NOTE

NOTES PAYABLE

Unrelated

August 25, 2020,

the Company borrowed

$153,000

from an unrelated party. The loan is unsecured, bears interest at a rate of

10%

and is due and payable on

August 25, 2021.

The loan

may

not

be prepaid. After

October 29, 2019,

the Company

may

not

repay the loan without the consent of the lender. At any time after

February 21, 2021,

the full value of any unpaid principal is convertible into the Company's common stock at a variable conversion price. The conversion price is equal to: (a) if the market price is greater than or equal to

$1.10,

the greater of (

) the variable conversion price (defined as market price multiplied by

percent) and (

)

$0.72,

and (b) if the market price is less than

$1.10,

the lesser of (

) the variable conversion price and (

)

$0.72.

The Company incurred debt issuance costs of

$3,000

which was recorded as a debt discount. Amortization expense related to the debt discount was

$250

during the year ended

September 30, 2020.

August 2, 2019

the Company secured a

$4,000,000

investment from an unrelated

third

party in the form of a loan. The loan was evidenced by a note which bears interest at the rate of

11%

per year, is due and payable on

August 2, 2022

and is secured by a

first

lien on Building

at the MCC.

The note holder also received a warrant which allows the holder to purchase

600,000

shares of the Company's common stock at a price of

$1.50

per share. The warrant will expire on the earlier of (i)

August 2, 2024

or (ii)

twenty

days after written notice of the holder that the daily Volume Weighted Average Price of the Company's common stock was at least

$4.00

for

twenty

consecutive trading days and the average daily volume of trades of the Company's common stock during the

twenty

trading days was at least

150,000

shares.

The broker for the loan received a cash commission of

$320,000

plus warrants to purchase

48,000

shares of the Company's common stock. The warrants are exercisable at a price of

$1.50

per share and expire on

August 2, 2024.

The cash commission and the fair value of the warrants amounting to

$52,392

were recognized as a discount to the note.

The Company allocated the proceeds between the note and the warrants based on their relative fair values. The relative fair value of the

600,000

warrants was

$562,762

which was recognized as additional paid in capital and a corresponding debt discount.

September 30, 2020,

the outstanding principal on this note was

$4,000,000

and the unamortized debt discount was

$571,483.

All debt discounts are being amortized on a straight-line basis over the terms of the note. Amortization expense related to the debt discounts was

$311,370

for the year ended

September 30, 2020.

December 2017

Convertible Note Offering

December 29, 2017

the Company sold convertible notes in the principal amount of

$800,000

to a group of accredited investors. The notes bear interest at

per year, are unsecured, and were due and payable on

December 31, 2018.

December 31, 2018,

the maturity date of the notes were extended to

December 31, 2019.

The notes were fully paid off in

January 2020.

The original notes included a provision to be converted at any time into shares of the Company's common stock at an initial conversion price of

$1.50

per share.

The note holders also received warrants which entitle the note holders to purchase up to

533,333

shares of the Company's common stock. The warrants are exercisable at a price of

$1.50

per share and expire on

October 17, 2022.

The placement agent for the offering received a cash commission of

$64,000,

plus warrants to purchase

106,667

shares of the Company's common stock. The warrants are exercisable at a price of

$1.50

per share and expire on

December 29, 2022.

The Company allocated the proceeds between the note and the warrants based on their relative fair values. The relative fair value of the

640,000

warrants was

$607,024

which was recognized as additional paid in capital and a corresponding debt discount. After such allocation, the effective conversion price on the issuance date was less than the fair value of the stock into which the notes were convertible, giving rise to a beneficial conversion feature of

$128,976

which was recognized as additional paid in capital and a corresponding debt discount.

The

$64,000

paid to the placement agent was allocated on a pro-rata basis to the warrants and the debt which was recorded as an offset to additional paid in capital and an increase in debt discount of

$48,562

and

$15,438,

respectively.

During

February 2019,

a loan in the principal amount of

$30,000

was converted into

20,000

shares of common stock.

During

May 2018,

a loan in the principal amount of

$575,000

was converted into

383,333

shares of common stock. In addition, interest payable in the amount of

$15,233

was converted into

10,155

shares.

September 30, 2020

and

September 30, 2019,

the outstanding principal on these notes was

and

$195,000,

respectively. All debt discounts are being recognized on a straight-line basis over the terms of the notes. Amortization expense related to the debt discounts were

and

$51,749

for the years ended

September 30, 2020

and

2019,

respectively.

February 2018

Convertible Note Offering

February 12, 2018

the Company sold convertible notes in the principal amount of

$810,000

to a group of accredited investors. The notes bear interest at

per year, are unsecured, and are due and payable on

December 31, 2018.

December 31, 2018,

the notes were extended to mature on

December 31, 2019.

At the option of the note holders, the notes

may

be converted at any time into shares of the Company's common stock at an initial conversion price of

$1.50

per share.

The note holders also received warrants which entitle the note holders to purchase up to

540,000

shares of the Company's common stock. The warrants are exercisable at a price of

$1.50

per share and expire on

October 17, 2022.

The Company allocated the proceeds between the note and the warrants based on their relative fair values. The relative fair value of the

540,000

warrants was

$523,013

which was recognized as additional paid in capital and a corresponding debt discount. After such allocation, the effective conversion price on the issuance date was less than the fair value of the stock into which the note is convertible, giving rise to a beneficial conversion feature of

$286,987

which is recognized as additional paid in capital and a corresponding debt discount.

During

January 2019,

a loan in the amount of

$35,000

was repaid in cash.

October 2018,

a loan in the principal amount of

$45,000

was converted into

30,000

shares of common stock. In addition, interest payable in the amount of

$1,992

was converted into

1,328

shares.

During

July 2018,

loans in the principal amount of

$375,000

were converted into

250,000

shares of common stock. In addition, interest payable in the amount of

$14,704

was converted into

9,802

shares.

May 2019,

loans in the principal amount of

$150,000

were converted into

100,000

shares of common stock. In addition, interest payable in the amount of

$19,521

was converted into

13,014

shares.

April 2019,

loans in the amount of

$15,000

were converted to

10,000

shares of common stock.

A loan in the amount of

$40,000

was repaid in

January 2020.

December 31, 2019,

the remaining outstanding note in the amount of

$150,000

was extended to mature on

December 31, 2020.

September 30, 2020

and

September 30, 2019,

the outstanding principal on these notes was

$150,000

and

190,000,

respectively. All debt discounts are being recognized on a straight-line basis over the terms of the notes. Amortization expense related to the debt discounts were

and

$87,001

for the years ended

September 30, 2020

and

2019,

respectively.

Related Party

SCP.

February 1, 2016,

we entered into an agreement with an unrelated party which provided us with borrowing capacity of

$200,000.

May 1, 2016,

the agreement was amended to increase the borrowing capacity to

$1,000,000.

July 14, 2016,

Strategic Capital Partners (“SCP”) assumed the

$521,297

loan borrowed against this credit line, increasing the total balance owed to SCP to

$2,431,646.

SCP is controlled by Benjamin J. Barton,

one

of our officers and directors and a principal shareholder. The amounts borrowed from SCP were used to fund our operations.

July 14, 2016,

we entered into a debt modification agreement whereby a portion of the debt was converted into common stock and the remaining debt was renegotiated into

two

promissory notes.

Of the amounts owed to SCP,

$500,000

was converted into

400,000

shares of our common stock (

$1.25

conversion rate).

The remaining

$1,756,646

owed to SCP was divided into

two

promissory notes.

The

first

note, in the principal amount of

$1,000,000,

bears interest at

9.5%

per year and matures on

December 31, 2019.

Interest is payable quarterly. The note can be converted at any time, at the option of the lender, into shares of our common stock, initially at a conversion price of

$1.25

per share.

The

second

note, in the principal amount of

$756,646,

bears interest at

per year and matures on

December 31, 2019.

Interest is payable quarterly. The note is

not

convertible into shares of our common stock but is secured by a

first

lien on all amounts due to us by WGP. Any payments received from the sale, lease or commercialization of the property in Denver, and any amounts received from WGP, will be applied to the principal amount of the note. Otherwise, all unpaid principal and interest will be due on

December 31, 2019.

In connection with the debt modification agreement, we issued SCP warrants to purchase

800,000

shares of our common stock, exercisable at a price of

$1.50

per share, and warrants to purchase an additional

800,000

shares of common stock, exercisable at a price of

$3.00

per share. Both sets of warrants expired on

June 30, 2020.

We allocated the relative fair values to the warrants, stock options, and convertible debt, as determined by the Black Scholes option pricing model. Based on the Black Scholes option pricing model, a net debt premium of

$72,651

was allocated to the warrants which are reflected in additional paid-in-capital. The debt premium is being amortized on a straight-line basis over the term of the notes.

September 30, 2019,

both notes were amended and combined into

one

note, in the principal amount of

$1,756,646,

bearing interest of

per year and maturing on

December 31, 2022.

Additionally, the conversion option in the

first

note was eliminated. The new note is secured by all amounts due from WGP or its affiliates. The note holders also received warrants to purchase

1,500,000

shares of the Company's common stock. The warrants are exercisable at a price of

$1.25

per share and expire on

December 31, 2022.

The debt modification was deemed substantial and was accounted for as a debt extinguishment. The fair value of the

1,500,000

warrants was

$977,110

and was recognized as loss on extinguishment of debt and the remaining unamortized premium and discount was written off during the year ended

September 30, 2019.

The Company made principal payments on the note of

$1,175,000

during the year ended

September 30, 2020.

Accrued interest on the note was

$26,246

and

$12,283

September 30, 2020

and

September 30, 2019,

respectively.

September 30, 2020,

the outstanding principal on this note was

$581,646,

and the unamortized debt premium was

$0.

Amortization of debt premium was

and

$25,673

for the years ended

September 30, 2020

and

2019,

respectively.

During the year ended

September 30, 2020,

the Company also incurred

$180,000

of consulting expenses with SCP of which

$65,000

remains outstanding at

September 30, 2020.