 2022, Lifted entered into a sublease for office space in Chicago, Illinois located at 2701-09 West Fulton PH, Chicago, Illinois 60612. The sublease costs $3,000 per month, plus supplemental lease related charges such as real estate taxes and common expenses of the property that we anticipate will be commercially typical costs. The sublease was retroactively effective as of June 1, 2022 and for a five-month term that ended on October 31, 2022. The purpose of the sublease is to make available office space for the members of Lifted’s sales team who live in Chicago. These salespeople were spending significant time in their cars commuting from Chicago to Kenosha.

The sublessor is one of our affiliates, Bill McLaughlin, Lifted’s Chief Strategy Officer. The sublease is structured so that Mr. McLaughlin's lease payment obligations to the landlord are passed on to Lifted on a dollar-for-dollar basis, such that Mr. McLaughlin does not realize a cashflow profit or loss from the sublease.

As described in “NOTE 15 – SUBSEQUENT EVENTS”, the sublease is currently operating on a month-to-month basis. Management expects to extend the sublease once Mr. McLaughlin is presented a new lease from his landlord.

F-6

Termination of Letter of Intent relating to the proposed acquisition by the Company of Savage Enterprises, Premier Greens LLC and MKRC Holdings, LLC

On December 15, 2021, the Company, our Chairman and CEO Gerard M. Jacobs (“GJacobs”), our President and CFO William C. “Jake” Jacobs (“WJacobs”), and our Vice Chairman and COO NWarrender, Savage Enterprises, a Wyoming corporation (“Savage”), Premier Greens LLC, a California limited liability company (“Premier Greens”), MKRC Holdings, LLC, a Wyoming limited liability company (“MKRC”), Christopher G. Wheeler (“Wheeler”), and Matt Winters (“Winters”), mutually stipulated to terminate the Letter of Intent dated June 15, 2021 that set out the Company’s possible acquisition of Savage, Premier Greens and MKRC.

Termination of Letter of Intent relating to the proposed acquisition by the Company of Fresh Farms E-Liquid, LLC

On December 16, 2021, the Company, Fresh Farms E-Liquid, LLC, a California limited liability company (“Fresh Farms”), Anthony J. Devincentis (“Devincentis”), Jakob M. Audino (“Audino”), Forrest F. Town (“Town”), John Z. Petti (“Petti”), GJacobs, NWarrender, WJacobs, Wheeler and Winters mutually stipulated to terminate the Letter of Intent dated September 1, 2021 that set out the Company’s possible acquisition of Fresh Farms.

Capital Raise

Cash on hand is currently limited, so in order to close future acquisitions, and potentially also in order to pay other corporate obligations such as certain bonuses, our company-wide bonus pool, and/or income taxes, it may be necessary for us to raise substantial additional capital, and no guarantee or assurance can be made that such capital can be raised on acceptable terms, if at all.

We are currently exploring the possibility of raising $5 million or more through some combination of debt and equity offerings in order to purchase for $1.375 million the building located at 5511 95^th Avenue, Kenosha, Wisconsin, that is currently being rented by Lifted, to pay off other liabilities of the Company and Lifted such as certain bonuses, our company-wide bonus pool, and/or income taxes, and to pay transactional fees and expenses. If we proceed forward with an equity raise, it may be in conjunction with a potential listing of our common stock on a stock exchange. However, there can be no guarantee or assurance that any such debt and/or equity capital raise or listing will be completed on acceptable terms, if at all.

NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Consolidated Financial Statements – The consolidated financial statements of the Company should be read in conjunction with the Company’s consolidated financial statements and related notes that appear in the annual report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 31, 2022. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying unaudited consolidated financial statements and consist of only normal recurring adjustments, except as disclosed herein. As part of the consolidation, all significant intercompany transactions are eliminated, and on the Consolidated Statements of Operations, certain expenses are consolidated into the Other Operating Expenses category.

Use of Estimates – The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) typically requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results and outcomes may differ from management’s estimates and assumptions. Key estimates in these financial statements include the allowance for doubtful accounts, sales allowance, estimated useful lives of property, plant and equipment, valuation allowance on deferred income tax assets and the fair value of stock options and warrants.

Cash and Cash Equivalents – Cash and cash equivalents as of September 30, 2022 and December 31, 2021 included cash on-hand. The Company considers all highly liquid investments with an original maturity date within 90 days to be cash equivalents. Cash equivalents are carried at cost. The Company maintains its cash balance at a credit-worthy financial institution that is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. Deposits with these banks may exceed the amount of insurance provided on such deposits; however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk.  

Fair Value of Financial Instruments – The historical carrying amount of the financial instruments, which principally include cash, trade receivables, historical accounts payable and accrued expenses, approximates fair value due to the relative short maturity of such instruments.

F-7

Accounting Standards Codification (“ASC”) 820 defines fair value, establishes a framework for measuring fair value under GAAP and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair-value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Ablis Holding Company, Bendistillery Inc. and Bend Spirits, Inc. are not publicly traded, and as such their financial instruments are Level 3 unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Accounts Receivable – The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded (the “Allowance for Doubtful Accounts”), which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s recent loss history and an overall assessment of past due trade accounts receivable outstanding. As of December 31, 2021, the Company implemented a new policy regarding allowances for doubtful accounts, which is that all accounts receivable older than 90 days at quarter end are accrued for in allowances for doubtful accounts. Allowances for doubtful accounts of $128,589 and $239,101 were recorded at September 30, 2022 and December 31, 2021, respectively.

Inventory – Inventory is valued at the lower of average cost or market value (net realizable value). Inventory consisted of the following at September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
Raw Goods	$	3,213,772	$	2,927,727
Finished Goods	$	3,130,905	$	882,217
Total Inventory	$	6,344,677	$	3,809,944

Monthly overhead costs such as payments for rent, utilities, insurance, and indirect labor are allocated to finished goods based on the estimated percentage cost toward the finished goods. Depreciation expense related to certain machinery and equipment is also allocated to finished goods.

At September 30, 2022, $112,507 of overhead costs were allocated to finished goods. In comparison, during the quarter ended September 30, 2021, $36,457 of overhead costs were allocated to finished goods.

During the nine months ended September 30, 2022, $3,279,262 of obsolete and spoiled inventory was written off; this is compared to $234,351 of obsolete and spoiled inventory written off during the nine months ended September 30, 2021.

Of the $3,279,262 of obsolete inventory that was written off during the nine months ended September 30, 2022, $2,479,798 of it was recognized during the quarter ended September 30, 2022. This write-off primarily related to $2,313,902 worth of certain 2 mL disposable vapes written off due to clogging issues (the “Clogged Vapes”). Management believes that the clogging was caused by the summer heat wave (the third hottest summer on record in the USA). The heat caused the oil in the Clogged Vapes to lose viscosity, so more oil solidified in the coils as they were brought to room temperature. Because these Clogged Vapes did not have preheat or variable voltage settings, the oil could not be unclogged from the coils. Management discontinued the sale of the Clogged Vapes during the third quarter. Lifted’s 2 mL disposable vapes have now been superseded by 3 mL disposable vapes that do have preheat and variable voltage settings, so management expects that this write off of Clogged Vapes should be a one-time occurrence. Management is attempting to negotiate an agreement pursuant to which the manufacturer of the Clogged Vapes will subsidize or share, in some fashion, in the losses that have been sustained by Lifted due to the Clogged Vapes; however, there can be no guarantees or assurances whatsoever that such an agreement to subsidize or share in such losses can be successfully negotiated.

The process of determining obsolete inventory during the quarter involved:

1)	Identifying raw goods that would no longer be used in the manufacture of finished goods;
2)	Identifying finished goods that would no longer be sold or that are slow moving; and
3)	Valuing and expensing raw and finished goods that would no longer be sold.

F-8

Fixed Assets – Fixed assets are recorded and stated at cost. Fixed assets that cost less than $2,500 are expensed, and fixed assets that cost $2,500 or more are capitalized. Depreciation of machinery and equipment, furniture and fixtures, leasehold improvements, and computer equipment, is based on the asset’s estimated useful life and is calculated using the straight-line method. Normal repairs and maintenance costs are expensed as incurred. Expenditures that materially increase values or extend useful lives are capitalized. The related costs and accumulated depreciation of disposed assets are eliminated and any resulting gain or loss on disposition is included in net income.

Management regularly reviews property and equipment and other long-lived assets for possible impairment. This review occurs annually, or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If there is indication of impairment, management then prepares an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The fair value is estimated using the present value of the future cash flows discounted at a rate commensurate with management’s estimates of the business risks.

Preparation of estimated expected future cash flows is inherently subjective and is based on management’s best estimate of assumptions concerning expected future conditions. Long-lived assets held for sale are recorded at the lower of their carrying amount or fair value less cost to sell.

Security Deposits – The Company has not paid a security deposit for its leased facility located at 5511 95^th Avenue, Kenosha, WI 53144 for the Company’s current office, manufacturing and warehouse space.

The Company has paid security deposits for its leased facilities located at 8920 58^th Place, Suite 850, Kenosha, WI 53144, 8910 58^th Place, Suites 600 and 700, Kenosha, WI 53144, 9560 58^th Place, Suite 360, Kenosha, WI 53144 and 2701-09 West Fulton PH, Chicago, Illinois 60612.

The Company had paid a security deposit to its lessor for the Company’s former office, manufacturing and warehouse space in Zion, IL, that was rented on a month-to-month basis from June 1, 2021 through November 2021. The security deposit was written off at December 31, 2021.

State Licensing Deposits – The Company is required to pay deposits for certain licenses in various states.

Revenue – The Company recognizes revenue in accordance with Accounting Standards Codification 606.

The majority of the Company’s sales are of branded products goods to distributors, wholesalers, and end consumers. A minority of the Company’s sales are of raw goods to manufacturers, distributors and wholesalers. The majority of the Company’s sales are to distributors, followed by the Company’s sales to wholesalers, and then the Company’s sales to end consumers. Distributors primarily sell Lifted’s products to vape and smoke shops, stores specializing in cannabinoid-infused products, convenience stores, gas stations, health food stores, and other outlets.

Typically, the Company’s revenue is recognized when it satisfies a single performance obligation by transferring control of its products to a customer. Control is generally transferred when the Company’s products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. If the shipping terms on a sale are FOB destination, the revenue is deferred until the product reaches its destination.

The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers.

Discounts and rebates to customers are recorded as a reduction to gross sales.

Management believes that adequate provision has been made for cash discounts, returns and spoilage based on the Company’s historical experience.

F-9

Described below are some of the reasons why a customer may want to return an ordered item, and how the Company responds in each situation:

1)	The ordered item breaks, melts, clogs, leaks or separates in transit to the customer. In this case, the Company will replace the broken, melted or separated item at no cost to the customer.
2)	The Company sent the wrong item to the customer. In this case, the Company will allow the customer to keep, at no cost to the customer, the item that was mistakenly sent to the customer. The Company will also send the correct product to the customer, at no cost to the customer.
3)	The customer ordered the wrong product. In this case, the customer, at his/her own expense, must mail the mistakenly ordered product back to the Company, and the Company will mail the correct product to the customer.
4)	The ordered item is recalled. In a situation where product is recalled, the Company will offer a replacement, credit, or refund.

As described above in the section “Inventory”, during the quarter ended September 30, 2022, some of Lifted’s customers returned certain Clogged Vapes. In total for the quarter ended September 30, 2022, the Company recorded a sales allowance of $841,269 for estimated future discounts/refunds and product returns, primarily associated with the Clogged Vapes. Please refer to the description in “Inventory” for more information regarding the Clogged Vapes.

Disaggregation of Revenue

During the quarter ended September 30, 2022, approximately 99% of the Company’s sales occurred inside of the United States of America. During the quarter ended September 30, 2021, approximately 99% of the Company’s sales occurred inside of the United States of America as well.

The Company has considered providing disaggregation of revenue by information regularly reviewed by the chief operating decision maker for evaluating the financial performance of operating segments, such as type of good, geographical region, market or type of customer, type of contract, contract duration, timing of transfer of goods, and sales channels. Due to the rapidly evolving nature of our industry, the Company is constantly launching new products to stay ahead of trends, finding new sales channels, initiating new distribution networks and modifying the prices of its products.

Shown below is a table showing the approximate disaggregation of historical revenue:

Type of Sale	For the three months ended September 30, 2022		% of Net Sales			For the three months ended September 30, 2021		% of Net Sales			For the nine months ended September 30, 2022		% of Net Sales			For the nine months ended September 30, 2021		% of Net Sales
Net sales of raw materials to customers	$	21,707		0.2	%	$	105,960		1.2	%	$	40,339		0.1	%	$	155,695		0.8	%
Net sales of products to private label clients		766,129		6.8	%	$	663,968		7.5	%	$	850,271		1.8	%	$	2,692,091		14.3	%
Net sales of products to wholesalers		1,404,590		12.5	%	$	1,255,947		14.2	%	$	5,825,584		12.6	%	$	2,842,714		15.1	%
Net sales of products to distributors		8,653,948		77.0	%	$	6,273,836		71.1	%	$	36,393,678		78.9	%	$	12,060,313		63.9	%
Net sales of products to end consumers		390,903		3.5	%	$	521,242		5.9	%	$	2,992,784		6.5	%	$	1,118,554		5.9	%
Net Sales	$	11,237,277		100.0	%	$	8,820,952		100.0	%	$	46,102,656		100.0	%	$	18,869,366		100.0	%

Deferred Revenue

Amounts received from a customer before the purchased product is shipped to the customer is treated as deferred revenue. If cash is not received, an accounts receivable is recognized for the invoiced order, but revenue is not recognized until the order is fully shipped. Accounts receivable includes amounts associated with partially shipped orders, for which the unshipped portion is a contract asset. Contract assets represent invoiced but unfulfilled performance obligations.

F-10

The table shown below represents the composition of deferred revenue between contract assets (invoiced but unfulfilled performance obligations) and deposits from customers from unfulfilled orders as of September 30, 2022 and December 31, 2021.

	September 30, 2022		December 31, 2021
Contract Assets (invoiced but unfulfilled performance obligations)	$	784,047	$	1,650,258
Deposits from customers for unfulfilled orders	$	-	$	524,135
Total Deferred Revenue	$	784,047	$	2,174,393

Cost of Goods Sold – Cost of goods sold consists of the costs of raw materials utilized in the manufacture of products, direct labor, co-packing fees, repacking fees, freight and shipping charges, warehouse expenses incurred prior to the manufacture of Lifted’s finished products and certain quality control costs. Finished goods that are sold account for the largest portion of cost of sales. Raw materials include ingredients, product components and packaging materials. $3,279,262 and $234,351 of cost of goods sold relates to spoiled and obsolete inventory written off during the nine months ended September 30, 2022 and September 30, 2021, respectively.

Operating Expenses – Operating expenses include payroll, consulting and independent contractor expenses, the accrual for the company-wide management bonus pool, professional fees, bank charges and merchant fees, advertising and marketing, bad debt expense, and depreciation and amortization. Total operating expenses decreased to $318,474 for the quarter ended September 30, 2022, down from $1,782,858 during the quarter ended September 30, 2021, primarily as a result of the complete elimination of the company-wide bonus pool accrual of $2,121,532, which had been accrued through June 30, 2022. Moreover, no company-wide management bonus pool accrual was booked for the quarter ended September 30, 2022.

Income Taxes – Provisions for income taxes are based on taxes payable or refundable for the current year and deferred income taxes. Deferred income taxes are provided on differences between the tax bases of assets and liabilities and their reported amounts in the financial statements and on tax carry forwards. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance is provided against deferred income tax assets when it is not more likely than not that the deferred income tax assets will be realized.

Basic and Diluted Earnings (Loss) Per Common Share – Basic earnings (loss) per common share is determined by dividing earnings (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per common share is calculated by dividing earnings (loss) by the weighted-average number of common shares and dilutive common share equivalents outstanding during the period. When dilutive, the incremental potential common shares issuable upon exercise of stock options and warrants are determined by the treasury stock method. The following table summarizes the calculations of basic and diluted earnings (loss) per common share for the three and nine months ended September 30, 2022 and September 30, 2021:

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net Income/(Loss)	$	423,486	$	2,236,178	$	6,587,739	$	4,450,690
Weighted average number of common shares outstanding:
Basic		14,102,578		13,015,717		14,073,366		10,525,461
Diluted		15,884,776		16,257,915		15,855,564		13,767,659
Basic Net Income (Loss) per Common Share	$	0.03	$	0.17	$	0.47	$	0.42
Diluted Net Income (Loss) per Common Share	$	0.03	$	0.14	$	0.41	$	0.32

As of September 30, 2022, in addition to our outstanding common stock, we have issued (a) options to purchase 1,076,698 shares of common stock at $2.00 per share, (b) warrants to purchase 155,500 shares of common stock at $1.00 per share, (c) rights to purchase warrants to purchase 100,000 shares of common stock at $1.85 per share, and (d) warrants to purchase 2,295,000 shares of common stock at $5.00 per share.

F-11

Regarding the aforementioned warrants to purchase 2,295,000 shares of our common stock at an exercise price of $5.00 per share: of the total, warrants to purchase 1,550,000 shares of our common stock are vested, while the remaining warrants to purchase 745,000 shares of our common stock are not vested and are subject to certain conditions and requirements.

At September 30, 2022, the Company had Series A Preferred Stock outstanding convertible into 450,000 shares of common stock; these are included in the diluted earnings calculation. Also at September 30, 2022, the Company had Series B Preferred Stock outstanding convertible into 40,000 shares of common stock; these are not included in the diluted earnings calculation because the exercise price ($5.00/share) was higher than the stock closing price at September 30, 2022 (3.40/share).

In comparison, as of September 30, 2021, in addition to our outstanding common stock, we have issued (a) options to purchase 1,086,698 shares of common stock at $2.00 per share, (b) warrants to purchase 205,500 shares of common stock at $1 per share, (c) rights to purchase warrants to purchase 1,375,000 shares of common stock at between $0.01 and $1.85 per share, and (d) warrants to purchase 2,295,000 shares of common stock at $5.00 per share.

Regarding the aforementioned rights to purchase warrants to purchase 1,375,000 shares of common stock at between $0.01 and $1.85 per share as of September 30, 2021: exercise rights to purchase 1.25 million shares of our common stock by exercise of the foregoing warrants are not vested and are not exercisable until a performance contingency is met.

Regarding the aforementioned warrants to purchase 2,295,000 shares of our common stock at an exercise price of $5.00 per share as of September 30, 2021: of the total, warrants to purchase 1,650,000 shares of our common stock are vested, while the remaining warrants to purchase 645,000 shares of our common stock are not vested and are subject to certain conditions and requirements.

Also outstanding at September 30, 2021, the Company had Series A Preferred Stock outstanding convertible into 575,000 shares of common stock; these are included in the diluted earnings calculation. At September 30, 2021, the Company also had Series B Preferred Stock outstanding convertible into 40,000 shares of common stock; these are not included in the diluted earnings calculation.

Recent Accounting Pronouncements – In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses (codified as Accounting Standards Codification (“ASC”) Topic 326). ASC 326 adds to US GAAP the current expected credit loss model, a measurement model based on expected losses rather than incurred losses. Under this new guidance, an entity recognizes its estimate of expected credit losses as an allowance, which the FASB believes will result in more timely recognition of such losses. ASU 2016-13 and its amendments will be effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2022, though early adoption is permitted. The Company believes the adoption will modify the way the Company analyzes financial instruments. The Company is currently evaluating the impact of ASU 2016-13 on its consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes, eliminates certain exceptions to the general principles in Topic 740 and clarifies certain aspects of the current guidance to improve consistent application among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021 and interim periods within annual periods beginning after December 15, 2022, though early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. The Company is currently evaluating the impact of ASU 2019-12 on its consolidated financial statements.

On August 5, 2020, the FASB issued ASU No. 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), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is effective for public business entities that meet the definition of a SEC filer, excluding smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The FASB noted that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.

F-12

The Company is researching what other pronouncements may be applicable to the Company’s accounting and whether or not any other pronouncements should be adopted.

Advertising and Marketing Expenses – Advertising and marketing costs are expensed as incurred. During the three and nine months ended September 30, 2022, the Company incurred $334,215 and $550,612, respectively, in advertising and marketing expenses, which related to trade shows, marketing, promotional products and public relations. In comparison, during the three and nine months ended September 30, 2021, the Company incurred $86,438 and $236,598 in advertising and marketing expenses, of which were related to trade shows, public relations and digital marketing. 

Compensated Absences – During the year ended December 31, 2021, paid time off (“PTO”) was provided to employees who obtained approval for it from NWarrender. Any approved PTO was granted at NWarrender’s discretion, and mandatory PTO was zero days, thus no accrual was necessary at December 31, 2021. Effective January 1, 2022, certain PTO policies have been adopted by Lifted, and a PTO accrual of $13,912 was recognized at September 30, 2022.

Off-Balance Sheet Arrangements – The Company has no off-balance sheet arrangements.

Reclassifications – Some items from the prior period have been reclassified within the financial statements to conform with the current presentation.

NOTE 3 – RECEIPT OF LOANS UNDER THE ECONOMIC INJURY DISASTER LOAN PROGRAM AND THE PAYCHECK PROTECTION PROGRAM

Lifted also applied for and received a loan (the “PPP Loan”) under the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted March 27, 2020. The PPP Loan was issued by BMO Harris Bank (the “Lender”) in the aggregate principal amount of $149,622.50 and evidenced by a promissory note (the “Note”), dated April 14, 2020 issued by Lifted to the Lender. On April 20, 2021, the entire PPP Loan ($149,622) and the interest payable on the PPP Loan ($1,525) was forgiven by the SBA, and a related gain on forgiveness of debt in the amount of $151,147 was recorded. In accordance with its terms, the Note was originally scheduled to mature on April 14, 2022 and bore interest at a rate of 1.00% per annum, payable monthly commencing on November 14, 2020, following an initial deferral period as specified under the PPP. In addition, the Note could be prepaid by Lifted at any time prior to its original maturity with no prepayment penalties. Proceeds from the PPP Loan were available to Lifted to fund designated expenses, including certain payroll costs and other permitted expenses, in accordance with the PPP. Under the terms of the PPP, up to the entire amount of principal and accrued interest of the PPP Loan could be forgiven to the extent that at least 75% of the PPP Loan proceeds are used for qualifying expenses as described in the CARES Act and applicable implementing guidance issued by the SBA under the PPP. As of March 31, 2021, Lifted had an accrual of $1,443 for the interest on the PPP Loan. During the three months ended June 30, 2021, interest of $82 was accrued prior to the forgiveness of the Loan.

NOTE 4 - RISKS AND UNCERTAINTIES

Going Concern – Prior to the acquisition of Lifted on February 24, 2020, the Company had no sources of revenue, and the Company had a history of recurring losses, which has resulted in an accumulated deficit of $4,842,407 as of September 30, 2022. Bankruptcy of the Company at some point in the future is a possibility. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management plans to sustain the Company as a going concern by taking the following actions: (1) acquiring and/or developing profitable businesses that will create positive income from operations; and/or (2) completing private placements of the Company’s common stock and/or preferred stock. Management believes that by taking these actions, the Company will be provided with sufficient future operations and cash flow to continue as a going concern. However, there can be no assurances or guarantees whatsoever that the Company will be successful in consummating such actions on acceptable terms, if at all. Moreover, any such actions can be expected to result in substantial dilution to the existing shareholders of the Company.

The Company’s investments in Ablis, Bendistillery and Bend Spirits made the Company a minority owner of these companies. As a minority owner, the Company is not able to recognize any portion of Ablis’, Bendistillery’s or Bend Spirits’ revenues or earnings in the Company’s financial statements. The Company monitors its investments in Ablis, Bendistillery and Bend Spirits, and from time to time and will evaluate whether there has been a potential impairment of value.

The COVID-19 pandemic and its ramifications, combined with the expenses and potential liabilities associated with litigation involving Lifted, combined with the regulatory risks and uncertainties associated with the cannabinoid-infused products, vaping and nicotine products industries, combined with the risks associated with internet hacking or sabotage, combined with the risks of employee and/or independent contractor disloyalty or theft of Company information and opportunities, have created significant adverse risks to the Company, which have caused substantial doubt about the Company’s ability to continue as a going concern.

F-13

Prior to the Acceleration Agreement, Lifted had an obligation to complete the purchase of the 5511 Building on or before December 31, 2022. Pursuant to the Acceleration Agreement, the deadline to purchase the 5511 Building has been extended by one year to December 31, 2023. In addition, the Acceleration Agreement contains a provision that if we raise $5,000,000 of debt or equity capital, then Lifted or our designee shall purchase the Property from 95th Holdings, LLC at the agreed upon $1,375,000 purchase price within two days.

The Company is also accruing 3% annual dividends on its Series A and Series B Convertible Preferred Stock.

Also, on February 14, 2022, NWarrender, GJacobs and WJacobs (together the “Parties”) and LFTD Partners, entered into an agreement (the “Amended Omnibus Agreement”) that amends in part the Agreement dated as of December 30, 2021 entered into by and among LFTD Partners Inc., the Parties, Lifted Liquids, Inc. d/b/a Lifted Made and 95th Holdings, LLC (the “Omnibus Agreement”). The Amended Omnibus Agreement (1) terminates the right for the Parties to receive bonus compensation in regard to 2021 that is in excess of the Modified 2021 Bonus Pool Amount of $1,556,055 set out in the Omnibus Agreement; (2) places a cap on the 2022 company-wide bonus pool such that the 2022 company-wide bonus pool shall not be allowed to be accrued or paid by LIFD if and to the extent that doing so would decrease LIFD’s 2022 diluted earnings per share of common stock below $0.56 per share; and (3) the $500,000 of additional bonus set out in the Omnibus Agreement, is now allocated and defined as a retention bonus of $166,667 to each of NWarrender, GJacobs and WJacobs to be paid at the end of 2022 so long as each respective executive has not earlier resigned from LFTD Partners (the “2022 Retention Bonuses”).

Moreover, LFTD Partners agrees and covenants that the Chairman of the Compensation Committee is authorized to negotiate and agree on behalf of LFTD Partners in regard to a 2023 supplemental retention bonus for NWarrender, GJacobs and WJacobs (in addition to the company-wide Bonus Pool) (the “2023 Retention Bonuses”), and if and only if the amounts of the 2023 Retention Bonuses are mutually agreed upon in writing among the Chairman of the Compensation Committee, NWarrender, GJacobs and WJacobs, then one-third of the 2023 Retention Bonuses shall be paid by LFTD Partners to each of NWarrender, GJacobs and WJacobs on or before March 15, 2024, provided that such officer shall not have earlier resigned as an officer of LFTD Partners.

During 2022, Lifted for the first time hired an outside laboratory to conduct research and development on a potential new, non-hemp-derived, synthetic psychedelic product (the “New Psychedelic Product”) for a total of $19,800. Such research and development of the New Psychedelic Product has been put on indefinite hold, as Lifted has recently successfully purchased from third parties a natural equivalent of the New Psychedelic Product.

In addition, factors that could materially affect future operating results include, but are not limited to, changes to laws and regulations, especially any future changes to the so-called “Farm Bill” at the federal level, and any other federal or state laws and regulations related to hemp-derived cannabinoids, nicotine products, kratom, psychedelic products and/or vaping. The company is also subject to vendor concentration risk, customer concentration risk, customer credit risk, and counterparty risk.

The Company maintains levels of cash bank accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and it believes that it is not exposed to any significant credit risk on cash.

No assurance or guarantee whatsoever can be given that the net income of the Company’s wholly-owned subsidiary Lifted will be sufficient to allow the Company to pay all of its operating expenses, the dividends accruing on the Company’s preferred stock, the company-wide bonus pool, and the 2022 Retention Bonuses and the 2023 Retention Bonuses. As a result, there is substantial doubt that the Company will be able to continue as a going concern. Bankruptcy of the Company at some point in the future is a possibility. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

F-14

The Company currently has one revenue-generating subsidiary, Lifted. If and to the extent that the revenue generated by Lifted is not adequate to pay the Company’s operating expenses and the dividends accruing on its preferred stock, then Company management plans to sustain the Company as a going concern by taking the following actions: (1) acquiring and/or developing additional profitable businesses that will create positive income from operations; and/or (2) completing private placements of the Company’s common stock and/or preferred stock. Management believes that by taking these actions, the Company will be provided with sufficient future operations and cash flow to continue as a going concern. However, there can be no assurances or guarantees whatsoever that the Company will be successful in consummating such actions on acceptable terms, if at all. Moreover, any such actions can be expected to result in substantial dilution to the existing shareholders of the Company.

Customer Concentration Risk – During the quarter ended September 30, 2022, twelve customers made up approximately 50% of Lifted Made’s sales. In comparison, during the quarter ended September 30, 2021, eight customers made up approximately 50% of Lifted Made’s sales. During the nine months ended September 30, 2022, 15 customers made up approximately 50% of Lifted Made’s sales. In comparison, during the nine months ended September 30, 2021, five customers made up approximately 50% of Lifted Made’s sales.

Vendor Dependence – Regarding the purchases of raw goods and finished goods (“Inventory”), during the quarter ended September 30, 2022, approximately 88% of the Inventory that Lifted purchased were from five vendors. In comparison, regarding the purchases of Inventory during the quarter ended September 30, 2021, approximately 70% of the Inventory purchases were from six vendors. Regarding the purchases of Inventory during the nine months ended September 30, 2022, approximately 73% of the Inventory purchases were from five vendors. In comparison, regarding the purchases of Inventory during the nine months ended September 30, 2021, approximately 62% of the Inventory purchases were from five vendors.

The loss of Lifted’s relationships with these customers and vendors could have a material adverse effect on Lifted’s business.

NOTE 5 – THE COMPANY’S INVESTMENTS

The Company’s Investments in Ablis, Bendistillery and Bend Spirits

On April 30, 2019, the Company purchased 4.99% of the common stock of each of Ablis Holding Company, Bendistillery Inc., and Bend Spirits, Inc. for an aggregate purchase price of $1,896,200.

Under US Generally Accepted Accounting Principles (“GAAP”), the Company uses the cost method to account for our minority equity ownership interests in businesses in which the Company owns less than 20% of equity ownership, and have no substantial influence over the management of the businesses. Under the cost method of accounting, the Company reports the historical costs of the investments as assets on its balance sheet. However, US GAAP does not permit the consolidation of its financial statements with the financial statements of companies in which the Company owns minority equity ownership interests.

As such, the Company’s investments in Ablis, Bendistillery and Bend Spirits made the Company a minority owner of these companies. As a minority owner, the Company will not be able to recognize any portion of Ablis’, Bendistillery’s or Bend Spirits’ revenues or earnings in the Company’s financial statements. US GAAP also requires the Company to record these types of investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. As such, the Company will not be allowed to consolidate into its financial statements any portion of the revenues, earnings or assets of companies in which it owns minority equity ownership interests such as Ablis, Bendistillery and Bend Spirits. Moreover, even if there is evidence that the fair market values of the investments have increased above their historical costs, US GAAP does not allow increasing the recorded values of the investments. Under US GAAP, the only adjustments that may be made to the historical costs of the investments are write downs of the values of the investments, which must be made if there is evidence that the fair market values of the investments have declined to below the recorded historical costs.

At each reporting period, the Company makes a qualitative assessment considering impairment indicators to evaluate whether its investments are impaired. Factors that the Company would consider indicators of impairment include: (1) a significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee, (2) a significant adverse change in the regulatory, economic, or technological environment of the investee, (3) a significant adverse change in the general market condition of either the geographical area or the industry in which the investee operates, (4) a bona fide offer to purchase, an offer by the investee to sell, or a completed auction process for the same or similar investment for an amount less than the carrying amount of that investment, and (5) factors that raise significant concerns about the investee’s ability to continue as a going concern, such as negative cash flows from operations, working capital deficiencies, or noncompliance with statutory capital requirements or debt covenants. Up to the date of this report on Form 10-Q, none of the above the above factors have been applicable to the Company’s investments.

F-15

The qualitative assessments at the end of quarters one, two and three are done via conference or video calls with the management teams of Ablis, Bendistillery and Bend Spirits. The qualitative assessment at the end of quarter four relating to these entities also includes review of their respective financial statements that have been reviewed by a third party accounting firm. At that time, the Company performs an annual impairment assessment. The reviewed financial statements of these companies are not audited, and the Company is not active in the management of these companies, and except for these companies’ quarterly meetings with the management of the Company, the Company’s assessment of these companies is inherently limited to infrequent and relatively brief conversations with officers of these companies and to reviews of those reviewed financial statements.

On October 19, 2022, a video conference meeting of the board of directors and management of Ablis, Bendistillery and Bend Spirits, and GJacobs and WJacobs was held. During this meeting, the management of Ablis, Bendistillery and Bend Spirits discussed the performance of Ablis, Bendistillery and Bend Spirits during the three months ended September 30, 2022. Based upon the financial and non-financial information that was shared with LFTD Partners during that conference call, the management of LFTD Partners believes that no impairment of the value of Bendistillery, Bend Spirits or Ablis is warranted at this point in time. The information that was shared by the management of Ablis included, among other things: new product launches and expansion into more stores. The information that was shared by the management of Bendistillery and Bend Spirits included, among other things: increased on-premise sales are up from the third quarter of 2021, Bendistillery’s in-house sales team is making up for the loss of revenue from third party distributors who have fired their own sales people as a result of the pandemic, and existing markets and new markets opening up. It is our understanding that the management of Bendistillery periodically receives inquiries regarding from large competitors about potentially investing in or acquiring Bendistillery.

The Company’s Investment in Lifted Made

Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the Company’s acquisitions is attributable to the value of the potential expanded market opportunity with new customers.

Goodwill is not amortized but is subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company performs an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing is a two-step process performed at the reporting unit level. Step one compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, the Company determines fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows. For the discount rate, the Company relies on the capital asset pricing model approach, which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, the Company’s risk relative to the overall market, the Company’s size and industry and other Company-specific risks. Other significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures and changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit as calculated in step one. In this step, the fair value of the reporting unit is allocated to all of the reporting unit’s assets and liabilities in a hypothetical purchase price allocation as if the reporting unit had been acquired on that date. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess.

F-16

Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, strategic plans, and future market conditions, among others. There can be no assurance that the Company’s estimates and assumptions made for purposes of the goodwill impairment testing will prove to be accurate predictions of the future. Changes in assumptions and estimates could cause the Company to perform an impairment test prior to scheduled annual impairment tests.

The Company performed its annual fair value assessment at December 31, 2021 on the goodwill recognized as part of the acquisition of Lifted, and determined that no impairment was necessary. The factors that led the Company to this conclusion include, among other things: continued growth in sales and profitability year-over-year, the launch of first-to-market, ground-breaking new products, the addition of more and more wholesalers and distributors nationwide, increased sales to wholesalers and end consumers, the continued growth of Lifted’s flagship brand Urb Finest Flowers, and continued positive publicity of Lifted.

The Company’s Investment in SmplyLifted LLC

On September 22, 2020, LFTD Partners Inc. and Lifted Made and privately-held SMPLSTC, Costa Mesa, CA formed an equally-owned new entity called SmplyLifted LLC, which sold tobacco-free nicotine pouches in several flavors and nicotine strengths under the brand name FR3SH (www.GETFR3SH.com).

Lifted had a 50% membership interest in SmplyLifted LLC. The other 50% of SmplyLifted is owned by SMPLSTC LLC and its principals, who are located in Costa Mesa, California. Under US GAAP, the Company used the equity method to account for its 50% membership interest in SmplyLifted. Under the equity method of accounting, the Company recorded its share (50%) of SmplyLifted’s earnings (or losses) as income (or losses) on the Consolidated Statements of Operations. The Company recorded its initial investment in SmplyLifted, which was $200,000, as an asset at historical cost. Under the equity method, the investment’s value was periodically adjusted to reflect the changes in value due to Lifted’s share in SmplyLifted’s income or losses.

During the year ended December 31, 2020, the Company recognized a loss of $4,429 from its 50% membership interest in SmplyLifted, and wrote down the value of its investment in SmplyLifted to $195,571. During the year ended December 31, 2021, the Company recognized a loss of $195,571 from its 50% membership interest in SmplyLifted. At December 31, 2021, Lifted Made wrote off its receivables from SmplyLifted, and its loans to SmplyLifted, which totaled $388,727.

On February 9, 2022, Lifted Made signed an Agreement to sell its 50% membership interest in SmplyLifted LLC to Corner Vapory LLC, an affiliate of NWarrender, CEO of Lifted, for $1, plus ninety-nine percent (99%) of any and all payments and other consideration received or owed to Corner Vapory LLC in regard to SmplyLifted’s existing inventory of FR3SH brand tobacco-free nicotine pouches. Lifted has the option to re-purchase the 50% membership interest in SmplyLifted LLC from Corner Vapory LLC for $1,000 in cash at any time on or before December 31, 2032.

NOTE 6 – PROPERTY AND EQUIPMENT, NET

Property and Equipment consist of the following:

Asset Class	September 30, 2022			December 31, 2021
Machinery & Equipment	$	593,208		$	258,533
Leasehold Improvements	$	385,220		$	152,985
Trade Show Booths	$	10,000		$	23,488
Vehicles	$	75,047		$	22,309
Computer Equipment	$	7,312		$	7,312
Furniture & Fixtures	$	83,286		$	46,553
Sub-total:	$	1,154,073		$	511,180
Less: accumulated depreciation	$	(164,384	)	$	(77,967	)
	$	989,688		$	433,213

F-17

The useful lives of the Company’s fixed assets by asset class are as follows:

Asset Class	Estimated Useful Life
Machinery & Equipment	60 months
Leasehold Improvements	60 months
Trade Show Booths	36 months
Vehicles	60 months
Computer Equipment	60 months
Furniture & Fixtures	60 months

Leasehold Improvements are depreciated over the shorter of the length of the lease or the estimated useful life. Depreciation expense of $18,279 and $49,854 was recognized during the three and nine months ended September 30, 2022. In comparison, depreciation expense of $10,992 and $53,483 was recognized during the three and nine months ended September 30, 2021, respectively.

NOTE 7 – NOTES RECEIVABLE

SmplyLifted LLC

At March 31, 2021, the Company had made shortfall loans to SmplyLifted LLC totaling $387,500, used primarily for the purchase of inventory. As of March 31, 2021, imputed interest receivable on the loans totaled $149.

At December 31, 2021, the Company had made interest-free loans to SmplyLifted LLC totaling $387,500, used primarily for the purchase of inventory. As of December 31, 2021, imputed interest receivable on the loans totaled $580. As described above, at December 31, 2021, these notes and related interest receivable were written off. 

F-18

NOTE 8 – INTANGIBLE ASSETS, NET

www.LiftedMade.com Website

The cost of developing Lifted’s website, www.LiftedMade.com, is being amortized over 32 months, and $347 and $1,040 in amortization related to the website was recognized during the three and nine months ended September 30, 2022. In comparison, $417 and $1,251 in amortization related to the website was recognized during the three and nine months ended September 30, 2021. 

NOTE 9 – RELATED PARTY TRANSACTIONS

Sublease For Commuter Employees 

On July 6, 2022, our wholly owned subsidiary Lifted entered into a sublease for office space in Chicago, Illinois located at 2701-09 West Fulton PH, Chicago, Illinois 60612. The sublease costs $3,000 per month, plus supplemental lease related charges such as real estate taxes and common expenses of the property that we anticipate will be commercially typical costs. The sublease was retroactively effective as of June 1, 2022 and for a five-month term that ended on October 31, 2022. The purpose of the sublease is to make available office space for the members of Lifted Made's sales team who live in Chicago. These salespeople were spending significant time in their cars commuting from Chicago to Kenosha.

The sublessor is one of our affiliates, Bill McLaughlin, Lifted’s Chief Strategy Officer. The sublease is structured so that Mr. McLaughlin's lease payment obligations to the landlord are passed on to Lifted on a dollar-for-dollar basis, such that Mr. McLaughlin does not realize a cashflow profit or loss from the sublease.

As described in “NOTE 15 – SUBSEQUENT EVENTS”, the sublease is currently operating on a month-to-month basis. Management expects to extend the sublease once Mr. McLaughlin is presented a new lease from his landlord. 

Shipping Costs

Lifted has shared a shipping account with a company operated by NWarrender’s father, Robert T. Warrender II, who is also an employee of Lifted and a member of the board of directors of LFTD Partners Inc. Lifted did this in an effort to reduce shipping costs, as the shipper gave a price discount based on volume. Lifted reimbursed Robert T. Warrender II’s company for the cost of shipping. During the quarter ended September 30, 2022, Lifted did not reimburse Robert T. Warrender II for any shipping costs. During the nine months ended September 30, 2022, Robert T. Warrender II’s company refunded Lifted a net amount of $7,377. During the quarter ended September 30, 2022, also, Lifted bought a manual fork lift from Robert T. Warrender II’s company for a price that we believe reflected its fair market value. In comparison, during the three and nine months ended September 30, 2021, Lifted reimbursed Robert T. Warrender II $75,838 and $150,266 in shipping costs, respectively.

Robert T. Warrender II

In January 2022, Lifted hired Robert T. Warrender II, NWarrender’s father, as an employee. Robert T. Warrender II is also a Director of LFTD Partners Inc. During the three and nine months ended September 30, 2022, $16,154 and $39,231 in wages were paid to Robert T. Warrender II. As of September 30, 2022, $4,977 in expense reimbursements were owed to Robert T. Warrender II.  

Robert T. Warrender III

During the three and nine months ended September 30, 2022, $0 and $54,384 in sales commissions were paid to Robert T. Warrender III, who is NWarrender’s brother, and Director Robert T. Warrender II’s son.

In comparison, during the three and nine months ended September 30, 2021, $26,196 and $43,678 in sales commissions were paid to Robert T. Warrender III.

Vincent J. Mesolella

During the quarter ended March 31, 2022, Lead Outside Director Vincent J. Mesolella was paid $40,000 of the Modified 2021 Bonus Pool Amount.

During each of the first, second and third quarters of 2022, Mr. Mesolella also received his $4,000 quarterly director fee.

There were no quarterly director fees or other compensation paid to Mr. Mesolella during the three and nine months ended September 30, 2021.

Joshua A. Bloom

During the quarter ended March 31, 2022, Dr. Joshua A. Bloom, Director, was paid $20,000 of the Modified 2021 Bonus Pool Amount.

During each of the first, second and third quarters of 2022, Dr. Bloom also received his $4,000 quarterly director fee.

F-19

Richard E. Morrissy

During each of the first, second and third quarters of 2022, Richard E. Morrissy, Director, received his $4,000 quarterly director fee.

James S. Jacobs

During each of the first, second and third quarters of 2022, Dr. James S. Jacobs, Director, received his $4,000 quarterly director fee.

Kevin J. Rocio

During each of the first, second and third quarters of 2022, Kevin J. Rocio, Director, received his $4,000 quarterly director fee.

Gerard M. Jacobs

The Compensation Agreement contemplated an aggregate of $350,000 being paid by the Company to GJacobs and WJacobs upon the closing of the Company’s acquisition of Lifted and an aggregate of $350,000 being paid by the Company to GJacobs and WJacobs upon December 1, 2020, but such payments were not timely made, and pursuant to the Amendment No. 1 such aggregate of $700,000 of compensation was deferred and made due and payable by the Company to GJacobs and WJacobs together with interest accrued at the rate of 2% annually commencing January 1, 2021, upon demand by GJacobs and WJacobs, and through the date of the Omnibus Agreement only $58,439 of such deferred compensation had been paid to GJacobs (the remaining unpaid deferred compensation together with accrued interest is hereby referred to as the “Deferred Compensation”). Pursuant to the Omnibus Agreement, the Deferred Compensation was paid by the Company to GJacobs and WJacobs in January 2022. During the quarter ended March 31, 2022, GJacobs was also paid $143,713 of the Modified 2021 Bonus Pool Amount.

On April 29, 2021, the Company paid GJacobs a portion ($50,000) of the bonus payable to GJacobs in regard to the closing of the acquisition of Lifted.

On August 30, 2021, GJacobs exercised, for an aggregate purchase price of $1, his right to purchase a warrant to purchase an aggregate of 750,000 shares of unregistered common stock of the Company at an exercise price of $0.01 per share, which warrant he immediately exercised. GJacobs also exercised his right to purchase an aggregate of 31,250 shares of unregistered common stock of the Company at an exercise price of $0.03 per share under separate warrants. GJacobs also demanded immediate payment of $8,438.50 of the bonuses which are currently due and payable by the Company to GJacobs, and GJacobs allocated and applied such $8,438.50 to pay for the aggregate cost of purchasing and exercising the above warrants.

As of September 30, 2021, there was total interest of $7,043 payable to GJacobs related to the Deferred Compensation.  

William C. “Jake” Jacobs

As described above, the Compensation Agreement contemplated an aggregate of $350,000 being paid by the Company to GJacobs and WJacobs upon the closing of the Company’s acquisition of Lifted and an aggregate of $350,000 being paid by the Company to GJacobs and WJacobs upon December 1, 2020, but such payments were not timely made, and pursuant to the Amendment No. 1 such aggregate of $700,000 of compensation was deferred and made due and payable by the Company to GJacobs and WJacobs together with interest accrued at the rate of 2% annually commencing January 1, 2021, upon demand by GJacobs and WJacobs, and through the date of the Omnibus Agreement only $58,439 of such deferred compensation had been paid to GJacobs (the remaining unpaid deferred compensation together with accrued interest is hereby referred to as the “Deferred Compensation”). Pursuant to the Omnibus Agreement, the Deferred Compensation was paid by the Company to GJacobs and WJacobs in January 2022. Moreover, pursuant to the Omnibus Agreement and simultaneously with such payment of the Deferred Compensation as set out above, the Company paid WJacobs a bonus of $300,000 in January 2022. During the quarter ended March 31, 2022, WJacobs was also paid $152,341 of the Modified 2021 Bonus Pool Amount.

As of September 30, 2021, there was total interest of $2,992 payable to WJacobs related to the Deferred Compensation. Also as of September 30, 2021, there were $233 in travel expense reimbursements owed to WJacobs.

$2,681 in income tax previously erroneously paid by WJacobs to the Illinois Department of Revenue during the year ended December 31, 2021, and refunded back to Lifted by the Illinois Department of Revenue in January 2021, was repaid to WJacobs during the quarter ended June 30, 2021.

F-20

Nicholas S. Warrender

On February 24, 2020 we closed on the acquisition of 100% of the ownership of CBD-infused products maker Warrender Enterprise Inc. d/b/a Lifted Made (formerly d/b/a Lifted Liquids) of Zion, Illinois (the “Merger”), for consideration of (1) $3,750,000 in cash, (2) $3,750,000 in the form of a secured promissory note accruing interest of 2% per year (the “$3.75M Note”), (3) 3,900,455 shares of unregistered common stock of the Company (the “Stock Consideration”), (4) 645,000 shares of unregistered common stock of the Company that constitute deferred contingent compensation to be issued and delivered to certain persons specified by NWarrender in a schedule delivered by NWarrender to the Company at the closing of the Merger (the “Deferred Contingent Stock”), and (5) warrants to purchase an aggregate of 1,820,000 shares of unregistered common stock of the Company at an exercise price of $5.00 per share that will be issued and delivered to certain persons specified by NWarrender in a schedule delivered by NWarrender to the Company at the closing of the Merger (the “Warrants”).

On December 30, 2021, LIFD repaid all principal and interest due under the $3.75M Note between NWarrender and LIFD dated February 24, 2020 that was a portion of the Merger Consideration paid by LIFD to NWarrender under the Merger Agreement. Pursuant to the terms of that promissory note, the unpaid balance of the note accrued interest at the rate of 2% per annum.

On December 30, 2021, NWarrender kept $1,000,000 of the repayment, plus accrued interest, and on January 3, 2022, reloaned $2,750,000 back to LIFD at the rate of 2.5% (the “$2.75M Note”).

Prior to July 25, 2022 the $2.75M Note payable jointly by the Company and Lifted to NWarrender was secured by a perfected first lien security interest (the “Security Interest”) that encumbered all of the assets of the Company and Lifted. The Company was obligated to pay off the principal of the $2.75M Note in five semi-annual payments to NWarrender of $458,333 and a sixth and final semi-annual payment to NWarrender of $458,335, in each case plus accrued interest, starting on June 30, 2022. 

On June 7, 2022, LFTD Partners prepaid $916,666 of the principal of the $2.75M Note, and $29,384 of related accrued interest through that date, which left $1,833,334 remaining principal on the $2.75M Note. On July 5, 2022, we entered into an agreement (“Acceleration Agreement”) with NWarrender. Under the terms of the Acceleration Agreement, we were obligated to repay the remaining principal balance as follows: $1,374,999 on or before December 31, 2022, and $458,335 on or before December 31, 2024. Then, on July 8, 2022, we prepaid $916,666, along with accrued interest, and then, on July 25, 2022, we prepaid the remaining principal balance of $916,668 and accrued interest in full, and all collateral securing the $2.75M Note was released.

Bonus

During the quarter ended March 31, 2022, NWarrender was also paid $680,000 of the Modified 2021 Bonus Pool Amount.

Obligation to Purchase Headquarters Building

Toward the end of 2020, NWarrender, through his assigned entity 95th Holdings, LLC, purchased a building located at 5511 95th Avenue in Kenosha, Wisconsin (“5511 Building”) that was immediately leased to us to conduct our expanded operations. The 5511 Building includes office, laboratory and warehouse space. As part of the lease agreement with 95th Holdings, LLC, the parties agreed that our wholly owned subsidiary Lifted would eventually purchase the 5511 Building. The purchase price for the 5511 Building was originally subject to variation based on a formula agreed upon by the parties. Pursuant to an agreement with Warrender on December 30, 2021, the parties agreed to set the purchase price for the 5511 Building at $1,375,000. Prior to the Acceleration Agreement, Lifted had an obligation to complete the purchase of the 5511 Building on or before December 31, 2022. Pursuant to the Acceleration Agreement, the deadline to purchase the 5511 Building has been extended by one year to December 31, 2023. In addition, the Acceleration Agreement contains a provision that if we raise $5,000,000 of debt or equity capital, then Lifted or our designee shall purchase the 5511 Building from 95th Holdings, LLC at the agreed upon $1,375,000 purchase price within two days.

F-21

SmplyLifted LLC

On a quarterly basis, SmplyLifted LLC reimbursed Lifted for WJacobs’ time as the Chief Financial Officer at WJacobs’ hourly rate. As of September 30, 2021, SmplyLifted LLC owed $313 to Lifted as reimbursement for WJacobs’ time as the Chief Financial Officer.

On February 2, 2021, Lifted owed SmplyLifted $450; on February 10, 2021, Lifted paid SmplyLifted the $450.

As of March 31, 2021, Lifted owed SmplyLifted $9,719. Between April 1, 2021 and April 5, 2021, Lifted paid SmplyLifted the $9,719.

During the quarter ended September 30, 2022, SMPLSTC, one of Lifted’s partners in SmplyLifted, wrote a check to Lifted for $19,992 on behalf of SmplyLifted LLC, to cover two third-party accounting-related invoices of SmplyLifted. SMPLSTC’s check was short of the total of the two invoices by $146. Lifted paid the remaining $146 that SmplyLifted owed one of the third party accounting firms and wrote off the corresponding receivable from SmplyLifted, due to the lack of collectability from SmplyLifted because of SmplyLifted’s insolvency.  

Corner Vapory LLC

NWarrender is a 50% owner in Corner Vapory LLC. Corner Vapory LLC owns a vape shop (called Corner Vapory), and Canna Vita, a CBD shop, both located in Kenosha, Wisconsin. The other owners of Corner Vapory LLC consist of Lifted’s Director of Operations and his wife. During the three and nine months ended September 30, 2022, Corner Vapory LLC purchased $9,306 and $40,410, respectively, worth of products from Lifted, and Lifted wrote off its receivable of $17,260 from Corner Vapory as of September 30, 2022.   

In comparison, during the three and nine months ended September 30, 2021, Corner Vapory purchased $21,842 and $34,032, respectively, worth of products from Lifted, and Lifted recorded a receivable of $9,070 from Corner Vapory as of September 30, 2021.

95th Holdings, LLC

From June 1, 2018 through June 1, 2021, Lifted rented 3,300 square feet of space located in Zion, Illinois, for manufacturing, warehousing and office space. From June 1, 2021 through November 2021, Lifted leased such space on a month-to-month basis. From May 2020 until April 1, 2021, Lifted also temporarily used additional space located adjacent to its rented space in Zion, Illinois, and made payments in lieu of rent therefor.

Lifted’s rented space in Zion, Illinois, was not adequate in light of various issues including zoning uncertainties, lack of air conditioning, and small size. As such, on December 18, 2020, Lifted as tenant entered into a Lease Agreement (the “Lease) with 95^th Holdings, LLC (“Landlord”) for office, laboratory and warehouse space in a building located at 5511 95^th Avenue, in the City of Kenosha, State of Wisconsin (the “Premises”). The lease commencement date was January 1, 2021, and lease termination date is January 1, 2026. 

Lifted constructed improvements including a clean room, and gradually moved into the Kenosha Premises over the course of the first quarter of 2021. Under the terms of the “triple-net” Lease, starting on January 1, 2021, Lifted leased approximately 11,238 square feet at the Premises at $6.13 per square foot per year in base rent ($68,888.94 in 2021), which is subject to a 2% increase in base rent each year, plus certain operating expenses and taxes. The Lease will continue until midnight on the fifth anniversary date of the commencement date of the Lease. Lifted shall have the right to extend the original five year term of the Lease for one extension period of two years, commencing upon the expiration of the original term. Lifted and Landlord are required to execute an “Amendment of Extension” prior to six months before the expiration of the original term.

Under the terms of the lease, the tenant, Lifted, has the option to purchase the property at any time prior to December 31, 2025, and in any event, Lifted is obligated to purchase the property on or before that date. Pursuant to the Lease, in all cases Lifted’s purchase price for the Premises shall be in an amount equal to the greater of: (1) the fair market value of the Premises at the time Lifted purchases the Premises; or (2) any remaining principal balance of any purchase-money mortgage for the Premises existing at the time of the closing of Lifted’s purchase, plus the corresponding amount identified in the Additional Purchase Price Schedule attached as Exhibit B to the Lease, which is an additional amount ranging between $300,000 and $375,000 based on the number of years that have passed between the commencement of the Lease and the purchase of the Premises by Lifted.

F-22

Landlord is an entity owned by NWarrender, the Company’s Vice Chairman and COO, the CEO of Lifted, and the largest stockholder of the Company as beneficial owner of 3,900,455 common stock shares. Due to the potential conflict of interest, the terms and conditions of the Lease were negotiated on behalf of Lifted by Vincent J. Mesolella, the Lead Outside Director of the Company. Landlord and Lifted were represented by their own independent legal counsel in connection with the Lease. Under the terms of the Lease, NWarrender is able to benefit through his entity 95^th Holdings, LLC by receiving rent and by eventually selling the Premises to Lifted.

During the quarter ended September 30, 2022, Lifted paid $17,567 in rent to 95^th Holdings, LLC. In comparison, during the three months ended September 30, 2021, Lifted paid $17,219 in rent to 95th Holdings, LLC, and owed $3.25 in September 2021 rent at September 30, 2021 to 95th Holdings, LLC. During the nine months ended September 30, 2022 and September 30, 2021, Lifted paid $52,700 and $51,663, respectively, in rent to 95th Holdings, LLC.

Under the terms of the Omnibus Agreement, Lifted is obligated to purchase the Premises from Landlord on or before December 31, 2022 for a fixed purchase price of $1,375,000. Pursuant to the terms of the Acceleration Agreement, the purchase date has been delayed until on or before December 31, 2023.

Liquid Event Marketing

Liquid Event Marketing is a company owned by Lifted’s Director of Operations, who was hired by Lifted on March 29, 2021. During the quarter and nine months ended September 30, 2022, Lifted purchased $0 and $6,470 of services from Liquid Event Marketing, and $2,262 was payable to Liquid Event Marketing as of September 30, 2022. There were also $8,862 in expense reimbursements owed to Lifted’s Director of Operations as of September 30, 2022.

In comparison, during the quarter ended September 30, 2021, Lifted paid $26,465 to Liquid Event Marketing for labor and consulting, and Lifted recognized a payable to Liquid Event Marketing for $19,965 at September 30, 2021. During the quarter ended June 30, 2021, Lifted paid Liquid Event Marketing $54,829 for the purchase of fixed assets, the installation of fixed assets, and other services.

NOTE 10 – SHAREHOLDERS’ EQUITY

Issuance of Series A Convertible Preferred Stock

The Company has authorized 400,000 shares of its Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock may be converted into 100 shares of common stock. The Series A Convertible Preferred Stock accrues dividends at the rate of 3% annually. The accrued Series A Convertible Preferred Stock dividends are cumulative. The Series A Convertible Preferred Stock dividends shall cease to accrue at such time as the Company’s Common Stock has closed at $3.00 per share or higher for 20 consecutive trading days after the first date that the Series A Registration Statement is effective, and there have been, on average, at least 25,000 shares traded on each of those 20 consecutive trading days. The Series A Convertible Preferred Stock have no voting rights. The holders of the Series A Convertible Preferred Stock shall have voluntary conversion rights. Shares of Series A Convertible Preferred Stock are subject to mandatory conversion (in the discretion of the Company) at such time as the Company’s common stock has closed at $5.00 per share or higher for 20 consecutive trading days after the first date that the Series A Registration Statement is effective, and there have been, on average, at least 50,000 shares traded on each of those 20 consecutive trading days.

Between February 27, 2019 and May 13, 2019, the Company accepted subscriptions from accredited investors to purchase 66,150 shares of newly issued Series A Preferred Stock for an aggregate purchase price of $6,615,000 in cash. These 66,150 shares of Series A Preferred Stock are convertible at the option of the holders into 6,615,000 shares of newly issued common stock of the Company, or $1.00 per share of common stock of the Company. The Series A Preferred Stock will receive an annual 3% dividend, and will be subject to mandatory conversion, under terms and conditions set forth in the Certificate of Designation of the Series A Preferred Stock. On August 2, 2019, the Company filed a Form S-1 Registration Statement covering the shares of newly issued common stock of the Company into which the Series A Convertible Preferred Stock can be converted. On July 6, 2020, the Company filed with the SEC an amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series A Preferred Stock may be converted. On December 10, 2020, the Company filed with the SEC a second amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series A Preferred Stock may be converted. On June 2, 2021, the Company filed with the SEC a third amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series A Preferred Stock may be converted. On July 2, 2021, the Company filed with the SEC a fourth amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series A Preferred Stock may be converted. On July 26, 2021, the Company filed with the SEC a fifth amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series A Preferred Stock may be converted. On August 19, 2021, the Company filed with the SEC a sixth amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series A Preferred Stock may be converted. The Registration Statement was approved deemed effective by the SEC on August 26, 2021. As of September 30, 2022, 61,650 shares of Series A Preferred Stock have been converted into a total of 6,165,000 shares of common stock of the Company, which leaves 4,500 shares of Series A Preferred Stock currently outstanding, convertible into 450,000 shares of common stock of the Company. 

F-23

As of September 30, 2022 and December 31, 2021, the Company has accrued a liability of $5,838 and $11,926, respectively, as dividends payable to holders of the Series A Convertible Preferred Stock. The Company fully intends on paying the annual dividends to the holders of the Series A Convertible Preferred Stock, and as such, the Company has accrued the liability on the Series A Convertible Preferred Stock. During the three and nine months ended September 30, 2022, a total of $0 and $17,147, respectively, of cash dividends were paid to the Series A Convertible Preferred Stock holders. In comparison, during the three and nine months ended September 30, 2021, a total of $0 and $199,187, respectively, of cash dividends were paid to the Series A Convertible Preferred Stock holders.

All of the issuances of securities described above were restricted share issuances and deemed to be exempt from registration in reliance on Rule 506 of Regulation D and/or Section 4(2) of the Securities Act as transactions by an issuer not involving a public offering. Each investor represented that they were accredited investors, as defined in Rule 501 of Regulation D and, there was no general solicitation or general advertising used to market the securities. We made available to each investor disclosure of all aspects of our business, including providing the investor with press releases, access to our auditors, and other financial, business, and corporate information. All securities issued were restricted with an appropriate restrictive legend on certificates for notes and warrants issued stating that the securities (and underlying shares) have not been registered under the Securities Act and cannot be sold or otherwise transferred without an effective registration or an exemption therefrom.

Issuance of Series B Convertible Preferred Stock

The Company has authorized 5,000,000 shares of its Series B Convertible Preferred Stock. Each share of Series B Convertible Preferred Stock may be converted into one shares of common stock. The Series B Convertible Preferred Stock accrues dividends at the rate of 3% annually. The accrued Series B Convertible Preferred Stock dividends are cumulative. The Series B Convertible Preferred Stock dividends shall cease to accrue at such time as the Company’s Common Stock has closed at $7.00 per share or higher for 20 consecutive trading days after the first date that the Series B Registration Statement is effective, and there have been, on average, at least 25,000 shares traded on each of those 20 consecutive trading days. The Series B Convertible Preferred Stock have no voting rights. The holders of the Series B Convertible Preferred Stock shall have voluntary conversion rights. Shares of Series B Convertible Preferred Stock are subject to mandatory conversion (in the discretion of the Company) at such time as the Company’s common stock has closed at $9.00 per share or higher for 20 consecutive trading days after the first date that the Series B Registration Statement is effective, and there have been, on average, at least 50,000 shares traded on each of those 20 consecutive trading days.

Between July 24, 2019 and December 5, 2019, the Company accepted subscriptions from accredited investors to purchase 100,000 shares of newly issued Series B Preferred Stock for an aggregate purchase price of $500,000 in cash. These 100,000 shares of Series B Preferred Stock are convertible at the option of the holder into 100,000 shares of newly issued common stock of the Company. The Series B Preferred Stock will receive an annual 3% dividend, and will be subject to mandatory conversion, under terms and conditions set forth in the Certificate of Designation of the Series B Preferred Stock. On August 2, 2019, the Company filed a Form S-1 Registration Statement covering the shares of newly issued common stock of the Company into which the Series B Convertible Preferred Stock can be converted. On July 6, 2020, the Company filed with the SEC an amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series B Preferred Stock may be converted. On December 10, 2020, the Company filed with the SEC a second amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series B Preferred Stock may be converted. On June 2, 2021, the Company filed with the SEC a third amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series B Preferred Stock may be converted. On July 2, 2021, the Company filed with the SEC a fourth amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series B Preferred Stock may be converted. On July 26, 2021, the Company filed with the SEC a fifth amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series B Preferred Stock may be converted. On August 19, 2021, the Company filed with the SEC a sixth amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series B Preferred Stock may be converted. The Registration Statement was approved deemed effective by the SEC on August 26, 2021. As of September 30, 2022, 60,000 shares of Series B Preferred Stock have been converted into a total of 60,000 shares of common stock of the Company, which leaves 40,000 shares of Series B Preferred Stock currently outstanding, convertible into 40,000 shares of common stock of the Company. 

F-24

As of September 30, 2022 and December 31, 2021, the Company has accrued a liability of $1,783 and $1,796, respectively as dividends payable to holders of the Series B Convertible Preferred Stock. The Company fully intends on paying the annual dividends to the holders of the Series B Convertible Preferred Stock, and as such, the Company has accrued the liability on the Series B Convertible Preferred Stock. During the three and nine months ended September 30, 2022, a total of $4,500 and $4,500, respectively, of cash dividends were paid to the Series B Convertible Preferred Stock holders. In comparison, during the three and nine months ended September 30, 2021, a total of $4,500 and $10,344, respectively, of cash dividends were paid to the Series B Convertible Preferred Stock holders.

All of the issuances of securities described above were restricted share issuances and deemed to be exempt from registration in reliance on Rule 506 of Regulation D and/or Section 4(2) of the Securities Act as transactions by an issuer not involving a public offering. Each investor represented that they were accredited investors, as defined in Rule 501 of Regulation D and, there was no general solicitation or general advertising used to market the securities. We made available to each investor disclosure of all aspects of our business, including providing the investor with press releases, access to our auditors, and other financial, business, and corporate information. All securities issued were restricted with an appropriate restrictive legend on certificates for notes and warrants issued stating that the securities (and underlying shares) have not been registered under the Securities Act and cannot be sold or otherwise transferred without an effective registration or an exemption therefrom.

Share-Based Compensation

No share-based compensation expense was recognized during the three or nine months ended September 30, 2022 or September 30, 2021.

The following is a summary of share-based compensation, stock option and warrant activity as of September 30, 2022 and changes during the quarter then ended:

					Weighted-Average		Aggregate
			Weighted-Average		Remaining Contractual		Intrinsic
	Shares		Exercise Price		Term (Years)		Value
Exercisable Options, Warrants, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants Outstanding, July 1, 2022		2,882,198	$	3.55		2.55	$	2,834,897
Exercisable Options, Warrants, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants Outstanding, September 30, 2022		2,882,198	$	3.55		2.30	$	2,035,579
Outstanding Options, Warrants, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants, September 30, 2022		3,627,198	$	3.85		2.32	$	2,035,579

F-25

Stock Buy-back Transactions with a Non-Affiliate Stockholder and Retirement of 72,000 Shares of Common Stock Held in Treasury

On November 24, 2020, LFTD Partners purchased 36,000 shares of common stock of the Company from a non-affiliate stockholder in a private transaction for $0.95 per share for a total of $34,200. These shares were held in treasury until August 31, 2021, which is when the Company retired them. The retirement of these shares was accounted for under the cost method of accounting.

On January 8, 2021, LFTD Partners Inc. purchased 36,000 shares of common stock of the Company from a non-affiliate stockholder in a private transaction for $0.95 per share for a total of $34,200. These shares were held in treasury until August 31, 2021, which is when the Company retired them. The retirement of these shares was accounted for under the cost method of accounting.

Exercise of Warrant by a Non-Affiliated Entity

On February 19, 2022, an entity non-affiliated with the Company exercised an option to purchase 50,000 shares of unregistered common stock of the Company at an exercise price of $1.00 per share, which the entity paid.

Stock Buy-back Transactions with a Non-Affiliate Stockholder Stock and Retirement of 100,000 Shares of Common Stock

On March 1, 2022, LFTD Partners signed an agreement to purchase a total of 100,000 shares of common stock of the Company from a non-affiliate stockholder in a private transaction for $1.50 per share for a total purchase price of $150,000. On March 8, 2022, all 100,000 shares were transferred to the Company and immediately cancelled.

Conversion of Series A Preferred Stock by a Non-Affiliated Shareholder

On April 1, 2022, a non-affiliated shareholder of the Company converted his 1,000 shares of Series A Preferred Stock into 100,000 shares of unregistered common stock of the Company.

Conversion of Series A Preferred Stock by a Non-Affiliated Shareholder

On April 14, 2022, a non-affiliated shareholder of the Company converted 250 shares of his Series A Preferred Stock into 25,000 shares of unregistered common stock of the Company.

NOTE 11 – CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

Operating and Finance Lease Right-of-Use Assets – In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “Leases” (Topic 842) (“ASU 2016-02”). The amended guidance, which is effective for the Company on January 1, 2019, requires the recognition of lease assets and lease liabilities on the balance sheet for those leases with terms in excess of 12 months and currently classified as operating leases. Leases with an initial term of one year or less are not recorded on the balance sheet; lease expense for these types of leases are recognized on a straight-line basis over the lease term. Options to extend or terminate a lease are not included in the determination of the right-of-use asset or lease liability unless it is reasonably certain to be exercised. Lifted adopted ASU 2016-02 using the modified retrospective approach, electing the package of practical expedients.

Lifted does not own any physical properties.

Lease of Building Located at 5511 95th Ave, Kenosha, Wisconsin

On December 18, 2020, Lifted as tenant entered into a Lease Agreement (the “Lease) with 95th Holdings, LLC (“Landlord”) for office, laboratory and warehouse space in a building located at 5511 95^th Avenue, in the City of Kenosha, State of Wisconsin (the “Premises”). The lease commencement date was January 1, 2021, and lease termination date is January 1, 2026. 

F-26

Landlord is an entity owned directly or indirectly by NWarrender, the Company’s Vice Chairman and COO, the CEO of Lifted, and the largest stockholder of the Company as the beneficial owner of 3,900,455 shares of common stock of the Company. Due to the potential conflict of interest, the terms and conditions of the Lease were negotiated on behalf of Lifted by Vincent J. Mesolella, the Lead Outside Director of the Company. Landlord and Lifted were represented by their own independent legal counsel in connection with the Lease. Under the terms of the Lease, NWarrender is able to benefit through his ownership of Landlord by Landlord’s receiving rent and eventually selling the Premises to Lifted.

Lifted constructed improvements to the Premises including a clean room, and gradually moved into the Premises over the course of the first quarter of 2021.

Under the terms of the “triple-net” Lease, starting on January 1, 2021, Lifted leased approximately 11,238 square feet at the Premises at $6.13 per square foot per year in base rent ($68,888.94 in 2021), which is subject to a 2% increase in base rent each year, plus certain operating expenses and taxes. The Lease will continue until midnight on the fifth anniversary date of the commencement date of the Lease. Lifted shall have the right to extend the original five year term of the Lease for one extension period of two years, commencing upon the expiration of the original term. Lifted and Landlord are required to execute an “Amendment of Extension” prior to six months before the expiration of the original term.

Under the terms of the Omnibus Agreement, Lifted was obligated to purchase the Premises from Landlord on or before December 31, 2022 for a fixed purchase price of $1,375,000. As a result, as of December 31, 2021, the Company modified its methodology for accounting of this finance lease (the “Modification Date”), such that the only liability recognized as of December 31, 2021 was a current (within one year) liability, and there was no long-term liability recognized. An immaterial loss on lease modification of $1,446 was also recognized as of the Modification Date. The Finance Lease Right-of-Use Asset value was reduced to reflect the fixed purchase price agreed to under the Omnibus Agreement.

Pursuant to the Acceleration Agreement, Lifted’s obligation to purchase the Premises from Landlord was delayed to on or before December 31, 2023.  

Prior to the signing of the Acceleration Agreement, the Finance Lease Right-of-Use Asset was to be amortized over its useful life (39 years) on a prospective basis from the Modification Date. That is, the Finance Lease Right-of-Use Asset was previously amortized over the lease term, but given mandatory purchase by December 31, 2022, the Finance Lease Right-of-Use Asset will be amortized over 39 years starting on the Modification Date. As a result of the signing of the Acceleration Agreement, the accounting for the Finance Lease Right-of-Use Asset will be adjusted accordingly.

Lease of Space Located at 8920 58th Place, Suite 850, Kenosha, Wisconsin

On September 23, 2021, Lifted entered into a Lease Agreement (the “58^th Lease”) with TI Investors of Kenosha LLC, (“TI”) for office and warehouse space (the “58^th Suite 850”) located at 8920 58th Place, Suite 850, Kenosha, WI 53144. The 58^th Suite 850 serve as sales offices and finished goods storage for Lifted.

The term of the 58^th Lease commenced on October 1, 2021. The initial term of the Lease will extend approximately three year, unless earlier terminated in accordance with the terms and conditions of the 58^th Lease. While extensions are not prohibited, Lifted does not have the right to unilaterally elect to extend the term of the 58^th Lease for an additional term.

Under the terms of the 58^th Lease, Lifted leases approximately 5,000 square feet of the 58^th Suite 850 and pays a base square foot charge of $5.75 per square foot per annum, with a 3% increase in rent each year during the term. Lifted is also be responsible for paying its proportionate share of real estate taxes and other operating costs. This lease is accounted for as an operating lease.

F-27

Rent Schedule

Date	Base Monthly  Rent
10/01/2021 – 09/30/2022	$	2,395.84
10/01/2022 – 09/30/2023	$	2,467.72
10/01/2023 – 09/30/2024	$	2,541.75

Lease of Space Located at 8910 58th Place, Suites 600 and 700, Kenosha, Wisconsin

On November 17, 2021, Lifted entered into a lease agreement with TI for office and warehouse space located at 8910 58th Place, Suites 600 & 700, Kenosha, WI 53144 (the “Second 58^th Lease”). The Second 58^th Lease is used for raw goods storage.

The term of the Second 58^th Lease commenced on January 1, 2022. The initial term of the Second 58^th Lease will extend approximately five years, unless extended or earlier terminated in accordance with the Second 58^th Lease. While extensions are not prohibited, Lifted does not have the right to unilaterally elect to extend the term of the Second 58^th Lease for an additional term.

Under the terms of the Second 58^th Lease, Lifted leases approximately 8,000 square feet at 8910 58th Place, Suites 600 & 700, Kenosha, WI and pay a base square foot charge of $6.00 per square foot per annum, with increases in rent each year during the term as set out in the table titled “Rent Schedule” below. Lifted is also responsible for paying its proportionate share of real estate taxes and other operating costs. This lease is accounted for as an operating lease.

Rent Schedule

Date	Base Monthly Rent
01/01/2022 – 12/31/2022	$	4,000.00
01/01/2023 – 12/31/2023	$	4,120.00
01/01/2024 – 12/31/2024	$	4,243.60
01/01/2025 – 12/31/2025	$	4,370.91
01/01/2026 – 12/31/2026	$	4,502.34

Lease of Space Located at 9560 58th Place Suite 360, Kenosha, Wisconsin

On May 31, 2022, Lifted entered into another lease agreement with TI for office and warehouse space located at 9560 58th Place, Suite 360, Kenosha, WI 53144 (the “Third 58^th Lease”). The Third 58^th Lease is expected to be used for gummy manufacturing, as well as provide additional needed office space.

The term of the Third 58^th Lease commenced on July 1, 2022 (the “Commencement Date”). The initial term of the Third 58^th Lease will extend approximately five years from the Commencement Date and ending June 30, 2027, unless extended or earlier terminated in accordance with the Lease. While extensions are not prohibited, Lifted does not have the right to unilaterally elect to extend the term of the Third 58^th Lease for an additional term.

Under the terms of the Third 58^th Lease, Lifted leases approximately 6,132 square feet at 9560 58th Place, Suite 360, Kenosha, WI 53144 and pay an initial base square foot charge of $10.75 per square foot per annum, with increases in rent each year during the term as set out in the table titled “Rent Schedule” below. Lifted is also responsible for paying its proportionate share of real estate taxes and other operating cost. This lease is accounted for as an operating lease.

F-28

Rent Schedule

Date	Base Monthly Rent
07/01/2022 – 06/30/2023	$	5,493.25
07/01/2023 – 06/30/2024	$	5,630.58
07/01/2024 – 06/30/2025	$	5,771.35
07/01/2025 – 06/30/2026	$	5,915.63
07/01/2026 – 06/30/2027	$	6,063.52

Sublease of Space Located at 2701-09 West Fulton PH, Chicago, Illinois 60612

On July 6, 2022, Lifted entered into a sublease for office space in Chicago, Illinois located at 2701-09 West Fulton PH, Chicago, Illinois 60612. The sublease costs $3,000 per month, plus supplemental lease related charges such as real estate taxes and common expenses of the property that we anticipate will be commercially typical costs. The sublease was retroactively effective as of June 1, 2022 and for a five-month term that ended on October 31, 2022. The purpose of the sublease is to make available office space for the members of Lifted’s sales team who live in Chicago. These salespeople were spending significant time in their cars commuting from Chicago to Kenosha.

The sublessor is one of our affiliates, Bill McLaughlin, Lifted’s Chief Strategy Officer. The sublease is structured so that Mr. McLaughlin's lease payment obligations to the landlord are passed on to Lifted on a dollar-for-dollar basis, such that Mr. McLaughlin does not realize a cashflow profit or loss from the sublease.

As described in “NOTE 15 – SUBSEQUENT EVENTS”, the sublease is currently operating on a month-to-month basis. Management expects to extend the sublease once Mr. McLaughlin is presented a new lease from his landlord.

Lease of Space in Zion, Illinois

From June 1, 2018 through June 1, 2021, Lifted rented 3,300 square feet of space located in Zion, Illinois, for manufacturing, warehousing and office space. From June 1, 2021 through November 2021, Lifted leased such space on a month-to-month basis. From May 2020 until April 1, 2021, Lifted also temporarily used additional space located adjacent to its rented space in Zion, Illinois, and made payments in lieu of rent therefor.

Third Party Facilities

From time to time, the Company maintains inventory at third party manufacturer or copacker facilities around the USA.

Balance Sheet Classification of Operating Lease Assets and Liabilities

Asset	Balance Sheet Line	September 30, 2022
Operating Lease Right-of-Use Asset, net of Right-of-Use Asset Amortization of $71,554 in 2022	Non-Current Assets	$	525,942
Liability	Balance Sheet Line	September 30, 2022
Operating Lease Liabilities	Current Liabilities	$	115,010
	Non-Current Liabilities	$	414,875

F-29

Balance Sheet Classification of Finance Lease Assets and Liabilities

Asset	Balance Sheet Line	September 30, 2022
Finance Lease Right-of-Use Asset, net of Right-of-Use Asset Amortization of $195,208 in 2022	Non-Current Assets	$	1,285,200
Liability	Balance Sheet Line	September 30, 2022
Finance Lease Liabilities	Current Liabilities	$	(26,079	)
Finance Lease Liabilities	Non-Current Liabilities	$	1,376,439

Lease Costs

The tables below summarizes the components of lease costs for the three and nine month periods ended September 30, 2022: 

Lease Cost:	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021
Finance lease expense:
Amortization of Right-of-Use Assets	$	10,800	$	12,337
Interest on lease liabilities		23,924		13,188
Operating lease expense		20,147		-
Total	$	54,871	$	25,525
Lease Cost:	Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Finance lease expense:
Amortization of Right-of-Use Assets	$	35,473	$	37,010
Interest on lease liabilities		46,445		39,673
Operating lease expense		60,442		8,000
Total	$	142,360	$	84,683

As described in Note 1, a portion of monthly overhead costs such as lease expense are allocated to finished goods. For example, monthly overhead costs such as payments for rent, utilities, insurance, and indirect labor are allocated to finished goods based on the estimated percentage cost toward the finished goods. Depreciation expense related to certain machinery and equipment is also allocated to finished goods.

Maturity Analysis as of September 30, 2022:
	Finance			Operating
2022	$	35,133		$	55,070
2023		1,445,970			146,018
2024		-			142,211
2025		-			122,573
2026		-			125,903
Thereafter		-			36,381
Total		1,481,103			628,156
Less: Present value discount		(138,730	)		(98,271	)
Lease liability	$	1,342,373		$	529,885

F-30

Potential Issuance of Warrants to Purchase Shares of Common Stock of the Company

The Compensation Committee of the Company’s Board of Directors may, from time to time, recommend that certain warrants to purchase shares of common stock of the Company should be issued to new or current members of the Company’s Board of Directors, to officers and employees of the Company and its subsidiaries, or to members of any advisory board or consultants to the Company.

Bonus to Lifted’s Chief Strategy Officer

Lifted’s Chief Strategy Officer hired on July 1, 2021 has developed and implemented certain important strategies which have assisted Lifted’s efforts to increase its production, fulfillment and sales capabilities. This employee’s two-year agreement with Lifted entitles such Chief Strategy Officer to be paid an annual salary of $180,000 plus a bonus equal to 5% of total net sales for Lifted in excess of $6,000,000 per quarter.

At September 30, 2022, the bonus payable to the Chief Strategy Officer totaled $261,864. This bonus is accrued for in the Accounts Payable and Accrued Expenses liability account on the Consolidated Balance Sheets.

Company-Wide Management Bonus Pool

Please refer to “NOTE 13 – COMPANY-WIDE MANAGEMENT BONUS POOL” for more information about the company-wide management bonus pool.

NOTE 12 – LEGAL PROCEEDINGS

The Company may be involved in certain legal proceedings that arise from time to time in the ordinary course of its business. Except for income tax contingencies, the Company records accruals for contingencies to the extent that management concludes that the occurrence is probable and that the related amounts of loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred.

The Company may be involved in certain legal proceedings that arise from time to time in the ordinary course of its business. Except for income tax contingencies, the Company records accruals for contingencies to the extent that management concludes that the occurrence is probable and that the related amounts of loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred.

Lifted currently is involved in three pending lawsuits, as the plaintiff:

(1)	Lifted Liquids, Inc. v. Girish GPO, Inc., Girish Ray, and the Law Offices of Saul Roffe – The Company has filed an action in a case styled “Lifted Liquids, Inc. v. Girish GPO, Inc., Girish Ray, and the Law Offices of Saul Roffe” seeking to recover $30,000 that was to be held in escrow. The Company is also requesting approximately $14,569 in damages resulting from Girish GPO’s failure to pay for product it ordered and that the Company delivered. The matter is in the discovery phase and the Company intends to continue pursuing the action and recover its damages.
(2)	Lifted Liquids, Inc. v. Asad Awawdeh and Habib Cash and Carry SD, Inc. – The Company has filed an action seeking to recover approximately $98,000 in damages resulting from Defendants’ failure to pay for product they ordered. The matter has been filed in California and the Company intends to pursue the action and recover its damages.
(3)	Lifted Liquids, Inc. v. DEV Distribution, LLC, No, DC-22-15080 – In October 2022, Lifted filed an action against Dev Distribution LLC,  a vendor who failed to deliver certain products that Lifted has purchased and paid $263,938 for. The case is pending in the State of Texas 14th Civil District Court of Dallas County and is in its early stages. Lifted is seeking an injunction requiring the vendor to provide to Lifted the products that Lifted has purchased and paid for. Lifted is considering amending the complaint to seek the return of its molds and its packaging materials. The Company will also seek to recover any damages as a result of the vendor's actions.

Lifted currently is involved in one pending lawsuit, as the defendant:

(1) Martha, Edgar v. Lifted Liquids – Edgar Martha, who worked as an independent contractor in Lifted’s production facility, has sued Lifted in regard to an alleged chemical burn. Mr. Martha has expressed to Lifted’s attorney that Mr. Martha is inclined to settle the case for $5,000. However, there can be no assurance or guarantee that the case can be settled for $5,000, as the medical bills in the case are significant and Mr. Martha’s medical insurance carrier has refused coverage.

On February 1, 2022, Lifted entered into a settlement agreement that was mutually acceptable to the parties which has resolved the following lawsuit: 

(1) Lifted Liquids, Inc. v. Monkey Bones Distribution LLC (United States Circuit Court for Kenosha County of the State of Wisconsin; Civil Case No. 2021 CV 001196).

F-31

In December 2021, our wholly-owned subsidiary Lifted sued distributor Monkey Bones Distribution, LLC for breach of contract for its failure to pay funds due under the agreement between the parties. In February 2022, the parties settled the litigation and agreed to mutual releases and dismissal of the lawsuit in exchange for $36,100.28 paid by Monkey Bones to Lifted Liquids and 15,000 custom gray scale empty disposable devices delivered to Monkey Bones by Lifted Liquids. The parties performed the settlement agreement and the matter was dismissed on February 3, 2022.

NOTE 13 – COMPANY-WIDE MANAGEMENT BONUS POOL

Pursuant to the employment agreements entered into between the Company and its three principal executives GJacobs, WJacobs and NWarrender (individually, “Executive”), the Company is obligated to compensate management of the Company via a management bonus pool.

For each fiscal year during the Employment Term, the Executive shall be eligible to be considered for an annual bonus (the “Annual Bonus”) as part of a Company-wide management bonus pool arrangement. During the fourth quarter of each year, the Chairman of the Compensation Committee of the Board (the “Compensation Committee”) shall recommend in writing a consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) target (each, a “Target”) for the following year (the “Target Year”), which Target must be approved in writing by each of the following for as long as he remains employed by the Company: GJacobs, WJacobs, and NWarrender (collectively, and with respect to each for only as long as he is an employee of the Company, the “Executive Management Group”). If the Chairman of the Compensation Committee does not recommend in writing a Target for a Target Year that is approved in writing by all of the members of the Executive Management Group prior to the commencement of the Target Year, then the Target for the Target Year shall be equal to the actual consolidated EBITDA of the Company and its subsidiaries during the then-current year (i.e., the year preceding the Target Year) as certified in writing by the Company’s outside firm of independent certified public accountants. If the actual consolidated EBITDA of the Company and its subsidiaries during the Target Year as certified in writing by the Company’s outside firm of independent certified public accountants exceeds the Target (the amount by which the actual consolidated EBITDA of the Company and its subsidiaries during the Target Year as certified in writing by the Company’s outside firm of independent certified public accountants exceeds the Target, the “Excess Amount”), then cash equal to 33% of the Excess Amount shall be set aside by the Company as a cash management bonus pool (the “Bonus Pool”), and the amount of the Bonus Pool shall be allocated and paid out by the Company as bonuses or fees to the officers of the Company and its subsidiaries (and potentially, to directors or third parties who have significantly helped the Company and its subsidiaries during the Target Year), with the amount to be paid to each payee, including the amount of any Annual Bonus to be paid to the Executive, to be determined by unanimous written agreement of the Executive Management Group, in their sole discretion. The Executive expressly agrees and acknowledges that the amount of the Annual Bonus (if any) allocated and paid to the Executive as so determined by unanimous written agreement of the Executive Management Group shall be final, non-appealable, and binding upon the Executive, regardless of whether the Executive receives any Annual Bonus, and regardless of whether any Annual Bonus received by the Executive is higher or lower than any other person’s bonus, under any and all circumstances whatsoever. The Company shall pay the Executive the Annual Bonus, if any, no later than March 15^th of the year following the applicable Target Year.) In the event that there is funding for the Bonus Pool but the Executive Management Group does not reach a unanimous decision on Bonus allocations, then no annual bonus shall be paid. The Annual Bonus Pool would then be placed in escrow and the Executive Management Group would mediate.

The company-wide Bonus Pool for 2021 was $1,559,334 (the “Modified 2021 Bonus Pool Amount”), which was the aggregate amount that was accrued for in LIFD’s financial statements covering the period from January 1, 2021 through September 30, 2021. The Modified 2021 Bonus Pool Amount was distributed during the quarter ended March 31, 2022.

Pursuant to the Amended Omnibus Agreement, the 2022 company-wide bonus pool shall not be allowed to be accrued or paid by LIFD if and to the extent that doing so would decrease LIFD’s 2022 diluted earnings per share of common stock below $0.56 per share. As of September 30, 2022, the Company did not meet the diluted earnings per share of common stock requirement of $0.42 per share ($0.56 x 3/4), and as a result, the Company eliminated the company-wide bonus pool accrual of $2,121,532, which had been accrued through June 30, 2022. Moreover, no company-wide management bonus pool accrual was booked for the quarter ended September 30, 2022. In comparison, as of December 31, 2021, the Company reported a company-wide bonus pool accrual of $1,556,055.

F-32

NOTE 14 – INCOME TAXES

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act reduced the U.S. federal statutory tax rate, broadened the corporate tax base through the elimination or reduction of deductions, exclusions, and credits, limited the ability of U.S. corporations to deduct interest expense, and transitioned to a territorial tax system which allows for the repatriation of foreign earnings to the U.S. with a 100% federal dividends received deduction prospectively. In addition, the Tax Act required a one-time transitional tax on foreign cash equivalents and previously unremitted earnings. Several of the new provisions enacted as part of the Tax Act require clarification and guidance from the U.S. Internal Revenue Service (“IRS”) and Treasury Department. These or other changes in U.S. tax laws could impact our profits, effective tax rate, and cash flows.

Significant components on the Company’s income tax provision (benefit) for continuing operations is as follows:

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2022			2021		2022			2021
Current
Domestic-Federal	$	584,994		$	-	$	1,970,372		$	-
Domestic-State		165,096			-		822,289			-
Texas Franchise Tax		838			-		57,366			-
Foreign		-			-		-			-
		750,929			-		2,850,027			-
Deferred
Domestic-Federal	$	(555,760	)	$	-		(253,605	)		-
Domestic-State		(171,142	)		-		(81,696	)		-
Foreign		-			-		-			-
		(726,902	)		-		(335,301	)		-
Total Provision (Benefit) for Income Taxes	$	24,027		$	-	$	2,514,726		$	-

The Company currently believes that all significant filing positions are highly certain and that all of its significant income tax filing positions and deductions would be sustained upon audit. Therefore, the Company has no significant reserves for uncertain tax positions and no adjustments to such reserves were required by generally accepted accounting principles. The Company’s policy is to recognize accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. The Company’s tax returns are subject to examination for the years ended December 31, 2016 through 2021. A reconciliation of the amount of tax provision (benefit) computed using the U.S. federal statutory income tax rate to the provision (benefit) for income taxes on continuing operations is as follows:

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Domestic-Federal	$	103,010		$	469,597		$	1,911,512		$	934,645
State tax benefit, net of federal benefit		(38,623	)		135,138		$	582,681			268,966
Non-deductible expenses		13,941			2,334		$	20,522			7,825
Texas franchise tax		838			-			57,366			-
Revision of prior years' provision to return filing		(72,471	)		-		$	(72,471	)		-
Change in estimated future income tax rates		94,839			-		$	(37,079	)		-
Change in valuation allowance		(79,303	)		(607,069	)	$	38,257			(1,211,436	)
Other		1,796			-		$	13,939			-
Total Provision (Benefit) for Income Taxes	$	24,027		$	-		$	2,514,726		$	-

F-33

Deferred tax assets and liabilities as of September 30, 2022 and December 31, 2021 were as follows:

	September 30,			December 31,
	2022			2021
Deferred Tax Assets:
Stock-based compensation	$	2,752,667		$	2,714,410
Sales Allowances		230,519			-
Spoiled and Written-Off Inventory		634,040			-
Accrued Related Party Expenses		4,412			259,463
Impairment of SmplyLifted Note and Other Receivables		-			105,124
Allowance for Doubtful Accounts		40,838			64,661
Other		17,867			8,725
Less: Valuation allowance		(2,752,667	)		(2,714,410	)
Total Deferred Tax Assets		927,676			437,973
Deferred Tax Liabilities:
Depreciation & Amortization		(260,824	)		(105,143	)
Other		-			(1,279	)
Total Deferred Tax Liabilities		(260,824	)		(106,422	)
Net Deferred Tax Assets	$	666,852		$	331,551

NOTE 15 – SUBSEQUENT EVENTS

Management of the Company has evaluated the events that have occurred through the date of the filing of this quarterly report on Form 10-Q and has noted the following subsequent events for disclosure purposes:

Lifted Liquids, Inc. v. DEV Distribution, LLC, No, DC-22-15080

In October 2022, Lifted filed an action against Dev Distribution LLC,  a vendor who failed to deliver certain products that Lifted has purchased and paid $263,938 for. The case is pending in the State of Texas 14th Civil District Court of Dallas County and is in its early stages. Lifted is seeking an injunction requiring the vendor to provide to Lifted the products that Lifted has purchased and paid for. Lifted is considering amending the complaint to seek the return of its molds and its packaging materials. The Company will also seek to recover any damages as a result of the vendor's actions.  

2701-09 West Fulton PH, Chicago, Illinois 60612

On July 6, 2022, our wholly owned subsidiary Lifted entered into a sublease for office space in Chicago, Illinois located at 2701-09 West Fulton PH, Chicago, Illinois 60612. The sublease costs $3,000 per month, plus supplemental lease related charges such as real estate taxes and common expenses of the property that we anticipate will be commercially typical costs. The sublease was retroactively effective as of June 1, 2022 and for a five-month term that ended on October 31, 2022. The purpose of the sublease is to make available office space for the members of Lifted Made's sales team who live in Chicago. These salespeople were spending significant time in their cars commuting from Chicago to Kenosha.

The sublessor is one of our affiliates, Bill McLaughlin, Lifted’s Chief Strategy Officer. The sublease is structured so that Mr. McLaughlin's lease payment obligations to the landlord are passed on to Lifted on a dollar-for-dollar basis, such that Mr. McLaughlin does not realize a cashflow profit or loss from the sublease.

The sublease is currently operating on a month-to-month basis. Management expects to extend the sublease once Mr. McLaughlin is presented a new lease from his landlord. 

F-34

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

As used in this Form 10-Q, references to the “Company,” “LFTD Partners,” “LIFD,” “we,” “our” or “us” refer to LFTD Partners Inc. and Lifted, unless the context otherwise indicates.

Prior to the acquisition of Lifted on February 24, 2020, LFTD Partners Inc., formerly known as Acquired Sales Corp., had no sources of revenue, and LFTD Partners Inc. had a history of recurring losses, which has resulted in an accumulated deficit of $4,842,407 as of September 30, 2022. LFTD Partners Inc. has Preferred Stock outstanding that is currently accruing dividends at the rate of 3% per year, and has certain bonuses being accrued. These matters raise substantial doubt about our ability to continue as a going concern.

This Management’s Discussion and Analysis (“MD&A”) section discusses our results of operations, liquidity and financial condition and certain factors that may affect our future results. You should read this MD&A in conjunction with our financial statements and accompanying notes included elsewhere in this report.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains statements that are considered forward-looking statements. Forward-looking statements give the Company’s current expectations and forecasts of future events. All statements other than statements of current or historical fact contained in this quarterly report, including statements regarding the Company’s future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “plan,” and similar expressions, as they relate to the Company, are intended to identify forward-looking statements. These statements are based on the Company’s current plans, and the Company’s actual future activities and results of operations may be materially different from those set forth in the forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. Any or all of the forward-looking statements in this annual report may turn out to be inaccurate. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. The forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and assumptions. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events occurring after the date hereof. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained in this quarterly report.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes that appear in our annual report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 31, 2022. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Certain information included herein contains statements that may be considered forward-looking statements, such as statements relating to our anticipated revenues and operating results, future performance and operations, plans for future expansion, capital spending, sources of liquidity and financing sources. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include the “Risk Factors” included herein and in our annual report on Form 10-K filed with the SEC on March 31, 2022, that can be read at www.sec.gov.

Overview

Please refer to “NOTE 1 – DESCRIPTION OF THE BUSINESS OF LFTD PARTNERS INC.” for information.

Liquidity and Capital Resources

The following table summarizes our current assets, current liabilities and working capital as of September 30, 2022 and December 31, 2021, as well as cash flows for the nine months ended September 30, 2022 and 2021.

	September 30, 2022		December 31, 2021
Current Assets	$	14,616,599	$	13,152,696
Current Liabilities		6,573,881		11,906,270
Working Capital		8,042,718		1,246,426

	For the Nine Months Ended
	September 30,
	2022			2021
Net Cash Provided by Operating Activities	$	3,536,595		$	4,350,358
Net Cash Used in Investing Activities	$	(656,381	)	$	(366,764	)
Net Cash Used In Financing Activities	$	(131,987	)	$	(118,094	)

3

Comparison of the balance sheet at September 30, 2022 to December 31, 2021

Total current assets at September 30, 2022 of $14,616,599 were adequate for us to fund current operations; total current assets primarily consisted of inventory of $6,344,677, cash on hand of $4,350,959, net accounts receivable of $1,967,391, and prepaid expenses of $1,946,318. In comparison, consolidated current assets of $13,152,696 at December 31, 2021 primarily consisted of prepaid expenses of $4,262,237, inventory of $3,809,944, net accounts receivable of $3,461,499, and cash on hand of $1,602,731.

The buildup of our inventory to the level of $10,049,245 as of June 30, 2022 reflected our strategy to have enough of our current product lineup on hand to meet anticipated customer demand, but also to try to schedule our production so that a significant portion of our lab and production staff, then in the third quarter, could be allocated toward the production of certain new products that were under research and development for months. However, this research and development took longer than expected. In addition, we experienced delays in the supply of certain raw materials from China. Also, we experienced slower sales in the second and third quarters of 2022, which we believe is attributable, at least in part, to the seasonality of certain products.

As a result of all these factors, Lifted Made furloughed 69 of its lab and production workers from August 15 through September 2, 2022, to allow our supply chain to catch up.  Following the completion of this furlough, certain of Lifted Made’s employees did not return to employment by Lifted Made, and certain of Lifted Made’s employees were terminated for cause during the third quarter of 2022. As of September 30, 2022, Lifted Made’s employee and independent contractor headcount was approximately 117.

As of September 30, 2022, inventory was valued at $6,344,677; this is after the write off of $2,313,902 of certain Clogged Vapes which were determined to be obsolete after random sampling of our inventory convinced us that the vast majority of the Clogged Vapes were clogged and unsellable. Please refer to the description in “Inventory” under NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES for more information regarding the Clogged Vapes. In comparison, as of December 31, 2021, inventory was valued at $3,809,944.

At September 30, 2022 and December 31, 2021, our other assets primarily included goodwill of $22,292,767 related to the acquisition of Lifted on February 24, 2020. Also, at both September 30, 2022 and December 31, 2021, our other assets included our investments in Ablis, Bendistillery and Bend Spirits, which total $1,896,200. At September 30, 2022, we also reported a net finance lease right-of-use asset of $1,285,200, net fixed assets of $989,688, and a net operating lease right-of-use asset of $525,942. In comparison, at December 31, 2021, we reported a net finance lease right-of-use asset of $1,227,532, net fixed assets of $433,213, and a net operating lease right-of-use asset of $76,412.

At September 30, 2022, current liabilities of $6,573,881 primarily consisted of accounts payable and accrued expenses of $5,168,054, deferred revenue of $784,047 and income tax payable of $509,127. In comparison, current liabilities as of December 31, 2021 of $11,906,270 primarily consisted of accounts payable and accrued expenses of $4,671,382, deferred revenue of $2,174,393, a company-wide bonus accrual of $1,556,055, current finance lease liability of $1,262,260, income tax payable of $1,242,974, and $941,562 in accrued management bonuses payable to GJacobs and WJacobs.

The Company had an accumulated deficit of $4,842,407 and $11,414,602 as of September 30, 2022 and December 31, 2021, respectively.

Comparison of operations for the three and nine months ended September 30, 2022 to September 30, 2021

On February 24, 2020, we acquired 100% of the ownership interests of Lifted. All of our sales are generated by our wholly-owned subsidiary Lifted; LFTD Partners as an entity by itself generates no sales. We also do not recognize any revenue or earnings from our investments in Bendistillery, Ablis or Bend Spirits.

During the three and nine months ended September 30, 2022, net sales increased to $11,237,277 and $46,102,656, respectively. As described above in the section “Inventory” under NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, during the quarter ended September 30, 2022, some of Lifted’s customers returned certain Clogged Vapes. In total for the quarter ended September 30, 2022, the Company recorded a sales allowance of $841,269 for estimated future discounts/refunds and product returns, primarily associated with the Clogged Vapes. Please refer to the description in “Inventory” for more information regarding the Clogged Vapes.

In comparison, during the three and nine months ended September 30, 2021, Lifted recognized net sales of $8,820,952 and $18,869,366, respectively. Gross profit for the three and nine months ended September 30, 2022 was $813,744 and $16,861,640, respectively. In comparison, gross profit for the three and nine months ended September 30, 2021 was $4,100,895 and $9,406,156, respectively.

During the three months ended September 30, 2022, hemp-derived products and non-hemp-derived psychedelic products made up approximately 98% and 2% of Lifted’s sales, respectively. Similarly, during the nine months ended September 30, 2022, hemp-derived products and non-hemp-derived psychedelic products made up approximately 98% and 2% of Lifted’s sales, respectively. In comparison, during the three months ended September 30, 2021, approximately 99% and 1% of sales were generated from the sale of hemp and hemp-derived products and e-liquid and disposable e-cigarettes, respectively. During the nine months ended September 30, 2021, approximately 96% and 4% of sales were generated from the sale of hemp and hemp-derived products and e-liquid and disposable e-cigarettes, respectively.

During the three and nine months ended September 30, 2022, the Company expensed $1,482,455 and $5,148,284, respectively, related to payroll, consulting and independent contractor expenses; this is up from $803,796 and $1,902,320, respectively, in payroll, consulting and independent contractor expenses during the three and nine months ended September 30, 2021. Year-over-year, Lifted has increased the size of its workforce, including production, fulfillment and sales people, and in conjunction with these increases, Lifted’s payroll, consulting and independent contractor expenses have increased significantly. In addition, Lifted’s Chief Strategy Officer, who was hired on July 1, 2021, has developed and implemented certain important strategies which have assisted Lifted’s efforts to increase its production, fulfillment and sales capabilities. The Chief Strategy Officer’s two-year agreement with Lifted entitles such employee to be paid an annual salary of $180,000 plus a bonus equal to 5% of total net sales for Lifted in excess of $6,000,000 per quarter. At September 30, 2022, the bonus payable to the Chief Strategy Officer totaled $261,864.

Pursuant to the Amended Omnibus Agreement, the 2022 company-wide bonus pool shall not be allowed to be accrued or paid by the Company if and to the extent that doing so would decrease LIFD’s 2022 diluted earnings per share of common stock below $0.56 per share. As of September 30, 2022, the Company did not meet the diluted earnings per share of common stock requirement of $0.42 per share ($0.56 x 3/4), and as a result, the Company eliminated the company-wide bonus pool accrual of $2,121,532, which had been accrued through June 30, 2022. Moreover, no company-wide management bonus pool accrual was booked for the quarter ended September 30, 2022.

In comparison, the Company recognized a company-wide management bonus pool expense of $400,000 and $1,559,335 for the three months and nine months ended September 30, 2021, respectively.

4

Driven by increased sales, bank charges and merchant fees increased to $106,845 and $372,351 during the three and nine months ended September 30, 2022, respectively, up from $104,485 and $289,111 during the three and nine months ended September 30, 2021, respectively.

During the three and nine months ended September 30, 2022, the Company incurred $334,215 and $550,612, respectively, in advertising and marketing expenses, which related to trade shows, marketing, promotional products and public relations. In comparison, during the three and nine months ended September 30, 2021, the Company incurred $86,438 and $236,598 in advertising and marketing expenses, of which were related to trade shows, public relations and digital marketing.

Bad debt expense reflects a net benefit of $11,898 and $75,107 during the three and nine months ended September 30, 2022, respectively, compared to a net expense of $61,449 and $81,621 during the three and nine months ended September 30, 2021, respectively. As of December 31, 2021, the Company implemented a new, conservative accounting policy regarding allowances for doubtful accounts, which is that all accounts receivable older than 90 days at quarter end are accrued for in allowances for doubtful accounts. The benefit recognized for bad debt expense in the third quarter of 2022 of $11,898 is due to improved collections in the quarter and an improved receivables aging at the end of the quarter.

Other operating expenses increased to $377,416 and $1,288,486 during the three and nine months ended September 30, 2022, respectively, from $170,820 and $350,985 during the three and nine months ended September 30, 2021, respectively. Other operating expenses include, for example, lease expenses, office expenses, insurance expenses, health expenses, software expenses, excise taxes, lobbying, lab testing, lab supplies, dues and subscriptions, meals and entertainment, repairs and maintenance, and state license & filing fees.

During the quarter ended September 30, 2022, total, non-operating net Other Expenses of $47,758 primarily consisted of interest expense of $37,181, loss on disposal of fixed assets of $8,243 and penalties of $4,461. In comparison, during the quarter ended September 30, 2021, total, non-operating net Other Expenses of $81,859 primarily consisted of the loss from Lifted Made’s 50% membership interest in SmplyLifted of $44,858 and interest expense of $35,368.

During the nine months ended September 30, 2022, total, non-operating net Other Income of $6,462 primarily consisted of interest expense of $95,839 offset by settlement income of $108,570. In comparison, during the nine months ended September 30, 2021, total, non-operating net Other Expenses of $84,702 primarily consisted of interest of $107,113, the loss from Lifted Made’s 50% membership interest in SmplyLifted of $95,399 and loss on deposits of $30,000, offset by gain on forgiveness of debt of $151,147.

During the quarter ended September 30, 2022, the Company recognized net income of $423,486. In comparison, during the quarter ended September 30, 2021, the Company recognized net income of $2,236,178.

During the nine months ended September 30, 2022, the Company recognized net income of $6,587,739. In comparison, during the nine months ended September 30, 2021, the Company recognized net income of $4,450,690.

Net cash provided by operating activities was $3,536,595 and $4,350,358  for the nine months ended September 30, 2022, and September 30, 2021, respectively. During the nine months ended September 30, 2022, net cash provided by operating activities was primarily generated from net income of $6,587,739; cash was primarily used for the purchase of inventory. Net cash provided by operating activities during the nine months ended September 30, 2021 was primarily generated from net income of $4,450,690; cash during this period was also primarily used for the purchase of inventory.

Net cash used in investing activities was $656,381 and $366,764 during the nine months ended September 30, 2022 and September 30, 2021, respectively. Net cash used in investing activities during the nine months ended September 30, 2022 related to the net purchase of fixed assets. Net cash used in investing activities during the nine months ended September 30, 2021 also primarily related to the purchases of fixed assets.

During the nine months ended September 30, 2022, net cash used in financing activities was $131,987. On December 30, 2021, the Company repaid all principal and interest due under the $3.75M Note.

NWarrender kept $1,000,000 of the repayment of the $3.75M Note, plus accrued interest, and on January 3, 2022, reloaned $2,750,000 to LIFD and Lifted (collectively “Payors”) at the rate of 2.5% (the “$2.75M Note”). The $2.75M Note payable jointly by the Company and Lifted to NWarrender was secured by a perfected first lien security interest (the “Security Interest”) that encumbers all of the assets of the Company and Lifted. The Company was obligated to pay off the principal of the $2.75M Note in five semi-annual payments to NWarrender of $458,333 and a sixth and final semi-annual payment to NWarrender of $458,335, in each case plus accrued interest, starting on June 30, 2022.

On June 7, 2022, LFTD Partners prepaid $916,666 of the principal of the $2.75M Note, and $29,384 of related accrued interest through that date, which left $1,833,334 remaining principal on the $2.75M Note. On July 5, 2022, we entered into an agreement (“Acceleration Agreement”) with NWarrender. Under the terms of the Acceleration Agreement, we were obligated to repay the remaining principal balance as follows: $1,374,999 on or before December 31, 2022, and $458,335 on or before December 31, 2024. Then, on July 8, 2022, we prepaid $916,666, along with accrued interest, and then, on July 25, 2022, we prepaid the remaining principal balance of $916,668 and accrued interest in full, and all collateral securing the $2.75M Note was released.

Also, net cash used in financing activities was driven by the purchase of $150,000 worth of common stock, and payments of dividends to the holders of the Series A Convertible Preferred Stock and Series B Convertible Preferred Stock totaling $21,647, offset by $50,000 received from the exercise of a warrant. In comparison, during the nine months ended September 30, 2021, $118,094 net cash was used in financing activities, primarily to make dividend payments totaling $209,532 to holders of the Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, and to purchase $34,200 worth of shares of common stock, offset by $142,024 in proceeds from the exercise of warrants.

5

During the nine months ended September 30, 2022, net cash increased by $2,748,228, and we had $4,350,959 in unrestricted cash at September 30, 2022. In comparison, during the nine months ended September 30, 2021, cash increased by $3,865,500, and we had $4,304,580 in unrestricted cash at September 30, 2021.

Prior to the acquisition of Lifted on February 24, 2020, the Company had a history of losses as evidenced by the accumulated deficit at September 30, 2022 of $4,842,407. We plan to sustain the Company as a going concern by taking the following actions: (1) continuing to operate Lifted; (2) acquiring and/or developing profitable businesses that will create positive income from operations; and/or (3) completing private placements of our common stock and/or preferred stock. We believe that by taking these actions, we will be provided with sufficient future operations and cash flow to continue as a going concern. However, there can be no assurance that we will be successful in consummating such actions on acceptable terms, if at all. Moreover, many of such actions can be expected to result in substantial dilution to the existing shareholders of the Company.

Critical Accounting Policies

Critical accounting policies are discussed in “NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES.”

SmplyLifted LLC

Please refer to “NOTE 8 – NOTES RECEIVABLE”.

Tax Provision

Please refer to “NOTE 15 – INCOME TAXES” for more information about the Company’s quarterly tax provision.

Other Matters

We may be subject to other legal proceedings, claims, and litigation arising in the ordinary course of business in addition to the matters discussed above in “NOTE 13 – LEGAL PROCEEDINGS”. We intend to vigorously pursue and defend such litigation. Although the outcome of these other matters is currently not determinable, our management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on our Company’s financial position, results of operations, or cash flows.

Impact of COVID-19 on Our Business

The COVID-19 pandemic has resulted, and may continue to result, in significant economic disruption despite progress made in recent months in the development and distribution of vaccines. It has already disrupted Lifted’s operations, global travel and supply chains, and adversely impacted global commercial activity. Considerable uncertainty still surrounds COVID-19, the evolution and future impact of its variants, its potential long-term economic effects, as well as the effectiveness of any responses taken by government authorities and businesses and of various efforts to inoculate the global population. The travel restrictions, limits on hours of operations and/or closures of non-essential businesses, and other efforts to curb the spread of COVID-19 have significantly disrupted business activity globally and there is uncertainty as to if and when these disruptions will fully subside.

Significant uncertainty continues to exist concerning the impact of the COVID-19 pandemic on Lifted’s, our customers’ and target companies’ business and operations in future periods. Although our total revenues for the three and nine months ended September 30, 2022 were not materially impacted by COVID-19, we believe that our revenues may be negatively impacted in future periods until the effects of the pandemic have fully subsided and the current macroeconomic environment has substantially recovered. The uncertainty related to COVID-19 may also result in increased volatility in the financial projections we use as the basis for estimates and assumptions used in our financial statements. We have made some efforts to try to adapt our operations to meet the challenges of this uncertain and rapidly evolving situation, including expanding operations in areas where we perceive government restrictions on business operations are relatively less burdensome, and focusing some of our new product development in areas where we perceive government restrictions and prohibitions on hemp-derived cannabinoid products are relatively less likely. The COVID-19 pandemic and its ramifications, including Illinois Governor Pritzker’s Executive Order in response to the pandemic, materially damaged Lifted’s business, among other things by disrupting Lifted’s access to its employees, suppliers, packaging, distributors and customers. That is why Lifted applied for and received funding under the federal Economic Injury Disaster Loan program and the federal Paycheck Protection Program.

6

Effects of the COVID-19 pandemic that may negatively impact our business in future periods include, but are not limited to: disruptions of Lifted’s workforce; limitations on the ability of our customers to conduct their business, purchase our products, and make timely payments; curtailed consumer spending; deferred purchasing decisions; supply chain problems and delays, and changes in demand from retail customers. We will continue to actively monitor the nature and extent of the impact to our business, operating results, and financial condition.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Our Chief Financial Officer, WJacobs, evaluated the effectiveness of the Company’s disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports, such as this report, that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, WJacobs concluded that because of the material weakness in internal control over financial reporting described below, our disclosure controls and procedures were not effective as of September 30, 2022.

(b) Management’s annual report on internal control over financial reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. “Internal Control Over Financial Reporting” is defined in Exchange Act Rules 13a -15(f) and 15d - 5(f) as a process designed by, or under the supervision of, an issuer’s principal executive and principal financial officers, or persons performing similar functions, and effected by an issuer’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. It includes those policies and procedures that:

(1)	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of an issuer;
(2)	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and
(3)	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material adverse effect on the financial statements.

7

During September 2022, management conducted an evaluation of the effectiveness of our internal control over financial reporting as of September 30, 2022 based on the framework set forth in the report entitled Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the evaluation, management concluded that our internal control over financial reporting as of September 30, 2022 was not effective. Management identified the following material weaknesses as of September 30, 2022:

(1) There existed a lack of segregation of duties in regard to the Company’s financial reporting, procedures for depositing of funds, procedures for cash disbursements, procedures for checkbook entries, period close procedures, and procedures for financial statement preparation.

Management has determined that the Company should seek to enhance its internal controls over financial reporting by maintaining the following steps first commenced in 2010:

(1) During November 2010, the Company increased its Board of Directors to six members by adding another independent member, Vincent J. Mesolella. Mr. Mesolella is the Chairman of the Narragansett Bay Commission, Providence, Rhode Island. Mr. Mesolella is also the Founder, President and Chief Executive Officer of MVJ Realty, LLC, a real estate development company. Mr. Mesolella has previously served as the Chairman of the Audit Committee of the Board of Directors of a publicly traded company.

Beginning in March 2010, the Company began emailing or mailing to Vincent J. Mesolella a copy of each monthly statement from its bank summarizing all activity in the Company’s checking account, for review and questioning as appropriate. The purpose of Mr. Mesolella’s involvement is to provide monitoring, oversight and assistance to GJacobs, Chief Executive Officer, in the preparation and reporting of the Company’s financial statements.

In December 2021, the Company engaged a third party consulting firm that specializes in the implementation of the Sarbanes-Oxley Act, to assist management with the implementation of internal controls and procedures pursuant to the Sarbanes-Oxley Act. This implementation is progressing, but it has not yet been completed, and additional work is required. This implementation is imposing and will, on an on-going basis, impose substantial costs on the Company.

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

This quarterly report on Form 10-Q does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.

Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this quarterly report on Form 10-Q.

Management is unaware of any material inaccuracies or errors in the Company’s financial statements as of September 30, 2022.

(c) Changes in internal control over financial reporting

Our Chief Executive Officer and Chief Financial Officer have concluded that there were no significant changes in our internal controls over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

8

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Description of Legal Proceedings

Lifted currently is involved in four pending lawsuits, three as the plaintiff, and one as the defendant. Please refer to NOTE 12 – LEGAL PROCEEDINGS above for more information.

ITEM 1A. RISK FACTORS.

The Risk Factors identified in our Annual Report on Form 10-K for the year ended December 31, 2021 continue to represent the most significant risks to the Company’s future results of operations and financial conditions, without further modification or amendment.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

We claimed exemption from registration under the Securities Act for the sales and issuances of securities in the following transactions under Section 4(a)(2) of the Securities Act and/or Regulations D and S promulgated thereunder, in that such sales and issuances (i) did not involve a public offering, or (ii) were made to non-U.S. Persons and otherwise complied with Rule 903 promulgated under the Securities Act, or (iii) were made pursuant to Rule 701 promulgated under the Securities Act, in that they were offered and sold either pursuant to written compensatory plans or pursuant to a written contract relating to compensation, as provided by Rule 701. All of the purchasers of unregistered securities for which we relied on Section 4(a)(2) and/or Regulation D represented that they were accredited investors as defined under the Securities Act. We claimed such exemption on the basis that (a) the purchasers in each case represented that they intended to acquire the securities for investment only and not with a view to the distribution thereof and that they either received adequate information about the registrant or had access, through employment or other relationships, to such information and (b) appropriate legends were affixed to the stock certificates issued in such transactions.

9

Stock Buy-back Transactions with a Non-Affiliate Stockholder and Retirement of 72,000 Shares of Common Stock Held in Treasury

On November 24, 2020, LFTD Partners purchased 36,000 shares of common stock of the Company from a non-affiliate stockholder in a private transaction for $0.95 per share for a total of $34,200. These shares were held in treasury until August 31, 2021, which is when the Company retired them. The retirement of these shares was accounted for under the cost method of accounting.

On January 8, 2021, LFTD Partners Inc. purchased 36,000 shares of common stock of the Company from a non-affiliate stockholder in a private transaction for $0.95 per share for a total of $34,200. These shares were held in treasury until August 31, 2021, which is when the Company retired them. The retirement of these shares was accounted for under the cost method of accounting.

Exercise of Warrant by a Non-Affiliated Entity

On February 19, 2022, an entity non-affiliated with the Company exercised an option to purchase 50,000 shares of unregistered common stock of the Company at an exercise price of $1.00 per share, which the entity paid.

Stock Buy-back Transaction with a Non-Affiliate Stockholder and Retirement of 100,000 Shares of Common Stock

On March 1, 2022, LFTD Partners signed an agreement to purchase a total of 100,000 shares of common stock of the Company from a non-affiliate stockholder in a private transaction for $1.50 per share for a total purchase price of $150,000. On March 8, 2022, all 100,000 shares were transferred to the Company and immediately cancelled.

Exercise of Warrants by Gerard M. Jacobs

On August 30, 2021, CEO Gerard M. Jacobs exercised, for an aggregate purchase price of $1, his right to purchase a warrant to purchase an aggregate of 750,000 shares of unregistered common stock of the Company at an exercise price of $0.01 per share, which warrant he immediately exercised. Gerard M. Jacobs also exercised his right to purchase an aggregate of 31,250 shares of unregistered common stock of the Company at an exercise price of $0.03 per share under separate warrants. Gerard M. Jacobs also demanded immediate payment of $8,439 of the bonuses which are currently due and payable by the Company to Gerard M. Jacobs, and Gerard M. Jacobs hereby allocated and applied such $8,439 to pay for the aggregate cost of purchasing and exercising the above warrants.

Exercise of Warrants by Vincent J. Mesolella

On September 13, 2021, lead outside director Vincent J. Mesolella exercised, for an aggregate purchase price of $1.00, his right to purchase a warrant to purchase an aggregate of 500,000 shares of unregistered common stock of the Company at an exercise price of $0.01 per share, which warrant he immediately exercised and paid for, and he also exercised an option to purchase 5,000 shares of unregistered common stock of the Company at an exercise price of $2.00 per share, which he paid.

Exercise of Option by Joshua A. Bloom

On September 22, 2021, director Joshua A. Bloom exercised an option to purchase 5,000 shares of unregistered common stock of the Company at an exercise price of $2.00 per share, which he paid.

Exercise of Option by Richard E. Morrissy

On September 15, 2021, director Richard E. Morrissy exercised an option to purchase 5,000 shares of unregistered common stock of the Company at an exercise price of $2.00 per share, which he paid.

10

Exercise of Option by a Non-Affiliated Shareholder

On September 26, 2021, a non-affiliated shareholder of the Company exercised an option to purchase 50,000 shares of unregistered common stock of the Company at an exercise price of $2.00 per share, which she paid.

Exercise of Option by a Non-Affiliated Shareholder

On December 7, 2021, a non-affiliated shareholder of the Company exercised a warrant to purchase 25,000 shares of unregistered common stock of the Company at an exercise price of $0.01 per share, which he paid.

Conversion of Series A Preferred Stock by a Non-Affiliated Shareholder

On April 1, 2022, a non-affiliated shareholder of the Company converted his 1,000 shares of Series A Preferred Stock into 100,000 shares of unregistered common stock of the Company.

Conversion of Series A Preferred Stock by a Non-Affiliated Shareholder

On April 14, 2022, a non-affiliated shareholder of the Company converted 250 shares of his Series A Preferred Stock into 25,000 shares of unregistered common stock of the Company.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None; not applicable.

ITEM 4. MINE SAFETY DISCLOSURES.

None; not applicable.

ITEM 5. OTHER INFORMATION.

None; not applicable.

11

ITEM 6. EXHIBITS.

The following Exhibits have been previously filed in the below referenced filings or have been attached hereto, and in any case, as is stated on the cover of this Report, all of the below Exhibits are incorporated herein by reference.

10.53	Compensation Agreement between Acquired Sales Corp., Gerard M. Jacobs and William C. "Jake" Jacobs dated as of June 19, 2019
10.61	Lease Agreement
10.62	Lease Agreement
10.67	Omnibus Agreement dated December 30, 2021 between LFTD Partners Inc. Nicholas S. Warrender, 95th Holdings, LLC, Gerard M. Jacobs and William C. “Jake” Jacobs
10.68	Agreement dated February 14, 2022 between LFTD Partners Inc. Nicholas S. Warrender, Gerard M. Jacobs and William C. “Jake” Jacobs
10.69	Lease Agreement
10.70	Acceleration Agreement
10.71	Commercial Sublease

This Form 10-Q

99.1	Press Release (earnings)
31.1	Certification of principal executive officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of principal accounting officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.SCH	XBRL Taxonomy Extension Schema Document.

12

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LFTD Partners Inc.
Dated: November 11, 2022	By:	/s/ Gerard M. Jacobs
		Gerard M. Jacobs
		Chief Executive Officer

13

EX-31.1

EXHIBIT 31.1

Certification of Principal Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

and Securities and Exchange Commission Release 34-46427

I, Gerard M. Jacobs, certify that:

1.	I have reviewed this report on Form 10-Q of LFTD Partners Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and I have:

a)	designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
d)	disclosed in this report any change in registrant’s internal control over financial reporting the occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	all deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 11, 2022	/s/ Gerard M. Jacobs
	Gerard M. Jacobs
	Principal Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of Principal Accounting Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

and Securities and Exchange Commission Release 34-46427

I, William C. “Jake” Jacobs, certify that:

1.	I have reviewed this report on Form 10-Q of LFTD Partners Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and I have:

a)	designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
d)	disclosed in this report any change in registrant’s internal control over financial reporting the occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)	all deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 11, 2022	/s/ William C. “Jake” Jacobs
	William C. “Jake” Jacobs
	Principal Accounting Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of LFTD Partners Inc. (the "Company") on Form 10-Q for the fiscal quarter ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Gerard M. Jacobs, Principal Executive Officer of the registrant, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Gerard M. Jacobs

Gerard M. Jacobs

Principal Executive Officer

November 11, 2022

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of LFTD Partners Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William C. “Jake” Jacobs, Principal Accounting Officer of the registrant, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ William C. “Jake” Jacobs

William C. “Jake” Jacobs

Principal Accounting Officer

November 11, 2022

EX-99.1

EXHIBIT 99.1

LFTD Partners Inc. Reports Ninth Consecutive Quarter of Positive GAAP EPS

JACKSONVILLE, FL / ACCESSWIRE / November 14, 2022 / LFTD Partners Inc. ("LFTD Partners" or the "Company") (OTCQB:LIFD), the corporate parent of leading cannabis and psychedelics manufacturer Lifted Made, today reported that it achieved its ninth consecutive quarter of positive earnings per share during the third quarter ended September 30, 2022, calculated in accordance with U.S. generally accepted accounting principles ("GAAP") and in U.S. dollars.

Income Statement Highlights – Q3 2022

●    Revenue of $11,237,277

●    Net income of $423,486

●    Basic earnings per share (“EPS”) of $0.03 per share

●    Diluted EPS of $0.03

●    Basic and diluted weighted average shares outstanding for the three months ended September 30, 2022 were 14,102,578 and 15,884,776, respectively

Balance Sheet Highlights – as of September 30, 2022

●    Cash on hand of $4,350,959

●    Inventory of $6,344,677

●    Current assets of $14,616,599

●    Current ratio of 2.22

●    Working capital of $8,042,718

●    No secured debt

Nicholas S. Warrender, Vice Chairman and COO of LFTD Partners, and founder and CEO of Lifted Made, said, “We grew our Q3 2022 sales 27% to $11.2 million, up from $8.8 million in Q3 2021. During the first nine months of 2022, we grew our sales 144% to $46.1 million, up from $18.9 million during the first nine months of 2021. We took some inventory write-offs during the third quarter of 2022, but we expect to break $60 million in annual sales during 2022, and to have another profitable quarter this quarter. Throughout our aggressive growth, we’ve stayed true to our philosophy of being nimble, innovate and hungry. I credit our operating and sales force for continuing to push our mission forward by fusing the vision of our brand with a team that’s able to execute on a dime. As great of a year this has been thus far, I believe the best is still yet to come from the Lifted team.”

Gerard M. Jacobs, CEO of LFTD Partners, said, “In addition to our hemp-derived cannabinoid and psychedelic products business, we are intensively working on an acquisition agreement with the owners of a growing US company outside of our industry that is pursuing expansion into Asia and the Middle East. If consummated, this exciting potential acquisition would significantly diversify our company’s revenues, and very likely would cause us to pursue the listing of LFTD Partners’ common stock on multiple stock exchanges.”

Earnings Conference Call and Webcast Information

LFTD Partners plans to hold a Q3 2022 earnings conference call and webcast today, November 14, 2022, at 8:30 AM ET.

Participant phone numbers:

Toll Free: 877-545-0523

International: 973-528-0016

Participant Access Code: 480030

Webcast event link:

https://www.webcaster4.com/Webcast/Page/2916/47115

The participant phone numbers and webcast event link are shown on the Investor Relations section of LFTD Partners' website at https://www.lftdpartners.com/investors.

The webcast replay will also be available on the Investor Relations section of LFTD Partners' website.

Although attendees will have the opportunity to submit questions during the earnings conference call, attendees are encouraged to submit questions prior to the call by emailing them to: jakejacobs@lftdpartners.com.

About LFTD Partners Inc.

LFTD Partners Inc. (OTCQB:LIFD) is focused upon acquiring rapidly growing and profitable companies that sell branded hemp-derived cannabinoid products, emerging psychedelic products, other alternative lifestyle products, and potentially also “essential” businesses that are outside its industry. LFTD Partners' first wholly-owned subsidiary is Lifted Made (www.LiftedMade.com), Kenosha, Wisconsin, which sells award-winning hemp-derived cannabinoid products and other psychedelic and alternative lifestyle products under its flagship brands Urb Finest Flowers and Silly Shruum. LFTD Partners also owns 4.99% of CBD-infused beverage and products maker Ablis (www.AblisBev.com), and of distillers Bendistillery Inc. d/b/a Crater Lake Spirits (www.CraterLakeSpirits.com) and Bend Spirits, Inc., all located in Bend, Oregon.

Please read LIFD's filings with the U.S. Securities and Exchange Commission which fully describe our business and the Risk Factors associated therewith. Learn more by subscribing to our newsletters at www.LFTDPartners.com and www.LiftedMade.com.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this document are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such information includes the acquisition, financing, revenue, profitability, and product strategies, plans and expectations of LFTD Partners Inc. and Lifted Made. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors, most notably federal and state laws and regulations, which may cause or contribute to the actual results of these companies' merger plans, financing plans, operations, or the performance or achievements of these companies differing materially from those expressed or implied by the forward-looking statements. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Actual results, performance or achievements could differ materially from those anticipated in such forward-looking statements as a result of certain other factors, including the risk factors set forth in LFTD Partners Inc.'s filings with the Securities and Exchange Commission. This press release does not constitute an offer to sell common stock or any other securities of LFTD Partners Inc.

CONTACTS:

Lifted Made

Attn: Nicholas S. Warrender, CEO

Phone: (224) 577-8148

Email: CEO@LiftedMade.com

Website: www.LiftedMade.com

LFTD Partners Inc.

Attn: William C. "Jake" Jacobs, CPA, President and CFO

Phone: (847) 400-7660

Email: JakeJacobs@LFTDPartners.com

Website: www.LFTDPartners.com

LFTD Partners Inc.

Attn: Gerard M. Jacobs, CEO

Phone: (847) 915-2446

Email: GerardMJacobs@LFTDPartners.com

Website: www.LFTDPartners.com

XML

Cover - shares	9 Months Ended
	Sep. 30, 2022	Nov. 11, 2022
Cover [Abstract]
Entity Registrant Name	LFTD PARTNERS INC.
Entity Central Index Key	0001391135
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Sep. 30, 2022
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2022
Entity Common Stock Shares Outstanding		14,102,578
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	000-52102
Entity Incorporation State Country Code	NV
Entity Tax Identification Number	87-0479286
Entity Address Address Line 1	14155 Pine Island Drive
Entity Address City Or Town	Jacksonville
Entity Address State Or Province	FL
Entity Address Postal Zip Code	32224
City Area Code	847
Local Phone Number	915-2446
Security 12b Title	Common Stock, $0.001 par value
Trading Symbol	LIFD
Entity Interactive Data Current	Yes

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Current Assets
Cash and Cash Equivalents	$ 4,350,959	$ 1,602,731
Dividend Receivable from Bendistillery, Inc.	0	2,495
Prepaid Expenses	1,946,318	4,262,237
Accounts Receivable, net of allowance of $128,589 in 2022 and $239,101 in 2021	1,967,391	3,461,499
Inventory	6,344,677	3,809,944
Other Current Assets	7,254	13,790
Total Current Assets	14,616,599	13,152,696
Goodwill	22,292,767	22,292,767
Investment in Ablis	399,200	399,200
Investment in Bendistillery and Bend Spirits	1,497,000	1,497,000
Net Deferred Tax Asset	666,852	331,551
Fixed Assets, less accumulated depreciation of $164,384 in 2022 and $77,967 in 2021	989,688	433,213
Intangible Assets, less accumulated amortization of $4,098 in 2022 and $3,058 in 2021	347	1,386
Security and State Licensing Deposits	25,600	6,900
Finance Lease Right-of-Use Asset, net of Right-of-Use Asset Amortization of $195,208 in 2022 and $252,876 in 2021	1,285,200	1,227,532
Operating Lease Right-of-Use Asset, net of Right-of-Use Asset Amortization of $71,554 in 2022 and $6,807 in 2021	525,942	76,412
Total Assets	42,299,196	39,418,657
Current Liabilities
Finance Lease Liability	(26,079)	1,262,260
Operating Lease Liability	115,010	26,047
Deferred Revenue	784,047	2,174,393
Income Tax Payable	509,127	1,242,974
Management Bonuses Payable - Related Party
Management Bonus Payable - Related Party - Payable to William C. Jacobs	0	500,000
Management Bonus Payable - Related Party - Payable to Gerard M. Jacobs	0	441,562
Management Bonuses Payable - Related Party	0	941,562
Company-Wide Management Bonus Pool	0	1,556,055
Accounts Payable and Accrued Expenses	5,168,054	4,671,382
Accounts Payable - Related Party	16,101	4,607
Interest Payable - Related Party
Interest - Payable to William C. Jacobs	0	4,000
Interest - Payable to Gerard M. Jacobs	0	9,269
Interest Payable - Related Party	0	13,269
Preferred Stock Dividends Payable
Series A Convertible Preferred Stock Dividends Payable	5,838	11,926
Series B Convertible Preferred Stock Dividends Payable	1,783	1,796
Preferred Stock Dividends Payable	7,621	13,722
Total Current Liabilities	6,573,881	11,906,270
Non-Current Liabilities
Finance Lease Liability	1,376,439	0
Operating Lease Liability	414,875	50,583
Net Deferred Tax Liability	0	0
Total Non-Current Liabilities	1,791,314	50,583
Total Liabilities	8,365,195	11,956,853
Commitments and Contingencies	0	0
Shareholders' Equity
Preferred Stock Value	45	46
Common Stock, $0.001 par value; 100,000,000 shares authorized; 14,102,578 shares issued and outstanding at September 30, 2022, and 14,027,578 shares issued and outstanding at December 31, 2021	14,103	14,028
Additional Paid-in Capital	38,762,260	38,862,333
Accumulated Deficit	(4,842,407)	(11,414,602)
Total Shareholders' Equity	33,934,000	27,461,804
Total Liabilities and Shareholders' Equity	$ 42,299,196	$ 39,418,657

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Accounts Receivable, Allowance	$ 128,589	$ 239,101
Accumulated Depreciation	164,384	77,967
Accumulated Amortization	4,098	3,058
Right-of-use Asset Amortization	195,208	252,876
Right-of-use Asset Amortization Operating Lease	$ 71,554	$ 6,807
Common Stock, Par Or Stated Value	$ 0.001	$ 0.001
Common Stock, Shares Authorized	100,000,000	100,000,000
Common Stock, Shares Issued	14,102,578	14,027,578
Common Stock, Shares Outstanding	14,102,578	14,027,578
Preferred Stock, Par Or Stated Value	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Series A Convertible Preferred Stock
Preferred Stock, Par Or Stated Value	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	400,000	400,000
Preferred Stock, Shares Issued	4,500	5,750
Preferred Stock, Shares Outstanding	4,500	5,750
Series B Convertible Preferred Stock
Preferred Stock, Par Or Stated Value	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	5,000,000	5,000,000
Preferred Stock, Shares Issued	40,000	40,000
Preferred Stock, Shares Outstanding	40,000	40,000

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
CONSOLIDATED STATEMENTS OF OPERATIONS
Net Sales	$ 11,237,277	$ 8,820,952	$ 46,102,656	$ 18,869,366
Cost of Goods Sold	10,423,533	4,720,057	29,241,016	9,463,210
Gross Profit	813,744	4,100,895	16,861,640	9,406,156
Operating Expenses:
Payroll, Consulting and Independent Contractor Expenses	1,482,455	803,796	5,148,284	1,902,320
Accrual for Company-Wide Management Bonus Pool	(2,121,532)	400,000	0	1,559,335
Professional Fees	143,180	139,526	463,809	366,452
Bank Charges and Merchant Fees	106,845	104,485	372,351	289,111
Advertising and Marketing	334,215	86,438	550,612	236,598
Bad Debt (Income)/ Expense	(11,898)	61,449	(75,107)	81,621
Depreciation and Amortization	7,793	16,344	17,202	84,342
Other Operating Expenses	377,416	170,820	1,288,486	350,985
Total Operating Expenses	318,474	1,782,858	7,765,637	4,870,764
Income From Operations	495,270	2,318,037	9,096,003	4,535,392
Other Income/(Expenses)
Income/(Loss) From 50% membership interest in SmplyLifted LLC (FR3SH)	0	(44,858)	0	(95,399)
Income from SmplyLifted for WCJ Labor	0	313	0	2,154
Interest Expense	(37,181)	(35,368)	(95,839)	(107,113)
Warehouse Buildout Credits	0	0	0	1,200
Penalties	(4,461)	(2,162)	(6,191)	(2,612)
Gain on Forgiveness of Debt	0	0	5,026	151,147
Settlement Income/Gain on Settlement	0	0	108,570	0
Gain(Loss) on Disposal of Fixed Assets	(8,243)	0	(8,243)	(4,750)
Loss on Deposits	0	0	0	(30,000)
Interest Income	2,127	217	3,139	671
Total Other Income/(Expenses)	(47,758)	(81,859)	6,462	(84,702)
Income Before Provision for Income Taxes	447,513	2,236,178	9,102,465	4,450,690
Provision for Income Taxes	(24,027)	0	(2,514,726)	0
Net Income Attributable to LFTD Partners Inc. common stockholders	$ 423,486	$ 2,236,178	$ 6,587,739	$ 4,450,690
Basic Net Income per Common Share	$ 0.03	$ 0.17	$ 0.47	$ 0.42
Diluted Net Income per Common Share	$ 0.03	$ 0.14	$ 0.41	$ 0.32
Weighted average number of common shares outstanding:
Basic	14,102,578	13,015,717	14,073,366	10,525,461
Diluted	15,884,776	16,257,915	15,855,564	13,767,659

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) - USD ($)	Total	Common Stock	Treasury Stock	Additional Paid-In Capital	Accumulated Deficit	Preferred Stocks
Balance, shares at Dec. 31, 2020		6,485,236	36,000			166,150
Balance, amount at Dec. 31, 2020	$ 21,618,720	$ 6,485	$ (34,200)	$ 38,787,444	$ (17,141,175)	$ 166
Series A Preferred Stock dividend payable	(24,855)				(24,855)
Series B Preferred Stock dividend payable	(3,316)				(3,316)
LIFD's January 8, 2021 purchase of 36,000 shares of common stock at $0.95 per share, for a total of $34,200, from an unrelated shareholder, shares			36,000
LIFD's January 8, 2021 purchase of 36,000 shares of common stock at $0.95 per share, for a total of $34,200, from an unrelated shareholder, amount	(34,200)		$ (34,200)
Conversions of Series A Convertible Preferred Stock to Common Stock, shares		3,290,000				(32,900)
Conversions of Series A Convertible Preferred Stock to Common Stock, amount	0	$ 3,290		(3,257)		$ 33
Conversions of Series B Convertible Preferred Stock to Common Stock, shares		60,000				(60,000)
Conversions of Series B Convertible Preferred Stock to Common Stock, amount	0	$ 60				$ (60)
Net Income	618,359				618,359
Balance, shares at Mar. 31, 2021		9,835,236	72,000			73,250
Balance, amount at Mar. 31, 2021	22,174,708	$ 9,835	$ (68,400)	38,784,187	(16,550,988)	$ 73
Balance, shares at Dec. 31, 2020		6,485,236	36,000			166,150
Balance, amount at Dec. 31, 2020	21,618,720	$ 6,485	$ (34,200)	38,787,444	(17,141,175)	$ 166
Net Income	4,450,690
Balance, shares at Sep. 30, 2021		14,002,576				45,750
Balance, amount at Sep. 30, 2021	26,118,122	$ 14,002	$ 0	38,862,107	(12,758,033)	$ 46
Balance, shares at Mar. 31, 2021		9,835,236	72,000			73,250
Balance, amount at Mar. 31, 2021	22,174,708	$ 9,835	$ (68,400)	38,784,187	(16,550,988)	$ 73
Series A Preferred Stock dividend payable	(33,521)				(33,521)
Series B Preferred Stock dividend payable	(1,496)				(1,496)
Conversions of Series A Convertible Preferred Stock to Common Stock, shares		2,750,000				(27,500)
Conversions of Series A Convertible Preferred Stock to Common Stock, amount	0	$ 2,750		(2,723)		$ (28)
Net Income	1,596,154				1,596,154
Exercise of warrants, shares		143,090
Exercise of warrants, amount	7,021	$ 143		6,878
Balance, shares at Jun. 30, 2021		12,728,326	72,000			45,750
Balance, amount at Jun. 30, 2021	23,742,866	$ 12,728	$ (68,400)	38,788,342	(14,989,850)	$ 46
Series A Preferred Stock dividend payable	(2,829)				(2,829)
Series B Preferred Stock dividend payable	(1,533)				(1,533)
Net Income	2,236,178				2,236,179
Cancellation of Common Stock held in treasury, shares		(72,000)	(72,000)
Cancellation of Common Stock held in treasury, amount	0	$ (72)	$ 68,400	(68,328)
Exercise of warrants and options, shares		1,346,250
Exercise of warrants and options, amount	143,439	$ 1,346		142,093
Balance, shares at Sep. 30, 2021		14,002,576				45,750
Balance, amount at Sep. 30, 2021	26,118,122	$ 14,002	0	38,862,107	(12,758,033)	$ 46
Balance, shares at Dec. 31, 2021		14,027,576				45,750
Balance, amount at Dec. 31, 2021	27,461,804	$ 14,028	0	38,862,333	(11,414,602)	$ 46
Series A Preferred Stock dividend payable	(4,253)				(4,253)
Series B Preferred Stock dividend payable	(1,476)				(1,476)
Net Income	2,944,793				2,944,793
Issuance of Common Stock Upon Exercise of Warrant, shares		50,000
Issuance of Common Stock Upon Exercise of Warrant, amount	50,000	$ 50		49,950
Repurchase and cancellation of Common Stock, shares		(100,000)
Repurchase and cancellation of Common Stock, amount	(150,000)	$ (100)		(149,900)
Balance, shares at Mar. 31, 2022		13,977,576				45,750
Balance, amount at Mar. 31, 2022	30,300,868	$ 13,978	0	38,762,383	(8,475,539)	$ 46
Balance, shares at Dec. 31, 2021		14,027,576				45,750
Balance, amount at Dec. 31, 2021	27,461,804	$ 14,028	0	38,862,333	(11,414,602)	$ 46
Net Income	6,587,739
Balance, shares at Sep. 30, 2022		14,102,576				44,500
Balance, amount at Sep. 30, 2022	33,934,000	$ 14,103	0	38,762,260	(4,842,407)	$ 45
Balance, shares at Mar. 31, 2022		13,977,576				45,750
Balance, amount at Mar. 31, 2022	30,300,868	$ 13,978	0	38,762,383	(8,475,539)	$ 46
Series A Preferred Stock dividend payable	(3,403)				(3,403)
Series B Preferred Stock dividend payable	(1,496)				(1,496)
Conversions of Series A Convertible Preferred Stock to Common Stock, shares		125,000				(1,250)
Conversions of Series A Convertible Preferred Stock to Common Stock, amount	0	$ 125		(124)		$ (1)
Net Income	3,219,460				3,219,460
Balance, shares at Jun. 30, 2022		14,102,576				44,500
Balance, amount at Jun. 30, 2022	33,515,429	$ 14,103	0	38,762,260	(5,260,978)	$ 45
Series A Preferred Stock dividend payable	(3,402)				(3,402)
Series B Preferred Stock dividend payable	(1,512)				(1,512)
Net Income	423,486				423,486
Balance, shares at Sep. 30, 2022		14,102,576				44,500
Balance, amount at Sep. 30, 2022	$ 33,934,000	$ 14,103	$ 0	$ 38,762,260	$ (4,842,407)	$ 45

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Cash Flows From Operating Activities
Net Income			$ 6,587,739	$ 4,450,690
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities:
Lifted Made's Portion of SmplyLifted's Net Loss			0	95,399
Bad Debt (Income)/Expense	$ (11,898)	$ 61,449	(75,107)	81,621
Depreciation and Amortization			128,176	100,435
Gain on Forgiveness of Debt			(5,026)	(151,147)
Loss (Gain) on Disposal of Fixed Assets			8,243	4,750
Loss on Deposits			0	30,000
Spoiled and Written Off Inventory			3,279,262	234,351
Sales Allowance			841,269	0
Deferred Income Taxes			(335,301)	0
Effect on Cash of Changes in Operating Assets and Liabilities
Accounts Receivable			727,946	(598,935)
Prepaid Expenses			2,315,918	(190,737)
Dividend Receivable from Bendistillery, Inc.			2,495	2,495
Income Tax Receivable and Payable			(733,847)	2,715
Management Bonuses Payable			(941,562)	(50,000)
Company-wide Management Bonus Pool			(1,556,055)	1,559,335
Interest Receivable			0	1,676
Inventory			(5,813,995)	(1,690,562)
Other Current Assets			(12,161)	(9,475)
Trade Accounts Payable and Accrued Expenses			501,698	827,789
Accounts Payable and Interest Payable to Related Parties			(1,774)	65,897
Change in ROU Asset			(28,394)	0
Change in Finance & Operating Lease Liabilities			37,418	4,442
Deferred Revenue			(1,390,346)	(420,381)
Net Cash Provided by Operating Activities			3,536,595	4,350,358
Cash Flows From Investing Activities
Reduction of CBD Lion Note Receivable			0	15,318
Net Purchase of Fixed Assets			(656,381)	(288,332)
Loans to SmplyLifted LLC			0	(93,750)
Net Cash Used in Investing Activities			(656,381)	(366,764)
Cash Flows From Financing Activities
Proceeds from Exercise of Warrants			0	142,024
Issuance of Common Stock			50,000	0
Payments of Dividends to Series A Convertible Preferred Stockholders			(17,147)	(199,188)
Payments of Dividends to Series B Convertible Preferred Stockholders			(4,500)	(10,344)
Financing Cost - Net Proceeds from Borrowing Under Notes Payable to Related Party - Nick Warrender			1,833,334	0
Financing Cost - Repayment of Borrowings Under Notes Payable to Related Party - Nick Warrender			(1,833,334)	0
Purchase of Shares of Common Stock			(150,000)	(34,200)
Repayment of Finance Lease Liability			(10,340)	(16,386)
Net Cash Used In Financing Activities			(131,987)	(118,094)
Net Increase in Cash			2,748,228	3,865,500
Cash and Cash Equivalents at Beginning of Period			1,602,731	439,080	$ 439,080
Cash and Cash Equivalents at End of Period	$ 4,350,959	$ 4,304,580	4,350,959	4,304,580	$ 1,602,731
Supplemental Cash Flow Information
Cash Paid For Interest			61,257	0
Cash Paid for Interest - Related Party			47,851	0
Cash Paid For Income Taxes			3,526,509	0
Non-Cash Activities:
Right-of-Use assets acquired from inception of Finance Leases			0	1,480,408
Right-of-Use assets acquired from inception of Operating Leases			514,278	0
Conversion of Series A and Series B Preferred Stock to Common Stock			125	6,100
Cashless exercise of Warrants			0	136
Cancellation of Common Stock held in Treasury			0	68,400
Reduction in bonus payable to Gerard M. Jacobs by the cost of exercising warrants			$ 0	$ 8,439

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DESCRIPTION OF THE BUSINESS OF LFTD PARTNERS INC

9 Months Ended

Sep. 30, 2022

DESCRIPTION OF THE BUSINESS OF LFTD PARTNERS INC

Description Of The Business Of Lftd Partners Inc.

NOTE 1 – DESCRIPTION OF THE BUSINESS OF LFTD PARTNERS INC.

Description of the Business of LFTD Partners Inc. – LFTD Partners Inc. (hereinafter sometimes referred to as “LFTD Partners”, the “Company”, “LIFD”, the “Company”, “we”, “us”, “our”, etc.) was organized under the laws of the State of Nevada on January 2, 1986. Shares of the Company’s common stock are traded on the OTCQB Venture Market under the trading symbol LIFD.

On May 18, 2021, the Company changed its name to LFTD Partners Inc. from Acquired Sales Corp. On March 15, 2022, the Company changed its stock trading symbol to LIFD.

After acquiring, operating and then selling businesses involved in the defense sector, our business is currently involved in developing, manufacturing and selling a wide variety of branded products containing hemp-derived cannabinoids and non-hemp-derived psychedelic products. We are interested in acquiring rapidly growing, profitable companies that are also involved in manufacturing and selling branded products containing hemp-derived cannabinoids, and in acquiring companies that manufacture and sell branded products containing kratom, kava and non-hemp-derived psychedelic products (a “Canna-Infused Products Company”).

Management of the Company is open-minded to the concept of also acquiring operating businesses and/or assets involving products containing marijuana, distilled spirits, beer, wine, and real estate. In addition, management of the Company is open-minded to the concept of acquiring all or a portion of one or more operating businesses and/or assets that are considered to be “essential” businesses which are unlikely to be shut down by the government during pandemics such as COVID-19. We are currently engaged in discussions with potential acquisition targets, both within and outside the hemp-derived cannabinoid industry.

On February 24, 2020, we acquired 100% of the ownership interests in one Canna-Infused Products Company called Lifted Liquids, Inc. d/b/a Lifted Made (formerly Warrender Enterprise Inc. d/b/a Lifted Liquids) (www.LiftedMade.com), Kenosha, Wisconsin (“Lifted Made” or “Lifted”).

On April 30, 2019, we also closed on the acquisition of 4.99% of the common stock of each of CBD-infused beverages maker Ablis Holding Company (“Ablis”) (www.AblisCBD.com), and of distilled spirits manufacturers Bendistillery Inc. (“Bendistillery”) and Bend Spirits, Inc. (“Bend Spirits”), all located in Bend, Oregon.

Prior to February 9, 2022, Lifted Made had a 50% membership interest in SmplyLifted LLC, which sells tobacco-free nicotine pouches under the brand name FR3SH (www.GETFR3SH.com). On February 9, 2022, Lifted Made sold its 50% membership interest in SmplyLifted LLC to Corner Vapory LLC, an affiliate of Nicholas S. Warrender (“NWarrender”), CEO of Lifted, for $1, plus ninety-nine percent (99%) of any and all payments and other consideration received or owed to Corner Vapory LLC in regard to SmplyLifted’s existing inventory of FR3SH brand tobacco-free nicotine pouches. Lifted has the option to re-purchase the 50% membership interest in SmplyLifted LLC from Corner Vapory LLC for $1,000 in cash at any time on or before December 31, 2032.

Merger Related Promissory Note

On February 24, 2020, we acquired Lifted as a wholly-owned subsidiary for cash and stock paid to Lifted’s then owner NWarrender. The $7,500,000 money component of the purchase consideration was paid to NWarrender in the form of $3,750,000 in cash at closing and a $3,750,000 promissory note that accrued interest at the rate of 2% per annum (“$3.75M Note”).

The $3.75M Note was secured by (a) a first lien security interest in all of the assets of the Company and Lifted; and (b) a pledge of: (i) all of the capital stock of Lifted; (ii) all of the common stock of Bendistillery, Bend Spirits and Ablis that is owned by the Company; and (iii) all of the capital stock of any other entity owned by the Company, Lifted or any of their subsidiaries, pursuant to a Collateral Stock Pledge Agreement between NWarrender, as Secured Party, and the Company and Lifted, as Pledgors.

On December 30, 2021, the Company repaid all principal and interest due under the $3.75M Note.

NWarrender kept $1,000,000 of the repayment of the $3.75M Note, plus accrued interest, and on January 3, 2022, reloaned $2,750,000 to LIFD and Lifted (collectively “Payors”) at the rate of 2.5% (the “$2.75M Note”). The $2.75M Note payable jointly by the Company and Lifted to NWarrender was secured by a perfected first lien security interest (the “Security Interest”) that encumbers all of the assets of the Company and Lifted. The Company was obligated to pay off the principal of the $2.75M Note in five semi-annual payments to NWarrender of $458,333 and a sixth and final semi-annual payment to NWarrender of $458,335, in each case plus accrued interest, starting on June 30, 2022.

On June 7, 2022, LFTD Partners prepaid $916,666 of the principal of the $2.75M Note, and $29,384 of related accrued interest through that date, which left $1,833,334 remaining principal on the $2.75M Note. On July 5, 2022, we entered into an agreement (“Acceleration Agreement”) with NWarrender. Under the terms of the Acceleration Agreement, we were obligated to repay the remaining principal balance as follows: $1,374,999 on or before December 31, 2022, and $458,335 on or before December 31, 2024. Then, on July 8, 2022, we prepaid $916,666, along with accrued interest, and then, on July 25, 2022, we prepaid the remaining principal balance of $916,668 and accrued interest in full, and all collateral securing the $2.75M Note was released.

Obligation to Purchase Headquarters Building

Toward the end of 2020, NWarrender, through his assigned entity 95th Holdings, LLC, purchased a building located at 5511 95th Avenue in Kenosha, Wisconsin (“5511 Building”) that was immediately leased to us to conduct our expanded operations. The 5511 Building includes office, laboratory and warehouse space. As part of the lease agreement with 95th Holdings, LLC, the parties agreed that our wholly owned subsidiary Lifted would eventually purchase the 5511 Building. The purchase price for the 5511 Building was originally subject to variation based on a formula agreed upon by the parties. Pursuant to an agreement with Warrender on December 30, 2021, the parties agreed to set the purchase price for the 5511 Building at $1,375,000. Prior to the Acceleration Agreement, Lifted had an obligation to complete the purchase of the 5511 Building on or before December 31, 2022. Pursuant to the Acceleration Agreement, the deadline to purchase the 5511 Building has been extended by one year to December 31, 2023. In addition, the Acceleration Agreement contains a provision that if we raise $5,000,000 of debt or equity capital, then Lifted or our designee shall purchase the 5511 Building from 95th Holdings, LLC at the agreed upon $1,375,000 purchase price within two days.

Sublease For Commuter Employees 

On July 6, 2022, Lifted entered into a sublease for office space in Chicago, Illinois located at 2701-09 West Fulton PH, Chicago, Illinois 60612. The sublease costs $3,000 per month, plus supplemental lease related charges such as real estate taxes and common expenses of the property that we anticipate will be commercially typical costs. The sublease was retroactively effective as of June 1, 2022 and for a five-month term that ended on October 31, 2022. The purpose of the sublease is to make available office space for the members of Lifted’s sales team who live in Chicago. These salespeople were spending significant time in their cars commuting from Chicago to Kenosha.

The sublessor is one of our affiliates, Bill McLaughlin, Lifted’s Chief Strategy Officer. The sublease is structured so that Mr. McLaughlin's lease payment obligations to the landlord are passed on to Lifted on a dollar-for-dollar basis, such that Mr. McLaughlin does not realize a cashflow profit or loss from the sublease.

As described in “NOTE 15 – SUBSEQUENT EVENTS”, the sublease is currently operating on a month-to-month basis. Management expects to extend the sublease once Mr. McLaughlin is presented a new lease from his landlord.

Termination of Letter of Intent relating to the proposed acquisition by the Company of Savage Enterprises, Premier Greens LLC and MKRC Holdings, LLC

On December 15, 2021, the Company, our Chairman and CEO Gerard M. Jacobs (“GJacobs”), our President and CFO William C. “Jake” Jacobs (“WJacobs”), and our Vice Chairman and COO NWarrender, Savage Enterprises, a Wyoming corporation (“Savage”), Premier Greens LLC, a California limited liability company (“Premier Greens”), MKRC Holdings, LLC, a Wyoming limited liability company (“MKRC”), Christopher G. Wheeler (“Wheeler”), and Matt Winters (“Winters”), mutually stipulated to terminate the Letter of Intent dated June 15, 2021 that set out the Company’s possible acquisition of Savage, Premier Greens and MKRC.

Termination of Letter of Intent relating to the proposed acquisition by the Company of Fresh Farms E-Liquid, LLC

On December 16, 2021, the Company, Fresh Farms E-Liquid, LLC, a California limited liability company (“Fresh Farms”), Anthony J. Devincentis (“Devincentis”), Jakob M. Audino (“Audino”), Forrest F. Town (“Town”), John Z. Petti (“Petti”), GJacobs, NWarrender, WJacobs, Wheeler and Winters mutually stipulated to terminate the Letter of Intent dated September 1, 2021 that set out the Company’s possible acquisition of Fresh Farms.

Capital Raise

Cash on hand is currently limited, so in order to close future acquisitions, and potentially also in order to pay other corporate obligations such as certain bonuses, our company-wide bonus pool, and/or income taxes, it may be necessary for us to raise substantial additional capital, and no guarantee or assurance can be made that such capital can be raised on acceptable terms, if at all.

We are currently exploring the possibility of raising $5 million or more through some combination of debt and equity offerings in order to purchase for $1.375 million the building located at 5511 95^th Avenue, Kenosha, Wisconsin, that is currently being rented by Lifted, to pay off other liabilities of the Company and Lifted such as certain bonuses, our company-wide bonus pool, and/or income taxes, and to pay transactional fees and expenses. If we proceed forward with an equity raise, it may be in conjunction with a potential listing of our common stock on a stock exchange. However, there can be no guarantee or assurance that any such debt and/or equity capital raise or listing will be completed on acceptable terms, if at all.

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2022

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis Of Presentation And Significant Accounting Policies

NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Consolidated Financial Statements – The consolidated financial statements of the Company should be read in conjunction with the Company’s consolidated financial statements and related notes that appear in the annual report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 31, 2022. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying unaudited consolidated financial statements and consist of only normal recurring adjustments, except as disclosed herein. As part of the consolidation, all significant intercompany transactions are eliminated, and on the Consolidated Statements of Operations, certain expenses are consolidated into the Other Operating Expenses category.

Use of Estimates – The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) typically requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results and outcomes may differ from management’s estimates and assumptions. Key estimates in these financial statements include the allowance for doubtful accounts, sales allowance, estimated useful lives of property, plant and equipment, valuation allowance on deferred income tax assets and the fair value of stock options and warrants.

Cash and Cash Equivalents – Cash and cash equivalents as of September 30, 2022 and December 31, 2021 included cash on-hand. The Company considers all highly liquid investments with an original maturity date within 90 days to be cash equivalents. Cash equivalents are carried at cost. The Company maintains its cash balance at a credit-worthy financial institution that is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. Deposits with these banks may exceed the amount of insurance provided on such deposits; however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk.  

Fair Value of Financial Instruments – The historical carrying amount of the financial instruments, which principally include cash, trade receivables, historical accounts payable and accrued expenses, approximates fair value due to the relative short maturity of such instruments.

Accounting Standards Codification (“ASC”) 820 defines fair value, establishes a framework for measuring fair value under GAAP and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair-value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Ablis Holding Company, Bendistillery Inc. and Bend Spirits, Inc. are not publicly traded, and as such their financial instruments are Level 3 unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Accounts Receivable – The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded (the “Allowance for Doubtful Accounts”), which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s recent loss history and an overall assessment of past due trade accounts receivable outstanding. As of December 31, 2021, the Company implemented a new policy regarding allowances for doubtful accounts, which is that all accounts receivable older than 90 days at quarter end are accrued for in allowances for doubtful accounts. Allowances for doubtful accounts of $128,589 and $239,101 were recorded at September 30, 2022 and December 31, 2021, respectively.

Inventory – Inventory is valued at the lower of average cost or market value (net realizable value). Inventory consisted of the following at September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
Raw Goods	$	3,213,772	$	2,927,727
Finished Goods	$	3,130,905	$	882,217
Total Inventory	$	6,344,677	$	3,809,944

Monthly overhead costs such as payments for rent, utilities, insurance, and indirect labor are allocated to finished goods based on the estimated percentage cost toward the finished goods. Depreciation expense related to certain machinery and equipment is also allocated to finished goods.

At September 30, 2022, $112,507 of overhead costs were allocated to finished goods. In comparison, during the quarter ended September 30, 2021, $36,457 of overhead costs were allocated to finished goods.

During the nine months ended September 30, 2022, $3,279,262 of obsolete and spoiled inventory was written off; this is compared to $234,351 of obsolete and spoiled inventory written off during the nine months ended September 30, 2021.

Of the $3,279,262 of obsolete inventory that was written off during the nine months ended September 30, 2022, $2,479,798 of it was recognized during the quarter ended September 30, 2022. This write-off primarily related to $2,313,902 worth of certain 2 mL disposable vapes written off due to clogging issues (the “Clogged Vapes”). Management believes that the clogging was caused by the summer heat wave (the third hottest summer on record in the USA). The heat caused the oil in the Clogged Vapes to lose viscosity, so more oil solidified in the coils as they were brought to room temperature. Because these Clogged Vapes did not have preheat or variable voltage settings, the oil could not be unclogged from the coils. Management discontinued the sale of the Clogged Vapes during the third quarter. Lifted’s 2 mL disposable vapes have now been superseded by 3 mL disposable vapes that do have preheat and variable voltage settings, so management expects that this write off of Clogged Vapes should be a one-time occurrence. Management is attempting to negotiate an agreement pursuant to which the manufacturer of the Clogged Vapes will subsidize or share, in some fashion, in the losses that have been sustained by Lifted due to the Clogged Vapes; however, there can be no guarantees or assurances whatsoever that such an agreement to subsidize or share in such losses can be successfully negotiated.

The process of determining obsolete inventory during the quarter involved:

1)	Identifying raw goods that would no longer be used in the manufacture of finished goods;
2)	Identifying finished goods that would no longer be sold or that are slow moving; and
3)	Valuing and expensing raw and finished goods that would no longer be sold.

Fixed Assets – Fixed assets are recorded and stated at cost. Fixed assets that cost less than $2,500 are expensed, and fixed assets that cost $2,500 or more are capitalized. Depreciation of machinery and equipment, furniture and fixtures, leasehold improvements, and computer equipment, is based on the asset’s estimated useful life and is calculated using the straight-line method. Normal repairs and maintenance costs are expensed as incurred. Expenditures that materially increase values or extend useful lives are capitalized. The related costs and accumulated depreciation of disposed assets are eliminated and any resulting gain or loss on disposition is included in net income.

Management regularly reviews property and equipment and other long-lived assets for possible impairment. This review occurs annually, or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If there is indication of impairment, management then prepares an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The fair value is estimated using the present value of the future cash flows discounted at a rate commensurate with management’s estimates of the business risks.

Preparation of estimated expected future cash flows is inherently subjective and is based on management’s best estimate of assumptions concerning expected future conditions. Long-lived assets held for sale are recorded at the lower of their carrying amount or fair value less cost to sell.

Security Deposits – The Company has not paid a security deposit for its leased facility located at 5511 95^th Avenue, Kenosha, WI 53144 for the Company’s current office, manufacturing and warehouse space.

The Company has paid security deposits for its leased facilities located at 8920 58^th Place, Suite 850, Kenosha, WI 53144, 8910 58^th Place, Suites 600 and 700, Kenosha, WI 53144, 9560 58^th Place, Suite 360, Kenosha, WI 53144 and 2701-09 West Fulton PH, Chicago, Illinois 60612.

The Company had paid a security deposit to its lessor for the Company’s former office, manufacturing and warehouse space in Zion, IL, that was rented on a month-to-month basis from June 1, 2021 through November 2021. The security deposit was written off at December 31, 2021.

State Licensing Deposits – The Company is required to pay deposits for certain licenses in various states.

Revenue – The Company recognizes revenue in accordance with Accounting Standards Codification 606.

The majority of the Company’s sales are of branded products goods to distributors, wholesalers, and end consumers. A minority of the Company’s sales are of raw goods to manufacturers, distributors and wholesalers. The majority of the Company’s sales are to distributors, followed by the Company’s sales to wholesalers, and then the Company’s sales to end consumers. Distributors primarily sell Lifted’s products to vape and smoke shops, stores specializing in cannabinoid-infused products, convenience stores, gas stations, health food stores, and other outlets.

Typically, the Company’s revenue is recognized when it satisfies a single performance obligation by transferring control of its products to a customer. Control is generally transferred when the Company’s products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. If the shipping terms on a sale are FOB destination, the revenue is deferred until the product reaches its destination.

The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers.

Discounts and rebates to customers are recorded as a reduction to gross sales.

Management believes that adequate provision has been made for cash discounts, returns and spoilage based on the Company’s historical experience.

Described below are some of the reasons why a customer may want to return an ordered item, and how the Company responds in each situation:

1)	The ordered item breaks, melts, clogs, leaks or separates in transit to the customer. In this case, the Company will replace the broken, melted or separated item at no cost to the customer.
2)	The Company sent the wrong item to the customer. In this case, the Company will allow the customer to keep, at no cost to the customer, the item that was mistakenly sent to the customer. The Company will also send the correct product to the customer, at no cost to the customer.
3)	The customer ordered the wrong product. In this case, the customer, at his/her own expense, must mail the mistakenly ordered product back to the Company, and the Company will mail the correct product to the customer.
4)	The ordered item is recalled. In a situation where product is recalled, the Company will offer a replacement, credit, or refund.

As described above in the section “Inventory”, during the quarter ended September 30, 2022, some of Lifted’s customers returned certain Clogged Vapes. In total for the quarter ended September 30, 2022, the Company recorded a sales allowance of $841,269 for estimated future discounts/refunds and product returns, primarily associated with the Clogged Vapes. Please refer to the description in “Inventory” for more information regarding the Clogged Vapes.

Disaggregation of Revenue

During the quarter ended September 30, 2022, approximately 99% of the Company’s sales occurred inside of the United States of America. During the quarter ended September 30, 2021, approximately 99% of the Company’s sales occurred inside of the United States of America as well.

The Company has considered providing disaggregation of revenue by information regularly reviewed by the chief operating decision maker for evaluating the financial performance of operating segments, such as type of good, geographical region, market or type of customer, type of contract, contract duration, timing of transfer of goods, and sales channels. Due to the rapidly evolving nature of our industry, the Company is constantly launching new products to stay ahead of trends, finding new sales channels, initiating new distribution networks and modifying the prices of its products.

Shown below is a table showing the approximate disaggregation of historical revenue:

Type of Sale	For the three months ended September 30, 2022		% of Net Sales			For the three months ended September 30, 2021		% of Net Sales			For the nine months ended September 30, 2022		% of Net Sales			For the nine months ended September 30, 2021		% of Net Sales
Net sales of raw materials to customers	$	21,707		0.2	%	$	105,960		1.2	%	$	40,339		0.1	%	$	155,695		0.8	%
Net sales of products to private label clients		766,129		6.8	%	$	663,968		7.5	%	$	850,271		1.8	%	$	2,692,091		14.3	%
Net sales of products to wholesalers		1,404,590		12.5	%	$	1,255,947		14.2	%	$	5,825,584		12.6	%	$	2,842,714		15.1	%
Net sales of products to distributors		8,653,948		77.0	%	$	6,273,836		71.1	%	$	36,393,678		78.9	%	$	12,060,313		63.9	%
Net sales of products to end consumers		390,903		3.5	%	$	521,242		5.9	%	$	2,992,784		6.5	%	$	1,118,554		5.9	%
Net Sales	$	11,237,277		100.0	%	$	8,820,952		100.0	%	$	46,102,656		100.0	%	$	18,869,366		100.0	%

Deferred Revenue

Amounts received from a customer before the purchased product is shipped to the customer is treated as deferred revenue. If cash is not received, an accounts receivable is recognized for the invoiced order, but revenue is not recognized until the order is fully shipped. Accounts receivable includes amounts associated with partially shipped orders, for which the unshipped portion is a contract asset. Contract assets represent invoiced but unfulfilled performance obligations.

The table shown below represents the composition of deferred revenue between contract assets (invoiced but unfulfilled performance obligations) and deposits from customers from unfulfilled orders as of September 30, 2022 and December 31, 2021.

	September 30, 2022		December 31, 2021
Contract Assets (invoiced but unfulfilled performance obligations)	$	784,047	$	1,650,258
Deposits from customers for unfulfilled orders	$	-	$	524,135
Total Deferred Revenue	$	784,047	$	2,174,393

Cost of Goods Sold – Cost of goods sold consists of the costs of raw materials utilized in the manufacture of products, direct labor, co-packing fees, repacking fees, freight and shipping charges, warehouse expenses incurred prior to the manufacture of Lifted’s finished products and certain quality control costs. Finished goods that are sold account for the largest portion of cost of sales. Raw materials include ingredients, product components and packaging materials. $3,279,262 and $234,351 of cost of goods sold relates to spoiled and obsolete inventory written off during the nine months ended September 30, 2022 and September 30, 2021, respectively.

Operating Expenses – Operating expenses include payroll, consulting and independent contractor expenses, the accrual for the company-wide management bonus pool, professional fees, bank charges and merchant fees, advertising and marketing, bad debt expense, and depreciation and amortization. Total operating expenses decreased to $318,474 for the quarter ended September 30, 2022, down from $1,782,858 during the quarter ended September 30, 2021, primarily as a result of the complete elimination of the company-wide bonus pool accrual of $2,121,532, which had been accrued through June 30, 2022. Moreover, no company-wide management bonus pool accrual was booked for the quarter ended September 30, 2022.

Income Taxes – Provisions for income taxes are based on taxes payable or refundable for the current year and deferred income taxes. Deferred income taxes are provided on differences between the tax bases of assets and liabilities and their reported amounts in the financial statements and on tax carry forwards. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance is provided against deferred income tax assets when it is not more likely than not that the deferred income tax assets will be realized.

Basic and Diluted Earnings (Loss) Per Common Share – Basic earnings (loss) per common share is determined by dividing earnings (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per common share is calculated by dividing earnings (loss) by the weighted-average number of common shares and dilutive common share equivalents outstanding during the period. When dilutive, the incremental potential common shares issuable upon exercise of stock options and warrants are determined by the treasury stock method. The following table summarizes the calculations of basic and diluted earnings (loss) per common share for the three and nine months ended September 30, 2022 and September 30, 2021:

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net Income/(Loss)	$	423,486	$	2,236,178	$	6,587,739	$	4,450,690
Weighted average number of common shares outstanding:
Basic		14,102,578		13,015,717		14,073,366		10,525,461
Diluted		15,884,776		16,257,915		15,855,564		13,767,659
Basic Net Income (Loss) per Common Share	$	0.03	$	0.17	$	0.47	$	0.42
Diluted Net Income (Loss) per Common Share	$	0.03	$	0.14	$	0.41	$	0.32

As of September 30, 2022, in addition to our outstanding common stock, we have issued (a) options to purchase 1,076,698 shares of common stock at $2.00 per share, (b) warrants to purchase 155,500 shares of common stock at $1.00 per share, (c) rights to purchase warrants to purchase 100,000 shares of common stock at $1.85 per share, and (d) warrants to purchase 2,295,000 shares of common stock at $5.00 per share.

Regarding the aforementioned warrants to purchase 2,295,000 shares of our common stock at an exercise price of $5.00 per share: of the total, warrants to purchase 1,550,000 shares of our common stock are vested, while the remaining warrants to purchase 745,000 shares of our common stock are not vested and are subject to certain conditions and requirements.

At September 30, 2022, the Company had Series A Preferred Stock outstanding convertible into 450,000 shares of common stock; these are included in the diluted earnings calculation. Also at September 30, 2022, the Company had Series B Preferred Stock outstanding convertible into 40,000 shares of common stock; these are not included in the diluted earnings calculation because the exercise price ($5.00/share) was higher than the stock closing price at September 30, 2022 (3.40/share).

In comparison, as of September 30, 2021, in addition to our outstanding common stock, we have issued (a) options to purchase 1,086,698 shares of common stock at $2.00 per share, (b) warrants to purchase 205,500 shares of common stock at $1 per share, (c) rights to purchase warrants to purchase 1,375,000 shares of common stock at between $0.01 and $1.85 per share, and (d) warrants to purchase 2,295,000 shares of common stock at $5.00 per share.

Regarding the aforementioned rights to purchase warrants to purchase 1,375,000 shares of common stock at between $0.01 and $1.85 per share as of September 30, 2021: exercise rights to purchase 1.25 million shares of our common stock by exercise of the foregoing warrants are not vested and are not exercisable until a performance contingency is met.

Regarding the aforementioned warrants to purchase 2,295,000 shares of our common stock at an exercise price of $5.00 per share as of September 30, 2021: of the total, warrants to purchase 1,650,000 shares of our common stock are vested, while the remaining warrants to purchase 645,000 shares of our common stock are not vested and are subject to certain conditions and requirements.

Also outstanding at September 30, 2021, the Company had Series A Preferred Stock outstanding convertible into 575,000 shares of common stock; these are included in the diluted earnings calculation. At September 30, 2021, the Company also had Series B Preferred Stock outstanding convertible into 40,000 shares of common stock; these are not included in the diluted earnings calculation.

Recent Accounting Pronouncements – In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses (codified as Accounting Standards Codification (“ASC”) Topic 326). ASC 326 adds to US GAAP the current expected credit loss model, a measurement model based on expected losses rather than incurred losses. Under this new guidance, an entity recognizes its estimate of expected credit losses as an allowance, which the FASB believes will result in more timely recognition of such losses. ASU 2016-13 and its amendments will be effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2022, though early adoption is permitted. The Company believes the adoption will modify the way the Company analyzes financial instruments. The Company is currently evaluating the impact of ASU 2016-13 on its consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes, eliminates certain exceptions to the general principles in Topic 740 and clarifies certain aspects of the current guidance to improve consistent application among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021 and interim periods within annual periods beginning after December 15, 2022, though early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. The Company is currently evaluating the impact of ASU 2019-12 on its consolidated financial statements.

On August 5, 2020, the FASB issued ASU No. 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), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is effective for public business entities that meet the definition of a SEC filer, excluding smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The FASB noted that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.

The Company is researching what other pronouncements may be applicable to the Company’s accounting and whether or not any other pronouncements should be adopted.

Advertising and Marketing Expenses – Advertising and marketing costs are expensed as incurred. During the three and nine months ended September 30, 2022, the Company incurred $334,215 and $550,612, respectively, in advertising and marketing expenses, which related to trade shows, marketing, promotional products and public relations. In comparison, during the three and nine months ended September 30, 2021, the Company incurred $86,438 and $236,598 in advertising and marketing expenses, of which were related to trade shows, public relations and digital marketing. 

Compensated Absences – During the year ended December 31, 2021, paid time off (“PTO”) was provided to employees who obtained approval for it from NWarrender. Any approved PTO was granted at NWarrender’s discretion, and mandatory PTO was zero days, thus no accrual was necessary at December 31, 2021. Effective January 1, 2022, certain PTO policies have been adopted by Lifted, and a PTO accrual of $13,912 was recognized at September 30, 2022.

Off-Balance Sheet Arrangements – The Company has no off-balance sheet arrangements.

Reclassifications – Some items from the prior period have been reclassified within the financial statements to conform with the current presentation.

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RECEIPT OF LOANS UNDER THE ECONOMIC INJURY DISASTER LOAN PROGRAM AND THE PAYCHECK PROTECTION PROGRAM

9 Months Ended

Sep. 30, 2022

RECEIPT OF LOANS UNDER THE ECONOMIC INJURY DISASTER LOAN PROGRAM AND THE PAYCHECK PROTECTION PROGRAM

Receipt Of Loans Under The Economic Injury Disaster Loan Program And The Paycheck Protection Program

NOTE 3 – RECEIPT OF LOANS UNDER THE ECONOMIC INJURY DISASTER LOAN PROGRAM AND THE PAYCHECK PROTECTION PROGRAM

Lifted also applied for and received a loan (the “PPP Loan”) under the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted March 27, 2020. The PPP Loan was issued by BMO Harris Bank (the “Lender”) in the aggregate principal amount of $149,622.50 and evidenced by a promissory note (the “Note”), dated April 14, 2020 issued by Lifted to the Lender. On April 20, 2021, the entire PPP Loan ($149,622) and the interest payable on the PPP Loan ($1,525) was forgiven by the SBA, and a related gain on forgiveness of debt in the amount of $151,147 was recorded. In accordance with its terms, the Note was originally scheduled to mature on April 14, 2022 and bore interest at a rate of 1.00% per annum, payable monthly commencing on November 14, 2020, following an initial deferral period as specified under the PPP. In addition, the Note could be prepaid by Lifted at any time prior to its original maturity with no prepayment penalties. Proceeds from the PPP Loan were available to Lifted to fund designated expenses, including certain payroll costs and other permitted expenses, in accordance with the PPP. Under the terms of the PPP, up to the entire amount of principal and accrued interest of the PPP Loan could be forgiven to the extent that at least 75% of the PPP Loan proceeds are used for qualifying expenses as described in the CARES Act and applicable implementing guidance issued by the SBA under the PPP. As of March 31, 2021, Lifted had an accrual of $1,443 for the interest on the PPP Loan. During the three months ended June 30, 2021, interest of $82 was accrued prior to the forgiveness of the Loan.

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RISKS AND UNCERTAINTIES

9 Months Ended

Sep. 30, 2022

RISKS AND UNCERTAINTIES

Risks And Uncertainties

NOTE 4 - RISKS AND UNCERTAINTIES

Going Concern – Prior to the acquisition of Lifted on February 24, 2020, the Company had no sources of revenue, and the Company had a history of recurring losses, which has resulted in an accumulated deficit of $4,842,407 as of September 30, 2022. Bankruptcy of the Company at some point in the future is a possibility. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management plans to sustain the Company as a going concern by taking the following actions: (1) acquiring and/or developing profitable businesses that will create positive income from operations; and/or (2) completing private placements of the Company’s common stock and/or preferred stock. Management believes that by taking these actions, the Company will be provided with sufficient future operations and cash flow to continue as a going concern. However, there can be no assurances or guarantees whatsoever that the Company will be successful in consummating such actions on acceptable terms, if at all. Moreover, any such actions can be expected to result in substantial dilution to the existing shareholders of the Company.

The Company’s investments in Ablis, Bendistillery and Bend Spirits made the Company a minority owner of these companies. As a minority owner, the Company is not able to recognize any portion of Ablis’, Bendistillery’s or Bend Spirits’ revenues or earnings in the Company’s financial statements. The Company monitors its investments in Ablis, Bendistillery and Bend Spirits, and from time to time and will evaluate whether there has been a potential impairment of value.

The COVID-19 pandemic and its ramifications, combined with the expenses and potential liabilities associated with litigation involving Lifted, combined with the regulatory risks and uncertainties associated with the cannabinoid-infused products, vaping and nicotine products industries, combined with the risks associated with internet hacking or sabotage, combined with the risks of employee and/or independent contractor disloyalty or theft of Company information and opportunities, have created significant adverse risks to the Company, which have caused substantial doubt about the Company’s ability to continue as a going concern.

Prior to the Acceleration Agreement, Lifted had an obligation to complete the purchase of the 5511 Building on or before December 31, 2022. Pursuant to the Acceleration Agreement, the deadline to purchase the 5511 Building has been extended by one year to December 31, 2023. In addition, the Acceleration Agreement contains a provision that if we raise $5,000,000 of debt or equity capital, then Lifted or our designee shall purchase the Property from 95th Holdings, LLC at the agreed upon $1,375,000 purchase price within two days.

The Company is also accruing 3% annual dividends on its Series A and Series B Convertible Preferred Stock.

Also, on February 14, 2022, NWarrender, GJacobs and WJacobs (together the “Parties”) and LFTD Partners, entered into an agreement (the “Amended Omnibus Agreement”) that amends in part the Agreement dated as of December 30, 2021 entered into by and among LFTD Partners Inc., the Parties, Lifted Liquids, Inc. d/b/a Lifted Made and 95th Holdings, LLC (the “Omnibus Agreement”). The Amended Omnibus Agreement (1) terminates the right for the Parties to receive bonus compensation in regard to 2021 that is in excess of the Modified 2021 Bonus Pool Amount of $1,556,055 set out in the Omnibus Agreement; (2) places a cap on the 2022 company-wide bonus pool such that the 2022 company-wide bonus pool shall not be allowed to be accrued or paid by LIFD if and to the extent that doing so would decrease LIFD’s 2022 diluted earnings per share of common stock below $0.56 per share; and (3) the $500,000 of additional bonus set out in the Omnibus Agreement, is now allocated and defined as a retention bonus of $166,667 to each of NWarrender, GJacobs and WJacobs to be paid at the end of 2022 so long as each respective executive has not earlier resigned from LFTD Partners (the “2022 Retention Bonuses”).

Moreover, LFTD Partners agrees and covenants that the Chairman of the Compensation Committee is authorized to negotiate and agree on behalf of LFTD Partners in regard to a 2023 supplemental retention bonus for NWarrender, GJacobs and WJacobs (in addition to the company-wide Bonus Pool) (the “2023 Retention Bonuses”), and if and only if the amounts of the 2023 Retention Bonuses are mutually agreed upon in writing among the Chairman of the Compensation Committee, NWarrender, GJacobs and WJacobs, then one-third of the 2023 Retention Bonuses shall be paid by LFTD Partners to each of NWarrender, GJacobs and WJacobs on or before March 15, 2024, provided that such officer shall not have earlier resigned as an officer of LFTD Partners.

During 2022, Lifted for the first time hired an outside laboratory to conduct research and development on a potential new, non-hemp-derived, synthetic psychedelic product (the “New Psychedelic Product”) for a total of $19,800. Such research and development of the New Psychedelic Product has been put on indefinite hold, as Lifted has recently successfully purchased from third parties a natural equivalent of the New Psychedelic Product.

In addition, factors that could materially affect future operating results include, but are not limited to, changes to laws and regulations, especially any future changes to the so-called “Farm Bill” at the federal level, and any other federal or state laws and regulations related to hemp-derived cannabinoids, nicotine products, kratom, psychedelic products and/or vaping. The company is also subject to vendor concentration risk, customer concentration risk, customer credit risk, and counterparty risk.

The Company maintains levels of cash bank accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and it believes that it is not exposed to any significant credit risk on cash.

No assurance or guarantee whatsoever can be given that the net income of the Company’s wholly-owned subsidiary Lifted will be sufficient to allow the Company to pay all of its operating expenses, the dividends accruing on the Company’s preferred stock, the company-wide bonus pool, and the 2022 Retention Bonuses and the 2023 Retention Bonuses. As a result, there is substantial doubt that the Company will be able to continue as a going concern. Bankruptcy of the Company at some point in the future is a possibility. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company currently has one revenue-generating subsidiary, Lifted. If and to the extent that the revenue generated by Lifted is not adequate to pay the Company’s operating expenses and the dividends accruing on its preferred stock, then Company management plans to sustain the Company as a going concern by taking the following actions: (1) acquiring and/or developing additional profitable businesses that will create positive income from operations; and/or (2) completing private placements of the Company’s common stock and/or preferred stock. Management believes that by taking these actions, the Company will be provided with sufficient future operations and cash flow to continue as a going concern. However, there can be no assurances or guarantees whatsoever that the Company will be successful in consummating such actions on acceptable terms, if at all. Moreover, any such actions can be expected to result in substantial dilution to the existing shareholders of the Company.

Customer Concentration Risk – During the quarter ended September 30, 2022, twelve customers made up approximately 50% of Lifted Made’s sales. In comparison, during the quarter ended September 30, 2021, eight customers made up approximately 50% of Lifted Made’s sales. During the nine months ended September 30, 2022, 15 customers made up approximately 50% of Lifted Made’s sales. In comparison, during the nine months ended September 30, 2021, five customers made up approximately 50% of Lifted Made’s sales.

Vendor Dependence – Regarding the purchases of raw goods and finished goods (“Inventory”), during the quarter ended September 30, 2022, approximately 88% of the Inventory that Lifted purchased were from five vendors. In comparison, regarding the purchases of Inventory during the quarter ended September 30, 2021, approximately 70% of the Inventory purchases were from six vendors. Regarding the purchases of Inventory during the nine months ended September 30, 2022, approximately 73% of the Inventory purchases were from five vendors. In comparison, regarding the purchases of Inventory during the nine months ended September 30, 2021, approximately 62% of the Inventory purchases were from five vendors.

The loss of Lifted’s relationships with these customers and vendors could have a material adverse effect on Lifted’s business.

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THE COMPANYS INVESTMENTS

9 Months Ended

Sep. 30, 2022

THE COMPANYS INVESTMENTS

The Companys Investments

NOTE 5 – THE COMPANY’S INVESTMENTS

The Company’s Investments in Ablis, Bendistillery and Bend Spirits

On April 30, 2019, the Company purchased 4.99% of the common stock of each of Ablis Holding Company, Bendistillery Inc., and Bend Spirits, Inc. for an aggregate purchase price of $1,896,200.

Under US Generally Accepted Accounting Principles (“GAAP”), the Company uses the cost method to account for our minority equity ownership interests in businesses in which the Company owns less than 20% of equity ownership, and have no substantial influence over the management of the businesses. Under the cost method of accounting, the Company reports the historical costs of the investments as assets on its balance sheet. However, US GAAP does not permit the consolidation of its financial statements with the financial statements of companies in which the Company owns minority equity ownership interests.

As such, the Company’s investments in Ablis, Bendistillery and Bend Spirits made the Company a minority owner of these companies. As a minority owner, the Company will not be able to recognize any portion of Ablis’, Bendistillery’s or Bend Spirits’ revenues or earnings in the Company’s financial statements. US GAAP also requires the Company to record these types of investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. As such, the Company will not be allowed to consolidate into its financial statements any portion of the revenues, earnings or assets of companies in which it owns minority equity ownership interests such as Ablis, Bendistillery and Bend Spirits. Moreover, even if there is evidence that the fair market values of the investments have increased above their historical costs, US GAAP does not allow increasing the recorded values of the investments. Under US GAAP, the only adjustments that may be made to the historical costs of the investments are write downs of the values of the investments, which must be made if there is evidence that the fair market values of the investments have declined to below the recorded historical costs.

At each reporting period, the Company makes a qualitative assessment considering impairment indicators to evaluate whether its investments are impaired. Factors that the Company would consider indicators of impairment include: (1) a significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee, (2) a significant adverse change in the regulatory, economic, or technological environment of the investee, (3) a significant adverse change in the general market condition of either the geographical area or the industry in which the investee operates, (4) a bona fide offer to purchase, an offer by the investee to sell, or a completed auction process for the same or similar investment for an amount less than the carrying amount of that investment, and (5) factors that raise significant concerns about the investee’s ability to continue as a going concern, such as negative cash flows from operations, working capital deficiencies, or noncompliance with statutory capital requirements or debt covenants. Up to the date of this report on Form 10-Q, none of the above the above factors have been applicable to the Company’s investments.

The qualitative assessments at the end of quarters one, two and three are done via conference or video calls with the management teams of Ablis, Bendistillery and Bend Spirits. The qualitative assessment at the end of quarter four relating to these entities also includes review of their respective financial statements that have been reviewed by a third party accounting firm. At that time, the Company performs an annual impairment assessment. The reviewed financial statements of these companies are not audited, and the Company is not active in the management of these companies, and except for these companies’ quarterly meetings with the management of the Company, the Company’s assessment of these companies is inherently limited to infrequent and relatively brief conversations with officers of these companies and to reviews of those reviewed financial statements.

On October 19, 2022, a video conference meeting of the board of directors and management of Ablis, Bendistillery and Bend Spirits, and GJacobs and WJacobs was held. During this meeting, the management of Ablis, Bendistillery and Bend Spirits discussed the performance of Ablis, Bendistillery and Bend Spirits during the three months ended September 30, 2022. Based upon the financial and non-financial information that was shared with LFTD Partners during that conference call, the management of LFTD Partners believes that no impairment of the value of Bendistillery, Bend Spirits or Ablis is warranted at this point in time. The information that was shared by the management of Ablis included, among other things: new product launches and expansion into more stores. The information that was shared by the management of Bendistillery and Bend Spirits included, among other things: increased on-premise sales are up from the third quarter of 2021, Bendistillery’s in-house sales team is making up for the loss of revenue from third party distributors who have fired their own sales people as a result of the pandemic, and existing markets and new markets opening up. It is our understanding that the management of Bendistillery periodically receives inquiries regarding from large competitors about potentially investing in or acquiring Bendistillery.

The Company’s Investment in Lifted Made

Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the Company’s acquisitions is attributable to the value of the potential expanded market opportunity with new customers.

Goodwill is not amortized but is subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company performs an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing is a two-step process performed at the reporting unit level. Step one compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, the Company determines fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows. For the discount rate, the Company relies on the capital asset pricing model approach, which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, the Company’s risk relative to the overall market, the Company’s size and industry and other Company-specific risks. Other significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures and changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit as calculated in step one. In this step, the fair value of the reporting unit is allocated to all of the reporting unit’s assets and liabilities in a hypothetical purchase price allocation as if the reporting unit had been acquired on that date. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess.

Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, strategic plans, and future market conditions, among others. There can be no assurance that the Company’s estimates and assumptions made for purposes of the goodwill impairment testing will prove to be accurate predictions of the future. Changes in assumptions and estimates could cause the Company to perform an impairment test prior to scheduled annual impairment tests.

The Company performed its annual fair value assessment at December 31, 2021 on the goodwill recognized as part of the acquisition of Lifted, and determined that no impairment was necessary. The factors that led the Company to this conclusion include, among other things: continued growth in sales and profitability year-over-year, the launch of first-to-market, ground-breaking new products, the addition of more and more wholesalers and distributors nationwide, increased sales to wholesalers and end consumers, the continued growth of Lifted’s flagship brand Urb Finest Flowers, and continued positive publicity of Lifted.

The Company’s Investment in SmplyLifted LLC

On September 22, 2020, LFTD Partners Inc. and Lifted Made and privately-held SMPLSTC, Costa Mesa, CA formed an equally-owned new entity called SmplyLifted LLC, which sold tobacco-free nicotine pouches in several flavors and nicotine strengths under the brand name FR3SH (www.GETFR3SH.com).

Lifted had a 50% membership interest in SmplyLifted LLC. The other 50% of SmplyLifted is owned by SMPLSTC LLC and its principals, who are located in Costa Mesa, California. Under US GAAP, the Company used the equity method to account for its 50% membership interest in SmplyLifted. Under the equity method of accounting, the Company recorded its share (50%) of SmplyLifted’s earnings (or losses) as income (or losses) on the Consolidated Statements of Operations. The Company recorded its initial investment in SmplyLifted, which was $200,000, as an asset at historical cost. Under the equity method, the investment’s value was periodically adjusted to reflect the changes in value due to Lifted’s share in SmplyLifted’s income or losses.

During the year ended December 31, 2020, the Company recognized a loss of $4,429 from its 50% membership interest in SmplyLifted, and wrote down the value of its investment in SmplyLifted to $195,571. During the year ended December 31, 2021, the Company recognized a loss of $195,571 from its 50% membership interest in SmplyLifted. At December 31, 2021, Lifted Made wrote off its receivables from SmplyLifted, and its loans to SmplyLifted, which totaled $388,727.

On February 9, 2022, Lifted Made signed an Agreement to sell its 50% membership interest in SmplyLifted LLC to Corner Vapory LLC, an affiliate of NWarrender, CEO of Lifted, for $1, plus ninety-nine percent (99%) of any and all payments and other consideration received or owed to Corner Vapory LLC in regard to SmplyLifted’s existing inventory of FR3SH brand tobacco-free nicotine pouches. Lifted has the option to re-purchase the 50% membership interest in SmplyLifted LLC from Corner Vapory LLC for $1,000 in cash at any time on or before December 31, 2032.

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PROPERTY AND EQUIPMENT NET

9 Months Ended

Sep. 30, 2022

PROPERTY AND EQUIPMENT NET

Property And Equipment Net

NOTE 6 – PROPERTY AND EQUIPMENT, NET

Property and Equipment consist of the following:

Asset Class	September 30, 2022			December 31, 2021
Machinery & Equipment	$	593,208		$	258,533
Leasehold Improvements	$	385,220		$	152,985
Trade Show Booths	$	10,000		$	23,488
Vehicles	$	75,047		$	22,309
Computer Equipment	$	7,312		$	7,312
Furniture & Fixtures	$	83,286		$	46,553
Sub-total:	$	1,154,073		$	511,180
Less: accumulated depreciation	$	(164,384	)	$	(77,967	)
	$	989,688		$	433,213

The useful lives of the Company’s fixed assets by asset class are as follows:

Asset Class	Estimated Useful Life
Machinery & Equipment	60 months
Leasehold Improvements	60 months
Trade Show Booths	36 months
Vehicles	60 months
Computer Equipment	60 months
Furniture & Fixtures	60 months

Leasehold Improvements are depreciated over the shorter of the length of the lease or the estimated useful life. Depreciation expense of $18,279 and $49,854 was recognized during the three and nine months ended September 30, 2022. In comparison, depreciation expense of $10,992 and $53,483 was recognized during the three and nine months ended September 30, 2021, respectively.

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NOTES RECEIVABLE

9 Months Ended

Sep. 30, 2022

NOTES RECEIVABLE

Notes Receivable

NOTE 7 – NOTES RECEIVABLE

SmplyLifted LLC

At March 31, 2021, the Company had made shortfall loans to SmplyLifted LLC totaling $387,500, used primarily for the purchase of inventory. As of March 31, 2021, imputed interest receivable on the loans totaled $149.

At December 31, 2021, the Company had made interest-free loans to SmplyLifted LLC totaling $387,500, used primarily for the purchase of inventory. As of December 31, 2021, imputed interest receivable on the loans totaled $580. As described above, at December 31, 2021, these notes and related interest receivable were written off. 

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INTANGIBLE ASSETS NET

9 Months Ended

Sep. 30, 2022

INTANGIBLE ASSETS NET

Intangible Assets Net

NOTE 8 – INTANGIBLE ASSETS, NET

www.LiftedMade.com Website

The cost of developing Lifted’s website, www.LiftedMade.com, is being amortized over 32 months, and $347 and $1,040 in amortization related to the website was recognized during the three and nine months ended September 30, 2022. In comparison, $417 and $1,251 in amortization related to the website was recognized during the three and nine months ended September 30, 2021. 

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2022

RELATED PARTY TRANSACTIONS

Related Party Transactions

NOTE 9 – RELATED PARTY TRANSACTIONS

Sublease For Commuter Employees 

On July 6, 2022, our wholly owned subsidiary Lifted entered into a sublease for office space in Chicago, Illinois located at 2701-09 West Fulton PH, Chicago, Illinois 60612. The sublease costs $3,000 per month, plus supplemental lease related charges such as real estate taxes and common expenses of the property that we anticipate will be commercially typical costs. The sublease was retroactively effective as of June 1, 2022 and for a five-month term that ended on October 31, 2022. The purpose of the sublease is to make available office space for the members of Lifted Made's sales team who live in Chicago. These salespeople were spending significant time in their cars commuting from Chicago to Kenosha.

The sublessor is one of our affiliates, Bill McLaughlin, Lifted’s Chief Strategy Officer. The sublease is structured so that Mr. McLaughlin's lease payment obligations to the landlord are passed on to Lifted on a dollar-for-dollar basis, such that Mr. McLaughlin does not realize a cashflow profit or loss from the sublease.

As described in “NOTE 15 – SUBSEQUENT EVENTS”, the sublease is currently operating on a month-to-month basis. Management expects to extend the sublease once Mr. McLaughlin is presented a new lease from his landlord. 

Shipping Costs

Lifted has shared a shipping account with a company operated by NWarrender’s father, Robert T. Warrender II, who is also an employee of Lifted and a member of the board of directors of LFTD Partners Inc. Lifted did this in an effort to reduce shipping costs, as the shipper gave a price discount based on volume. Lifted reimbursed Robert T. Warrender II’s company for the cost of shipping. During the quarter ended September 30, 2022, Lifted did not reimburse Robert T. Warrender II for any shipping costs. During the nine months ended September 30, 2022, Robert T. Warrender II’s company refunded Lifted a net amount of $7,377. During the quarter ended September 30, 2022, also, Lifted bought a manual fork lift from Robert T. Warrender II’s company for a price that we believe reflected its fair market value. In comparison, during the three and nine months ended September 30, 2021, Lifted reimbursed Robert T. Warrender II $75,838 and $150,266 in shipping costs, respectively.

Robert T. Warrender II

In January 2022, Lifted hired Robert T. Warrender II, NWarrender’s father, as an employee. Robert T. Warrender II is also a Director of LFTD Partners Inc. During the three and nine months ended September 30, 2022, $16,154 and $39,231 in wages were paid to Robert T. Warrender II. As of September 30, 2022, $4,977 in expense reimbursements were owed to Robert T. Warrender II.  

Robert T. Warrender III

During the three and nine months ended September 30, 2022, $0 and $54,384 in sales commissions were paid to Robert T. Warrender III, who is NWarrender’s brother, and Director Robert T. Warrender II’s son.

In comparison, during the three and nine months ended September 30, 2021, $26,196 and $43,678 in sales commissions were paid to Robert T. Warrender III.

Vincent J. Mesolella

During the quarter ended March 31, 2022, Lead Outside Director Vincent J. Mesolella was paid $40,000 of the Modified 2021 Bonus Pool Amount.

During each of the first, second and third quarters of 2022, Mr. Mesolella also received his $4,000 quarterly director fee.

There were no quarterly director fees or other compensation paid to Mr. Mesolella during the three and nine months ended September 30, 2021.

Joshua A. Bloom

During the quarter ended March 31, 2022, Dr. Joshua A. Bloom, Director, was paid $20,000 of the Modified 2021 Bonus Pool Amount.

During each of the first, second and third quarters of 2022, Dr. Bloom also received his $4,000 quarterly director fee.

Richard E. Morrissy

During each of the first, second and third quarters of 2022, Richard E. Morrissy, Director, received his $4,000 quarterly director fee.

James S. Jacobs

During each of the first, second and third quarters of 2022, Dr. James S. Jacobs, Director, received his $4,000 quarterly director fee.

Kevin J. Rocio

During each of the first, second and third quarters of 2022, Kevin J. Rocio, Director, received his $4,000 quarterly director fee.

Gerard M. Jacobs

The Compensation Agreement contemplated an aggregate of $350,000 being paid by the Company to GJacobs and WJacobs upon the closing of the Company’s acquisition of Lifted and an aggregate of $350,000 being paid by the Company to GJacobs and WJacobs upon December 1, 2020, but such payments were not timely made, and pursuant to the Amendment No. 1 such aggregate of $700,000 of compensation was deferred and made due and payable by the Company to GJacobs and WJacobs together with interest accrued at the rate of 2% annually commencing January 1, 2021, upon demand by GJacobs and WJacobs, and through the date of the Omnibus Agreement only $58,439 of such deferred compensation had been paid to GJacobs (the remaining unpaid deferred compensation together with accrued interest is hereby referred to as the “Deferred Compensation”). Pursuant to the Omnibus Agreement, the Deferred Compensation was paid by the Company to GJacobs and WJacobs in January 2022. During the quarter ended March 31, 2022, GJacobs was also paid $143,713 of the Modified 2021 Bonus Pool Amount.

On April 29, 2021, the Company paid GJacobs a portion ($50,000) of the bonus payable to GJacobs in regard to the closing of the acquisition of Lifted.

On August 30, 2021, GJacobs exercised, for an aggregate purchase price of $1, his right to purchase a warrant to purchase an aggregate of 750,000 shares of unregistered common stock of the Company at an exercise price of $0.01 per share, which warrant he immediately exercised. GJacobs also exercised his right to purchase an aggregate of 31,250 shares of unregistered common stock of the Company at an exercise price of $0.03 per share under separate warrants. GJacobs also demanded immediate payment of $8,438.50 of the bonuses which are currently due and payable by the Company to GJacobs, and GJacobs allocated and applied such $8,438.50 to pay for the aggregate cost of purchasing and exercising the above warrants.

As of September 30, 2021, there was total interest of $7,043 payable to GJacobs related to the Deferred Compensation.  

William C. “Jake” Jacobs

As described above, the Compensation Agreement contemplated an aggregate of $350,000 being paid by the Company to GJacobs and WJacobs upon the closing of the Company’s acquisition of Lifted and an aggregate of $350,000 being paid by the Company to GJacobs and WJacobs upon December 1, 2020, but such payments were not timely made, and pursuant to the Amendment No. 1 such aggregate of $700,000 of compensation was deferred and made due and payable by the Company to GJacobs and WJacobs together with interest accrued at the rate of 2% annually commencing January 1, 2021, upon demand by GJacobs and WJacobs, and through the date of the Omnibus Agreement only $58,439 of such deferred compensation had been paid to GJacobs (the remaining unpaid deferred compensation together with accrued interest is hereby referred to as the “Deferred Compensation”). Pursuant to the Omnibus Agreement, the Deferred Compensation was paid by the Company to GJacobs and WJacobs in January 2022. Moreover, pursuant to the Omnibus Agreement and simultaneously with such payment of the Deferred Compensation as set out above, the Company paid WJacobs a bonus of $300,000 in January 2022. During the quarter ended March 31, 2022, WJacobs was also paid $152,341 of the Modified 2021 Bonus Pool Amount.

As of September 30, 2021, there was total interest of $2,992 payable to WJacobs related to the Deferred Compensation. Also as of September 30, 2021, there were $233 in travel expense reimbursements owed to WJacobs.

$2,681 in income tax previously erroneously paid by WJacobs to the Illinois Department of Revenue during the year ended December 31, 2021, and refunded back to Lifted by the Illinois Department of Revenue in January 2021, was repaid to WJacobs during the quarter ended June 30, 2021.

Nicholas S. Warrender

On February 24, 2020 we closed on the acquisition of 100% of the ownership of CBD-infused products maker Warrender Enterprise Inc. d/b/a Lifted Made (formerly d/b/a Lifted Liquids) of Zion, Illinois (the “Merger”), for consideration of (1) $3,750,000 in cash, (2) $3,750,000 in the form of a secured promissory note accruing interest of 2% per year (the “$3.75M Note”), (3) 3,900,455 shares of unregistered common stock of the Company (the “Stock Consideration”), (4) 645,000 shares of unregistered common stock of the Company that constitute deferred contingent compensation to be issued and delivered to certain persons specified by NWarrender in a schedule delivered by NWarrender to the Company at the closing of the Merger (the “Deferred Contingent Stock”), and (5) warrants to purchase an aggregate of 1,820,000 shares of unregistered common stock of the Company at an exercise price of $5.00 per share that will be issued and delivered to certain persons specified by NWarrender in a schedule delivered by NWarrender to the Company at the closing of the Merger (the “Warrants”).

On December 30, 2021, LIFD repaid all principal and interest due under the $3.75M Note between NWarrender and LIFD dated February 24, 2020 that was a portion of the Merger Consideration paid by LIFD to NWarrender under the Merger Agreement. Pursuant to the terms of that promissory note, the unpaid balance of the note accrued interest at the rate of 2% per annum.

On December 30, 2021, NWarrender kept $1,000,000 of the repayment, plus accrued interest, and on January 3, 2022, reloaned $2,750,000 back to LIFD at the rate of 2.5% (the “$2.75M Note”).

Prior to July 25, 2022 the $2.75M Note payable jointly by the Company and Lifted to NWarrender was secured by a perfected first lien security interest (the “Security Interest”) that encumbered all of the assets of the Company and Lifted. The Company was obligated to pay off the principal of the $2.75M Note in five semi-annual payments to NWarrender of $458,333 and a sixth and final semi-annual payment to NWarrender of $458,335, in each case plus accrued interest, starting on June 30, 2022. 

On June 7, 2022, LFTD Partners prepaid $916,666 of the principal of the $2.75M Note, and $29,384 of related accrued interest through that date, which left $1,833,334 remaining principal on the $2.75M Note. On July 5, 2022, we entered into an agreement (“Acceleration Agreement”) with NWarrender. Under the terms of the Acceleration Agreement, we were obligated to repay the remaining principal balance as follows: $1,374,999 on or before December 31, 2022, and $458,335 on or before December 31, 2024. Then, on July 8, 2022, we prepaid $916,666, along with accrued interest, and then, on July 25, 2022, we prepaid the remaining principal balance of $916,668 and accrued interest in full, and all collateral securing the $2.75M Note was released.

Bonus

During the quarter ended March 31, 2022, NWarrender was also paid $680,000 of the Modified 2021 Bonus Pool Amount.

Obligation to Purchase Headquarters Building

Toward the end of 2020, NWarrender, through his assigned entity 95th Holdings, LLC, purchased a building located at 5511 95th Avenue in Kenosha, Wisconsin (“5511 Building”) that was immediately leased to us to conduct our expanded operations. The 5511 Building includes office, laboratory and warehouse space. As part of the lease agreement with 95th Holdings, LLC, the parties agreed that our wholly owned subsidiary Lifted would eventually purchase the 5511 Building. The purchase price for the 5511 Building was originally subject to variation based on a formula agreed upon by the parties. Pursuant to an agreement with Warrender on December 30, 2021, the parties agreed to set the purchase price for the 5511 Building at $1,375,000. Prior to the Acceleration Agreement, Lifted had an obligation to complete the purchase of the 5511 Building on or before December 31, 2022. Pursuant to the Acceleration Agreement, the deadline to purchase the 5511 Building has been extended by one year to December 31, 2023. In addition, the Acceleration Agreement contains a provision that if we raise $5,000,000 of debt or equity capital, then Lifted or our designee shall purchase the 5511 Building from 95th Holdings, LLC at the agreed upon $1,375,000 purchase price within two days.

SmplyLifted LLC

On a quarterly basis, SmplyLifted LLC reimbursed Lifted for WJacobs’ time as the Chief Financial Officer at WJacobs’ hourly rate. As of September 30, 2021, SmplyLifted LLC owed $313 to Lifted as reimbursement for WJacobs’ time as the Chief Financial Officer.

On February 2, 2021, Lifted owed SmplyLifted $450; on February 10, 2021, Lifted paid SmplyLifted the $450.

As of March 31, 2021, Lifted owed SmplyLifted $9,719. Between April 1, 2021 and April 5, 2021, Lifted paid SmplyLifted the $9,719.

During the quarter ended September 30, 2022, SMPLSTC, one of Lifted’s partners in SmplyLifted, wrote a check to Lifted for $19,992 on behalf of SmplyLifted LLC, to cover two third-party accounting-related invoices of SmplyLifted. SMPLSTC’s check was short of the total of the two invoices by $146. Lifted paid the remaining $146 that SmplyLifted owed one of the third party accounting firms and wrote off the corresponding receivable from SmplyLifted, due to the lack of collectability from SmplyLifted because of SmplyLifted’s insolvency.  

Corner Vapory LLC

NWarrender is a 50% owner in Corner Vapory LLC. Corner Vapory LLC owns a vape shop (called Corner Vapory), and Canna Vita, a CBD shop, both located in Kenosha, Wisconsin. The other owners of Corner Vapory LLC consist of Lifted’s Director of Operations and his wife. During the three and nine months ended September 30, 2022, Corner Vapory LLC purchased $9,306 and $40,410, respectively, worth of products from Lifted, and Lifted wrote off its receivable of $17,260 from Corner Vapory as of September 30, 2022.   

In comparison, during the three and nine months ended September 30, 2021, Corner Vapory purchased $21,842 and $34,032, respectively, worth of products from Lifted, and Lifted recorded a receivable of $9,070 from Corner Vapory as of September 30, 2021.

95th Holdings, LLC

From June 1, 2018 through June 1, 2021, Lifted rented 3,300 square feet of space located in Zion, Illinois, for manufacturing, warehousing and office space. From June 1, 2021 through November 2021, Lifted leased such space on a month-to-month basis. From May 2020 until April 1, 2021, Lifted also temporarily used additional space located adjacent to its rented space in Zion, Illinois, and made payments in lieu of rent therefor.

Lifted’s rented space in Zion, Illinois, was not adequate in light of various issues including zoning uncertainties, lack of air conditioning, and small size. As such, on December 18, 2020, Lifted as tenant entered into a Lease Agreement (the “Lease) with 95^th Holdings, LLC (“Landlord”) for office, laboratory and warehouse space in a building located at 5511 95^th Avenue, in the City of Kenosha, State of Wisconsin (the “Premises”). The lease commencement date was January 1, 2021, and lease termination date is January 1, 2026. 

Lifted constructed improvements including a clean room, and gradually moved into the Kenosha Premises over the course of the first quarter of 2021. Under the terms of the “triple-net” Lease, starting on January 1, 2021, Lifted leased approximately 11,238 square feet at the Premises at $6.13 per square foot per year in base rent ($68,888.94 in 2021), which is subject to a 2% increase in base rent each year, plus certain operating expenses and taxes. The Lease will continue until midnight on the fifth anniversary date of the commencement date of the Lease. Lifted shall have the right to extend the original five year term of the Lease for one extension period of two years, commencing upon the expiration of the original term. Lifted and Landlord are required to execute an “Amendment of Extension” prior to six months before the expiration of the original term.

Under the terms of the lease, the tenant, Lifted, has the option to purchase the property at any time prior to December 31, 2025, and in any event, Lifted is obligated to purchase the property on or before that date. Pursuant to the Lease, in all cases Lifted’s purchase price for the Premises shall be in an amount equal to the greater of: (1) the fair market value of the Premises at the time Lifted purchases the Premises; or (2) any remaining principal balance of any purchase-money mortgage for the Premises existing at the time of the closing of Lifted’s purchase, plus the corresponding amount identified in the Additional Purchase Price Schedule attached as Exhibit B to the Lease, which is an additional amount ranging between $300,000 and $375,000 based on the number of years that have passed between the commencement of the Lease and the purchase of the Premises by Lifted.

Landlord is an entity owned by NWarrender, the Company’s Vice Chairman and COO, the CEO of Lifted, and the largest stockholder of the Company as beneficial owner of 3,900,455 common stock shares. Due to the potential conflict of interest, the terms and conditions of the Lease were negotiated on behalf of Lifted by Vincent J. Mesolella, the Lead Outside Director of the Company. Landlord and Lifted were represented by their own independent legal counsel in connection with the Lease. Under the terms of the Lease, NWarrender is able to benefit through his entity 95^th Holdings, LLC by receiving rent and by eventually selling the Premises to Lifted.

During the quarter ended September 30, 2022, Lifted paid $17,567 in rent to 95^th Holdings, LLC. In comparison, during the three months ended September 30, 2021, Lifted paid $17,219 in rent to 95th Holdings, LLC, and owed $3.25 in September 2021 rent at September 30, 2021 to 95th Holdings, LLC. During the nine months ended September 30, 2022 and September 30, 2021, Lifted paid $52,700 and $51,663, respectively, in rent to 95th Holdings, LLC.

Under the terms of the Omnibus Agreement, Lifted is obligated to purchase the Premises from Landlord on or before December 31, 2022 for a fixed purchase price of $1,375,000. Pursuant to the terms of the Acceleration Agreement, the purchase date has been delayed until on or before December 31, 2023.

Liquid Event Marketing

Liquid Event Marketing is a company owned by Lifted’s Director of Operations, who was hired by Lifted on March 29, 2021. During the quarter and nine months ended September 30, 2022, Lifted purchased $0 and $6,470 of services from Liquid Event Marketing, and $2,262 was payable to Liquid Event Marketing as of September 30, 2022. There were also $8,862 in expense reimbursements owed to Lifted’s Director of Operations as of September 30, 2022.

In comparison, during the quarter ended September 30, 2021, Lifted paid $26,465 to Liquid Event Marketing for labor and consulting, and Lifted recognized a payable to Liquid Event Marketing for $19,965 at September 30, 2021. During the quarter ended June 30, 2021, Lifted paid Liquid Event Marketing $54,829 for the purchase of fixed assets, the installation of fixed assets, and other services.

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SHAREHOLDERS EQUITY

9 Months Ended

Sep. 30, 2022

SHAREHOLDERS EQUITY

Shareholders Equity

NOTE 10 – SHAREHOLDERS’ EQUITY

Issuance of Series A Convertible Preferred Stock

The Company has authorized 400,000 shares of its Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock may be converted into 100 shares of common stock. The Series A Convertible Preferred Stock accrues dividends at the rate of 3% annually. The accrued Series A Convertible Preferred Stock dividends are cumulative. The Series A Convertible Preferred Stock dividends shall cease to accrue at such time as the Company’s Common Stock has closed at $3.00 per share or higher for 20 consecutive trading days after the first date that the Series A Registration Statement is effective, and there have been, on average, at least 25,000 shares traded on each of those 20 consecutive trading days. The Series A Convertible Preferred Stock have no voting rights. The holders of the Series A Convertible Preferred Stock shall have voluntary conversion rights. Shares of Series A Convertible Preferred Stock are subject to mandatory conversion (in the discretion of the Company) at such time as the Company’s common stock has closed at $5.00 per share or higher for 20 consecutive trading days after the first date that the Series A Registration Statement is effective, and there have been, on average, at least 50,000 shares traded on each of those 20 consecutive trading days.

Between February 27, 2019 and May 13, 2019, the Company accepted subscriptions from accredited investors to purchase 66,150 shares of newly issued Series A Preferred Stock for an aggregate purchase price of $6,615,000 in cash. These 66,150 shares of Series A Preferred Stock are convertible at the option of the holders into 6,615,000 shares of newly issued common stock of the Company, or $1.00 per share of common stock of the Company. The Series A Preferred Stock will receive an annual 3% dividend, and will be subject to mandatory conversion, under terms and conditions set forth in the Certificate of Designation of the Series A Preferred Stock. On August 2, 2019, the Company filed a Form S-1 Registration Statement covering the shares of newly issued common stock of the Company into which the Series A Convertible Preferred Stock can be converted. On July 6, 2020, the Company filed with the SEC an amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series A Preferred Stock may be converted. On December 10, 2020, the Company filed with the SEC a second amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series A Preferred Stock may be converted. On June 2, 2021, the Company filed with the SEC a third amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series A Preferred Stock may be converted. On July 2, 2021, the Company filed with the SEC a fourth amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series A Preferred Stock may be converted. On July 26, 2021, the Company filed with the SEC a fifth amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series A Preferred Stock may be converted. On August 19, 2021, the Company filed with the SEC a sixth amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series A Preferred Stock may be converted. The Registration Statement was approved deemed effective by the SEC on August 26, 2021. As of September 30, 2022, 61,650 shares of Series A Preferred Stock have been converted into a total of 6,165,000 shares of common stock of the Company, which leaves 4,500 shares of Series A Preferred Stock currently outstanding, convertible into 450,000 shares of common stock of the Company. 

As of September 30, 2022 and December 31, 2021, the Company has accrued a liability of $5,838 and $11,926, respectively, as dividends payable to holders of the Series A Convertible Preferred Stock. The Company fully intends on paying the annual dividends to the holders of the Series A Convertible Preferred Stock, and as such, the Company has accrued the liability on the Series A Convertible Preferred Stock. During the three and nine months ended September 30, 2022, a total of $0 and $17,147, respectively, of cash dividends were paid to the Series A Convertible Preferred Stock holders. In comparison, during the three and nine months ended September 30, 2021, a total of $0 and $199,187, respectively, of cash dividends were paid to the Series A Convertible Preferred Stock holders.

All of the issuances of securities described above were restricted share issuances and deemed to be exempt from registration in reliance on Rule 506 of Regulation D and/or Section 4(2) of the Securities Act as transactions by an issuer not involving a public offering. Each investor represented that they were accredited investors, as defined in Rule 501 of Regulation D and, there was no general solicitation or general advertising used to market the securities. We made available to each investor disclosure of all aspects of our business, including providing the investor with press releases, access to our auditors, and other financial, business, and corporate information. All securities issued were restricted with an appropriate restrictive legend on certificates for notes and warrants issued stating that the securities (and underlying shares) have not been registered under the Securities Act and cannot be sold or otherwise transferred without an effective registration or an exemption therefrom.

Issuance of Series B Convertible Preferred Stock

The Company has authorized 5,000,000 shares of its Series B Convertible Preferred Stock. Each share of Series B Convertible Preferred Stock may be converted into one shares of common stock. The Series B Convertible Preferred Stock accrues dividends at the rate of 3% annually. The accrued Series B Convertible Preferred Stock dividends are cumulative. The Series B Convertible Preferred Stock dividends shall cease to accrue at such time as the Company’s Common Stock has closed at $7.00 per share or higher for 20 consecutive trading days after the first date that the Series B Registration Statement is effective, and there have been, on average, at least 25,000 shares traded on each of those 20 consecutive trading days. The Series B Convertible Preferred Stock have no voting rights. The holders of the Series B Convertible Preferred Stock shall have voluntary conversion rights. Shares of Series B Convertible Preferred Stock are subject to mandatory conversion (in the discretion of the Company) at such time as the Company’s common stock has closed at $9.00 per share or higher for 20 consecutive trading days after the first date that the Series B Registration Statement is effective, and there have been, on average, at least 50,000 shares traded on each of those 20 consecutive trading days.

Between July 24, 2019 and December 5, 2019, the Company accepted subscriptions from accredited investors to purchase 100,000 shares of newly issued Series B Preferred Stock for an aggregate purchase price of $500,000 in cash. These 100,000 shares of Series B Preferred Stock are convertible at the option of the holder into 100,000 shares of newly issued common stock of the Company. The Series B Preferred Stock will receive an annual 3% dividend, and will be subject to mandatory conversion, under terms and conditions set forth in the Certificate of Designation of the Series B Preferred Stock. On August 2, 2019, the Company filed a Form S-1 Registration Statement covering the shares of newly issued common stock of the Company into which the Series B Convertible Preferred Stock can be converted. On July 6, 2020, the Company filed with the SEC an amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series B Preferred Stock may be converted. On December 10, 2020, the Company filed with the SEC a second amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series B Preferred Stock may be converted. On June 2, 2021, the Company filed with the SEC a third amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series B Preferred Stock may be converted. On July 2, 2021, the Company filed with the SEC a fourth amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series B Preferred Stock may be converted. On July 26, 2021, the Company filed with the SEC a fifth amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series B Preferred Stock may be converted. On August 19, 2021, the Company filed with the SEC a sixth amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series B Preferred Stock may be converted. The Registration Statement was approved deemed effective by the SEC on August 26, 2021. As of September 30, 2022, 60,000 shares of Series B Preferred Stock have been converted into a total of 60,000 shares of common stock of the Company, which leaves 40,000 shares of Series B Preferred Stock currently outstanding, convertible into 40,000 shares of common stock of the Company. 

As of September 30, 2022 and December 31, 2021, the Company has accrued a liability of $1,783 and $1,796, respectively as dividends payable to holders of the Series B Convertible Preferred Stock. The Company fully intends on paying the annual dividends to the holders of the Series B Convertible Preferred Stock, and as such, the Company has accrued the liability on the Series B Convertible Preferred Stock. During the three and nine months ended September 30, 2022, a total of $4,500 and $4,500, respectively, of cash dividends were paid to the Series B Convertible Preferred Stock holders. In comparison, during the three and nine months ended September 30, 2021, a total of $4,500 and $10,344, respectively, of cash dividends were paid to the Series B Convertible Preferred Stock holders.

All of the issuances of securities described above were restricted share issuances and deemed to be exempt from registration in reliance on Rule 506 of Regulation D and/or Section 4(2) of the Securities Act as transactions by an issuer not involving a public offering. Each investor represented that they were accredited investors, as defined in Rule 501 of Regulation D and, there was no general solicitation or general advertising used to market the securities. We made available to each investor disclosure of all aspects of our business, including providing the investor with press releases, access to our auditors, and other financial, business, and corporate information. All securities issued were restricted with an appropriate restrictive legend on certificates for notes and warrants issued stating that the securities (and underlying shares) have not been registered under the Securities Act and cannot be sold or otherwise transferred without an effective registration or an exemption therefrom.

Share-Based Compensation

No share-based compensation expense was recognized during the three or nine months ended September 30, 2022 or September 30, 2021.

The following is a summary of share-based compensation, stock option and warrant activity as of September 30, 2022 and changes during the quarter then ended:

					Weighted-Average		Aggregate
			Weighted-Average		Remaining Contractual		Intrinsic
	Shares		Exercise Price		Term (Years)		Value
Exercisable Options, Warrants, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants Outstanding, July 1, 2022		2,882,198	$	3.55		2.55	$	2,834,897
Exercisable Options, Warrants, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants Outstanding, September 30, 2022		2,882,198	$	3.55		2.30	$	2,035,579
Outstanding Options, Warrants, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants, September 30, 2022		3,627,198	$	3.85		2.32	$	2,035,579

Stock Buy-back Transactions with a Non-Affiliate Stockholder and Retirement of 72,000 Shares of Common Stock Held in Treasury

On November 24, 2020, LFTD Partners purchased 36,000 shares of common stock of the Company from a non-affiliate stockholder in a private transaction for $0.95 per share for a total of $34,200. These shares were held in treasury until August 31, 2021, which is when the Company retired them. The retirement of these shares was accounted for under the cost method of accounting.

On January 8, 2021, LFTD Partners Inc. purchased 36,000 shares of common stock of the Company from a non-affiliate stockholder in a private transaction for $0.95 per share for a total of $34,200. These shares were held in treasury until August 31, 2021, which is when the Company retired them. The retirement of these shares was accounted for under the cost method of accounting.

Exercise of Warrant by a Non-Affiliated Entity

On February 19, 2022, an entity non-affiliated with the Company exercised an option to purchase 50,000 shares of unregistered common stock of the Company at an exercise price of $1.00 per share, which the entity paid.

Stock Buy-back Transactions with a Non-Affiliate Stockholder Stock and Retirement of 100,000 Shares of Common Stock

On March 1, 2022, LFTD Partners signed an agreement to purchase a total of 100,000 shares of common stock of the Company from a non-affiliate stockholder in a private transaction for $1.50 per share for a total purchase price of $150,000. On March 8, 2022, all 100,000 shares were transferred to the Company and immediately cancelled.

Conversion of Series A Preferred Stock by a Non-Affiliated Shareholder

On April 1, 2022, a non-affiliated shareholder of the Company converted his 1,000 shares of Series A Preferred Stock into 100,000 shares of unregistered common stock of the Company.

Conversion of Series A Preferred Stock by a Non-Affiliated Shareholder

On April 14, 2022, a non-affiliated shareholder of the Company converted 250 shares of his Series A Preferred Stock into 25,000 shares of unregistered common stock of the Company.

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CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

9 Months Ended

Sep. 30, 2022

CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

Contingent Contractual Obligations And Commercial Commitments

NOTE 11 – CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

Operating and Finance Lease Right-of-Use Assets – In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “Leases” (Topic 842) (“ASU 2016-02”). The amended guidance, which is effective for the Company on January 1, 2019, requires the recognition of lease assets and lease liabilities on the balance sheet for those leases with terms in excess of 12 months and currently classified as operating leases. Leases with an initial term of one year or less are not recorded on the balance sheet; lease expense for these types of leases are recognized on a straight-line basis over the lease term. Options to extend or terminate a lease are not included in the determination of the right-of-use asset or lease liability unless it is reasonably certain to be exercised. Lifted adopted ASU 2016-02 using the modified retrospective approach, electing the package of practical expedients.

Lifted does not own any physical properties.

Lease of Building Located at 5511 95th Ave, Kenosha, Wisconsin

On December 18, 2020, Lifted as tenant entered into a Lease Agreement (the “Lease) with 95th Holdings, LLC (“Landlord”) for office, laboratory and warehouse space in a building located at 5511 95^th Avenue, in the City of Kenosha, State of Wisconsin (the “Premises”). The lease commencement date was January 1, 2021, and lease termination date is January 1, 2026. 

Landlord is an entity owned directly or indirectly by NWarrender, the Company’s Vice Chairman and COO, the CEO of Lifted, and the largest stockholder of the Company as the beneficial owner of 3,900,455 shares of common stock of the Company. Due to the potential conflict of interest, the terms and conditions of the Lease were negotiated on behalf of Lifted by Vincent J. Mesolella, the Lead Outside Director of the Company. Landlord and Lifted were represented by their own independent legal counsel in connection with the Lease. Under the terms of the Lease, NWarrender is able to benefit through his ownership of Landlord by Landlord’s receiving rent and eventually selling the Premises to Lifted.

Lifted constructed improvements to the Premises including a clean room, and gradually moved into the Premises over the course of the first quarter of 2021.

Under the terms of the “triple-net” Lease, starting on January 1, 2021, Lifted leased approximately 11,238 square feet at the Premises at $6.13 per square foot per year in base rent ($68,888.94 in 2021), which is subject to a 2% increase in base rent each year, plus certain operating expenses and taxes. The Lease will continue until midnight on the fifth anniversary date of the commencement date of the Lease. Lifted shall have the right to extend the original five year term of the Lease for one extension period of two years, commencing upon the expiration of the original term. Lifted and Landlord are required to execute an “Amendment of Extension” prior to six months before the expiration of the original term.

Under the terms of the Omnibus Agreement, Lifted was obligated to purchase the Premises from Landlord on or before December 31, 2022 for a fixed purchase price of $1,375,000. As a result, as of December 31, 2021, the Company modified its methodology for accounting of this finance lease (the “Modification Date”), such that the only liability recognized as of December 31, 2021 was a current (within one year) liability, and there was no long-term liability recognized. An immaterial loss on lease modification of $1,446 was also recognized as of the Modification Date. The Finance Lease Right-of-Use Asset value was reduced to reflect the fixed purchase price agreed to under the Omnibus Agreement.

Pursuant to the Acceleration Agreement, Lifted’s obligation to purchase the Premises from Landlord was delayed to on or before December 31, 2023.  

Prior to the signing of the Acceleration Agreement, the Finance Lease Right-of-Use Asset was to be amortized over its useful life (39 years) on a prospective basis from the Modification Date. That is, the Finance Lease Right-of-Use Asset was previously amortized over the lease term, but given mandatory purchase by December 31, 2022, the Finance Lease Right-of-Use Asset will be amortized over 39 years starting on the Modification Date. As a result of the signing of the Acceleration Agreement, the accounting for the Finance Lease Right-of-Use Asset will be adjusted accordingly.

Lease of Space Located at 8920 58th Place, Suite 850, Kenosha, Wisconsin

On September 23, 2021, Lifted entered into a Lease Agreement (the “58^th Lease”) with TI Investors of Kenosha LLC, (“TI”) for office and warehouse space (the “58^th Suite 850”) located at 8920 58th Place, Suite 850, Kenosha, WI 53144. The 58^th Suite 850 serve as sales offices and finished goods storage for Lifted.

The term of the 58^th Lease commenced on October 1, 2021. The initial term of the Lease will extend approximately three year, unless earlier terminated in accordance with the terms and conditions of the 58^th Lease. While extensions are not prohibited, Lifted does not have the right to unilaterally elect to extend the term of the 58^th Lease for an additional term.

Under the terms of the 58^th Lease, Lifted leases approximately 5,000 square feet of the 58^th Suite 850 and pays a base square foot charge of $5.75 per square foot per annum, with a 3% increase in rent each year during the term. Lifted is also be responsible for paying its proportionate share of real estate taxes and other operating costs. This lease is accounted for as an operating lease.

Rent Schedule

Date	Base Monthly  Rent
10/01/2021 – 09/30/2022	$	2,395.84
10/01/2022 – 09/30/2023	$	2,467.72
10/01/2023 – 09/30/2024	$	2,541.75

Lease of Space Located at 8910 58th Place, Suites 600 and 700, Kenosha, Wisconsin

On November 17, 2021, Lifted entered into a lease agreement with TI for office and warehouse space located at 8910 58th Place, Suites 600 & 700, Kenosha, WI 53144 (the “Second 58^th Lease”). The Second 58^th Lease is used for raw goods storage.

The term of the Second 58^th Lease commenced on January 1, 2022. The initial term of the Second 58^th Lease will extend approximately five years, unless extended or earlier terminated in accordance with the Second 58^th Lease. While extensions are not prohibited, Lifted does not have the right to unilaterally elect to extend the term of the Second 58^th Lease for an additional term.

Under the terms of the Second 58^th Lease, Lifted leases approximately 8,000 square feet at 8910 58th Place, Suites 600 & 700, Kenosha, WI and pay a base square foot charge of $6.00 per square foot per annum, with increases in rent each year during the term as set out in the table titled “Rent Schedule” below. Lifted is also responsible for paying its proportionate share of real estate taxes and other operating costs. This lease is accounted for as an operating lease.

Rent Schedule

Date	Base Monthly Rent
01/01/2022 – 12/31/2022	$	4,000.00
01/01/2023 – 12/31/2023	$	4,120.00
01/01/2024 – 12/31/2024	$	4,243.60
01/01/2025 – 12/31/2025	$	4,370.91
01/01/2026 – 12/31/2026	$	4,502.34

Lease of Space Located at 9560 58th Place Suite 360, Kenosha, Wisconsin

On May 31, 2022, Lifted entered into another lease agreement with TI for office and warehouse space located at 9560 58th Place, Suite 360, Kenosha, WI 53144 (the “Third 58^th Lease”). The Third 58^th Lease is expected to be used for gummy manufacturing, as well as provide additional needed office space.

The term of the Third 58^th Lease commenced on July 1, 2022 (the “Commencement Date”). The initial term of the Third 58^th Lease will extend approximately five years from the Commencement Date and ending June 30, 2027, unless extended or earlier terminated in accordance with the Lease. While extensions are not prohibited, Lifted does not have the right to unilaterally elect to extend the term of the Third 58^th Lease for an additional term.

Under the terms of the Third 58^th Lease, Lifted leases approximately 6,132 square feet at 9560 58th Place, Suite 360, Kenosha, WI 53144 and pay an initial base square foot charge of $10.75 per square foot per annum, with increases in rent each year during the term as set out in the table titled “Rent Schedule” below. Lifted is also responsible for paying its proportionate share of real estate taxes and other operating cost. This lease is accounted for as an operating lease.

Rent Schedule

Date	Base Monthly Rent
07/01/2022 – 06/30/2023	$	5,493.25
07/01/2023 – 06/30/2024	$	5,630.58
07/01/2024 – 06/30/2025	$	5,771.35
07/01/2025 – 06/30/2026	$	5,915.63
07/01/2026 – 06/30/2027	$	6,063.52

Sublease of Space Located at 2701-09 West Fulton PH, Chicago, Illinois 60612

On July 6, 2022, Lifted entered into a sublease for office space in Chicago, Illinois located at 2701-09 West Fulton PH, Chicago, Illinois 60612. The sublease costs $3,000 per month, plus supplemental lease related charges such as real estate taxes and common expenses of the property that we anticipate will be commercially typical costs. The sublease was retroactively effective as of June 1, 2022 and for a five-month term that ended on October 31, 2022. The purpose of the sublease is to make available office space for the members of Lifted’s sales team who live in Chicago. These salespeople were spending significant time in their cars commuting from Chicago to Kenosha.

The sublessor is one of our affiliates, Bill McLaughlin, Lifted’s Chief Strategy Officer. The sublease is structured so that Mr. McLaughlin's lease payment obligations to the landlord are passed on to Lifted on a dollar-for-dollar basis, such that Mr. McLaughlin does not realize a cashflow profit or loss from the sublease.

As described in “NOTE 15 – SUBSEQUENT EVENTS”, the sublease is currently operating on a month-to-month basis. Management expects to extend the sublease once Mr. McLaughlin is presented a new lease from his landlord.

Lease of Space in Zion, Illinois

From June 1, 2018 through June 1, 2021, Lifted rented 3,300 square feet of space located in Zion, Illinois, for manufacturing, warehousing and office space. From June 1, 2021 through November 2021, Lifted leased such space on a month-to-month basis. From May 2020 until April 1, 2021, Lifted also temporarily used additional space located adjacent to its rented space in Zion, Illinois, and made payments in lieu of rent therefor.

Third Party Facilities

From time to time, the Company maintains inventory at third party manufacturer or copacker facilities around the USA.

Balance Sheet Classification of Operating Lease Assets and Liabilities

Asset	Balance Sheet Line	September 30, 2022
Operating Lease Right-of-Use Asset, net of Right-of-Use Asset Amortization of $71,554 in 2022	Non-Current Assets	$	525,942
Liability	Balance Sheet Line	September 30, 2022
Operating Lease Liabilities	Current Liabilities	$	115,010
	Non-Current Liabilities	$	414,875

Balance Sheet Classification of Finance Lease Assets and Liabilities

Asset	Balance Sheet Line	September 30, 2022
Finance Lease Right-of-Use Asset, net of Right-of-Use Asset Amortization of $195,208 in 2022	Non-Current Assets	$	1,285,200
Liability	Balance Sheet Line	September 30, 2022
Finance Lease Liabilities	Current Liabilities	$	(26,079	)
Finance Lease Liabilities	Non-Current Liabilities	$	1,376,439

Lease Costs

The tables below summarizes the components of lease costs for the three and nine month periods ended September 30, 2022: 

Lease Cost:	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021
Finance lease expense:
Amortization of Right-of-Use Assets	$	10,800	$	12,337
Interest on lease liabilities		23,924		13,188
Operating lease expense		20,147		-
Total	$	54,871	$	25,525
Lease Cost:	Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Finance lease expense:
Amortization of Right-of-Use Assets	$	35,473	$	37,010
Interest on lease liabilities		46,445		39,673
Operating lease expense		60,442		8,000
Total	$	142,360	$	84,683

As described in Note 1, a portion of monthly overhead costs such as lease expense are allocated to finished goods. For example, monthly overhead costs such as payments for rent, utilities, insurance, and indirect labor are allocated to finished goods based on the estimated percentage cost toward the finished goods. Depreciation expense related to certain machinery and equipment is also allocated to finished goods.

Maturity Analysis as of September 30, 2022:
	Finance			Operating
2022	$	35,133		$	55,070
2023		1,445,970			146,018
2024		-			142,211
2025		-			122,573
2026		-			125,903
Thereafter		-			36,381
Total		1,481,103			628,156
Less: Present value discount		(138,730	)		(98,271	)
Lease liability	$	1,342,373		$	529,885

Potential Issuance of Warrants to Purchase Shares of Common Stock of the Company

The Compensation Committee of the Company’s Board of Directors may, from time to time, recommend that certain warrants to purchase shares of common stock of the Company should be issued to new or current members of the Company’s Board of Directors, to officers and employees of the Company and its subsidiaries, or to members of any advisory board or consultants to the Company.

Bonus to Lifted’s Chief Strategy Officer

Lifted’s Chief Strategy Officer hired on July 1, 2021 has developed and implemented certain important strategies which have assisted Lifted’s efforts to increase its production, fulfillment and sales capabilities. This employee’s two-year agreement with Lifted entitles such Chief Strategy Officer to be paid an annual salary of $180,000 plus a bonus equal to 5% of total net sales for Lifted in excess of $6,000,000 per quarter.

At September 30, 2022, the bonus payable to the Chief Strategy Officer totaled $261,864. This bonus is accrued for in the Accounts Payable and Accrued Expenses liability account on the Consolidated Balance Sheets.

Company-Wide Management Bonus Pool

Please refer to “NOTE 13 – COMPANY-WIDE MANAGEMENT BONUS POOL” for more information about the company-wide management bonus pool.

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LEGAL PROCEEDINGS

9 Months Ended

Sep. 30, 2022

LEGAL PROCEEDINGS

Legal Proceedings

NOTE 12 – LEGAL PROCEEDINGS

The Company may be involved in certain legal proceedings that arise from time to time in the ordinary course of its business. Except for income tax contingencies, the Company records accruals for contingencies to the extent that management concludes that the occurrence is probable and that the related amounts of loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred.

The Company may be involved in certain legal proceedings that arise from time to time in the ordinary course of its business. Except for income tax contingencies, the Company records accruals for contingencies to the extent that management concludes that the occurrence is probable and that the related amounts of loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred.

Lifted currently is involved in three pending lawsuits, as the plaintiff:

(1)	Lifted Liquids, Inc. v. Girish GPO, Inc., Girish Ray, and the Law Offices of Saul Roffe – The Company has filed an action in a case styled “Lifted Liquids, Inc. v. Girish GPO, Inc., Girish Ray, and the Law Offices of Saul Roffe” seeking to recover $30,000 that was to be held in escrow. The Company is also requesting approximately $14,569 in damages resulting from Girish GPO’s failure to pay for product it ordered and that the Company delivered. The matter is in the discovery phase and the Company intends to continue pursuing the action and recover its damages.
(2)	Lifted Liquids, Inc. v. Asad Awawdeh and Habib Cash and Carry SD, Inc. – The Company has filed an action seeking to recover approximately $98,000 in damages resulting from Defendants’ failure to pay for product they ordered. The matter has been filed in California and the Company intends to pursue the action and recover its damages.
(3)	Lifted Liquids, Inc. v. DEV Distribution, LLC, No, DC-22-15080 – In October 2022, Lifted filed an action against Dev Distribution LLC,  a vendor who failed to deliver certain products that Lifted has purchased and paid $263,938 for. The case is pending in the State of Texas 14th Civil District Court of Dallas County and is in its early stages. Lifted is seeking an injunction requiring the vendor to provide to Lifted the products that Lifted has purchased and paid for. Lifted is considering amending the complaint to seek the return of its molds and its packaging materials. The Company will also seek to recover any damages as a result of the vendor's actions.

Lifted currently is involved in one pending lawsuit, as the defendant:

(1) Martha, Edgar v. Lifted Liquids – Edgar Martha, who worked as an independent contractor in Lifted’s production facility, has sued Lifted in regard to an alleged chemical burn. Mr. Martha has expressed to Lifted’s attorney that Mr. Martha is inclined to settle the case for $5,000. However, there can be no assurance or guarantee that the case can be settled for $5,000, as the medical bills in the case are significant and Mr. Martha’s medical insurance carrier has refused coverage.

On February 1, 2022, Lifted entered into a settlement agreement that was mutually acceptable to the parties which has resolved the following lawsuit: 

(1) Lifted Liquids, Inc. v. Monkey Bones Distribution LLC (United States Circuit Court for Kenosha County of the State of Wisconsin; Civil Case No. 2021 CV 001196).

In December 2021, our wholly-owned subsidiary Lifted sued distributor Monkey Bones Distribution, LLC for breach of contract for its failure to pay funds due under the agreement between the parties. In February 2022, the parties settled the litigation and agreed to mutual releases and dismissal of the lawsuit in exchange for $36,100.28 paid by Monkey Bones to Lifted Liquids and 15,000 custom gray scale empty disposable devices delivered to Monkey Bones by Lifted Liquids. The parties performed the settlement agreement and the matter was dismissed on February 3, 2022.

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COMPANY WIDE MANAGEMENT BONUS POOL

9 Months Ended

Sep. 30, 2022

COMPANY WIDE MANAGEMENT BONUS POOL

Company Wide Management Bonus Pool

NOTE 13 – COMPANY-WIDE MANAGEMENT BONUS POOL

Pursuant to the employment agreements entered into between the Company and its three principal executives GJacobs, WJacobs and NWarrender (individually, “Executive”), the Company is obligated to compensate management of the Company via a management bonus pool.

For each fiscal year during the Employment Term, the Executive shall be eligible to be considered for an annual bonus (the “Annual Bonus”) as part of a Company-wide management bonus pool arrangement. During the fourth quarter of each year, the Chairman of the Compensation Committee of the Board (the “Compensation Committee”) shall recommend in writing a consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) target (each, a “Target”) for the following year (the “Target Year”), which Target must be approved in writing by each of the following for as long as he remains employed by the Company: GJacobs, WJacobs, and NWarrender (collectively, and with respect to each for only as long as he is an employee of the Company, the “Executive Management Group”). If the Chairman of the Compensation Committee does not recommend in writing a Target for a Target Year that is approved in writing by all of the members of the Executive Management Group prior to the commencement of the Target Year, then the Target for the Target Year shall be equal to the actual consolidated EBITDA of the Company and its subsidiaries during the then-current year (i.e., the year preceding the Target Year) as certified in writing by the Company’s outside firm of independent certified public accountants. If the actual consolidated EBITDA of the Company and its subsidiaries during the Target Year as certified in writing by the Company’s outside firm of independent certified public accountants exceeds the Target (the amount by which the actual consolidated EBITDA of the Company and its subsidiaries during the Target Year as certified in writing by the Company’s outside firm of independent certified public accountants exceeds the Target, the “Excess Amount”), then cash equal to 33% of the Excess Amount shall be set aside by the Company as a cash management bonus pool (the “Bonus Pool”), and the amount of the Bonus Pool shall be allocated and paid out by the Company as bonuses or fees to the officers of the Company and its subsidiaries (and potentially, to directors or third parties who have significantly helped the Company and its subsidiaries during the Target Year), with the amount to be paid to each payee, including the amount of any Annual Bonus to be paid to the Executive, to be determined by unanimous written agreement of the Executive Management Group, in their sole discretion. The Executive expressly agrees and acknowledges that the amount of the Annual Bonus (if any) allocated and paid to the Executive as so determined by unanimous written agreement of the Executive Management Group shall be final, non-appealable, and binding upon the Executive, regardless of whether the Executive receives any Annual Bonus, and regardless of whether any Annual Bonus received by the Executive is higher or lower than any other person’s bonus, under any and all circumstances whatsoever. The Company shall pay the Executive the Annual Bonus, if any, no later than March 15^th of the year following the applicable Target Year.) In the event that there is funding for the Bonus Pool but the Executive Management Group does not reach a unanimous decision on Bonus allocations, then no annual bonus shall be paid. The Annual Bonus Pool would then be placed in escrow and the Executive Management Group would mediate.

The company-wide Bonus Pool for 2021 was $1,559,334 (the “Modified 2021 Bonus Pool Amount”), which was the aggregate amount that was accrued for in LIFD’s financial statements covering the period from January 1, 2021 through September 30, 2021. The Modified 2021 Bonus Pool Amount was distributed during the quarter ended March 31, 2022.

Pursuant to the Amended Omnibus Agreement, the 2022 company-wide bonus pool shall not be allowed to be accrued or paid by LIFD if and to the extent that doing so would decrease LIFD’s 2022 diluted earnings per share of common stock below $0.56 per share. As of September 30, 2022, the Company did not meet the diluted earnings per share of common stock requirement of $0.42 per share ($0.56 x 3/4), and as a result, the Company eliminated the company-wide bonus pool accrual of $2,121,532, which had been accrued through June 30, 2022. Moreover, no company-wide management bonus pool accrual was booked for the quarter ended September 30, 2022. In comparison, as of December 31, 2021, the Company reported a company-wide bonus pool accrual of $1,556,055.

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INCOME TAXES

9 Months Ended

Sep. 30, 2022

INCOME TAXES

Income Taxes

NOTE 14 – INCOME TAXES

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act reduced the U.S. federal statutory tax rate, broadened the corporate tax base through the elimination or reduction of deductions, exclusions, and credits, limited the ability of U.S. corporations to deduct interest expense, and transitioned to a territorial tax system which allows for the repatriation of foreign earnings to the U.S. with a 100% federal dividends received deduction prospectively. In addition, the Tax Act required a one-time transitional tax on foreign cash equivalents and previously unremitted earnings. Several of the new provisions enacted as part of the Tax Act require clarification and guidance from the U.S. Internal Revenue Service (“IRS”) and Treasury Department. These or other changes in U.S. tax laws could impact our profits, effective tax rate, and cash flows.

Significant components on the Company’s income tax provision (benefit) for continuing operations is as follows:

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2022			2021		2022			2021
Current
Domestic-Federal	$	584,994		$	-	$	1,970,372		$	-
Domestic-State		165,096			-		822,289			-
Texas Franchise Tax		838			-		57,366			-
Foreign		-			-		-			-
		750,929			-		2,850,027			-
Deferred
Domestic-Federal	$	(555,760	)	$	-		(253,605	)		-
Domestic-State		(171,142	)		-		(81,696	)		-
Foreign		-			-		-			-
		(726,902	)		-		(335,301	)		-
Total Provision (Benefit) for Income Taxes	$	24,027		$	-	$	2,514,726		$	-

The Company currently believes that all significant filing positions are highly certain and that all of its significant income tax filing positions and deductions would be sustained upon audit. Therefore, the Company has no significant reserves for uncertain tax positions and no adjustments to such reserves were required by generally accepted accounting principles. The Company’s policy is to recognize accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. The Company’s tax returns are subject to examination for the years ended December 31, 2016 through 2021. A reconciliation of the amount of tax provision (benefit) computed using the U.S. federal statutory income tax rate to the provision (benefit) for income taxes on continuing operations is as follows:

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Domestic-Federal	$	103,010		$	469,597		$	1,911,512		$	934,645
State tax benefit, net of federal benefit		(38,623	)		135,138		$	582,681			268,966
Non-deductible expenses		13,941			2,334		$	20,522			7,825
Texas franchise tax		838			-			57,366			-
Revision of prior years' provision to return filing		(72,471	)		-		$	(72,471	)		-
Change in estimated future income tax rates		94,839			-		$	(37,079	)		-
Change in valuation allowance		(79,303	)		(607,069	)	$	38,257			(1,211,436	)
Other		1,796			-		$	13,939			-
Total Provision (Benefit) for Income Taxes	$	24,027		$	-		$	2,514,726		$	-

Deferred tax assets and liabilities as of September 30, 2022 and December 31, 2021 were as follows:

	September 30,			December 31,
	2022			2021
Deferred Tax Assets:
Stock-based compensation	$	2,752,667		$	2,714,410
Sales Allowances		230,519			-
Spoiled and Written-Off Inventory		634,040			-
Accrued Related Party Expenses		4,412			259,463
Impairment of SmplyLifted Note and Other Receivables		-			105,124
Allowance for Doubtful Accounts		40,838			64,661
Other		17,867			8,725
Less: Valuation allowance		(2,752,667	)		(2,714,410	)
Total Deferred Tax Assets		927,676			437,973
Deferred Tax Liabilities:
Depreciation & Amortization		(260,824	)		(105,143	)
Other		-			(1,279	)
Total Deferred Tax Liabilities		(260,824	)		(106,422	)
Net Deferred Tax Assets	$	666,852		$	331,551

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2022

SUBSEQUENT EVENTS

Subsequent Events

NOTE 15 – SUBSEQUENT EVENTS

Management of the Company has evaluated the events that have occurred through the date of the filing of this quarterly report on Form 10-Q and has noted the following subsequent events for disclosure purposes:

Lifted Liquids, Inc. v. DEV Distribution, LLC, No, DC-22-15080

In October 2022, Lifted filed an action against Dev Distribution LLC,  a vendor who failed to deliver certain products that Lifted has purchased and paid $263,938 for. The case is pending in the State of Texas 14th Civil District Court of Dallas County and is in its early stages. Lifted is seeking an injunction requiring the vendor to provide to Lifted the products that Lifted has purchased and paid for. Lifted is considering amending the complaint to seek the return of its molds and its packaging materials. The Company will also seek to recover any damages as a result of the vendor's actions.  

2701-09 West Fulton PH, Chicago, Illinois 60612

On July 6, 2022, our wholly owned subsidiary Lifted entered into a sublease for office space in Chicago, Illinois located at 2701-09 West Fulton PH, Chicago, Illinois 60612. The sublease costs $3,000 per month, plus supplemental lease related charges such as real estate taxes and common expenses of the property that we anticipate will be commercially typical costs. The sublease was retroactively effective as of June 1, 2022 and for a five-month term that ended on October 31, 2022. The purpose of the sublease is to make available office space for the members of Lifted Made's sales team who live in Chicago. These salespeople were spending significant time in their cars commuting from Chicago to Kenosha.

The sublessor is one of our affiliates, Bill McLaughlin, Lifted’s Chief Strategy Officer. The sublease is structured so that Mr. McLaughlin's lease payment obligations to the landlord are passed on to Lifted on a dollar-for-dollar basis, such that Mr. McLaughlin does not realize a cashflow profit or loss from the sublease.

The sublease is currently operating on a month-to-month basis. Management expects to extend the sublease once Mr. McLaughlin is presented a new lease from his landlord. 

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2022

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

Consolidated Financial Statements

Consolidated Financial Statements – The consolidated financial statements of the Company should be read in conjunction with the Company’s consolidated financial statements and related notes that appear in the annual report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 31, 2022. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying unaudited consolidated financial statements and consist of only normal recurring adjustments, except as disclosed herein. As part of the consolidation, all significant intercompany transactions are eliminated, and on the Consolidated Statements of Operations, certain expenses are consolidated into the Other Operating Expenses category.

Use Of Estimates

Use of Estimates – The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) typically requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results and outcomes may differ from management’s estimates and assumptions. Key estimates in these financial statements include the allowance for doubtful accounts, sales allowance, estimated useful lives of property, plant and equipment, valuation allowance on deferred income tax assets and the fair value of stock options and warrants.

Cash And Cash Equivalents

Cash and Cash Equivalents – Cash and cash equivalents as of September 30, 2022 and December 31, 2021 included cash on-hand. The Company considers all highly liquid investments with an original maturity date within 90 days to be cash equivalents. Cash equivalents are carried at cost. The Company maintains its cash balance at a credit-worthy financial institution that is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. Deposits with these banks may exceed the amount of insurance provided on such deposits; however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk.  

Fair Value Of Financial Instruments

Fair Value of Financial Instruments – The historical carrying amount of the financial instruments, which principally include cash, trade receivables, historical accounts payable and accrued expenses, approximates fair value due to the relative short maturity of such instruments.

Accounting Standards Codification (“ASC”) 820 defines fair value, establishes a framework for measuring fair value under GAAP and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair-value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Ablis Holding Company, Bendistillery Inc. and Bend Spirits, Inc. are not publicly traded, and as such their financial instruments are Level 3 unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Accounts Receivable

Accounts Receivable – The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded (the “Allowance for Doubtful Accounts”), which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s recent loss history and an overall assessment of past due trade accounts receivable outstanding. As of December 31, 2021, the Company implemented a new policy regarding allowances for doubtful accounts, which is that all accounts receivable older than 90 days at quarter end are accrued for in allowances for doubtful accounts. Allowances for doubtful accounts of $128,589 and $239,101 were recorded at September 30, 2022 and December 31, 2021, respectively.

Inventory

Inventory – Inventory is valued at the lower of average cost or market value (net realizable value). Inventory consisted of the following at September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
Raw Goods	$	3,213,772	$	2,927,727
Finished Goods	$	3,130,905	$	882,217
Total Inventory	$	6,344,677	$	3,809,944

Monthly overhead costs such as payments for rent, utilities, insurance, and indirect labor are allocated to finished goods based on the estimated percentage cost toward the finished goods. Depreciation expense related to certain machinery and equipment is also allocated to finished goods.

At September 30, 2022, $112,507 of overhead costs were allocated to finished goods. In comparison, during the quarter ended September 30, 2021, $36,457 of overhead costs were allocated to finished goods.

During the nine months ended September 30, 2022, $3,279,262 of obsolete and spoiled inventory was written off; this is compared to $234,351 of obsolete and spoiled inventory written off during the nine months ended September 30, 2021.

Of the $3,279,262 of obsolete inventory that was written off during the nine months ended September 30, 2022, $2,479,798 of it was recognized during the quarter ended September 30, 2022. This write-off primarily related to $2,313,902 worth of certain 2 mL disposable vapes written off due to clogging issues (the “Clogged Vapes”). Management believes that the clogging was caused by the summer heat wave (the third hottest summer on record in the USA). The heat caused the oil in the Clogged Vapes to lose viscosity, so more oil solidified in the coils as they were brought to room temperature. Because these Clogged Vapes did not have preheat or variable voltage settings, the oil could not be unclogged from the coils. Management discontinued the sale of the Clogged Vapes during the third quarter. Lifted’s 2 mL disposable vapes have now been superseded by 3 mL disposable vapes that do have preheat and variable voltage settings, so management expects that this write off of Clogged Vapes should be a one-time occurrence. Management is attempting to negotiate an agreement pursuant to which the manufacturer of the Clogged Vapes will subsidize or share, in some fashion, in the losses that have been sustained by Lifted due to the Clogged Vapes; however, there can be no guarantees or assurances whatsoever that such an agreement to subsidize or share in such losses can be successfully negotiated.

The process of determining obsolete inventory during the quarter involved:

1)	Identifying raw goods that would no longer be used in the manufacture of finished goods;
2)	Identifying finished goods that would no longer be sold or that are slow moving; and
3)	Valuing and expensing raw and finished goods that would no longer be sold.

Fixed Assets

Fixed Assets – Fixed assets are recorded and stated at cost. Fixed assets that cost less than $2,500 are expensed, and fixed assets that cost $2,500 or more are capitalized. Depreciation of machinery and equipment, furniture and fixtures, leasehold improvements, and computer equipment, is based on the asset’s estimated useful life and is calculated using the straight-line method. Normal repairs and maintenance costs are expensed as incurred. Expenditures that materially increase values or extend useful lives are capitalized. The related costs and accumulated depreciation of disposed assets are eliminated and any resulting gain or loss on disposition is included in net income.

Management regularly reviews property and equipment and other long-lived assets for possible impairment. This review occurs annually, or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If there is indication of impairment, management then prepares an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The fair value is estimated using the present value of the future cash flows discounted at a rate commensurate with management’s estimates of the business risks.

Preparation of estimated expected future cash flows is inherently subjective and is based on management’s best estimate of assumptions concerning expected future conditions. Long-lived assets held for sale are recorded at the lower of their carrying amount or fair value less cost to sell.

Security Deposit

Security Deposits – The Company has not paid a security deposit for its leased facility located at 5511 95^th Avenue, Kenosha, WI 53144 for the Company’s current office, manufacturing and warehouse space.

The Company has paid security deposits for its leased facilities located at 8920 58^th Place, Suite 850, Kenosha, WI 53144, 8910 58^th Place, Suites 600 and 700, Kenosha, WI 53144, 9560 58^th Place, Suite 360, Kenosha, WI 53144 and 2701-09 West Fulton PH, Chicago, Illinois 60612.

The Company had paid a security deposit to its lessor for the Company’s former office, manufacturing and warehouse space in Zion, IL, that was rented on a month-to-month basis from June 1, 2021 through November 2021. The security deposit was written off at December 31, 2021.

State Licensing Deposits

State Licensing Deposits – The Company is required to pay deposits for certain licenses in various states.

Revenue

Revenue – The Company recognizes revenue in accordance with Accounting Standards Codification 606.

The majority of the Company’s sales are of branded products goods to distributors, wholesalers, and end consumers. A minority of the Company’s sales are of raw goods to manufacturers, distributors and wholesalers. The majority of the Company’s sales are to distributors, followed by the Company’s sales to wholesalers, and then the Company’s sales to end consumers. Distributors primarily sell Lifted’s products to vape and smoke shops, stores specializing in cannabinoid-infused products, convenience stores, gas stations, health food stores, and other outlets.

Typically, the Company’s revenue is recognized when it satisfies a single performance obligation by transferring control of its products to a customer. Control is generally transferred when the Company’s products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. If the shipping terms on a sale are FOB destination, the revenue is deferred until the product reaches its destination.

The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers.

Discounts and rebates to customers are recorded as a reduction to gross sales.

Management believes that adequate provision has been made for cash discounts, returns and spoilage based on the Company’s historical experience.

Described below are some of the reasons why a customer may want to return an ordered item, and how the Company responds in each situation:

1)	The ordered item breaks, melts, clogs, leaks or separates in transit to the customer. In this case, the Company will replace the broken, melted or separated item at no cost to the customer.
2)	The Company sent the wrong item to the customer. In this case, the Company will allow the customer to keep, at no cost to the customer, the item that was mistakenly sent to the customer. The Company will also send the correct product to the customer, at no cost to the customer.
3)	The customer ordered the wrong product. In this case, the customer, at his/her own expense, must mail the mistakenly ordered product back to the Company, and the Company will mail the correct product to the customer.
4)	The ordered item is recalled. In a situation where product is recalled, the Company will offer a replacement, credit, or refund.

As described above in the section “Inventory”, during the quarter ended September 30, 2022, some of Lifted’s customers returned certain Clogged Vapes. In total for the quarter ended September 30, 2022, the Company recorded a sales allowance of $841,269 for estimated future discounts/refunds and product returns, primarily associated with the Clogged Vapes. Please refer to the description in “Inventory” for more information regarding the Clogged Vapes.

Disaggregation of Revenue

During the quarter ended September 30, 2022, approximately 99% of the Company’s sales occurred inside of the United States of America. During the quarter ended September 30, 2021, approximately 99% of the Company’s sales occurred inside of the United States of America as well.

The Company has considered providing disaggregation of revenue by information regularly reviewed by the chief operating decision maker for evaluating the financial performance of operating segments, such as type of good, geographical region, market or type of customer, type of contract, contract duration, timing of transfer of goods, and sales channels. Due to the rapidly evolving nature of our industry, the Company is constantly launching new products to stay ahead of trends, finding new sales channels, initiating new distribution networks and modifying the prices of its products.

Shown below is a table showing the approximate disaggregation of historical revenue:

Type of Sale	For the three months ended September 30, 2022		% of Net Sales			For the three months ended September 30, 2021		% of Net Sales			For the nine months ended September 30, 2022		% of Net Sales			For the nine months ended September 30, 2021		% of Net Sales
Net sales of raw materials to customers	$	21,707		0.2	%	$	105,960		1.2	%	$	40,339		0.1	%	$	155,695		0.8	%
Net sales of products to private label clients		766,129		6.8	%	$	663,968		7.5	%	$	850,271		1.8	%	$	2,692,091		14.3	%
Net sales of products to wholesalers		1,404,590		12.5	%	$	1,255,947		14.2	%	$	5,825,584		12.6	%	$	2,842,714		15.1	%
Net sales of products to distributors		8,653,948		77.0	%	$	6,273,836		71.1	%	$	36,393,678		78.9	%	$	12,060,313		63.9	%
Net sales of products to end consumers		390,903		3.5	%	$	521,242		5.9	%	$	2,992,784		6.5	%	$	1,118,554		5.9	%
Net Sales	$	11,237,277		100.0	%	$	8,820,952		100.0	%	$	46,102,656		100.0	%	$	18,869,366		100.0	%

Deferred Revenue

Amounts received from a customer before the purchased product is shipped to the customer is treated as deferred revenue. If cash is not received, an accounts receivable is recognized for the invoiced order, but revenue is not recognized until the order is fully shipped. Accounts receivable includes amounts associated with partially shipped orders, for which the unshipped portion is a contract asset. Contract assets represent invoiced but unfulfilled performance obligations.

The table shown below represents the composition of deferred revenue between contract assets (invoiced but unfulfilled performance obligations) and deposits from customers from unfulfilled orders as of September 30, 2022 and December 31, 2021.

	September 30, 2022		December 31, 2021
Contract Assets (invoiced but unfulfilled performance obligations)	$	784,047	$	1,650,258
Deposits from customers for unfulfilled orders	$	-	$	524,135
Total Deferred Revenue	$	784,047	$	2,174,393

Cost Of Goods Sold

Cost of Goods Sold – Cost of goods sold consists of the costs of raw materials utilized in the manufacture of products, direct labor, co-packing fees, repacking fees, freight and shipping charges, warehouse expenses incurred prior to the manufacture of Lifted’s finished products and certain quality control costs. Finished goods that are sold account for the largest portion of cost of sales. Raw materials include ingredients, product components and packaging materials. $3,279,262 and $234,351 of cost of goods sold relates to spoiled and obsolete inventory written off during the nine months ended September 30, 2022 and September 30, 2021, respectively.

Operating Expenses

Operating Expenses – Operating expenses include payroll, consulting and independent contractor expenses, the accrual for the company-wide management bonus pool, professional fees, bank charges and merchant fees, advertising and marketing, bad debt expense, and depreciation and amortization. Total operating expenses decreased to $318,474 for the quarter ended September 30, 2022, down from $1,782,858 during the quarter ended September 30, 2021, primarily as a result of the complete elimination of the company-wide bonus pool accrual of $2,121,532, which had been accrued through June 30, 2022. Moreover, no company-wide management bonus pool accrual was booked for the quarter ended September 30, 2022.

Income Taxes

Income Taxes – Provisions for income taxes are based on taxes payable or refundable for the current year and deferred income taxes. Deferred income taxes are provided on differences between the tax bases of assets and liabilities and their reported amounts in the financial statements and on tax carry forwards. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance is provided against deferred income tax assets when it is not more likely than not that the deferred income tax assets will be realized.

Basic And Diluted Earnings (loss) Per Common Share

Basic and Diluted Earnings (Loss) Per Common Share – Basic earnings (loss) per common share is determined by dividing earnings (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per common share is calculated by dividing earnings (loss) by the weighted-average number of common shares and dilutive common share equivalents outstanding during the period. When dilutive, the incremental potential common shares issuable upon exercise of stock options and warrants are determined by the treasury stock method. The following table summarizes the calculations of basic and diluted earnings (loss) per common share for the three and nine months ended September 30, 2022 and September 30, 2021:

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net Income/(Loss)	$	423,486	$	2,236,178	$	6,587,739	$	4,450,690
Weighted average number of common shares outstanding:
Basic		14,102,578		13,015,717		14,073,366		10,525,461
Diluted		15,884,776		16,257,915		15,855,564		13,767,659
Basic Net Income (Loss) per Common Share	$	0.03	$	0.17	$	0.47	$	0.42
Diluted Net Income (Loss) per Common Share	$	0.03	$	0.14	$	0.41	$	0.32

As of September 30, 2022, in addition to our outstanding common stock, we have issued (a) options to purchase 1,076,698 shares of common stock at $2.00 per share, (b) warrants to purchase 155,500 shares of common stock at $1.00 per share, (c) rights to purchase warrants to purchase 100,000 shares of common stock at $1.85 per share, and (d) warrants to purchase 2,295,000 shares of common stock at $5.00 per share.

Regarding the aforementioned warrants to purchase 2,295,000 shares of our common stock at an exercise price of $5.00 per share: of the total, warrants to purchase 1,550,000 shares of our common stock are vested, while the remaining warrants to purchase 745,000 shares of our common stock are not vested and are subject to certain conditions and requirements.

At September 30, 2022, the Company had Series A Preferred Stock outstanding convertible into 450,000 shares of common stock; these are included in the diluted earnings calculation. Also at September 30, 2022, the Company had Series B Preferred Stock outstanding convertible into 40,000 shares of common stock; these are not included in the diluted earnings calculation because the exercise price ($5.00/share) was higher than the stock closing price at September 30, 2022 (3.40/share).

In comparison, as of September 30, 2021, in addition to our outstanding common stock, we have issued (a) options to purchase 1,086,698 shares of common stock at $2.00 per share, (b) warrants to purchase 205,500 shares of common stock at $1 per share, (c) rights to purchase warrants to purchase 1,375,000 shares of common stock at between $0.01 and $1.85 per share, and (d) warrants to purchase 2,295,000 shares of common stock at $5.00 per share.

Regarding the aforementioned rights to purchase warrants to purchase 1,375,000 shares of common stock at between $0.01 and $1.85 per share as of September 30, 2021: exercise rights to purchase 1.25 million shares of our common stock by exercise of the foregoing warrants are not vested and are not exercisable until a performance contingency is met.

Regarding the aforementioned warrants to purchase 2,295,000 shares of our common stock at an exercise price of $5.00 per share as of September 30, 2021: of the total, warrants to purchase 1,650,000 shares of our common stock are vested, while the remaining warrants to purchase 645,000 shares of our common stock are not vested and are subject to certain conditions and requirements.

Also outstanding at September 30, 2021, the Company had Series A Preferred Stock outstanding convertible into 575,000 shares of common stock; these are included in the diluted earnings calculation. At September 30, 2021, the Company also had Series B Preferred Stock outstanding convertible into 40,000 shares of common stock; these are not included in the diluted earnings calculation.

Recent Accounting Pronouncements

Recent Accounting Pronouncements – In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses (codified as Accounting Standards Codification (“ASC”) Topic 326). ASC 326 adds to US GAAP the current expected credit loss model, a measurement model based on expected losses rather than incurred losses. Under this new guidance, an entity recognizes its estimate of expected credit losses as an allowance, which the FASB believes will result in more timely recognition of such losses. ASU 2016-13 and its amendments will be effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2022, though early adoption is permitted. The Company believes the adoption will modify the way the Company analyzes financial instruments. The Company is currently evaluating the impact of ASU 2016-13 on its consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes, eliminates certain exceptions to the general principles in Topic 740 and clarifies certain aspects of the current guidance to improve consistent application among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021 and interim periods within annual periods beginning after December 15, 2022, though early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. The Company is currently evaluating the impact of ASU 2019-12 on its consolidated financial statements.

On August 5, 2020, the FASB issued ASU No. 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), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is effective for public business entities that meet the definition of a SEC filer, excluding smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The FASB noted that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.

The Company is researching what other pronouncements may be applicable to the Company’s accounting and whether or not any other pronouncements should be adopted.

Advertising And Marketing Expenses

Advertising and Marketing Expenses – Advertising and marketing costs are expensed as incurred. During the three and nine months ended September 30, 2022, the Company incurred $334,215 and $550,612, respectively, in advertising and marketing expenses, which related to trade shows, marketing, promotional products and public relations. In comparison, during the three and nine months ended September 30, 2021, the Company incurred $86,438 and $236,598 in advertising and marketing expenses, of which were related to trade shows, public relations and digital marketing. 

Compensated Absences

Compensated Absences – During the year ended December 31, 2021, paid time off (“PTO”) was provided to employees who obtained approval for it from NWarrender. Any approved PTO was granted at NWarrender’s discretion, and mandatory PTO was zero days, thus no accrual was necessary at December 31, 2021. Effective January 1, 2022, certain PTO policies have been adopted by Lifted, and a PTO accrual of $13,912 was recognized at September 30, 2022.

Off Balance Sheet Arrangements

Off-Balance Sheet Arrangements – The Company has no off-balance sheet arrangements.

Reclassifications

Reclassifications – Some items from the prior period have been reclassified within the financial statements to conform with the current presentation.

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2022

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

Schedule Of Inventory

	September 30, 2022		December 31, 2021
Raw Goods	$	3,213,772	$	2,927,727
Finished Goods	$	3,130,905	$	882,217
Total Inventory	$	6,344,677	$	3,809,944

Schedule Of Historical Revenue

Type of Sale	For the three months ended September 30, 2022		% of Net Sales			For the three months ended September 30, 2021		% of Net Sales			For the nine months ended September 30, 2022		% of Net Sales			For the nine months ended September 30, 2021		% of Net Sales
Net sales of raw materials to customers	$	21,707		0.2	%	$	105,960		1.2	%	$	40,339		0.1	%	$	155,695		0.8	%
Net sales of products to private label clients		766,129		6.8	%	$	663,968		7.5	%	$	850,271		1.8	%	$	2,692,091		14.3	%
Net sales of products to wholesalers		1,404,590		12.5	%	$	1,255,947		14.2	%	$	5,825,584		12.6	%	$	2,842,714		15.1	%
Net sales of products to distributors		8,653,948		77.0	%	$	6,273,836		71.1	%	$	36,393,678		78.9	%	$	12,060,313		63.9	%
Net sales of products to end consumers		390,903		3.5	%	$	521,242		5.9	%	$	2,992,784		6.5	%	$	1,118,554		5.9	%
Net Sales	$	11,237,277		100.0	%	$	8,820,952		100.0	%	$	46,102,656		100.0	%	$	18,869,366		100.0	%

Schedule Of Deferred Revenue

	September 30, 2022		December 31, 2021
Contract Assets (invoiced but unfulfilled performance obligations)	$	784,047	$	1,650,258
Deposits from customers for unfulfilled orders	$	-	$	524,135
Total Deferred Revenue	$	784,047	$	2,174,393

Schedule Of Earnings Per Share, Basic And Diluted

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net Income/(Loss)	$	423,486	$	2,236,178	$	6,587,739	$	4,450,690
Weighted average number of common shares outstanding:
Basic		14,102,578		13,015,717		14,073,366		10,525,461
Diluted		15,884,776		16,257,915		15,855,564		13,767,659
Basic Net Income (Loss) per Common Share	$	0.03	$	0.17	$	0.47	$	0.42
Diluted Net Income (Loss) per Common Share	$	0.03	$	0.14	$	0.41	$	0.32

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PROPERTY AND EQUIPMENT NET (Tables)

9 Months Ended

Sep. 30, 2022

PROPERTY AND EQUIPMENT NET (Tables)

Schedule Of Property And Equipment

Asset Class	September 30, 2022			December 31, 2021
Machinery & Equipment	$	593,208		$	258,533
Leasehold Improvements	$	385,220		$	152,985
Trade Show Booths	$	10,000		$	23,488
Vehicles	$	75,047		$	22,309
Computer Equipment	$	7,312		$	7,312
Furniture & Fixtures	$	83,286		$	46,553
Sub-total:	$	1,154,073		$	511,180
Less: accumulated depreciation	$	(164,384	)	$	(77,967	)
	$	989,688		$	433,213

Schedule Of Estimated Useful Lives

Asset Class	Estimated Useful Life
Machinery & Equipment	60 months
Leasehold Improvements	60 months
Trade Show Booths	36 months
Vehicles	60 months
Computer Equipment	60 months
Furniture & Fixtures	60 months

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SHAREHOLDERS EQUITY (Tables)

9 Months Ended

Sep. 30, 2022

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

Schedule Of Share-based Compensation, Stock Options And Warrant Activity

					Weighted-Average		Aggregate
			Weighted-Average		Remaining Contractual		Intrinsic
	Shares		Exercise Price		Term (Years)		Value
Exercisable Options, Warrants, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants Outstanding, July 1, 2022		2,882,198	$	3.55		2.55	$	2,834,897
Exercisable Options, Warrants, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants Outstanding, September 30, 2022		2,882,198	$	3.55		2.30	$	2,035,579
Outstanding Options, Warrants, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants, September 30, 2022		3,627,198	$	3.85		2.32	$	2,035,579

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CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS (Tables)

9 Months Ended

Sep. 30, 2022

CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS (Tables)

Rent Schedule

Date	Base Monthly  Rent
10/01/2021 – 09/30/2022	$	2,395.84
10/01/2022 – 09/30/2023	$	2,467.72
10/01/2023 – 09/30/2024	$	2,541.75

Date	Base Monthly Rent
01/01/2022 – 12/31/2022	$	4,000.00
01/01/2023 – 12/31/2023	$	4,120.00
01/01/2024 – 12/31/2024	$	4,243.60
01/01/2025 – 12/31/2025	$	4,370.91
01/01/2026 – 12/31/2026	$	4,502.34

Date	Base Monthly Rent
07/01/2022 – 06/30/2023	$	5,493.25
07/01/2023 – 06/30/2024	$	5,630.58
07/01/2024 – 06/30/2025	$	5,771.35
07/01/2025 – 06/30/2026	$	5,915.63
07/01/2026 – 06/30/2027	$	6,063.52

Schedule Of Operating Lease Assets And Liabilities

Asset	Balance Sheet Line	September 30, 2022
Operating Lease Right-of-Use Asset, net of Right-of-Use Asset Amortization of $71,554 in 2022	Non-Current Assets	$	525,942
Liability	Balance Sheet Line	September 30, 2022
Operating Lease Liabilities	Current Liabilities	$	115,010
	Non-Current Liabilities	$	414,875

Asset	Balance Sheet Line	September 30, 2022
Finance Lease Right-of-Use Asset, net of Right-of-Use Asset Amortization of $195,208 in 2022	Non-Current Assets	$	1,285,200
Liability	Balance Sheet Line	September 30, 2022
Finance Lease Liabilities	Current Liabilities	$	(26,079	)
Finance Lease Liabilities	Non-Current Liabilities	$	1,376,439

Schedule Of Lease Cost

Lease Cost:	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021
Finance lease expense:
Amortization of Right-of-Use Assets	$	10,800	$	12,337
Interest on lease liabilities		23,924		13,188
Operating lease expense		20,147		-
Total	$	54,871	$	25,525
Lease Cost:	Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Finance lease expense:
Amortization of Right-of-Use Assets	$	35,473	$	37,010
Interest on lease liabilities		46,445		39,673
Operating lease expense		60,442		8,000
Total	$	142,360	$	84,683

Schedule Of Lease Liability

Maturity Analysis as of September 30, 2022:
	Finance			Operating
2022	$	35,133		$	55,070
2023		1,445,970			146,018
2024		-			142,211
2025		-			122,573
2026		-			125,903
Thereafter		-			36,381
Total		1,481,103			628,156
Less: Present value discount		(138,730	)		(98,271	)
Lease liability	$	1,342,373		$	529,885

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INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2022

INCOME TAXES

Schedule Of Provision For Income Taxes

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2022			2021		2022			2021
Current
Domestic-Federal	$	584,994		$	-	$	1,970,372		$	-
Domestic-State		165,096			-		822,289			-
Texas Franchise Tax		838			-		57,366			-
Foreign		-			-		-			-
		750,929			-		2,850,027			-
Deferred
Domestic-Federal	$	(555,760	)	$	-		(253,605	)		-
Domestic-State		(171,142	)		-		(81,696	)		-
Foreign		-			-		-			-
		(726,902	)		-		(335,301	)		-
Total Provision (Benefit) for Income Taxes	$	24,027		$	-	$	2,514,726		$	-

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Domestic-Federal	$	103,010		$	469,597		$	1,911,512		$	934,645
State tax benefit, net of federal benefit		(38,623	)		135,138		$	582,681			268,966
Non-deductible expenses		13,941			2,334		$	20,522			7,825
Texas franchise tax		838			-			57,366			-
Revision of prior years' provision to return filing		(72,471	)		-		$	(72,471	)		-
Change in estimated future income tax rates		94,839			-		$	(37,079	)		-
Change in valuation allowance		(79,303	)		(607,069	)	$	38,257			(1,211,436	)
Other		1,796			-		$	13,939			-
Total Provision (Benefit) for Income Taxes	$	24,027		$	-		$	2,514,726		$	-

Schedule Of Deferred Tax Assets And Liabilities

	September 30,			December 31,
	2022			2021
Deferred Tax Assets:
Stock-based compensation	$	2,752,667		$	2,714,410
Sales Allowances		230,519			-
Spoiled and Written-Off Inventory		634,040			-
Accrued Related Party Expenses		4,412			259,463
Impairment of SmplyLifted Note and Other Receivables		-			105,124
Allowance for Doubtful Accounts		40,838			64,661
Other		17,867			8,725
Less: Valuation allowance		(2,752,667	)		(2,714,410	)
Total Deferred Tax Assets		927,676			437,973
Deferred Tax Liabilities:
Depreciation & Amortization		(260,824	)		(105,143	)
Other		-			(1,279	)
Total Deferred Tax Liabilities		(260,824	)		(106,422	)
Net Deferred Tax Assets	$	666,852		$	331,551

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DESCRIPTION OF THE BUSINESS OF LFTD PARTNERS INC. (Details Narrative) - USD ($)						1 Months Ended			9 Months Ended
	Jul. 06, 2022	Jul. 05, 2022	Jun. 07, 2022	Feb. 09, 2022	Jan. 03, 2022	Jul. 25, 2022	Dec. 30, 2021	Feb. 24, 2020	Sep. 30, 2022	Mar. 01, 2022	Dec. 31, 2021	May 18, 2021	Apr. 09, 2019
Debt And Equity Offerings										$ 5,000,000
Repayment of principal and interest due amount											$ 3,750,000
NWarrender [Member]
Total purchase consideration								$ 7,500,000
Cash payment								3,750,000
Promissory note issued								$ 3,750,000
Interest rate								2.00%
Promissory note description								The $3.75M Note was secured by (a) a first lien security interest in all of the assets of the Company and Lifted; and (b) a pledge of: (i) all of the capital stock of Lifted; (ii) all of the common stock of Bendistillery, Bend Spirits and Ablis that is owned by the Company; and (iii) all of the capital stock of any other entity owned by the Company, Lifted or any of their subsidiaries, pursuant to a Collateral Stock Pledge Agreement between NWarrender, as Secured Party, and the Company and Lifted, as Pledgors.
Acceleration agreement description		Under the terms of the Acceleration Agreement, we were obligated to repay the remaining principal balance as follows: $1,374,999 on or before December 31, 2022, and $458,335 on or before December 31, 2024. Then, on July 8, 2022, we prepaid $916,666, along with accrued interest
Purchase price of building							$ 1,375,000
LFTD PARTNERS INC [Member]
Promissory Note					$ 3,750,000.00		3,750,000						$ 3,750,000.00
Payment of accrued interest			$ 29,384
Repayment of promissory note						$ 916,668
Sublease costs	$ 3,000
Securing amount						$ 2,750,000
Repayment Of Promissory Note					1,000,000
Reloaned Of Promissory Note					2,750,000
Principal Promissory Note			$ 1,833,334		$ 2,750,000,000,000
Description Security Interest					The $2,750,000 Promissory Note payable jointly by the Company and Lifted to NWarrender is secured by a perfected first lien security interest (the “Security Interest”) that encumbers all of the assets of the Company and Lifted
Description Pay Off					The Company was obligated to pay off the principal of the $2.75M Note in five semi-annual payments to NWarrender of $458,333 and a sixth and final semi-annual payment to NWarrender of $458,335, in each case plus accrued interest, starting on June 30, 2022.
Purchase Of Building									$ 1,375,000
Ownership Interests					2.50%							100.00%	4.99%
Description Membership Interest				Prior to February 9, 2022, Lifted Made had a 50% membership interest in SmplyLifted LLC, which sells tobacco-free nicotine pouches under the brand name FR3SH (www.GETFR3SH.com). On February 9, 2022, Lifted Made sold its 50% membership interest in SmplyLifted LLC to Corner Vapory LLC, an affiliate of Nicholas S. Warrender (“NWarrender”), CEO of Lifted, for $1, plus ninety-nine percent (99%) of any and all payments and other consideration received or owed to Corner Vapory LLC in regard to SmplyLifted’s existing inventory of FR3SH brand tobacco-free nicotine pouches. Lifted has the option to re-purchase the 50% membership interest in SmplyLifted LLC from Corner Vapory LLC for $1,000 in cash at any time on or before December 31, 2032.
Promissory Note Amount							$ 5,000,000

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details)
Raw Goods	$ 3,213,772	$ 2,927,727
Finished Goods	3,130,905	882,217
Total Inventory	$ 6,344,677	$ 3,809,944

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Percentage Of Net Sales	100.00%	100.00%	100.00%	100.00%
Net Sales	$ 11,237,277	$ 8,820,952	$ 46,102,656	$ 18,869,366
Customer [Member]
Percentage Of Net Sales	0.20%	1.20%	0.10%	0.80%
Net Sales	$ 21,707	$ 105,960	$ 40,339	$ 155,695
Private Label Clients [Member]
Percentage Of Net Sales	6.80%	7.50%	1.80%	14.30%
Net Sales	$ 766,129	$ 663,968	$ 850,271	$ 2,692,091
Wholesalers [Member]
Percentage Of Net Sales	12.50%	14.20%	12.60%	15.10%
Net Sales	$ 1,404,590	$ 1,255,947	$ 5,825,584	$ 2,842,714
Distributors [Member]
Percentage Of Net Sales	77.00%	71.10%	78.90%	63.90%
Net Sales	$ 8,653,948	$ 6,273,836	$ 36,393,678	$ 12,060,313
End Consumers [Member]
Percentage Of Net Sales	3.50%	5.90%	6.50%	5.90%
Net Sales	$ 390,903	$ 521,242	$ 2,992,784	$ 1,118,554

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details)
Contract Assets (invoiced But Unfulfilled Performance Obligations)	$ 784,047	$ 1,650,258
Deposits From Customers For Unfulfilled Orders	0	524,135
Total Deferred Revenue	$ 784,047	$ 2,174,393

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
DESCRIPTION OF THE BUSINESS OF LFTD PARTNERS INC. (Details Narrative)
Net Income/(loss)	$ 423,486	$ 2,236,178	$ 6,587,739	$ 4,450,690
Weighted Average Number Of Basic Share Outstanding	14,102,578	13,015,717	14,073,366	10,525,461
Weighted Average Number Of Diluted Shares Outstanding	15,884,776	16,257,915	15,855,564	13,767,659
Basic Net Income/loss Per Share	$ 0.03	$ 0.17	$ 0.47	$ 0.42
Diluted Net Income/loss Per Share	$ 0.03	$ 0.14	$ 0.41	$ 0.32

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Feb. 14, 2022	Dec. 31, 2021	Mar. 31, 2021
Bonus Pool Accrual	$ 2,121,532		$ 2,121,532		$ 1,556,055	$ 1,556,055
Write off amount			2,313,902
Sale allownace			$ 841,269
Issued Common Stock	14,102,578		14,102,578			14,027,578
Allowances For Bad Debts	$ 128,589		$ 128,589			$ 239,101
Inventory Write Down			3,279,262	$ 234,351
Operating Expense	318,474	$ 1,782,858	$ 7,765,637	4,870,764
Prefered Stock
Warrant To Purchase			1,550,000
Fdic Limit	250,000		$ 250,000				$ 250,000
Allowances For Bad Debts	128,589		128,589				$ 239,101
Fixed Assets Capitalized	2,500		2,500
Fixed Assets Expensed	2,500		2,500
Packaging Materials			561,417
Inventory Write Down			3,279,262	234,351
Cost of goods sold			3,279,262	234,351
Advertising Cost	334,215	$ 86,438	550,612	236,598
Operating Expense			318,474	1,782,858
Obsolete and spoiled inventory	$ 2,479,798		3,279,262
Pto Accrual			13,912
Overhead Cost			$ 112,507	$ 36,457
Remaining Warrants To Purchase			745,000
Series B Preferred Stock
A Preferred Stock Outstanding Convertible Into Common Stock	40,000		40,000
Exercise Price	$ 5		$ 5
Stock Closing Price	$ 3.40		$ 3.40
Series A Preferred Stock [Member]
Aggregate Purchase Price							500,000
Issued Common Stock							645,000
A Preferred Stock Outstanding Convertible Into Common Stock	475,000		475,000				1,650,000
Stock Option
Options To Purchase			1,076,698	1,086,698
Common Stock Per Share			$ 2
Stock Option | Minimum [Member]
Ercisable				$ 0.0001
Stock Option | Maximum [Member]
Ercisable				$ 2.00
Warrant One [Member]
Common Stock Per Share			$ 1
Warrant To Purchase			155,500	1,375,000
Ercisable Maximum				$ 1.85
Ercisable Minimum				0.01
Warrant Two [Member]
Common Stock Per Share			$ 1.85	$ 5
Warrant To Purchase			100,000	2,295,000
Warrant Three [Member]
Common Stock Per Share			$ 5.00	$ 5.00
Warrant To Purchase			2,295,000	450,000
Warrant Four [Member]
Common Stock Per Share			$ 1.85
Warrant To Purchase			1,350,000	1,250,000
Aforementioned Warrants			2,295,000
Common Stock Per Share One			$ 5.00
Ercisable				$ 5.00
Financing Warrant
Warrant To Purchase				31,250
Ercisable				$ 0.03
Lifted Merger Agreement [Member]
Promissory Note	$ 2,750,000		$ 2,750,000

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RECEIPT OF LOANS UNDER THE ECONOMIC INJURY DISASTER LOAN PROGRAM AND THE PAYCHECK PROTECTION PROGRAM (Details Narative) - USD ($)		1 Months Ended	3 Months Ended	9 Months Ended
	Apr. 14, 2020	Apr. 20, 2021	Jun. 30, 2021	Sep. 30, 2022	Mar. 31, 2021
Accrued Interest					$ 1,443
Forgiveness Of The Loan			$ 82
Interest Payable On The Ppp Loan		$ (1,525)
Ppp Loan		$ (149,622)
Gain On The Forgiveness				$ 151,147
BMO Harris Bank [Member]
Principal Amount	$ 149,622
Maturity Date	Apr. 14, 2022
Interest Rate	1.00%

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RISKS AND UNCERTAINTIES (Details Narrative) - USD ($)	9 Months Ended		10 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2020	Feb. 14, 2022	Dec. 31, 2021	Aug. 30, 2021
Debt	$ 500,000
Purchase property	1,375,000
Research and development	19,800
Accumulated Deficit	(4,842,407)				$ (11,414,602)
Accrued Bonus	$ 2,121,532			$ 1,556,055	$ 1,556,055
Diluted Earnings Per Share Of Common Stock	$ 0.56
Cost Of Research And Development	$ 100,000
Sales [Member]
Concentration Risk, Percentage	50.00%	50.00%	8.00%
Five Vendors [Member] | Supplies [Member]
Concentration Risk, Percentage	88.00%	70.00%
Six Vendors [Member] | Supplies [Member]
Concentration Risk, Percentage	73.00%	62.00%
Nicholas S Warrender [Member]
Financial Obligations	$ 2,750,000
Promisssory Note	$ 2,750,000
Promissory Note Accruing Interest Percentage	2.50%
Omnibus Agreement [Member] | Nicholas S Warrender [Member]
Accrued Bonus	$ 16,575
Prefered Stock, Dividend Rate	3.00%
Obligation To Purchase	$ 1,375,000
Additional Bonus	500,000
GJacobs [Member]
Accrued Bonus	166,667		$ 300,000			$ 8,438
WJacobs [Member]
Accrued Bonus	$ 166,667

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THE COMPANYS INVESTMENTS (Details Narrative) - USD ($)	9 Months Ended		12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021	Dec. 31, 2020	Feb. 09, 2022	Sep. 22, 2020	Apr. 30, 2019
Loss	$ 6,587,739	$ 4,450,690
SmplyLifted LLC
Investment	200,000			$ 195,571
Loss	$ 195,571		$ 195,571	$ 4,429
Ownership Interests	50.00%			50.00%	50.00%	50.00%	50.00%
Receivables			$ 388,727
Cash					$ 1,000
Lifted Amount For Agreement					$ 1
Payment Percentage					99.00%
Bendistillery
Ownership Interests							4.90%
Purchse Price							$ 1,896,200

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PROPERTY AND EQUIPMENT, NET (Details) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Gross Property And Equipment	$ 1,154,073	$ 511,180
Less: Accumulated Depreciation	(164,384)	(77,967)
Net Property And Equipment	989,688	433,213
Leasehold Improvements [Member]
Gross Property And Equipment	385,220	152,985
Trade Show Booth [Member]
Gross Property And Equipment	10,000	23,488
Vehicles [Member]
Gross Property And Equipment	75,047	22,309
Computer Equipment [Member]
Gross Property And Equipment	7,312	7,312
Furniture and Fixtures [Member]
Gross Property And Equipment	83,286	46,553
Machinery and Equipment [Member]
Gross Property And Equipment	$ 593,208	$ 258,533

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PROPERTY AND EQUIPMENT, NET (Details 1)	9 Months Ended
	Sep. 30, 2022
Leasehold Improvements [Member]
Estimated Useful Life	60 years
Trade Show Booth [Member]
Estimated Useful Life	36 years
Vehicles [Member]
Estimated Useful Life	60 years
Computer Equipment [Member]
Estimated Useful Life	60 years
Furniture and Fixtures [Member]
Estimated Useful Life	60 years
Machinery and Equipment [Member]
Estimated Useful Life	60 years

XML

PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
PROPERTY AND EQUIPMENT NET (Tables)
Depreciation Expense	$ 18,279	$ 10,992	$ 49,854	$ 53,483

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NOTES RECEIVABLE (Details Narrative) - USD ($)	Dec. 31, 2021	Mar. 31, 2021
DESCRIPTION OF THE BUSINESS OF LFTD PARTNERS INC. (Details Narrative)
Imputed Interest Receivable	$ 580	$ 149
Loan To Smplylifted Llc	$ 387,500	$ 387,500

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INTANGIBLE ASSETS, NET (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
INTANGIBLE ASSETS, NET (Details Narrative)
Amortization Expenses	$ 1,040	$ 417	$ 1,040	$ 1,251
Finite-lived Intangible Asset, Useful Life			32 years

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RELATED PARTY TRANSACTIONS (Details Narrative)			1 Months Ended			3 Months Ended			9 Months Ended
	Jun. 07, 2022 USD ($)	Jan. 03, 2022 USD ($)	Dec. 30, 2021 USD ($)	Aug. 30, 2021 USD ($) $ / shares shares	Feb. 29, 2020 USD ($) shares	Sep. 30, 2022 USD ($) integer $ / shares	Mar. 31, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($) integer $ / shares shares	Sep. 30, 2021 USD ($) $ / shares	Jun. 30, 2022 $ / shares	Feb. 14, 2022 USD ($)	Dec. 31, 2021 USD ($)	Jun. 01, 2021 integer	Apr. 05, 2021 USD ($)	Feb. 10, 2021 USD ($)	Feb. 02, 2021 USD ($)	Jan. 01, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 01, 2020 USD ($)	Feb. 24, 2020 USD ($) $ / shares
Shipping Costs						$ 7,377
Repaid Promissory Note			$ 3,750,000
Sublease costs	$ 3,000
Purchase of property									$ 1,375,000
Purchase property									1,375,000
Reimbursement expenses						377,416		$ 170,820	1,288,486	$ 350,985
Bonus Payable						$ 2,121,532			$ 2,121,532			$ 1,556,055	$ 1,556,055
Exercise Price | $ / shares						$ 3.55			$ 3.55		$ 3.55
Vincent J Mesolella
Payments for commissions									$ 40,000
Director Fees Received									4,000
Gerard M. Jacobs
Payments for commissions										143,713
Accrued Interest Rate																		2.00%
Bonus Payable																			$ 350,000
Deferred Compensation																		$ 58,439
Interest Payable										7,043
Prepaid Consulting Fee																				$ 350,000
W Jacobs
Payments for commissions										152,431
Accrued Interest Rate																		2.00%
Reimbursement expenses								233
Bonus Payable																			350,000
Deferred Compensation																		$ 58,439
Interest Payable										2,992
Prepaid Consulting Fee																				$ 350,000
Joshua A. Bloom
Payments for commissions									20,000
Director Fees Received									4,000
Richard E. Morrissy
Director Fees Received									4,000
James S. Jacobs
Director Fees Received									4,000
Kevin J. Rocio
Director Fees Received									4,000
Robert T Warrender III [Member]
Payments for commissions						$ 0		26,196	$ 54,384	43,678
NintyFiveHoldingsLLC [Member]
Purchase Price													$ 68,888
Rented Space | integer						11,238			11,238					3,300
Rented Space Per Foot									6.13
Increase In Base Rent									2.00%
Beneficial Common Stock | shares									3,900,455
Lifted Paid Rent						$ 17,567		17,219	$ 52,700	$ 51,663
Property taxes | $ / shares									$ 3.25	$ 3.25
Corner Vapory
Purchase						9,306		21,842	$ 40,410	$ 34,032
Receivable									17,260	9,070
Robert T Warrender II [Member]
Shipping Costs						75,838			150,266
Wages Paid						16,154			39,231
Reimbursements expense						4,977			4,977
Liquid Event Marketing [Member]
Purchase property								54,829
Payment To Related Party								26,465		26,465
Payable amount						2,262			2,262
Reimbursement expenses									8,862
Payable amount for labour								$ 19,965		$ 19,965
Purchase services						0			6,470
NWarrender [Member]
Prepayment of promissory note	916,666
Payments for commissions							$ 680,000		680,000
Promissory Note Payable						2,750,000.00			2,750,000.00
Promissory Note Pay Off Principal						2,750,000.00			2,750,000.00
Five Semi Annual Payments						458,333			458,333
Final Semi-annual Payment						458,335			458,335
Accrued Interest Payable	29,384					16,575			16,575
Promissory Note						3,750,000.00			3,750,000.00
Promissory note secured																					$ 3,750,000,000,000
Equity capital						5,000,000			5,000,000
Purchase property									1,375,000
Accrued Interest Rate																					2.00%
Principal Amount	2,750,000.00																		3,750,000
Remaining Amount	1,833,334,000,000
Remaining principal balance	1,374,999,000,000
NWarrender [Member] | December 31 2024 [Member]
Remaining principal balance	458,335,000,000
NWarrender [Member] | July 8, 2022 [Member]
Prepayment of promissory note	916,666
NWarrender [Member] | July 25 2022 [Member]
Repayment of promissory note	$ 916,668
SmplyLifted LLC
Reimbursement						313			313
Due To Related Party						9,719			9,719								$ 450
Payment To Related Party															$ 9,719	$ 450
payment on behalf of the related party									19,992
Invoices for related party									146
Remaining payment for invoices									146
Warrender Enterprise
Exercise Price | $ / shares																					$ 5.00
Warrants Issued | shares					1,820,000
Re-loan		$ 2,750,000
Cash Consideration					$ 3,750,000
Stock Consideration | shares					3,900,455
Warrender Enterprise | Unregistered common stock
Stock Consideration | shares					645,000
Warrender Enterprise | Secured Promissory Note
Cash Consideration					$ 3,750,000
GJacobs [Member]
Reimbursement expenses				$ 8,438
Aggregate purchase price				$ 1
Warrant purchase | shares				750,000
Purchase price | $ / shares				$ 0.01
Unregistered common stock | shares				31,250
Exercise price | $ / shares				$ 0.03
Bonus Payable				$ 8,438		$ 166,667			$ 166,667										$ 300,000

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SHAREHOLDERS EQUITY (Details) - USD ($)	6 Months Ended	9 Months Ended
	Jun. 30, 2022	Sep. 30, 2022
SHAREHOLDERS EQUITY (Details)
Share-based Compensation Arrangement By Share-based Payment Award, Options, Exercisable, Number	2,882,198	2,882,198
Share-based Compensation Arrangement By Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price	$ 3.55	$ 3.55
Share-based Compensation Arrangement By Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term	2 years 6 months 18 days	2 years 3 months 18 days
Share-based Compensation Arrangement By Share-based Payment Award, Options, Exercisable, Intrinsic Value	$ 2,834,897	$ 2,035,579
Share-based Compensation Arrangement By Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price		$ 3.85
Share-based Compensation Arrangement By Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term		2 years 3 months 25 days
Share-based Compensation Arrangement By Share-based Payment Award, Options, Outstanding, Intrinsic Value		$ 36
Outstanding Options Rights To Purchase Warrants To Purchase Common Stock And Financing Warrant		3,627,198

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SHAREHOLDERS EQUITY (Details Narrative) - USD ($)			1 Months Ended		3 Months Ended				4 Months Ended	9 Months Ended
	Mar. 02, 2022	Jan. 08, 2021	Feb. 19, 2022	Nov. 24, 2020	Sep. 30, 2022	Mar. 31, 2022	Sep. 30, 2021	May 13, 2019	Dec. 05, 2019	Sep. 30, 2022	Sep. 30, 2021	Apr. 14, 2022	Apr. 01, 2022	Mar. 08, 2022	Mar. 01, 2022	Dec. 31, 2021	Mar. 31, 2021
Stock Issued During Period, Value, New Issues						$ 50,000
Preferred Stock, Shares Authorized					10,000,000					10,000,000						10,000,000
Accrued Liability																	$ 1,443
Nonaffiliate Stockholder
Share Price		$ 0.95	$ 1.00	$ 0.95											$ 1.50
Stock Repurchased During Period, Shares	100,000	36,000		36,000
Stock Repurchased During Period, Amount	$ 150,000	$ 34,200		$ 34,200
Option To Purchase Shares Of Unregistered Common Stock			500,000
Shares Transferred, Immediately Cancelled														100,000
Series B Preferred Stock
Share Price					$ 9.00					$ 9.00
Preferred Stock, Shares Authorized					5,000,000					5,000,000
Preferred Stock Terms Of Conversion										As of September 30, 2022, 60,000 shares of Series B Preferred Stock have been converted into a total of 60,000 shares of common stock of the Company, which leaves 40,000 shares of Series B Preferred Stock currently outstanding, convertible into 40,000 shares of common stock of the Company.
Accrued Liability					$ 1,783					$ 1,783						$ 1,796
Dividends, Cash					$ 4,500		$ 4,500			$ 4,500	$ 10,344
Series A Preferred Stock [Member]
Share Price					$ 5.00					$ 5.00
Preferred Stock, Shares Authorized					400,000					400,000
Preferred Stock, Voting Rights										As of June 30, 2022, 60,000 shares of Series B Preferred Stock have been converted into a total of 60,000 shares of common stock of the Company, which leaves 40,000 shares of Series B Preferred Stock currently outstanding.
Preferred Stock Terms Of Conversion										As of September 30, 2022, 61,650 shares of Series A Preferred Stock have been converted into a total of 6,165,000 shares of common stock of the Company, which leaves 4,500 shares of Series A Preferred Stock currently outstanding, convertible into 450,000 shares of common stock of the Company.
Accrued Liability					$ 5,838					$ 5,838						$ 11,926
Dividends, Cash					$ 0		$ 0			$ 17,147	$ 199,187
Accredited Investors | Series B Preferred Stock
Annual Dividend Percentage									3.00%	30.00%
Share Price					$ 7.00					$ 7.00
Stock Issued During Period, Shares, New Issues									100,000
Stock Issued During Period, Value, New Issues									$ 500,000
Number Of Preffered Stock Converted Into Common Stock									100,000
Unregistered common stock												25,000	100,000
Convertible Preferred Stock, Shares Reserved For Future Issuance												250	1,000
Accredited Investors | Series A Preferred Stock [Member]
Annual Dividend Percentage								3.00%		30.00%
Share Price					$ 3.00					$ 3.00
Stock Issued During Period, Shares, New Issues								66,150
Stock Issued During Period, Value, New Issues								$ 6,615,000
Number Of Preffered Stock Converted Into Common Stock								66,150
Convertible Preferred Stock, Shares Reserved For Future Issuance								6,615,000
Debt Instrument, Convertible, Conversion Price								$ 1.00

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CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS Schedule of Operating Lease Assets and Liabilities (Details) - USD ($)	12 Months Ended
	Jun. 30, 2027	Dec. 31, 2026	Jun. 30, 2026	Dec. 31, 2025	Jun. 30, 2025	Dec. 31, 2024	Sep. 30, 2024	Jun. 30, 2024	Dec. 31, 2023	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022	Sep. 30, 2022
DESCRIPTION OF THE BUSINESS OF LFTD PARTNERS INC. (Details Narrative)
Base Monthly Rent	$ 6,063	$ 4,502	$ 5,915	$ 4,370	$ 5,771	$ 4,243	$ 2,541	$ 5,630	$ 4,120	$ 2,467	$ 5,493	$ 4,000	$ 2,395

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CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS Schedule of Operating Lease Assets and Liabilities (Details 1) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
DESCRIPTION OF THE BUSINESS OF LFTD PARTNERS INC. (Details Narrative)
Operating Lease Right Of Use Asset	$ 525,942	$ 76,412
Operating Lease Liability Current	115,010	26,047
Operating Lease Liability Noncurrent	414,875	50,583
Finance Lease Right Of Use Asset	1,285,200	1,227,532
Finance Lease Liability Current	(26,079)
Finance Lease Liability	$ 1,376,439	$ 0

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CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS Schedule of Operating Lease Assets and Liabilities (Details 2) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
DESCRIPTION OF THE BUSINESS OF LFTD PARTNERS INC. (Details Narrative)
Amortization Of Right Of Use Assets	$ 10,800	$ 12,337	$ 35,473	$ 37,010
Interest On Lease Liabilities	23,924	13,188	46,445	39,673
Operating lease expense	20,147	0	60,442	8,000
Finance Lease Expense	$ 54,871	$ 25,525	$ 142,360	$ 84,683

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CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS Schedule of Operating Lease Assets and Liabilities (Details 3)	Sep. 30, 2022 USD ($)
DESCRIPTION OF THE BUSINESS OF LFTD PARTNERS INC. (Details Narrative)
Finance Lease Liability Payments Due Year Two	$ 35,133
Finance Lease Liability Payments Due Year Three	1,445,970
Finance Lease Liability Payments Due Year Four	0
Finance Lease Liability Payments Due Year Five	0
Finance Lease Liability Payments Due Next Six Months	0
Finance lease liability payments due after year five	0
Finance Lease Liability Payments Due	1,481,103
Finance Lease Liability Discount Excess Amount	(138,730)
Finance Lease Liability	1,342,373
Lessee Operating Lease Liability Payments Due Year Two	55,070
Lessee Operating Lease Liability Payments Due Year Three	146,018
Lessee Operating Lease Liability Payments Due Year Four	142,211
Lessee Operating Lease Liability Payments Due Year Five	122,573
Lessee Operating Lease Liability Payments Due Next Six Months	125,903
Operating Lease Liability Payments Due After Year Five	36,381
Lessee Operating Lease Liability Paymentsdue	628,156
Lessee Operating Lease Liability Discounted Excess Amount	98,271
Operating Lease Liability	$ 529,885

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CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS (Details Narrative)	Jul. 06, 2022 USD ($)	Sep. 30, 2022 USD ($) shares	Jul. 01, 2022 USD ($)	Feb. 14, 2022 USD ($)	Jan. 01, 2022 USD ($)	Dec. 31, 2021 USD ($)	Oct. 01, 2021 USD ($)	Jul. 01, 2021 USD ($)	Jan. 01, 2021 USD ($)
Shares Of Common Stock | shares		3,900,455
Increase In Base Rent (percentage)		2.00%					3.00%
Premises Rent, Per Square		6.13	10.75		6.00		5.75
Base Rent, Amount									$ 68,888
Fixed Purchase Price						$ 1,375,000
Immaterial Loss On Lease Modification						1,446
Sublease costs	$ 3,000
Bonus Payable		$ 2,121,532		$ 1,556,055		$ 1,556,055
Chief Strategy Officer [Member]
Bonus Equal								5.00%
Bonus Payable		$ 261,864
Net Sales								$ 6,000,000
Salary								$ 180,000

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LEGAL PROCEEDINGS (Details Narrative) - USD ($)	1 Months Ended	9 Months Ended	12 Months Ended
	Oct. 31, 2022	Sep. 30, 2022	Dec. 31, 2021
Lifted Liquids, Inc. [Member]
Agreement releases and dismissal		$ 36,100
Saul Roffe [Member]
Settlement Cost		30,000
Lifted Liquids		15,000
Damage Recover		14,569
Martha Edgar V Lifted Liquids [Member]
Settlement Cost		5,000	$ 5,000
Awawdeh And Habib [Member]
Settlement Cost		$ 98,000
Dev Distribution LLC V Lifted Liquids [Member] | Subsequent Event [Member]
Amount paid for undelivered products	$ 263,938

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COMPANY WIDE MANAGEMENT BONUS POOL (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2022	Feb. 14, 2022	Dec. 31, 2021
COMPANY WIDE MANAGEMENT BONUS POOL (Details Narrative)
Annual Bonus	$ 1,559,334
Bonus Payable	$ 2,121,532	$ 1,556,055	$ 1,556,055
Diluted Earnings Per Share	$ 0.56

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INCOME TAXES (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Current
Domestic-federal	$ 584,994	$ 0	$ 1,970,372	$ 0
Domestic-state	165,096	0	822,289	0
Texas Franchise Tax	838		57,366
Foreign	0	0	0	0
Total	750,929	0	2,850,027	0
Deferred
Domestic-federal	(555,760)	0	(253,605)
Domestic-state	(171,142)	0	(81,696)	0
Foreign	0	0	0	0
Total	(726,902)	0	(335,301)	0
Total Provision (benefit) For Income Taxes	$ 24,027	$ 0	$ 2,514,726	$ 0

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INCOME TAXES (Details 1) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
INCOME TAXES
Domestic Federal	$ 103,010	$ 469,597	$ 1,911,512	$ 934,645
State Tax Benefit, Net Of Federal Benefit	(38,623)	135,138	582,681	268,966
Non-deductible Expenses	13,941	2,334	20,522	7,825
Texas franchise tax	838	0	57,366	0
Revision of prior years' deferred tax assets	(72,471)	0	(72,471)	0
Change In Estimated Future Income Tax Rates	94,839	0	(37,079)	0
Change In Valuation Allowance	(79,303)	(607,069)	38,257	(1,211,436)
Other	1,796	0	13,939	0
Total Provision (benefit) For Income TaxesEF	$ 24,027	$ 0	$ 2,514,726	$ 0

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INCOME TAXES (Details 2) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Deferred Tax Assets
Sales allowances	$ 230,519	$ 0
Spoiles and written off inventory	634,040	0
Stock-based Compensation	2,752,667	2,714,410
Accrued Related Party Expenses	4,412	259,463
Impairment Of Smplylifted Note And Other Receivables	0	105,124
Allowance For Doubtful Accounts	40,838	64,661
Other	17,867	8,725
Less: Valuation Allowance	(2,752,667)	(2,714,410)
Total Deferred Tax Asset	927,676	437,973
Deferred Tax Liabilities:
Depreciation & Amortization	(260,824)	(105,143)
Other	0	(1,279)
Total Deferred Tax Liabilities	(260,824)	(106,422)
Net Deferred Tax (Liabilities) Assets	$ 666,852	$ 331,551

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INCOME TAXES (Details Narrative)	1 Months Ended
	Dec. 22, 2017
INCOME TAXES
Federal Dividends	100.00%

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SUBSEQUENT EVENTS (Details Narrative) - USD ($)		1 Months Ended
	Jul. 06, 2022	Oct. 31, 2022
Dev Distribution LLC V Lifted Liquids [Member] | Subsequent Event [Member]
Amount paid for undelivered products		$ 263,938
LFTD PARTNERS INC [Member]
Sublease costs	$ 3,000