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ACQUISITIONS

12 Months Ended

Dec. 31, 2022

NOTE 2. ACQUISITIONS

Trees

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

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


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

Compared to the estimated purchase price allocation reported in our financial statements included in Item 8 of our Form 10-K for the year ended December 31, 2021 filed with the SEC on March 25, 2022, the final purchase price estimate resulted in a reduction of tradename intangible assets and a corresponding increase to goodwill of $3.6 million.

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


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

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

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

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


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

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


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

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

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


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

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

On December 12, 2022, we completed the Green Tree Acquisition which consisted of the acquisition of substantially all of the assets of Ancient Alternatives LLC, Natural Alternatives For Life, LLC, Mountainside Industries, LLC, Hillside Enterprises, LLC, and GT Creations, LLC, each a Colorado limited liability company (collectively, the "Green Tree Entities”). We paid cash in the amount of $500,000 and stock consideration of 17,977,528 shares of our Common Stock. The closing price of our Common Stock on December 12, 2022, the date of license transfer, was $0.165 per share, as

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

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


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

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

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


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

The unaudited pro-forma results of operations are presented for information purpose only. The unaudited pro-forma results are not intended to present actual results that would have been attained had the acquisition been completed as of January 1, 2021, or to project potential operating results as of any future date or for any future periods.

On December 19, 2022, we completed the Green Man Acquisition, consisting of the acquisition of substantially all of the assets of Green Man. We paid cash in the amount of $1,225,000 and stock consideration of 4,494,382 shares of Common Stock. The closing price of our Common Stock on December 19, 2022, the date of license transfer, was $0.18 per share, as such, fair value of the equity consideration is $808,989. An additional $1,500,000 in cash will be paid to the sellers in eighteen (18) equal monthly payments commencing on the 12-month anniversary of the closing. Based on a discount rate of 12%, the fair value of these additional monthly payments is approximately $1,224,846. This liability is included in Notes payable-current and Notes payable-non-current in the accompanying consolidated balance sheets. See Note 13 for additional details.

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


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

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

The accompanying consolidated financial statements include the results of Green Man from the date of acquisition for financial reporting purposes, December 19, 2022. The pro forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2021, are as follows:


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