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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, ~~2020~~2021

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

For the transitional period from _____________ to ______________

Commission file number 333-189731

DIEGO PELLICER WORLDWIDE, INC.

(Exact name of registrant as specified in its charter)

Delaware		33-1223037
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

6160 Plumas Street, Suite 100, Reno, NV 89519

(Address of principal executive offices) (Zip Code)

(516) 900-3799

(Registrant’s telephone number, including area code)

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

Title of each class registered:		Trading Symbol(s):		Name of each exchange on which registered:
N/A		N/A		N/A

Securities registered pursuant to section 12(g) of the Act:

Common Shares, par value $0.00001 per share

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

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act: Yes o ☐ No x☒

Indicate by check mark whether the registrant (1) has filed all reports required 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 day. Yes x☒ No o ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted ~~pursuant~~ pursuant to Rule 405 of Regulation S-T (Section 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 x☒ No o ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o☐

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for ~~complying~~ complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment. o☐

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

As of June 30, ~~2020~~2021, the aggregate market value of the shares of the registrant’s common equity held by non-affiliates was approximately $17,~~730~~039,~~402~~615, using the June 30, ~~2020~~2021 closing price of the Registrant’s common stock of $0.~~0128~~036/share. Shares of the registrant’s common stock held by each executive officer and director and by each person who beneficially owns 10 percent or more of the registrant’s outstanding common stock have been excluded in that such persons may be deemed to be “affiliates” of the registrant for purposes of the above calculation. This determination of affiliate status is not a conclusive determination for other purposes.

As of ~~March~~April 318, ~~2021~~2022, the registrant had ~~222~~260,~~327~~661,~~908~~ 121 shares issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	3
Item 1A.	Risk Factors	1314
Item 1B.	Unresolved Staff Comments	1314
Item 2.	Properties	1314
Item 3.	Legal Proceedings	1314
Item 4.	Mine Safety Disclosures	1314
PART II
Item 5.	Market For Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	1415
Item 6.	~~Selected Financial Data~~[Reserved]	1617
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1617
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	1920
Item 8.	Financial Statements and Supplementary Data	2021
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	2122
Item 9A.	Controls and Procedures	2122
Item 9B.	Other Information	2223
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	23
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	2324
Item 11.	Executive Compensation	2526
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	2627
Item 13.	Certain Relationships and Related Transactions, and Director Independence	2627
Item 14.	Principal Accountant Fees and Services	2728
PART IV
Item 15.	Exhibits and Financial Statement Schedules	2829

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K (the “Annual Report”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “anticipate,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Annual Report on Form 10-K and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the Annual Report on Form 10-K. All subsequent written and oral forward-looking statements concerning other matters addressed in this Annual Report on Form 10-K and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Annual Report on Form 10-K.

Unless otherwise provided in this Annual Report, references to the “Company,” “Diego,” “we,” “us” and “our” refer to Diego Pellicer Worldwide, Inc.

PART I

Item 1. Business

Overview of the Market

The cannabis market has a multi-billion dollar potential. The industry is still in ~~its~~a ~~infancy~~development stage, and is ~~rapidly~~ being ~~propelled~~rapidly propelled towards its potential by the state legalization and the rush by suppliers to meet the pent-up demand. Most suppliers are small , unsophisticated but capable operators. The federal legal constraints provide an opportunity to those companies early to the market to gain a first mover advantage and to the successful ones, an opportunity to be a consolidator in the industry.

What is Diego’s Strategy, Phases One and Two?

Diego is a real estate and a consumer retail development company that is focused on high quality recurring revenues resulting from leasing real estate to licensed cannabis operators, and the management of operations for these and other third party cannabis operators deriving income from management and royalty fees. Diego provides a competitive advantage to these operators by developing “Diego Pellicer” as the world’s first premium marijuana brand and by establishing the highest quality standards for its facilities and products.

The Company’s first phase strategy is to lease and develop the most prominent and convenient real estate locations for the purposes of leasing them to state licensed operators in the cannabis industry. Diego’s first phase revenues result from leasing real estate and selling non-cannabis related accessories to our tenants. The Company has developed a brand name strategy, providing training, design services, branded accessories, systems and systems training, locational selection, and other advisory services to their tenants. We enter into branding agreements with our tenants. In addition, part of the vetting process in finding the proper tenant is selecting a tenant that shares the Company’s values and strictly complies with respective state laws, follows strict safety and testing requirements and provides consistent, high-quality products. If the tenants do not comply, they will not be allowed to use the brand.

The second phase of our strategy is to secure options to purchase the tenant’s operations. When mutually advantageous for Diego and the tenant, Diego will negotiate acquisition contracts with selected Diego operators/tenants. When it becomes federally legal to do so, Diego will execute the acquisition contracts, consolidate our selected tenants and become a nationally branded marijuana retailer and producer concurrent with the change of federal law.

Diego Pellicer Management Company, a wholly owned subsidiary, will license the upscale Diego Pellicer (“DP”) brand to qualified operators and receive royalty payments, while providing expertise in retail, product and manufacturing from Diego’s management team.

Value Proposition

Value Proposition 1:

By providing branding, management experience, training, unique accessories, purchasing services, locational experience, standardized design, and experienced construction supervision, the tenant reduces his startup time, reduces cash drain, increases his efficiency, and builds his gross margin. Diego provides the capital for preopening lease costs and tenant improvements. This results in a turnkey retail location for the tenant. Thus, Diego’s real estate, management, consulting and accessory sales are positioned to deliver a premium return on our investment.

Value Proposition 2:

With each lease, Diego negotiates an acquisition contract with selected licensed tenants to acquire their operations. This contract will be executed at Diego’s option, and upon changes to federal law, introduces our second value proposition-ownership of operations.

Revenue Generation and Growth

Diego generates current revenue and stages future revenue streams through the following processes:

●

Acquire target properties to be improved for the growing, processing, distribution, and sale of medical and recreational marijuana, extracts and ancillary products.

●

Build and lease turnkey Retail, Processing and/or Growing facilities.

●

The Company may choose to secure management contracts with other retail and grow facilities to manage the business the “Diego Way.” This will generate additional revenue with which we can further expand our network of stores.

●

Negotiate merger agreements with favored partners that will trigger when marijuana commerce becomes legal federally.

●

Own DP Brands and other intellectual property.

●

Charge reasonable rents and management fees to tenants or operators to recover all build-out, start-up investment plus profit margin, and management expertise over the lease term.

● Sell non-cannabis branded products lines such as apparel and edibles to Diego stores, other retail stores and for wholesale.

●

Create an e-commerce platform selling non-cannabis branded merchandise

●

Continue to build and market the brand utilizing all forms of media including traditional and digital media, social media, e-commerce, and strategic partners.

Why We Believe this is a Winning Strategy

Should the United States and countries around the world legalize the commerce of marijuana, Diego is positioning itself to be a dominate player in the marijuana marketplace. Diego will accomplish this by being a fully integrated marijuana retail operation and premium brand, capitalizing on the beautifully designed retail stores offering the finest quality products at competitive prices.

Most industries evolve through the same business cycle. Many small independent companies initially operate in fragmented markets in the early stages. Then there is a consolidation of the industry, with the consolidators thriving and the independent companies dwindling. The larger companies have access to cheaper capital, lower costs, better merchandising, brand name recognition, and more efficient operations. This is what we offer our tenants when negotiating the lease: an agreement to acquire them when marijuana is legalized. This gives the tenant the ultimate opportunity to participate in the rapid consolidation that we believe will happen when marijuana is legalized. This consolidation will result in companies that have been unable to participate in the rapidly growing industry to be scrambling to enter the space. Diego and its tenants will already be established and consolidated. As an exit strategy, we want to position Diego to be a likely candidate for acquisition or a major player in the marketplace.

Recent Developments

~~2020 was~~2021 was a time of continued growth and a change of focus for the Company. An effective and experienced team was assembled from within our operators to develop our management company, and to complement the current executives with knowledge and experience in real estate operations, banking, site selection, branding, marketing, facility design, corporate finance, investor relations, store management, and grow expertise, Additional capital needed to be raised in order to have sufficient capital to help support our operators expand within their markets, and to begin the expansion into different markets in the US. Much of the Company’s debt is being renegotiated, and additional commitments were formalized for the expansion in the Colorado market. New markets had to be explored, new alliances forged, and opportunities prioritized.

New markets were explored. Three facilities continued to see ~~year~~solid ~~upon year increases in~~ revenues, which lead to ~~increased~~ rental revenue cash-flow to the Company. In ~~2020~~2021, Diego focused on our Colorado operations, ~~and divested itself from one of the grow facilities~~ in Denver ~~Colorado to conserve cash and secured all the future rent due under the sublease agreement~~. Diego received revenues from ~~three~~the Colorado facilities, and ~~continued to~~received ~~receive~~ revenues from ~~the~~a divested leased property in 2020. Diego now ~~had~~has ~~three~~two facilities generating rent in 2021 ~~2020 for the year~~ and we have actively been expanding in the Colorado markets with potential acquisitions for our tenants, and our management company. ~~The~~Although our tenants ~~growing~~ continue to strengthen their presence in the marketplace, post COVID-19 sales ~~and~~have ~~improving~~tapered ~~operational~~off ~~efficiency~~slightly as the general workforce returns to work. Diego worked with these tenants, partially forbearing on their rent so as to allow these operators to strengthen their position and become capable of paying full rents. The properties generating rents in ~~2020~~2021 are as follows:

Table 1: Property Portfolio

Purpose	Size	~~Size~~	City	State	~~City~~	~~State~~
Retail store (recreational and medical)	3,300 sq.	~~3,300 sq.~~	Denver	CO	~~Denver~~	CO
Cultivation warehouse -Terminated		18,600 sq.			Denver	CO
Cultivation warehouse	14,800 sq.		Denver	CO
Cultivation warehouse		14,800 sq.			Denver	CO

Diego’s Denver Colorado tenant opened our first grow store in Seattle in October 2016. On October 21 2020, the Company entered into an agreement with a third party, to which the Company sold the Elizabeth Street leased location operation securing all the future premium rents due under the extended lease agreement The Colorado tenant opened the Diego Denver branded grow facility in February 2017. The retail facilities have shown steady growth in sales since their opening. The three Colorado properties were subleased to a single entity. The Company is currently is exploring the acquisition of ~~this~~other ~~entity~~entities to increase cash flow and value for the company.

Diego Pellicer Denver

Diego will continue this strategy in states where recreational or medical marijuana sales and cultivation is legal under state law. Our business model is recurring lease revenue, royalties, management fees, and is entirely scalable. Our success will dependent upon continuing to raise capital for expansion, continual improvement of our business model, standardizing store design, controlling costs, new store management opportunities, and continuing to develop the brand.

~~COVID-19~~On February 8, 2022, the Company entered into an Equity Purchase Agreement (the “Purchase Agreement”), with Hemp Choice Distribution, LLC, a Colorado limited liability company (“HCD”), its owners (the “Sellers”), and Gabriela Vergara (the “Sellers’ Representative”), pursuant to which we have agreed to acquire all of the issued and outstanding equity interests of HCD (“Membership Interests”). The closing of the transaction is expected to occur within 90 days from the date of the Purchase Agreement (the “Closing”).

OnThe ~~January~~purchase ~~30,~~price ~~2020~~for the Membership Interests shall be the aggregate amount of $4,400,000 payable at the ~~World~~Closing ~~Health~~as ~~Organization~~ follows: (~~“WHO”~~i) ~~announced~~$250,000 ain ~~global~~cash ~~health~~by ~~emergency~~wire intransfer of ~~response~~immediately toavailable afunds; ~~new~~(ii) ~~strain~~the number of arestricted ~~coronavirus~~shares (of the ~~“COVID-19~~Company’s ~~outbreak”). In~~common ~~March~~stock ~~2020~~that is equal to $250,000 divided by the ~~WHO~~current ~~classified~~market ~~the~~price ~~COVID-19~~at ~~outbreak~~the astime aof ~~pandemic~~Closing, ~~based~~but onsuch ~~the~~price ~~rapid~~shall ~~increase~~not inbe ~~exposure~~greater ~~globally~~than $.05 ~~The~~per ~~full~~share ~~impact~~or less than of$.02 ~~the~~per ~~COVID-19~~share: ~~outbreak~~and ~~continues~~(iii) tothree ~~evolve~~million asnine ofhundred thousand dollars ($3,900,000) in the ~~date~~form of ~~this~~390,000 ~~report.~~shares ~~Management~~of isredeemable preferred ~~actively~~stock ~~monitoring~~(with ~~the~~a ~~global~~stated ~~situation~~value ~~and its~~of ~~effects~~$10.00 onper share) of the Company’s. ~~industry,~~The ~~financial~~terms ~~condition,~~of ~~liquidity,~~the redeemable preferred shares shall be specifically and ~~operations.~~fully ~~Given~~set ~~the~~forth ~~daily~~in ~~evolution~~a Certificate of ~~the~~Designations ~~COVID-19 outbreak~~to ~~and~~be filed with the ~~global~~State ~~responses~~of toDelaware ~~curb~~at ~~its~~the ~~spread,~~time of Closing. After the ~~Company~~Closing, isthe ~~not~~Purchaser ~~able~~agrees to ~~estimate~~provide ~~the~~HCD ~~effects~~with a line of ~~the~~credit ~~COVID-19~~or ~~outbreak~~assist onit ~~its~~in obtaining a line of credit from a ~~results~~third party of ~~operations~~up to $1,000,000. ~~financial~~In ~~condition~~addition, orthe ~~liquidity~~business ~~for~~of ~~fiscal~~HCD ~~year~~shall ~~2021.~~continue ~~However,~~to ifbe ~~the~~managed ~~pandemic~~by ~~continues,~~Sellers’ itRepresentative subject ~~may~~to ~~have~~the aconditions ~~material adverse~~of ~~effect~~an onemployment ~~the~~agreement ~~Company’s~~to ~~results~~be ofentered ~~future~~into ~~operations,~~by ~~financial~~the ~~position,~~Company and ~~liquidity~~Sellers’ inRepresentative ~~fiscal~~prior to ~~year~~the ~~2021~~Closing.

What does our premium branding accomplish?

A very important aspect of our marketing plan is to build Diego Pellicer as a luxury brand. This not only enables us to establish a premium brand, but also to generate significant revenues from non- cannabis products.

The Company is establishing several levels of branding and will use these to appeal to the various segments of the marketplace depending upon the location, competition, legal constraints, and budget. Standard store templates are being developed, complimentary accessories selectively designed, and customer preferences and segments analyzed.

Our ~~Seattle and~~ Denver stores have been met with enthusiastic demand and quickly growing revenues ~~quickly~~. This is proving the initial Diego concept.

The Industry: Retail Sales Continue to Rise ~~Rapidly~~

Legalization of marijuana is a very recent movement. California was the first to legalize in 1996 when medical marijuana was approved. Eleven ~~states~~ states and the District of Columbia have legalized the drug for recreational purposes, according to the National Conference of State Legislatures. More than half the states (36) – plus the District of Columbia, Guam and Puerto Rico – have legalized it for medical purposes. The list of states that have legalized marijuana could expand this November. ~~Voters in Michigan and North Dakota will decide whether to allow recreational use.~~ Marijuana remains illegal under U.S. federal law.

Source: 2021 Marijuana Business Daily, a division of Anne Holland Ventures Inc.

~~The~~Source: ~~growth~~2021 inMarijuana ~~public~~Business ~~support~~Daily, ~~for legal marijuana comes as~~ a ~~growing~~division ~~number~~ of ~~states~~Anne ~~have~~Holland ~~legalized~~Ventures ~~the~~Inc, ~~drug~~National ~~for~~Institutes ~~medical~~of ~~or recreational purposes in recent years.~~Health,

~~About~~New ~~7-in-ten~~Leaf ~~Americans~~Data ~~(74%) say the use of marijuana should be legalized~~Services, ~~reflecting a steady increase over the past decade~~LLC, ~~according~~Cigar ~~to a~~Association ~~new Pew Research Center survey. The share~~ of ~~U.S.~~America, ~~adults who support marijuana legalization has changed from about a year ago – when 62% favored it – but it is more than double what it was in 2000 (31%)~~Inc.

The growth in public support for legal marijuana and hemp derived CBD comes as a growing number of states have legalized the drug for medical or recreational purposes in recent years.

About 7-in-10 Americans (74%) say the use of marijuana should be legalized, reflecting a steady increase over the past decade, according to a new Pew Research Center survey. The share of U.S. adults who support marijuana legalization has changed from about 2 years ago – when 62% favored it – but it is more than double what it was in 2000 (31%).

As in the past, there are wide generational and partisan differences in views of marijuana legalization. Majorities of Millennials (74%), Gen Xers (63%) and Baby Boomers (54%) say the use of marijuana should be legal. Members of the Silent Generation continue to be the least supportive of legalization (39%), but they have become more supportive in the past year.

Source: Pew Research Center

Annual cannabis retail sales continue to grow year-over-year as new markets emerge and more states legalize medical and recreational marijuana. Sales in 2024 are projected to increase to over $30 billion

By 2024, annual retail marijuana sales in the United States could top $3540 billion, which would represent more than a ~~260~~30% increase ~~from~~ from 2019.

Source: 2021 ~~2020~~ Marijuana Business Daily, a division of Anne Holland Ventures Inc.

~~Source:~~The retail and medical marijuana industry brought in an estimated $59.2 - $70 billion of economic impact in 2020 ~~Marijuana~~just ~~Business~~in ~~Daily~~the USA. By 2025, awe ~~division~~expect ofthe ~~Anne~~potential ~~Holland~~for ~~Ventures~~the ~~Inc~~industry to surpass $135 billion in annual economic benefit.

The retail and medical marijuana industry brought in an estimated $39 - $48 billion of economic impact in 2019 just in the USA. By 2024, we expect the potential for the industry to surpass $120 billion in annual economic benefit.

Estimates for economic impact are based on an impact multiplier of 3.5. This means that for every $1 consumers spend at dispensaries or recreational stores, another $2.50 in economic benefit will be created in the cities, states and ultimately the nation.

Here are some of the factors in this overall economic impact:

	●	The launch of new businesses
	●	Hundreds of millions of dollars in state and local taxes
	●	Real estate investments
	●	Visiting tourists spending money to legally consume
	●	Marijuana employees circulating earnings back into the economy

The marijuana labor market has increased about 38% over last year with marijuana industry supporting about 240,000-295,000 employees. A majority of this growth has come from other states legalizing marijuana use over the last few years including California, which is the next market Diego is focusing its attention on for acquisitions, and branding agreements. In 2019, marijuana employment surpassed that of the technology industry of web developers and is fast approaching the number of clergy in the USA.

The continued growth in the cannabis market, including legalizing the growing and retailing of hemp based products, has boosted the rapid growth in employees and retail sales. The industry is expected to add more than 430,000 full-time jobs between now and 2024 with compounding annual growth rates of 22% and should lead to over 575,000 jobs by 2024.

Outside of California, however, sales are expected to continue climbing, bolstered by ongoing growth in mature markets like New Mexico and Arizona, increased patient access in Florida and new Medical Marijuana (MMJ) programs coming online in Maryland and Pennsylvania. The transition to fully regulated, state-licensed MMJ sales in Michigan has caused some short-term instability, but it remains one of the largest medical markets in the country and will likely continue to form the foundation of the MMJ industry for years to come.

As more states continue to legalize medical and recreational marijuana sales, an ever increasing number of adults are introduced, or re-introduced to the product. Continued research into the benefits of Cannabidiol (CBD) derived from both the Marijuana and hemp plants, has catapulted the cannabis industry into the mainstream media. Legal sales of recreational and medical marijuana reached about $1825.62 billion in sales for ~~2020~~2021, about ~~twice~~half that spent on tobacco cigarettes. It is estimated that total demand for cannabis including legally produced product is in excess of $50 - $60 billion

By ~~2024~~2025, we project total retail and medical marijuana sales in the United States will reach approximately $3738.4-45.9 billion annually - more than a threefold increase from estimated annual sales in 2017. Our estimates account for the fact that more states will likely legalize medical or adult-use marijuana in the coming years - though it’s difficult to predict when that will happen and how big those markets will be. Using a range of estimates that incorporate several factors - such as the likelihood of a given state passing a legalization measure, the size of the customer/patient base and time frame for the launch of sales - helps account for this uncertainty. Our approach is refined over time as more information becomes available.

It’s important to point out that the marijuana industry has a big and growing impact on the economy at large as the revenue it generates ripples across a community, city and/ or state - as well as the nation. To understand an industry’s economic impact, traditional macroeconomic multipliers can range anywhere from 10 to 20 times the original dollar spent. Based on new data from other industries, we’ve settled on a standard multiplier of 3.5 for the marijuana industry - a slight revision from last year’s multiplier of four.

In other words, for every $1 consumers/patients spend at dispensaries and rec stores, an additional $2.50 of economic value will be injected into the economy - much of it at the local level.

Source: ~~2020~~2021 Marijuana Business Daily, a division of Anne Holland Ventures Inc. (Note that our goal is to provide conservative, realistic ~~financial~~ financial forecasts that reflect the high degree of uncertainty in the industry. Total cannabis sales in any given calendar year are highly dependent upon progress made - or not made - in each individual state. California is currently the big wild card, as the slow rollout of its statewide regulatory system makes it difficult to get a handle on the exact size of this enormous market. As more information comes to light over time, it could change our estimates for California and, therefore, the industry at large.)

Where are the Greatest Market Opportunities?

All eyes are on California.

That’s the reality for nearly everyone involved in the global marijuana market. Companies around the world - from Europe to Canada to Israel and beyond - want a piece of the California market. But there are plenty of practical ramifications. No other state or federal government in the world has tried to implement such a wide-ranging regulatory system that affects tens of thousands of existing black- and gray-market businesses.

The bottom line: The sheer immensity of the California cannabis market is topped only by its complexity. And that complexity has led to major struggles and big wait times for entrepreneurs looking to tap the California market potential. California’s Marijuana (MJ) regulatory system covers a population of 40 million and includes incentives for existing businesses to transition to the licit tax-paying industry.

There are plenty of other hurdles for existing and future businesses as well, including local license caps from towns and counties that are hesitant to grant permits to any type of cannabis companies. As of early October 2018, only a fraction of local governments had opted to allow recreational use companies to set up shop within their borders, and state business permits are dependent on a company first obtaining local authorization of some sort. Plenty of companies are striving to play by the rules, but they’re often unable to stay in business while doing so because they haven’t been able to find locations that fit all the legal parameters for licensing.

The same is true for thousands of small-scale growers in California, as well as edibles makers, concentrate producers and other plant-touching businesses. One option for such companies, at least for now, is to focus on the medical marijuana market instead of recreational. Far more local governments allow limited medical companies than adult-use businesses. Obtaining such permits could be a stopgap move because, as time goes on, it’s likely that more and more local governments will decide to permit recreational use. Another option could be to pivot into an alternate cannabis sector, such as distribution or testing labs, given that there’s a dearth of both key business types in the state.

Hemp and CBD

Hemp was once prized for making rope. Two hundred years later, the plant still has us tied in knots. From a patchwork of state hemp rules to confusion among cannabis entrepreneurs about the definition of hemp, uncertainty reigns in the hemp industry. Hemp has long been bedeviled by its conflation with marijuana, and the Controlled Substances Act banned its production for decades. That changed in 2014, when the U.S. Farm Bill opened the door for a hemp revival in states willing to experiment (and control) the crop’s return to legal production. The federal government defines hemp as cannabis sativa with a THC content at or below 0.3%.

The Farm Bill set off an explosion of hemp production and experimentation and has given cannabis entrepreneurs new opportunities to grow, sell and buy cannabis in a nonintoxicating form. ~~As of October 2018, hemp production is legal under at least limited circumstances in 41 states.~~ The Farm Bill allows limited interstate commerce for hemp - something still off-limits to marijuana entrepreneurs. ~~And~~Hemp ~~hemp~~ businesses report fewer banking and regulatory headaches ~~(though barriers certainly exist in these areas), compared to their marijuana-producing colleagues~~.

The U.S. hemp experiment is still unfolding. Market conditions vary widely. Though the laws vary from state to state, it is more or less legal to produce hemp in most American states. America is finally getting its staple agriculture back. This can greatly benefit America as it will revolutionize several of its key industries – textiles, biomass, natural gas, building materials among others.

~~The~~Not all U.S. ~~hemp~~states ~~experiment~~use isthe ~~still~~federal ~~unfolding.~~THC ~~Market~~guidelines ~~conditions~~to ~~vary~~define ~~widely~~hemp, and the 0.3% ~~Some~~THC ~~states~~threshold ~~ban~~has ~~all~~little ~~hemp~~basis ~~production;~~in ~~others~~science, meaning ~~allow~~that ~~some~~scientists ~~but~~don’t ~~not all~~agree ~~farmers~~about how much THC a plant needs to ~~grow~~produce ~~it;~~a high when heated and aconsumed. Cannabis ~~handful~~plants have more than 100 cannabinoids, of ~~states~~which ~~invite~~THC ~~all~~is ~~farmers~~only toone, ~~try~~and hemp ~~and~~products ~~even~~with ~~offer~~no todetectable ~~help~~THC ~~market~~can ~~the~~still be ~~crop~~considered ~~and~~psychoactive ~~find~~if ~~companies to~~they ~~process~~contain ~~it.~~cannabinoids Uthat relieve anxiety or depression.S. ~~agriculture~~At ~~authorities~~least ~~consider~~one ~~hemp~~state, ~~legal~~Iowa, explicitly ~~only~~dictates ifthat itcannabidiol is ~~grown~~legal asbut ~~part~~high ofTHC amarijuana ~~state~~is not legal -~~backed~~ ~~pilot~~then ~~project,~~goes soon ~~the~~to ~~USDA~~say it accepts ~~keeps~~cannabidiol nowith ~~records~~a ofTHC limit 10 times higher than the ~~nation’s~~federal ~~nascent~~threshold ~~hemp~~for ~~industry~~legal hemp.

Not all U.S. states use the federal THC guidelines to define hemp, and the 0.3% THC threshold has little basis in science, meaning that scientists don’t agree how much THC a plant needs to produce a high when heated and consumed. Cannabis plants have more than 100 cannabinoids, of which THC is only one, and hemp products with no detectable THC can still be considered psychoactive if they contain cannabinoids that relieve anxiety or depression. At least one state, Iowa, explicitly dictates that cannabidiol is legal but high THC marijuana is not legal - then goes on to say it accepts cannabidiol with a THC limit 10 times higher than the federal threshold for legal hemp.

Still, the 0.3% THC threshold is a useful metric for dividing marijuana from hemp, and it is the standard used in the industry.

Longtime hemp prohibition in the United States has left the industry frozen in time. There is little modern agricultural equipment appropriate for hemp harvesting and processing, and the crop likely won’t match the market share it enjoyed before the Industrial Revolution, when hemp fibers were commonly used in commercial fabrics. Today, hemp’s value comes mostly from its flower, rich in cannabinoids beyond THC. The most valuable as of this report is CBD, a cannabinoid with established therapeutic uses including pain relief and reducing muscle spasms associated with epilepsy or muscular sclerosis.

Hemp Industry Daily estimates that the U.S. market for hemp-derived CBD will hit approximately $~~500~~4.7 ~~million~~billion in ~~2018~~2021, with the potential to to eclipse $36 billion annually by ~~2022~~2024 - a ~~500%~~substantial increase in just ~~four~~a few years.

Expect hemp-derived cannabinoid products low in THC to take increasing market share (and media attention) in the overall cannabis industry.

Source: ~~2018~~2021 Marijuana Business Daily, a division of Anne Holland Ventures Inc.

What Benchmarks could Diego be Measured Against?

Diego was one of the first to the market with a real estate holding and branding business model; however, other companies have since adopted similar strategies. Key differentiators between Diego and its competitors are superior branding, optimized build-out and turnkey grow and retail development, pre-negotiated acquisition contracts, and most importantly a branded management company. Table 4 provides a financial benchmark of other cannabis entities.

Table 4: Financial Benchmark-thousands

	Market Cap at 12/31/2020			Revenue		Cost of Revenue		Gross Margin %			Net Profit (Loss)			For the year ended
General Cannabis Corp. (CANN)	$	54	M	$	7,120	$	5,467		23	%	$	(7,680	)	12/31/2020
Mountain High Acquisitions Corp. (MYHI)		11	M		-		-		N/A			(486	)	3/31/2020
Innovative Industrial Properties, Inc. (IIPR)		4,476	M		116,896		4,952		96	%		65,730		12/31/2020
M J Holdings Inc. (MJNE)		37	M		898		1,188		N/A			(8,272	)	12/31/2019

Status of Federal Law

While marijuana is legal under the laws of several U.S. States, at the present time the concept of “medical marijuana” and “retail marijuana” do not exist under U.S. federal law. The United States Federal Controlled Substance Act classifies marijuana as a Schedule I drug. As defined under U.S. federal law, a Schedule I drug or substance has a high potential for abuse, no accepted medical use in the United States, and a lack of safety for the use of the drug under medical supervision.

The United States Supreme Court has ruled in several cases that the federal government does not violate the federal constitution by regulating and criminalizing cannabis, even for medical purposes. Therefore, federal law criminalizing the use of marijuana pre-empts state laws that legalizes its use for medicinal and recreational purposes.

Attorney General Jeff Sessions’ January 2018 decision to rescind the Cole Memo raised some concerns in the marijuana industry that federal officials may try to interfere with legal cannabis. Those concerns, for the most part, haven’t materialized, but the scare did get many marijuana businesses thinking about the possibility of federal interference and what could be done about it.

The memo was drafted during the Obama administration by former U.S. Deputy Attorney General James Cole in 2013 as a way to minimize the threat of federal crackdowns against legal marijuana businesses. The document essentially instructed federal law enforcement not to interfere with state-licensed marijuana businesses complying with state laws and certain conditions, such as not selling product to minors or into the black market.

While the Cole Memo clearly expressed an Obama administration policy of leaving legal marijuana businesses alone, it was not a legal change - which only Congress can do. Therefore, the Cole Memo technically allowed U.S. attorneys to go after marijuana businesses if they wanted. With the sending of the Cole Memo to the proverbial shredder, U.S. attorneys no longer have guidelines on how to deal with state-licensed marijuana businesses. But in an April 2018 conversation with Republican U.S. Sen. Cory Gardner, President Donald Trump pledged to keep the Department of Justice from interfering with state cannabis laws and, perhaps more significantly, support legislation protecting state-legal marijuana businesses. White House officials later confirmed the president’s policy stance.

The news is being celebrated by advocates working to reform marijuana laws, but many are wary of taking President Trump at his word as nothing has been codified that would prevent him from reversing course.

Several bills have been introduced to Congress seeking to reform federal marijuana laws in different ways, including the removal of cannabis from the list of controlled substances, allowing MJ companies to access traditional banking services and amending the IRS code to more fairly tax cannabis businesses. Similar bills have been introduced in previous sessions of Congress, but none have gained significant traction. This time, however, may be different, as marijuana reform has become a bipartisan issue that has the support of many prominent Democrats and Republicans.

As the Biden administration continues to dive deeper into its policy agenda, cannabis is a topic to watch. Though the administration has been focused on tackling immediate priorities, marijuana is likely to rise to the surface in the near term.

The Current Landscape

President Biden’s views on marijuana legalization—as well as the Democratic Party’s—have evolved over time, as reflected in the 2020 Democratic Party Platform. In it, the party stated it would “decriminalize marijuana use and reschedule it through executive action on the federal level. [It would] support legalization of medical marijuana, and believe[d] states should be able to make their own decisions about recreational use.” Medical marijuana is legal in 36 states, and, since February 2021, when New Jersey passed its own legalization bill, recreational cannabis is legal in 15. states. Additionally, some states such as Mississippi, where recreational use is not legal, have agreed to lessen the penalties for possession, while other states like Illinois are expunging arrests related to marijuana possession. New York Governor Andrew M. Cuomo ~~today~~has signed legislation (S.854-A/A.1248-A) legalizing adult-use cannabis, fulfilling a key component of his 2021 State of the State agenda

With Democrats controlling Congress and the White House, and with the cannabis industry growing ever larger, many expect Congress to soon take up the issue of cannabis in earnest. “Ending the federal marijuana prohibition is necessary to right the wrongs of this failed [War on Drugs] and end decades of harm inflicted on communities of color across the country,” said Senate Majority Leader Chuck Schumer (D-NY), along with Cory Booker (D-NJ) and Ron Wyden (D-OR), in a February 2021 joint statement.

Bipartisan support is swelling. A December 2020 poll found that two-thirds of all Americans, including 51 percent of Republicans, supported a December 2020 bill to federally legalize marijuana. Although the House omitted marijuana legalization in its most recent COVID relief bill, there are three marijuana-related pieces of major legislation that could pass during this congressional term:

The SAFE Banking Act, which provides a path for the financial system with respect to cannabis.
The MORE Act, which addresses some of the societal injustices created by the War on Drugs.
The STATES Act, which protects individuals who comply with state laws regulating marijuana.
All three bills are expected to be re-addressed during this congressional term.

The Biden administration has yet to formally weigh in on or issue an executive order concerning marijuana reform. However, when asked at his confirmation hearing if he thought 2014 Financial Crimes Enforcement Network (FinCEN) guidance should be updated to “set expectation for financial institutions that provide services to cannabis-related industries” and what steps he would take, Deputy Secretary of Treasury nominee Adewale Adeyamo said that he planned to address the issue if confirmed.

What This Means for Business

Organizations of all types should be mindful of the current landscape as it relates to cannabis, given the impact the pending legislation will have on law and rulemaking in the workplace. However, two sectors should pay particularly close attention to action in this space: the investment community and the financial services industry.

Investment Community

Descheduling and decriminalizing marijuana, as well as legalizing it to any degree, would open a larger window of opportunity to list cannabis-related stocks on U.S. exchanges. While providing more legal oversight of the industry would offer the potential for more jobs and revenue by supplying incentive for more people and entities to dive into the industry, it would also open the door for fraud risk. New market entrants should be vetted, as the risk of counterfeit products is high. As they do when deciding to fund any new product or venture, investors should assess their safeguards and risk mitigation framework before diving in.

Financial Services Industry

Banks in particular have long had a complicated relationship with marijuana-related businesses (MRBs). For the most part, MRBs do not have access to the banking industry. They are unable to accept credit cards, deposit revenues, access loans, or write checks to meet payroll or pay taxes, which makes them vulnerable. However, until cannabis is federally legal, financial services will continue to be handled by local providers, such as credit unions, which presents both opportunities and risks. Since regulations vary from state to state, bringing on a MRB client is complex and does not always align with prescribed risk. However, as the $56 billion industry continues to grow, banks must continue to evaluate whether it makes financial sense to consider banking this contradictory industry.

Even if the current administration makes banking MRBs more feasible, financial institutions should still evaluate clients on a case-by-case basis, ensuring compliance is strong at the core. Banks will need to ensure that MRBs—like other high-risk clients—are equipped with the right technology, ample compliance staff training, and clear parameters on risks and red flags. As compliance teams increasingly find their mandates growing and their resources stagnating or shrinking, looking to outsourced financial crimes risk management solutions can also provide some reprieve and support for managing this risk.

Despite movement on the federal marijuana front, organizations of all types should be mindful that the law has not changed yet—and if change does occur at the federal level, consulting with legal counsel and third-party risk experts before engaging in any new sector or product remains advisable.

Source: K2 Integrity New York, NY

Item 1A. Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

Item 1B. Unresolved items

None.

Item 2. Properties

Our principal executive office is located at 6160 Plumas St. Suite 100, Reno NV 89519.

The Company leases real estate to licensed marijuana operators.

The properties generating rents in ~~2020~~2021 and ~~2019~~2020 are as follows:

Purpose	Size	City	State
Retail store (recreational and medical)	3,300 sq.	Denver	CO
Cultivation warehouse – terminated October 2020	18,600 sq.	Denver	CO
Cultivation warehouse	14,800 sq.	Denver	CO
Retail store (recreational and medical) – sold in May 2019	4,500 sq.	Seattle	WA

The Company’s three properties in Denver, CO (one terminated in October 2020) are leased to Royal Asset Management, LLC (“RAM”). RAM opened the Diego Denver branded flagship store in February 2017. This store is known as “Diego Colorado”. The retail facilities have shown steady growth in sales since opening. For the other two properties subleased (one terminated in October 2020), RAM uses these properties for its cultivation facilities in Denver, CO. Production at these facilities began in late 2016. The Company is currently ~~exploring~~in ~~the acquisition~~litigation ofwith ~~this~~RAM ~~entity,~~regarding ~~and~~outstanding ~~the~~amounts ~~parties~~due ~~are~~on inthe ~~negotiations~~leases.

In October 2020, the master lease and sublease associated with the 18,600 sq. cultivation warehouse in Denver were terminated.

Our premises are suitable for our current operations.

Item 3. Legal Proceedings

~~We currently~~On ~~are~~May ~~not~~10, 2021, a ~~party~~lawsuit towas ~~any~~filed ~~material~~against the ~~litigation~~Company, oralong with other ~~material~~defendants, ~~legal~~by ~~proceedings.~~plaintiff ~~From~~Erin ~~time~~Turoff toin ~~time,~~the weDistrict ~~may~~Court, ~~become~~City ~~involved~~and ~~in various~~County ~~lawsuits~~of ~~and~~Denver, ~~legal~~State ~~proceedings~~of Colorado. ~~which~~The ~~arise~~specific inallegations against the ~~ordinary~~Company ~~course~~include ofcivil ~~business.~~theft ~~However,~~and ~~litigation~~civil isconspiracy ~~subject~~and tothe ~~inherent~~plaintiff ~~uncertainties~~is seeking actual and ancompensatory ~~adverse~~damages. ~~result~~No inspecific ~~these~~monetary oramount ~~other~~was ~~matters~~demanded ~~may~~in ~~arise~~the ~~from~~lawsuit. ~~time~~On toJuly ~~time~~8, ~~that~~2021, ~~may~~the ~~harm~~Company ~~our~~filed ~~business.~~an Weanswer to ~~are~~the ~~currently~~complaint, ~~not~~denying ~~aware~~the ~~of any~~allegations. ~~such~~The ~~legal~~Company ~~proceedings~~believes ~~or claims~~ that wethe ~~believe~~suit ~~will~~is ~~have~~without amerit ~~material~~and ~~adverse~~that ~~effect~~the onCompany ~~our~~will ~~business,~~ultimately prevail ~~financial~~in ~~condition~~any ~~or operating results~~litigation.

Other than as listed above. we are currently not aware of any legal proceedings or claims against the Company that we believe will have a material adverse effect on our business, financial condition or operating results.

Item 4. Mine Safety Disclosures

Not applicable.

1314

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The table below sets forth the range of quarterly high and low closing sales prices for its common stock for ~~2020~~2021 and ~~2019~~2020. The quotations below reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions:

	High		Low
Year ended December 31, 2021
First Quarter	$	0.18	$	0.01
Second Quarter	$	0.07	$	0.03
Third Quarter	$	0.04	$	0.01
Fourth Quarter	$	0.02	$	0.01

	High		Low
Year ended December 31, 2020
First Quarter	$	0.01	$	0.01
Second Quarter	$	0.02	$	0.01
Third Quarter	$	0.02	$	0.01
Fourth Quarter	$	0.01	$	0.01

	High		Low
Year ended December 31, 2019
First Quarter	$	0.02	$	0.01
Second Quarter	$	0.03	$	0.01
Third Quarter	$	0.06	$	0.02
Fourth Quarter	$	0.12	$	0.05

Record Holders

As of ~~March~~April 318, ~~2021~~2022, there were approximately ~~204~~ 205 shareholders of record holding a total of ~~222~~260,~~327~~661,~~908~~121 shares of common stock, including shares held in “street name” by banks, brokerage clearing houses, depositories or otherwise in unregistered form. The Company does not know the beneficial owners of such shares, or the number of beneficial holders of such shares.

Dividend Distributions

The Company has not declared any cash dividends since inception and does not anticipate paying any dividends in the foreseeable future. The payment of dividends is within the discretion of the Board of Directors and will depend on the Company’s earnings, capital requirements, financial condition, and other relevant factors. We currently expect to use all available funds to finance the future development and expansion of our business and do not anticipate paying dividends on our common Stock in the foreseeable future.

Penny Stock

Our common stock is considered “penny stock” under the rules the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934. The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ Stock Market System, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the Commission, that:

contains a description of the nature and level of risks in the market for penny stocks in both public offerings and secondary trading;

contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of Securities' laws; contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;

contains a toll-free telephone number for inquiries on disciplinary actions;

defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and

contains such other information and is in such form, including language, type, size and format, as the Commission shall require by rule or regulation.

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with:

bid and offer quotations for the penny stock;

the compensation of the broker-dealer and its salesperson in the transaction;

the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the marker for such stock; and

monthly account statements showing the market value of each penny stock held in the customer's account.

In addition, the penny stock rules that require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgement of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement.

These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.

1415

Related Stockholder Matters

None.

Issuer Purchases of Equity Securities

We made no share repurchases during the year ended December 31, ~~2020~~2021.

Unregistered Sales of Equity Securities and Use of Proceeds

During ~~2020~~ 2021, we issued 395,~~489~~026,~~099~~ 413 shares of common stock upon the conversion of $~~180~~100,~~922~~000 of notes and $146,~~702~~256 of accrued interest.

During ~~2020~~ 2021, we issued 41,~~000~~167,~~000~~826 shares of common stock, valued at $5117,~~200~~915, for services.

During ~~2020~~ 2021, we issued 127,~~219~~635,~~836~~992 shares of common stock, valued at $~~177~~172,~~323~~283, for related party services.

On September ~~June 17~~2, ~~2020~~2021, we issued 4 976,~~939,759~~526 shares of common stock in exchange for 3920,~~048~~000 shares of Series C Convertible Preferred Shares to Geneva.

On September ~~July 20~~8, ~~2020~~2021, we issued 1 2,~~800~~512,~~000~~077 shares of common stock in exchange for 1250,000 shares of Series C Convertible Preferred Shares to Geneva.

On September ~~July 29~~14, ~~2020~~2021, we issued 3 1,~~181~~890,~~818~~909 shares of common stock in exchange for 2030,000 shares of Series C Convertible Preferred Shares to Geneva.

On September ~~August 4~~22, ~~2020~~2021, we issued 2,~~423~~915,~~077~~888 shares of common stock in exchange for 1530,000 shares of Series C Convertible Preferred Shares to Geneva.

On September ~~August 10~~30, ~~2020~~2021, we issued 3 5,~~387~~400,~~097~~418 shares of common stock in exchange for 2049,~~000~~850 shares of Series C Convertible Preferred Shares to Geneva.

On October ~~August 14~~7, ~~2020~~2021, we issued 3 4,~~442~~378,~~623~~947 shares of common stock in exchange for 2040,000 shares of Series C Convertible Preferred Shares to Geneva.

On October ~~August 24~~18, ~~2020~~2021, we issued 2 4,~~570~~378,~~105~~947 shares of common stock in exchange for 1340,~~952~~000 shares of Series C Convertible Preferred Shares to Geneva.

On October ~~September 3~~19, ~~2020~~2021, we issued 3,~~818~~705,~~182~~684 shares of common stock in exchange for 2033,~~000~~850 shares of Series C Convertible Preferred Shares to Geneva.

On September 9, 2020, we issued 3,818,182 shares of common stock in exchange for 20,000 shares of Series C Convertible Preferred Shares to Geneva.

On September 11, 2020, we issued 2,962,500 shares of common stock in exchange for 15,800 shares of Series C Convertible Preferred Shares to Geneva.

On October 15, 2020, we issued 3,841,463 shares of common stock in exchange for 15,000 shares of Series C Convertible Preferred Shares to Geneva.

On October 22, 2020, we issued 4,697,368 shares of common stock in exchange for 17,000 shares of Series C Convertible Preferred Shares to Geneva.

On October 23, 2020, we issued 6,754,054 shares of common stock in exchange for 23,800 shares of Series C Convertible Preferred Shares to Geneva.

In connection with the issuances of the foregoing securities, the Company relied on the exemptions from registration provided by Section 4(a) (2) of, and Rule 506 of Regulation D promulgated under, the Securities Act of 1933, as amended, for transactions not involving a public offering.

1516

Item 6. ~~Selected Financial Data~~[Reserved]

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the results of operations and financial condition for the years ended December 31, ~~2020~~2021 and ~~2019~~ 2020 should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements ~~that~~ that are included elsewhere in this Annual Report. Our discussion includes forward-looking statements based upon current expectations ~~that~~ that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. See “Forward-Looking Statements.”

COVID-19

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency in response to a new strain of a coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. Management is actively monitoring the global situation and its effects on the Company’s industry, financial condition, liquidity, and operations. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for fiscal year 2022. However, if the pandemic continues, it may have a material adverse effect on the Company’s results of future operations, financial position, and liquidity in fiscal year 2022.

Overview

Diego Pellicer Worldwide, Inc. was established on August 26, 2013 to take advantage of growing market for legalized cannabis being made possible by the escalating legislation allowing for the legalization of cannabis operations in the majority of states:

The industry is operating under stringent regulations within the various state jurisdictions. The Company’s primary business plan is twofold: First to lease various properties to licensed operators in these jurisdictions to grow, process and sell cannabis and related products, and the second the Diego Pellicer Management Company, will license the upscale Diego Pellicer brand to qualified operators and receive royalty payments, while providing expertise in retail, product and manufacturing from Diego’s management team. The Company will also provide educational training, compliance consultation, branding, and related accessories to their tenants. These leases and management agreements are expected to provide substantial streams of income. We believe that as laws evolve, it is possible that we will have the opportunity to participate directly in these operations. Accordingly, the Company will selectively negotiate an option on our tenants’ operating company.

Source: Headset & 2020 Marijuana Business Daily, a division of Anne Holland Ventures Inc.

The legalization taking place in other states such as California and Florida present opportunities many times that of Washington and Colorado. The Company is exploring opportunities in Oregon, California and Florida and is getting inquiries from other potential operators in other jurisdictions.

1617

Summary

The Company’s primary business objective is to lease various properties to licensed operators to grow, process and retail cannabis and related products. By developing a premium brand name, building upscale facilities, and providing quality accessories to a market where financing is difficult to obtain, these subleases are designed to provide a substantial stream of income. We believe that as laws evolve, it is possible that we will have the opportunity to participate directly in these operations as well.

~~2018~~2019 was a ~~year~~time of continued growth ~~for~~and ~~Diego~~a ~~Pellicer~~change ~~Worldwide.~~of ~~All~~focus ~~tenants~~for ~~were~~the ~~open~~Company. An effective and ~~generating~~experienced team ~~lease~~was ~~revenue.~~assembled ~~The~~from ~~tenants~~within ~~were~~our ~~showing~~operators ~~steady~~to develop our newly formed management company, and to complement the current executives ~~revenue~~with ~~increases~~knowledge and ~~operating~~experience ~~improvements.~~in ~~The~~real ~~business~~estate ~~model~~operations, ~~was~~banking, ~~being~~site ~~proven.~~selection, ~~The~~branding, ~~brand~~facility ~~name~~design, ~~was~~corporate ~~getting~~finance, investor ~~national~~relations, ~~recognition~~store management, and grow expertise, Additional capital needed to be raised in order to have sufficient capital ~~garnered~~to help support our operators expand within their markets, and to begin the ~~“Most~~expansion ~~Valuable~~into ~~Brand~~different ofmarkets in the ~~Year”~~US. atMuch of the ~~2018~~Company’s ~~National~~debt ~~Cannabis~~was ~~Business~~renegotiated, ~~Awards~~and ~~beating~~additional ~~out~~commitments ~~tough~~were ~~national~~formalized ~~competition~~for the expansion in the Colorado market. ~~including~~New ~~MedMen™~~markets had to be explored, ~~The~~new ~~Clinic~~alliances forged, ~~Lightshade~~and opportunities prioritized. 2020 was a year of strategic alliances and ~~Olio~~developing a strong operating structure that would be used to compliment any new acquisition, and guiding our branded tenants. ~~Diego~~An effective and experienced team was ~~also~~developed ~~honored~~from aswithin our operators to develop our management company. The Company has been working diligently to renegotiate our debt and lower our convertible debt in anticipation of the merger ~~“Best~~and ~~Retail~~acquisition ~~Center”~~phase ~~for~~of the ~~second year~~Company. inThe Company divested itself from a ~~row,~~poor ~~defeating~~performing ~~other~~lease ~~highly~~and ~~regarded~~secured ~~names~~all ~~including~~the ~~LiveWell,~~potential future ~~The~~premium ~~Clinic~~rents from our branded tenant, at the same time as securitizing deferred rents from this tenant in the form of a note with specific short term repayment functions. The ~~Green~~Company ~~Solutions,~~has ~~Euflora~~started ~~and~~numerous ~~Kind~~introductory ~~Love~~discussions with potential acquisitions that would follow one of the key requirements at being additive to our consolidated financial statements.

~~2019~~2021 was a ~~time~~year ofwhere ~~continued~~the ~~growth~~Company ~~and~~took aadvantage ~~change~~ of ~~focus for~~ the ~~Company.~~changes Anin ~~effective~~the ~~and~~continued ~~experienced~~advancement ~~team~~of ~~was~~cannabis ~~assembled~~legalization ~~from~~in ~~within~~the ~~our operators to develop our newly formed management company~~USA, and the togrowth ~~complement~~in the ~~current~~hemp ~~executives~~industry ~~with~~to ~~knowledge~~mid ~~and~~year ~~experience~~pivot inthe ~~real estate~~main ~~operations,~~focus ~~banking,~~of ~~site~~the ~~selection,~~Company ~~branding,~~to ~~facility~~expand ~~design,~~its ~~corporate~~branding ~~finance,~~and ~~investor relations, store~~ management, ~~and grow~~businesses. ~~expertise,~~The ~~Additional~~company ~~capital~~actively ~~needed~~searched tofor beviable ~~raised~~acquisitions in ~~order~~both tothe ~~have~~legal ~~sufficient~~cannabis ~~capital~~and tohemp ~~help~~industries, ~~support~~that ~~our~~would ~~operators~~be ~~expand~~additive ~~within their~~to ~~markets,~~our ~~and~~consolidated tofinancial ~~begin~~statements. ~~the~~The ~~expansion~~Company ~~into~~opened ~~different~~negotiations ~~markets~~with ina ~~the~~company ~~US.~~in ~~Much of~~ the ~~Company’s~~hemp ~~debt~~and ~~was~~CBD ~~renegotiated,~~industry ~~and~~to ~~additional~~acquire ~~commitments~~all ~~were~~their ~~formalized~~operations for ~~the~~a ~~expansion~~combination inof ~~the~~company ~~Colorado~~stock ~~market. New markets had to be explored, new alliances forged,~~ and ~~opportunities prioritized~~cash.

2020 was a year of strategic alliances and developing a strong operating structure that would be used to compliment any new acquisition, and guiding our branded tenants. An effective and experienced team was developed from within our operators to develop our management company. The Company has been working diligently to renegotiate our debt and lower our convertible debt in anticipation of the merger and acquisition phase of the Company. The Company divested itself from a poor performing lease and secured all the potential future premium rents from our branded tenant, at the same time as securitizing deferred rents from this tenant in the form of a note with specific short term repayment functions. The Company has started numerous introductory discussions with potential acquisitions that would follow one of the key requirements at being additive to our consolidated financial statements.

Plans of Operation

Diego is currently exploring opportunities in California, Colorado, Nevada, Florida, Washington and other states. The Company will continue to raise capital to finance that expansion. This should result in increased revenues for the future and increased opportunities into new markets.

~~Going~~Recent ~~Concern Qualification~~Developments

~~The~~On ~~accompanying~~February ~~consolidated~~8, ~~financial~~2022, ~~statements have been prepared assuming that~~ the Company ~~will~~entered ~~continue~~into asan aEquity ~~going~~Purchase ~~concern.~~Agreement ~~The~~(the ~~Company~~“Purchase ~~has~~Agreement”), ~~incurred~~with ~~losses~~Hemp ~~since~~Choice Distribution, ~~inception~~LLC, ~~its~~a ~~current~~Colorado ~~liabilities~~limited ~~exceed~~liability ~~its~~company ~~current assets by $11~~(“HCD”),~~767,522~~ atits ~~December~~owners ~~31,~~(the ~~2020~~“Sellers”), and itGabriela ~~has~~Vergara ~~an accumulated deficit of~~(the ~~$55,110,000~~“Sellers’ ~~at December 31~~Representative”), ~~2020.~~pursuant ~~These~~to ~~factors~~which ~~raise~~the ~~substantial~~Company ~~doubt~~has ~~about~~agreed ~~its~~to ~~ability~~acquire toall ~~continue~~of asthe aissued ~~going~~and ~~concern~~outstanding equity ~~over~~interests ~~the~~of ~~next twelve~~HCD ~~months~~(“Membership Interests”). The ~~financial~~closing ~~statements~~of dothe ~~not~~transaction ~~include~~is ~~any~~expected ~~adjustments~~to ~~that~~occur ~~might~~within ~~result~~90 days from the ~~outcome~~date of ~~this~~the ~~uncertainty~~Purchase Agreement (the “Closing”).

~~Although~~The purchase price for the ~~Company~~Membership ~~has~~Interests ~~been~~shall ~~successful~~be ~~raising~~the ~~additional~~aggregate ~~capital,~~amount ~~there~~of is$4,400,000 nopayable ~~assurance~~at ~~that~~ the ~~company~~Closing ~~will~~as ~~sell~~follows: ~~additional~~(i) ~~shares~~$250,000 ofin ~~stock~~cash orby ~~borrow~~wire ~~additional~~transfer of immediately available funds.; ~~The~~(ii) the number of restricted shares of the Company’s ~~inability~~common tostock ~~raise~~that is ~~additional~~equal ~~cash~~to ~~could~~$250,000 ~~have~~divided aby ~~material~~the ~~adverse~~current ~~effect~~market onprice ~~its~~at ~~financial position,~~the ~~results~~time of ~~operations~~Closing, ~~and~~but ~~its~~such ~~ability~~price toshall ~~continue~~not inbe ~~existence~~greater than $.05 per ~~These~~share ~~financial~~or ~~statements~~less dothan ~~not~~$.02 ~~include~~per ~~any~~share: ~~adjustments that~~and ~~might~~(iii) ~~result~~three ~~from~~million nine hundred thousand dollars ($3,900,000) in the ~~outcome~~form of ~~this~~390,000 shares ~~uncertainty~~of redeemable preferred stock (with a stated value of $10.00 ~~Management~~per ~~believes~~share) ~~that~~of the Company’s. ~~future~~The ~~success~~terms isof ~~dependent~~the ~~upon~~redeemable preferred ~~its~~shares ~~ability~~shall tobe ~~achieve~~specifically ~~profitable~~and ~~operations,~~fully ~~generate~~set ~~cash~~forth ~~from~~in ~~operating~~a ~~activities~~Certificate ~~and~~of ~~obtain~~Designations ~~additional~~to ~~financing.~~be ~~There~~filed iswith nothe ~~assurance~~State of Delaware at the ~~that~~time of Closing. After the ~~Company~~Closing, ~~will~~the beCompany ~~able~~agrees to ~~generate~~provide ~~sufficient~~HCD ~~cash~~with ~~from~~a ~~operations,~~line ~~sell~~of ~~additional~~credit ~~shares~~or assist it in obtaining a line of ~~stock~~credit orfrom ~~borrow~~a ~~additional~~third ~~funds~~party of up to $1,000,000. ~~However~~ In addition, ~~cash~~the ~~generated~~business ~~from~~of ~~lease~~HCD ~~revenues~~shall iscontinue ~~currently~~to ~~exceeding~~be ~~lease~~managed ~~costs,~~by ~~but~~Sellers’ Representative issubject ~~insufficient~~to the conditions of an employment agreement to ~~cover~~be ~~operating~~entered ~~expenses~~into by the Company and Sellers’ Representative prior to the Closing.

1718

RESULTS OF OPERATIONS

Year ended December 31, ~~2020~~2021 compared to year ended December 31, ~~2019~~2020

After rental expense the gross margins on the lease were as follows:

	Year Ended			Year Ended			Increase (Decrease)
	December 31, 2020			December 31, 2019			$			%
	December 31, 2021			December 31, 2020			$			%
Revenues
Net rental revenue	$	1768,~~265,137~~516		$	1,~~646~~265,~~369~~137		$	(~~381~~496,~~232~~621	)		-2339	%
Rental expense		(1624,~~006,581~~619	)		(1,~~189~~006,~~352~~581	)		~~182~~381,~~771~~962			1538	%
Gross profit		~~258~~143,~~556~~897			~~457~~258,~~017~~556			(~~198~~114,~~461~~659	)		-4344	%
General and administrative expenses		1857,~~029,185~~260			21,~~521~~029,~~649~~185			(1171,~~492,464~~925	)		-5917	%
Selling expense		3235,~~940~~486			5232,~~605~~940			~~(19~~2,~~665~~546	)		~~-37~~8	%
Depreciation expense		—			139,595			(139,595	)		-100	%
Loss from operations	$	(748,849	)	$	(803,569	)	$	54,720			7	%
Loss from operations	$	(803,569	)	$	(2,256,832	)	$	1,453,263			64	%

Revenues. For the year ended December 31, ~~2020~~2021 ~~and 2019,~~ the Company leased ~~three~~two facilities to licensees in Colorado. ~~The~~For the year ended December 31, 2020, the company leased three facilities until October 2020. The year ended December 31, 2021 is the beginning of the ~~third~~ fourth year of operations for these licensees. Diego, is no longer forbearing the premium rents contractually due from the tenant as a result of the cost of leasehold improvements, but is still forbearing the deferral of preopening rents. These will become recorded as revenue when the Company considers all the premium rents collectible considering the relative success of the tenant’s ~~operations. These licensees have now had their opening year behind them and are experiencing increasing revenues in the~~ ~~second year of~~ operations. The Company also divested itself from one of the underperforming leaseholds to conserve cash flow and negotiated from the tenant all the future premium rents due through the end of the lease. This is a significant event for the Company. In October 2020 one of the leases and the related sublease was terminated. As a result, total revenue for the year ended December 31, ~~2020~~2021 was $1768,~~265~~516,~~137,~~ as compared to $1,~~646~~265,~~369~~137 for the year ended December 31, ~~2019~~2020, a decrease of $~~381~~496,~~232~~621. The cultivation warehouse lease was extended during 2021 through July 31, 2024.

Gross profit. Rental revenue for the period ended December 31, ~~2020~~2021 decreased over the prior year ended December 31, ~~2019~~2020, resulting in in a gross profit of $~~258~~143,~~556~~897, a decrease of $~~198~~114,~~461~~659 from ~~2019~~2020 gross profit of $~~457~~258,~~017~~556.

General and administrative expense. Our general and administrative expenses for the year ended December 31, ~~2020~~2021 were $1857,~~029~~260,~~185,~~ compared to $21,~~521~~029,~~649~~185 for the year ended December 31, ~~2019~~2020. The decrease of $1171,~~492,464~~925 was largely attributable to a reduction in stock based executive compensation and ~~termination~~a ~~costs~~decrease ~~and~~in professional fees.

Selling expense. Our selling expenses for the year ended December 31, ~~2020~~2021 were $3235,~~940~~486, compared to $5232,~~605~~940 for the year ~~ended~~ ended December 31, ~~2019~~2020. The ~~decline~~increase of $192,~~665~~546 was due to ~~reduction~~increased of services used related to selling and marketing .

	Year Ended			Year Ended			Increase (Decrease)
	December 31, 2020			December 31, 2019			$			%
	December 31, 2021			December 31, 2020			$			%
Other income (expense)
Interest income	$	~~150~~85,~~577~~341		$	~~153~~150,~~782~~577		$	(365,~~205~~236	)		-243	%
Other income		~~236~~46,~~705~~065			—236,705			~~236~~(190,~~705~~640	)		~~100~~-81	%
Interest expense		(1,994,199	)		(3,184,951	)		(1,190,752	)		-37	%
Forgiveness of debt income		56,908			—			56,908			100	%
Lease termination payments		33,851			-			33,851			100	%
Interest expense		(662,721	)		(1,994,199	)		1,331,478			67	%
Gain on sale/termination of lease		55,256			534,649			(479,393	)		-90	%
Lease termination payments		137,434			33,851			103,583			306	%
Extinguishment of debt		(9,387	)		218,196			(227,583	)		-104	%
Gain on termination of lease		—			55,256			(55,256	)		-100	%
Change in derivative liabilities		(670,152	)		1,948,643			(2,618,795	)		-134	%
Extinguishment of debt		330,576			(9,387	)		339,963			3,622	%
Change in value of warrants		491			15,609			(15,118	)		-97	%
Change in derivative liabilities		3,727,226			(670,152	)		4,397,378			656	%
Total other income (loss)	$	(2,196,858	)	$	(314,072	)	$	(1,882,786	)		-600	%
Change in value of warrants		38			491			(453	)		-92	%
Total other income (loss)	$	3,720,867		$	(2,196,858	)	$	5,917,725			269	%

The increase in net other ~~expense~~income resulted primarily from the effects that the changes in market value of the Company’s stock had on the derivative liability associated with our convertible debt, ~~plus~~and apreferred ~~decrease in gain on the sale/termination of leases~~stock, ~~partially~~plus ~~offset by~~ a decrease in interest expense and financing costs of ~~new~~ debt incurred by the Company.

LIQUIDITY AND CAPITAL RESOURCES

	Year Ended			Year Ended			Increase (Decrease)
	December 31, 2020			December 31, 2019			$			%
	December 31, 2021			December 31, 2020			$			%
Net Cash used in operating activities	$	(~~346~~232,~~448~~915	)	$	(1346,~~183,991~~448	)	$	~~837~~113,~~543~~533			7133	%
Net Cash provided by investing activities		—			~~550,000~~—			~~(550,000~~—	)		~~-100~~—	%
Net Cash provided by financing activities		356,866			891,000			(534,134	)		-60	%
Net Cash provided (used) by financing activities		(45,800	)		356,866			(402,666	)		113	%
Net Increase in Cash		10,418			257,009			(246,591	)		-96	%
Net Increase (Decrease) in Cash		(278,715	)		10,418			(289,133	)		-2,775	%
Cash - beginning of year		~~317~~327,~~446~~864			60317,~~437~~446			~~257~~10,~~009~~418
Cash - end of year	$	~~327~~49,~~864~~149		$	~~317~~327,~~446~~864		$	10(278,~~418~~715	)		3-85	%

1819

Operating Activities. For the year ended December 31, ~~2020~~2021, the net cash used of $~~346~~232,~~448~~915 was a decrease over the same period of the ~~prior~~ prior year of $~~837~~113,~~543~~533. The loss from operations after non-cash adjustments ~~decreased~~increased by $~~787~~124,~~651~~079 from the prior year.

Investing Activities. There were no investing activities for the ~~year~~years ended December 31, ~~2020.~~2021 ~~For~~and ~~the year ended December 31, 2019, proceeds from sale of the Seattle lease was $550,000~~2020.

Financing Activities. During the year ended December 31, ~~2020~~2021, we ~~received~~loaned an aggregate of $~~306~~124,~~444~~000 into ~~proceeds~~an ~~from~~entity ~~notes~~and ~~payable~~received ~~and~~repayments of ~~convertible~~principal ~~notes~~of ~~payable and~~$11,200. We received $~~100~~267,000 from the sale of preferred stock. Payments of convertible notes payable was $49200,~~578~~000. During the year ended December 31, ~~2019~~ 2020, we received $~~897~~306,~~725~~444 in proceeds ~~were~~ from notes payable and convertible notes payable and $~~130~~100,000 from the sale of preferred stock. Payments of convertible notes payable was $~~120~~49,~~500 and debt cost was $16,225~~578.

Going Concern Qualification

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred losses since inception, its current liabilities exceed its current assets by $8,372,169 at December 31, 2021, and it has an accumulated deficit of $52,137,982 at December 31, 2021. These factors raise substantial doubt about its ability to continue as a going concern over the next twelve months. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Although the Company has been successful raising additional capital, there is no assurance that the company will sell additional shares of stock or borrow additional funds. The Company’s inability to raise additional cash could have a material adverse effect on its financial position, results of operations, and its ability to continue in existence. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management believes that the Company’s future success is dependent upon its ability to achieve profitable operations, generate cash from operating activities and obtain additional financing. There is no assurance that the Company will be able to generate sufficient cash from operations, sell additional shares of stock or borrow additional funds. However, cash generated from lease revenues is currently exceeding lease costs, but is insufficient to cover operating expenses.

Critical Accounting Policies

Our critical accounting policies are included in Note 2 – “Summary of Significant Accounting Policies” of Notes to Consolidated Financial Statements included in this Annual Report.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Recently Issued Accounting Standards

Our recently issued accounting standards are included in Note 2 – “Summary of Significant Accounting Policies” of Notes to Consolidated Financial Statements included in this Annual Report.

Item 7A. Quantitative and Qualitative Disclosure about Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

1920

Item 8. Financial Statements and Supplementary Data.

Diego Pellicer Worldwide, Inc.

December 31, ~~2020~~2021 and ~~2019~~2020

Index to the Consolidated Financial Statements

Contents		Page(s)
Report of Independent Registered Public Accounting Firm		F-1
Report of Independent Registered Public Accounting Firm (PCAOB ID: 324)		F-1
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets at December 31, 2021 and 2020		F-3
Consolidated Balance Sheets at December 31, 2020 and 2019		F-3
Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020		F-4
Consolidated Statements of Operations for the Years Ended December 31, 2020 and 2019		F-4
Consolidated Statement of Changes In Stockholders’ Deficit for the Years Ended December 31, 2021 and 2020		F-5
Consolidated Statement of Changes In Stockholders’ Deficit for the Years Ended December 31, 2020 and 2019		F-5
Consolidated Statements of Cash Flows for the Year Ended December 31, 2021 and 2020		F-6
Consolidated Statements of Cash Flows for the Year Ended December 31, 2020 and 2019		F-6
Notes to the Consolidated Financial Statements		F-7

2021

Report of Independent Registered Public Accounting Firm

~~To the Shareholders and~~ Board of Directors ~~of Diego~~and ~~Pellicer Worldwide, Inc.~~Shareholders

~~Opinion~~Diego onPellicer ~~the~~Worldwide, ~~financial statements~~Inc.

WeOpinion ~~have~~on ~~audited~~ the ~~accompanying~~Financial consolidated balance sheet of Diego Pellicer Worldwide, Inc. (the “Company”) as of December 31, 2020, and the related consolidated statement of operations, redeemable convertible preferred stock and stockholders’ deficit and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.Statements

We have audited the accompanying consolidated balance sheet of Diego Pellicer Worldwide, Inc. (the “Company”) as of December 31, 2021 and 2020 and the related consolidated statements of operations, redeemable convertible preferred stock and stockholders’ deficit and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the accompanying consolidated financial statements, the Company has suffered recurring losses from operations, generated negative cash flows from operating activities, and has an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. Management’'s plans in regard to these matters are described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on the entity’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“"PCAOB”") and are required to be independent with respect to ~~the~~ Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the ~~consolidated~~ financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over ~~financial~~ financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the ~~Board~~audit ofcommittee ~~Directors~~ and that: (1) relate to accounts or disclosures that ~~are~~ are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

F-1

Valuation of derivative liabilities

Description of the Matter

As disclosed in ~~Notes~~Note 98 ~~and 10~~ to the consolidated financial statements, The Company has issued several convertible notes which are outstanding. The note holders have the right to convert principal and accrued interest outstanding into shares of common stock at a discounted price to the market price of ~~the~~our ~~Company’s~~ common stock. The conversion feature is recognized as an embedded derivative and is valued using a Binomial Option Pricing Model. In addition, ~~The~~as disclosed in Note 9, the Company has issued shares of Series C Convertible Preferred Shares, with an annual accruing dividend, for cash. The preferred shares provide the holder with the opportunity to redeem the shares at various dates. The holders may convert the Series C Shares into Registrant’s common shares, commencing on the 6-month anniversary of the closing at a discount to the public market price. The Company values such liability based on the Binomial Option Pricing Model. Auditing the Company’s valuation of its derivatives is challenging as the Company uses complex valuation methodologies that incorporate significant assumptions which include the discount rate and forecasted volatility of the Company’s common stock price. The valuation includes assumptions about economic and market conditions with uncertain future outcomes.

How We Addressed the Matter in Our Audit

To test the valuation of the derivative liability, our audit procedures included, among others, evaluating the methodologies used in the valuation model and testing the significant assumptions. For example, we compared the forecasted volatility of the Company’s common stock price to its historical volatility. We also assessed the completeness and accuracy of the underlying data. We involved our external valuation specialists to assist in our evaluation of the significant assumptions and methodologies used by the Company. We also evaluated the Company’s financial statement disclosures related to these matters included in Note 98 and 109 to the Consolidated Financial Statements.

Collectability of Amounts Due from Lessees

Description of the Matter

As described in Note 54 to the consolidated financial statements, At December 31, ~~2020~~2021, the Company had amounts outstanding from its sublessee, and the Company subleases two properties in Colorado to Royal Asset Management at December 31, 2021. At December 31, 2021, the outstanding receivables from the subleases approximated $1,200,000 and during ~~2020~~the ~~one~~year ~~customer~~ended December 31, 2021, the Company’s subleases with RAM accounted for 100% of the Company’s revenues. ASC 842 requires the Company to assess the probability of collecting substantially all of the contractual lease payments. If collectability of substantially all of the lease payments through maturity is not probable, all or a portion of the straight-line rent receivable and other lease receivables may be written off, and the rental income recorded during the period would be limited to lesser of the income that would have been recognized if collection were probable, and the lease payments received. Auditing the Company’'s collectability assessment is complex due to the judgment involved in the Company’s determination of the collectability of future lease payments from its operators. The determination involves consideration of experience with the lessee, including the lessee’s payment history, if any, an assessment of the financial strength of the lessees, future contractual rents, and the timing of expected payments.

How We Addressed the Matter in Our Audit

To test the rental income recognized, we performed audit procedures that include, among others, confirming the amounts receivable balance, evaluating the data and assumptions used in determining whether substantially all of the future lease payments were probable based on the lessee’s payment history, underlying collateral and status of repayment. In addition, we tested the completeness and accuracy of the data used in management’s collectability analysis.

Macias Gini & O’Connell LLP

April 1215, ~~2021 We have served as the Company’s auditor since 2019. Irvine, CA 92618~~2022

F-1

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Diego Pellicer Worldwide, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Diego Pellicer Worldwide, Inc. (the “Company”) as of December 31, 2019, and the related consolidated statement of operations, stockholders’ deficit, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

The Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the accompanying consolidated financial statements, the Company has suffered recurring losses from operations, generated negative cash flows from operating activities, and has an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on the entity’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion.

Hall & Company Certified Public Accountants and Consultants, Inc.

We have served as the Company’s auditor since 2019

Irvine, CA ~~June 02, 2020~~CA

F-2

Diego Pellicer Worldwide, Inc. ~~Consolidated Balance Sheets~~

	December 31,			December 31,
	2020			2019
Assets
Current assets:
Cash	$	327,864		$	317,446
Accounts receivable		523,958			391,273
Prepaid expenses		11,275			12,111
Total current assets		863,097			720,830
Other receivables		1,030,422			788,177
Security deposits		90,000			150,000
Right of Use Assets		1,062,592			3,009,163
Total assets	$	3,046,111		$	4,668,170
Liabilities and deficiency in stockholders’ equity
Current liabilities:
Accounts payable	$	526,377		$	514,196
Accrued payable - related parties		1,332,756			1,293,238
Accrued expenses		931,825			587,707
Notes payable - related party		140,958			140,958
Notes payable		133,403			133,403
Convertible notes, net of discount and costs		3,239,274			2,352,530
Derivative liabilities		5,997,865			5,024,321
Lease Liabilities		327,685			676,336
Warrant liabilities		476			967
Total current liabilities		12,630,619			10,723,656
Notes payable - long term		206,444			-
Lease Liabilities, net of current portion		715,488			2,299,152
Total liabilities		13,552,551			13,022,808
Redeemable convertible preferred stock, Series C, par value $.00001 per share; 1,500,000 shares authorized, no shares and 140,000 shares issued and outstanding, net of discount of $0 and $131,250, respectively,		-			8,750
Deficiency in stockholders’ equity:
Preferred stock, Series A and B, par value $.0001 per share; 5,000,000 shares authorized, none issued and outstanding		-			-
Common stock, par value $.000001 per share; 840,000,000 shares authorized, 217,271,495 and 113,926,332 shares issued and outstanding, respectively		216			114
Additional paid-in capital		44,554,119			43,478,139
Stock to be issued		49,225			127,261
Accumulated deficit		(55,110,000	)		(51,968,902	)
Total deficiency in stockholders’ equity		(10,506,440	)		(8,363,388	)
Total liabilities and deficiency in stockholders’ equity	$	3,046,111		$	4,668,170

Consolidated Balance Sheets

	December 31, 2021			December 31, 2020

Assets

Current assets:
Cash	$	49,149		$	327,864
Accounts receivable		598,667			523,958
Notes receivable		112,800			—
Prepaid expenses		—			11,275

Total current assets		760,616			863,097

Other receivables, net		620,781			1,030,422
Security deposits		90,000			90,000
Right of use assets		1,269,113			1,062,592

Total assets	$	2,740,510		$	3,046,111

Liabilities and deficiency in stockholders’ equity

Current liabilities:
Accounts payable	$	441,625		$	526,377
Accrued payable - related parties		1,210,275			1,332,756
Accrued expenses		1,144,521			931,825
Notes payable - related party		140,958			140,958
Notes payable		133,403			133,403
Convertible notes		2,941,274			3,239,274
Derivative liabilities		2,733,803			5,997,865
Lease liabilities		386,488			327,685
Warrant liabilities		438			476

Total current liabilities		9,132,785			12,630,619

Notes payable - long term		150,000			206,444
Lease liabilities, net of current portion		882,976			715,488

Total liabilities		10,165,761			13,552,551

Redeemable convertible preferred stock, Series C, par value $.00001 per share; 1,500,000 shares authorized, no shares issued and outstanding		—			—

Deficiency in stockholders’ equity:

Preferred stock, Series A, par value $.0001 per share; 13,000,000 shares authorized, none issued and outstanding		—			—
Common stock, par value $.000001 per share;
840,000,000 shares authorized, 257,261,121 and 217,271,495 shares issued and outstanding, respectively		256			216
Additional paid-in capital		44,681,028			44,554,119
Stock to be issued		31,447			49,225
Accumulated deficit		(52,137,982	)		(55,110,000	)

Total deficiency in stockholders’ equity		(7,425,251	)		(10,506,440	)

Total liabilities and deficiency in stockholders’ equity	$	2,740,510		$	3,046,111

See Accompanying Notes to Consolidated Financial Statements.

F-3

Diego Pellicer Worldwide, Inc. ~~Consolidated Statements of Operations~~

	Year Ended			Year Ended
	December 31, 2020			December 31, 2019
Revenues
Net rental revenue	$	1,265,137		$	1,646,369
Rental expense		(1,006,581	)		(1,189,352	)
Gross profit		258,556			457,017
Operating expenses:
General and administrative expenses		1,029,185			2,521,649
Selling expense		32,940			52,605
Depreciation expense		-			139,595
Loss from operations		(803,569	)		(2,256,832	)
Other income (expense)
Interest income		150,577			153,782
Other income		236,705			-
Interest expense		(1,994,199	)		(3,184,951	)
Lease termination payments		33,851			-
Gain on sale/termination of lease		55,256			534,649
Extinguishment of debt		(9,387	)		218,196
Change in derivative liabilities		(670,152	)		1,948,643
Change in value of warrants		491			15,609
Total other loss, net		(2,196,858	)		(314,072	)
Provision for taxes		-			-
Net loss		(3,000,427	)		(2,570,904	)
Accrued dividends and accretion of conversion feature
Deemed dividend on preferred stock		(140,671	)		(43,968	)
Net loss attributable to common stockholders	$	(3,141,098	)	$	(2,614,872	)
Loss per share - basic and diluted	$	(0.02	)	$	(0.04	)
Weighted average common shares outstanding - basic and diluted		150,896,077			59,828,096

Consolidated Statements of Operations

	Year Ended December 31, 2021			Year Ended December 31, 2020

Revenues
Net rental revenue	$	768,516		$	1,265,137
Rental expense		(624,619	)		(1,006,581	)
Gross profit		143,897			258,556

Operating expenses:
General and administrative expenses		857,260			1,029,185
Selling expense		35,486			32,940
Loss from operations		(748,849	)		(803,569	)

Other income (expense)
Interest income		85,341			150,577
Other income		46,065			236,705
Forgiveness of debt income		56,908			—
Interest expense		(662,721	)		(1,994,199	)
Lease termination payments		137,434			33,851
Gain on sale/termination of lease		—			55,256
Extinguishment of debt		330,576			(9,387	)
Change in derivative liabilities		3,727,226			(670,152	)
Change in value of warrants		38			491
Total other income (loss), net		3,720,867			(2,196,858	)

Provision for taxes		—			—
Net income (loss)		2,972,018			(3,000,427	)
Deemed dividend on preferred stock		(1,199,910	)		(140,671	)
Net income (loss) attributable to common stockholders	$	1,772,108		$	(3,141,098	)

Income (loss) per share - basic	$	0.01		$	(0.02	)
Income (loss) per share - diluted	$	(0.00	)	$	(0.02	)

Weighted average common shares outstanding - basic		230,016,288			150,896,077
Weighted average common shares outstanding - diluted		1,690,134,958			150,896,077

See Accompanying Notes to Consolidated Financial Statements.

F-4

DIEGO PELLICER WORLDWIDE, INC ~~Consolidated Statements of Stockholders’ Deficit For the Years Ended December 31, 2020 and 2019~~

	Redeemable Convertible
	Preferred Stock						Common Stock					Preferred Stock				Additional			Accumulated			Common Stock
	Shares			Amount			Shares			Amount		Shares		Amount		Paid-in Capital			Deficit			to be issued			Total
Balance - December 31, 2018		-		$	-			28,287,414		$	28		-	$	-	$	40,378,973		$	(49,354,030	)	$	710,838		$	(8,264,191	)
Sale of common stock		-			-			5,000			-		-		-		2,648			-			(2,648	)		-
Issuance of common shares for services		-			-			4,987,610			5		-		-		481,179			-			(310,836	)		170,348
Issuance of common shares for services - related parties		-			-			24,566,400			25		-		-		977,200			-			(245,196	)		732,029
Common stock issued upon conversion of notes payable		-			-			48,684,667			48		-		-		1,583,887			-			(133,018	)		1,450,917
Shares cancelled for convertible note		-			-			(675,759	)		-		-		-		(108,121	)		-			108,121			-
Cashless warrant exercise		-			-			8,071,000			8		-		-		(8	)		-			-			-
Series C preferred stock issued for cash, net of costs and discounts		140,000			-			-			-		-		-		-			-			-			-
Accretion of conversion feature on Series C preferred stock					8,750			-			-		-		-		-			(8,750	)					(8,750	)
Fair value of warrants and options granted for services		-			-			-			-		-		-		162,381			-			-			162,381
Deemed dividends related to conversion feature of Series C preferred stock		-			-			-			-		-		-		-			(35,218	)		-			(35,218	)
Net loss		-			-			-			-		-		-		-			(2,570,904	)		-			(2,570,904	)
Balance - December 31, 2019		140,000			8,750			113,926,332			114		-		-		43,478,139			(51,968,902	)		127,261			(8,363,388	)
Issuance of common shares for services		-			-			4,000,000			4		-		-		51,196			-			2,719			53,919
Issuance of common shares for services - related parties		-			-			12,219,836			13		-		-		177,311			-			(66,772	)		110,552
Common stock issued upon conversion of notes payable		-			-			39,489,099			39		-		-		328,847			-			(13,983	)		314,903
Series C preferred stock issued for cash, net of costs and discounts		111,600			-			-			-		-		-		-			-			-			-
Series C preferred stock converted to common stock		(251,600	)		(89,295	)		47,636,228			46		-		-		432,020			-			-			432,066
Fair value of warrants and options granted for services		-			-			-			-		-		-		86,606			-			-			86,606
Accrued dividends and accretion of conversion feature on Series C preferred stock		-			80,545			-			-		-		-		-			(80,545	)		-			(80,545	)
Deemed dividends related to conversion feature of Series C preferred stock		-			-			-			-		-		-		-			(60,126	)		-			(60,126	)
Net loss		-			-			-			-		-		-		-			(3,000,427	)		-			(3,000,427	)
Balance - December 31, 2020		-			-			217,271,495		$	216		-	$	-	$	44,554,119		$	(55,110,000	)	$	49,225		$	(10,506,440	)

Consolidated Statements of Stockholders’ Deficit

For the Years Ended December 31, 2021 and 2020

	Redeemable Convertible Preferred Stock Shares		Amount			Common Stock Shares	Amount		Preferred Stock Shares	Amount		Additional Paid-in Capital			Accumulated Deficit			Common Stock to be issued			Total
Balance - December 31, 2019	140,000		$	8,750		113,926,332	$	114	—	$	—	$	43,478,139		$	(51,968,902	)	$	127,261		$	(8,363,388	)
Issuance of common shares for services	—			—		4,000,000		4	—		—		51,196			—			2,719			53,919
Issuance of common shares for services - related parties	—			—		12,219,836		13	—		—		177,311			—			(66,772	)		110,552
Common stock issued upon conversion of notes payable	—			—		39,489,099		39	—		—		328,847			—			(13,983	)		314,903
Series C preferred stock issued for cash, net of costs and discounts	111,600			—		—		—	—		—		—			—			—			—
Series C preferred stock converted to common stock	(251,600	)		(89,295	)	47,636,228		46	—		—		432,020			—			—			432,066
Fair value of warrants and options granted for services	—			—		—		—	—		—		86,606			—			—			86,606
Accrued dividends and accretion of conversion feature on Series C preferred stock	—			80,545		—		—	—		—		—			(80,545	)		—			(80,545	)
Deemed dividends related to conversion feature of Series C preferred stock	—			—		—		—	—		—		—			(60,126	)		—			(60,126	)
Net loss	—			—		—		—	—		—		—			(3,000,427	)		—			(3,000,427	)
Balance - December 31, 2020	—			—		217,271,495		216	—		—		44,554,119			(55,110,000	)		49,225			(10,506,440	)
Issuance of common shares for services	—			—		1,167,826		1	—		—		17,914			—			(8,000	)		9,915
Issuance of common shares for services - related parties	—			—		7,635,992		8	—		—		172,275			—			(9,778	)		162,505
Common stock issued upon conversion of notes payable and accrued interest	—			—		5,026,413		5	—		—		705,630			—			—			705,635
Series C preferred stock issued for cash, net of costs and discounts	293,700			—		—		—	—		—		—			—			—			—
Series C preferred stock converted to common stock	(293,700	)		(95,327	)	26,159,396		26	—		—		431,000			—			—			431,026
Accrued dividends and accretion of conversion feature on Series C preferred stock	—			95,327		—		—	—		—		(95,327	)		—			—			(95,327	)
Deemed dividends related to conversion feature of Series C preferred stock	—			—		—		—	—		—		(1,104,583	)		—			—			(1,104,583	)
Net income	—			—		—		—	—		—		—			2,972,018			—			2,972,018
Balance - December 31, 2021	—			—		257,261,122	$	256	—	$	—	$	44,681,028		$	(52,137,982	)	$	31,447		$	(7,425,251	)

See Accompanying Notes to Consolidated Financial Statements.

F-5

Diego Pellicer Worldwide, Inc. ~~Consolidated Statements of Cash Flows~~

	Year Ended			Year Ended
	December 31, 2020			December 31, 2019
Cash flows from operating activities:
Net loss	$	(3,000,427	)	$	(2,570,904	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		-			139,595
Change in fair value of derivative liability		670,152			(1,948,643	)
Change in value of warrants		(491	)		(15,609	)
Amortization of debt related costs		942,601			2,833,612
Noncash finance cost		100,000			-
Expense related to additional derivative liability		584,553			-
Extinguishment of debt		9,387			(218,196	)
Stock-based compensation		192,475			1,014,756
Common stock payable issued for services		44,619			-
Gain on sale/termination of lease		(55,256	)		(534,649	)
Changes in operating assets and liabilities:
Accounts receivable		(132,685	)		(222,414	)
Prepaid expenses		836			42,059
Other assets		(242,243	)		(463,416	)
Security deposits		60,000			-
Accounts payable		12,181			(98,385	)
Accrued liability - related parties		39,518			879,132
Accrued expenses		358,820			294,217
Lease liabilities		69,512			(107,236	)
Contingent liabilities		-			(207,910	)
Cash used in operating activities		(346,448	)		(1,183,991	)
Cash flows from investing activities:
Proceeds from sale of lease		-			550,000
Cash provided by investing activities		-			550,000
Cash flows from financing activities:
Debt costs		-			(16,225	)
Proceeds from notes payable		206,444			-
Net proceeds from convertible notes payable		100,000			897,725
Repayments of convertible notes payable, net		(49,578	)		(120,500	)
Proceeds from sale of preferred stock, net		100,000			130,000
Cash provided by financing activities		356,866			891,000
Net increase in cash		10,418			257,009
Cash, beginning of year		317,446			60,437
Cash, end of year	$	327,864		$	317,446
Cash paid for interest	$	-		$	-
Cash paid for taxes	$	-		$	-
Supplemental schedule of noncash financial activities:
Lease liability related to termination of lease	$	1,325,445			-
Notes converted to stock	$	180,922		$	842,712
Discount related to convertible notes and convertible Preferred C shares	$	214,600		$	905,500
Accrued interest converted to stock	$	14,702		$	60,627
Value of derivative liability extinguished upon conversion of notes and preferred stock and payment of notes	$	530,042		$	891,922
Accounts payable and accrued expenses paid with common stock	$	-		$	50,000
Debt issuance costs deducted from proceeds of notes	$	-		$	16,225
Debt discount extinguished with note conversion	$	53,567		$	-
Debt discount extinguished with note repayment	$	21,075		$	-
Conversion of preferred stock to common stock	$	265,115		$	-
Discount extinguished with preferred stock conversion	$	175,820		$	-
Accrued dividends and accretion of conversion feature	$	80,545		$	-
Deemed dividends related to conversion feature of Series C preferred stock	$	60,126		$	-

Consolidated Statements of Cash Flows

	Year Ended December 31, 2021			Year Ended December 31, 2020

Cash flows from operating activities:
Net income (loss)	$	2,972,018		$	(3,000,427	)
Adjustments to reconcile net income (loss) to net cash used in
operating activities
Change in fair value of derivative liability		(3,727,226	)		670,152
Change in value of warrants		(38	)		(491	)
Amortization of debt related costs		—			942,601
Noncash finance cost		2,000			100,000
Expense related to additional derivative liability		331,844			584,553
Extinguishment of debt		(330,576	)		9,387
Stock-based compensation		172,420			192,475
Common stock payable issued for services		—			44,619
Gain on sale/termination of lease		—			(55,256	)
Forgiveness of debt		(56,908	)		—
Changes in operating assets and liabilities:
Accounts receivable		(74,709	)		(132,685	)
Prepaid expenses		11,275			836
Other assets		409,641			(242,243	)
Security deposits		—			60,000
Accounts payable		(84,752	)		12,181
Accrued liability - related parties		(122,481	)		39,518
Accrued expenses		244,807			358,820
Lease liabilities		19,770			69,512

Cash used in operating activities		(232,915	)		(346,448	)

Cash flows from financing activities:
Notes receivable		(124,000	)		—
Repayments of notes receivable		11,200			—
Proceeds from notes payable		—			206,444
Proceeds from convertible notes payable		—			100,000
Repayments of convertible notes payable, net		(200,000	)		(49,578	)
Proceeds from sale of preferred stock, net		267,000			100,000

Cash (used in) provided by financing activities		(45,800	)		356,866

Net increase (decrease) in cash		(278,715	)		10,418
Cash, beginning of period		327,864			317,446
Cash, end of period	$	49,149		$	327,864

Cash paid for interest	$	70,000		$	—
Cash paid for taxes	$	—		$	—

Supplemental schedule of noncash financial activities:
Notes converted to stock	$	100,000		$	180,922
Conversion of Preferred Stock to Common Stock	$	305,449		$	265,115
Derivative liability related to convertible Preferred C shares	$	1,374,113		$	—
Accrued interest converted to stock	$	6,256		$	14,702
Value of common stock issued for conversion of notes and accrued interest	$	705,635		$	—
Value of common stock issued for conversion of preferred stock and dividends	$	431,026		$	—
Value of derivative liability extinguished upon conversion and pay off of notes and accrued interest	$	904,565		$	177,037
Value of derivative liability extinguished upon conversion of preferred stock and dividends	$	338,228		$	353,005
Debt discount attributable to convertible notes and preferred stock	$	267,000		$	214,600
Accrued interest extinguished with note payment	$	25,390		$	—
Debt discount extinguished with note conversion	$	—		$	53,567
Debt discount extinguished with note repayment	$	—		$	21,075
Discount extinguished with preferred stock conversion	$	210,123		$	175,820
Accrued dividends and accretion of conversion feature on Series C preferred stock	$	95,327		$	80,545
Deemed dividends related to conversion feature of Series C preferred stock	$	1,104,583		$	60,126
Lease liability related to termination of lease	$	—		$	1,325,445

See Accompanying Notes to Consolidated Financial Statements.

F-6

Diego Pellicer Worldwide, Inc.

December 31, ~~2020~~2021 and ~~2019~~2020

Notes to the Consolidated Financial Statements

Note 1 – Organization and Operations

History

On March 13, 2015, Diego Pellicer Worldwide, Inc. (the Company) (f/k/a Type 1 Media, Inc.) closed on a merger and share exchange agreement by and among (i) the Company, and (ii) Diego Pellicer World-wide 1, Inc., a Delaware corporation, (“Diego”), and (iii) Jonathan White, the majority shareholder of the Company. Diego was merged with and into the Company with the Company to continue as the surviving corporation in the merger.

Business Operations

The Company leases real estate to licensed marijuana operators, providing complete turnkey growing space, processing space, recreational and medical retail sales space and related facilities to licensed marijuana growers, processors, dispensary and recreational store operators. Additionally, the Company plans to explore ancillary opportunities in the regulated marijuana industry, as well as offering for wholesale distribution branded non-marijuana clothing and accessories.

The properties generating rents in ~~2020~~2021 and ~~2019~~2020 are as follows:

Purpose	Size	City	State
Retail store (recreational and medical)	3,300 sq.	Denver	CO
Cultivation warehouse – terminated October 2020	18,600 sq.	Denver	CO
Cultivation warehouse	14,800 sq.	Denver	CO
Retail store (recreational and medical) – sold in May 2019	4,500 sq.	Seattle	WA

The Company’s three properties in Denver, CO (one terminated in October 2020) are leased to Royal Asset Management, LLC (“RAM”). RAM opened the Diego Denver branded flagship store in February 2017. This store is known as “Diego Colorado”. The retail facilities have shown steady growth in sales since opening. For the other two properties subleased (one terminated in October 2020), RAM uses these properties for its cultivation facilities in Denver, CO. Production at these facilities began in late 2016. On ~~The~~July 27, 2021, the Company isfiled ~~currently~~a lawsuit against Royal Asset Management, LLC (“RAM”) and Neil Demers (“Demers”) ~~exploring~~in the ~~acquisition~~District Court, City and County of ~~this~~Denver, ~~entity~~State of Colorado, ~~and~~alleging breach of contract on four subleases for which RAM has failed to make the ~~parties~~required ~~are~~payments into ~~negotiations~~the Company pursuant to the respective sublease agreements (see Note 54).

In ~~regards~~August ~~to the Seattle property~~2021, ~~on May 6, 2019~~ the ~~Company~~master ~~entered~~lease ~~into~~and ansublease ~~agreement~~associated with athe ~~third party~~14,800 ~~and~~sq. ~~sold~~cultivation ~~the~~warehouse ~~Seattle~~were ~~leased location.~~extended ~~The~~through ~~sale~~July ~~provided $550~~31,~~000~~ 2024 in(see ~~capital~~Note ~~and executive resources for possible expansion and working capital purposes~~10).

In October 2020, the master lease and sublease associated with the 18,600 sq. cultivation warehouse ~~in Denver~~ were terminated (see Note 5 4).

Note 2 – Significant and Critical Accounting Policies and Practices

The management of the Company is responsible for the selection and use of appropriate accounting policies and for the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results of operations and that require management’s most difficult, subjective, or complex judgments, often because of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below, as required by generally accepted accounting principles.

Basis of Presentation

The accompanying consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and presented in accordance with accounting principles generally accepted in the United States of America (US GAAP).

Principles of Consolidation

The financial statements include the accounts of Diego Pellicer Worldwide, Inc., and its wholly-owned subsidiary Diego Pellicer World-wide 1, Inc. Intercompany balances and transactions have been eliminated in consolidation.

F-7

Use of Estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. These estimates and assumptions include valuing equity securities and derivative financial instruments issued in financing transactions and share based payment arrangements, the collectability of accounts receivable and other receivables (~~See~~see Note 54), valuation of right of use assets and lease liabilities and deferred taxes and related valuation allowances.

Certain estimates, including evaluating the collectability of accounts receivable, could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could influence our estimates and could cause actual results to differ from our estimates. The Company intends to re-evaluate all its accounting estimates at least quarterly based on these conditions and record adjustments when necessary.

F-7

Accounts Receivable

Accounts receivable consist of rents receivable from the Company’s sublessee as disclosed in Note 4. Management periodically assesses the Company’s accounts receivable and, if necessary, establishes an allowance for estimated uncollectible amounts. Accounts determined to be uncollectible are charged to operations when that determination is made. The Company usually does not require collateral. We have not recorded an allowance for doubtful accounts as of December 31, 2021 and 2020.

Fair Value Measurements

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Fair Value of Financial Instruments

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, ~~2020~~ 2021 and December 31, ~~2019~~2020. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, accounts receivable, prepaid expenses, ~~and~~note receivable, accounts payable and notes payable. Fair values were assumed to approximate carrying values for cash, ~~and~~receivables, notes receivable, payables and notes payable because they are short term in nature and their carrying amounts approximate fair values or they are payable on on demand.

The following table reflects assets and liabilities that are measured at fair value on a recurring basis (in thousands):

As of December 31, 2020	Fair Value Measurement Using
As of December 31, 2021	Fair Value Measurement Using
	Level 1		Level 2		Level 3		Total
Derivative liabilities	$	—	$	—	$	52,~~998~~734	$	52,~~998~~734
Stock warrant liabilities		—		—		1		1
	$	—	$	—	$	5,999	$	5,999
total	$	—	$	—	$	2,735	$	2,735

As of December 31, 2019	Fair Value Measurement Using
As of December 31, 2020	Fair Value Measurement Using
	Level 1		Level 2		Level 3		Total
Derivative Liabilities	$	—	$	—	$	5,~~024~~998	$	5,~~024~~998
Stock warrant Liabilities		—		—		1		1
	$	—	$	—	$	5,025	$	5,025
Total	$	—	$	—	$	5,999	$	5,999

Derivative ~~liabilities~~ liabilities and stock warrant liabilities were valued using the Binomial Option Pricing Model in calculating the embedded conversion features for the years ended December 31, ~~2020~~2021 and ~~2019~~2020.

Cash

The Company maintains cash balances at various financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation, and the National Credit Union Share Insurance Fund, up to $250,000. The Company’s accounts at these institutions may, at times, exceed the federal insured limits. The Company has not experienced any losses in such accounts. Uninsured balances were approximately $~~73,000~~0 and $6373,000 at December 31, ~~2020~~2021 and ~~2019~~2020, respectively.

F-8

Revenue recognition

In accordance with ASC 842, Leases, the Company recognizes rent income on a straight-line basis over the lease term to the extent that collection is considered probable. As a result, the Company has been recognizing rents as they become payable.

During the initial term of the lease, management has a policy of partial rent forbearance when the tenant first opens the facility to assure that the tenant has the opportunity for success. Management may be required to exercise considerable judgment in estimating revenue to be recognized.

When management concludes that the Company is the owner of tenant improvements, the Company records the cost to construct the tenant improvements as a capital asset. In addition, the Company records the cost of certain tenant improvements paid for or reimbursed by tenants as capital assets when management concludes that the Company is the owner of such tenant improvements. For these tenant improvements, the Company records the amount funded or reimbursed by tenants as deferred revenue, which is amortized as additional rental income over the term of the related lease. When management concludes that the tenant is the owner of tenant improvements for accounting purposes, we record the Company’s contribution towards those improvements as a lease incentive, which is amortized as a reduction to rental revenue on a straight-line basis over the term of the lease.

The Company has adopted the new revenue recognition guidelines in accordance with ASC 606, Revenue from Contracts with Customers (ASC 606), commencing from January 1, 2019. The adoption of ASC 606 did not have a material impact on the financial statements and related disclosures since the Company is primarily a lessor for revenue purposes and recognizes rent income under ASC 842, Leases. F-8

The Company analyzes its contracts to assess that they are within the scope and in accordance with ASC 606. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under each of its agreements, whether for goods and services or licensing, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

Advertising

During the years ended December 31, ~~2020~~2021 and ~~2019~~2020, advertising expense was $3235,~~940~~486 and $5232,~~605~~940, respectively.

Income Taxes

Income taxes are provided for using the liability method of accounting in accordance with the Income Taxes Topic of the FASB ASC. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized and when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The computation of limitations relating to the amount of such tax assets, and the determination of appropriate valuation allowances relating to the realizing of such assets, are inherently complex and require the exercise of judgment. As additional information becomes available, the Company continually assesses the carrying value of their net deferred tax assets.

Common Stock Purchase Warrants and Other Derivative Financial Instruments

The Company classifies as equity any contracts that require physical settlement or net-share settlement or provide us a choice of net cash settlement or settlement in our own shares (physical settlement or net-share settlement) provided that such contracts are indexed to our own stock as defined in ASC Topic 815-40 “Contracts in Entity’s Own Equity.” The Company classifies as assets or liabilities any contracts that require net-cash settlement including a requirement to net cash settle the contract if an event occurs and if that event is outside our control or give the counterparty a choice of net-cash settlement or settlement in shares. The Company assesses classification of its common stock purchase warrants and other free-standing derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required.

Stock-Based Compensation

The Company recognizes compensation expense for stock-based compensation in accordance with ASC Topic 718. The Company calculates the fair value of the award on the date of grant using the Black-Scholes method for stock options and the quoted price of our common stock for common shares; the expense is recognized over the service period for awards expected to vest. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. The Company considers many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience.

F-9

Income (loss) per common share

The Company utilizes ASC 260, “Earnings per Share” for calculating the basic and diluted loss per share. In accordance with ASC 260, the basic and diluted loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted net loss per share is computed similar to basic loss per share except that the denominator is adjusted for the potential dilution that could occur if stock options, warrants, and other convertible securities were exercised or converted into common stock. Potentially dilutive securities are not included in the calculation of the diluted loss per share if their effect would be anti-dilutive. The Company has 880,952,637 and 1,462,069,888 ~~and 631,737,597~~ common stock equivalents at December 31, ~~2020~~2021 and ~~2019~~2020, respectively. For the ~~years~~year ended December 31, 2020, ~~and~~the ~~2019~~1,462,069,888 ~~these~~ potential shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would reduce net loss per share. There are 840,000,000 shares authorized resulting in ~~839~~298,~~341~~213,~~383~~758 insufficient shares as of December 31, ~~2020~~2021.

Diluted loss per share for the year ended December 31, 2021 is calculated as follows:

	Year ended December 31, 2021
Net income attributable to common shareholders	$	1,772,108
Income attributable to convertible instruments		(4,057,802	)
Expense and deemed dividend attributable to convertible instruments		729,875

Diluted loss attributable to common shareholders	$	(1,555,819	)

Basic shares outstanding		230,016,288
Convertible instruments		1,460,118,670

Diluted shares outstanding		1,690,134,958

Diluted loss per share	$	(0.00	)

F-9

Legal and regulatory environment

The cannabis industry is subject to numerous laws and regulations of federal, state and local governments. These laws and regulations include, but are not limited to, matters such as licensure, accreditation, and different taxation between federal and state. Federal government activity may increase in the future with respect to companies involved in the cannabis industry concerning possible violations of federal statutes and regulations.

Management believes that the Company is in compliance with local, state and federal regulations and, while no regulatory inquiries have been made, compliance with such laws and regulations can be subject to future government review and interpretation, as well as regulatory actions unknown or unasserted at this time.

Recent accounting pronouncements.

The Company believes recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented.

Note 3 – Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred losses since inception, its current liabilities exceed its current assets by $118,~~767~~372,~~522~~169 at December 31, ~~2020~~2021, and it has an accumulated deficit of $5552,~~110~~137,~~000~~ 982 at December 31, ~~2020~~2021. These factors raise substantial doubt about its ability to continue as a going concern over the next twelve months. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company believes that it has sufficient cash on hand and cash generated by real estate leases to sustain operations provided that management and board members continue to agree to be paid company stock in exchange for accrued compensation. There are other future noncash charges in connection with financings such as a change in derivative liability that will affect income but have no effect on cash flow.

Note 4 – ~~Property~~ Accounts Receivables and ~~Equipment~~Other Receivables

OnAs disclosed ~~May~~in 6,Note ~~2019~~1, the Company ~~entered~~subleases ~~into~~two anproperties ~~agreement~~in ~~with~~Colorado ato ~~third~~Royal ~~party,~~Asset byManagement ~~which~~at ~~the~~December ~~Company~~31, ~~sold~~2021. ~~the~~At ~~Seattle~~December 31, ~~leased~~2021 ~~location~~and ~~for $550~~2020,~~000~~ inthe ~~cash. The~~ Company ~~plans~~had tooutstanding ~~allocate~~receivables ~~its~~from ~~efforts~~the tosubleases ~~new~~totaling ~~locations~~$598,667 and ~~cannabis~~$523,958, ~~grow~~respectively, ~~facilities~~and during inthe ~~Colorado.~~years Inended ~~connection~~December ~~with~~31, ~~the~~2021 ~~sale,~~and ~~fully~~2020 ~~amortized leasehold~~the ~~improvements~~Company’s subleases with aRAM ~~historical~~accounted ~~cost~~for 100% of ~~$566,830~~the ~~were sold~~Company’s revenues.

~~During~~In addition to the ~~years~~receivables ~~ended~~from the subleases, the Company has agreed to provide RAM and affiliates of RAM up to an aggregate ~~December~~amount of $1,030,000 in financing. These notes accrue interest at the rates ranging from 12% to 18% per annum. As of December 31, ~~2020~~2021 and ~~2019~~2020, the ~~Company~~outstanding ~~recorded~~balance ~~depreciation~~of ~~expense~~these notes receivable total $620,781 and $1,030,422, respectively, including accrued interest of $0290,781 and $~~139~~300,~~595~~422, respectively. The ~~Company~~notes are secured by a UCC filing and also $400,000 of the balance was personally guaranteed by the managing member of RAM. Our position was subordinate to the CEO’s ~~assets~~note ~~were~~described in Note 6. We have recorded ~~fully~~interest ~~depreciated~~income atof $84,129 and $146,913 during the years ended December 31, 2021 and 2020, respectively. In April 2021, we received a payment of $400,000 of note principal and ~~2019~~$93,770 of related accrued interest.

~~Note~~On September 59, –2020, ~~Accounts~~we closed on a Membership Interest Purchase Agreement dated September 4, 2020, and obtained the right to acquire ~~Receivables~~a 15.13% membership interest in Blue Bronco, LLC. The purchase of the 15.13% interest in Blue Bronco LLC is subject to the approval of the Colorado Marijuana Enforcement Division. Necessary approval by governing authorities is expected to be received in the third or fourth quarter of 2022 pending the resolution of a lawsuit between the RAM and ~~Other~~other ~~Receivables~~parties related to the transaction. Accrued interest receivable of approximately $68,000 will be applied to the purchase of the membership interest upon approval of the purchase by the Colorado Marijuana Enforcement Division.

As disclosed in Note 1, the Company subleases three properties in Colorado to Royal Asset Management. At December 31, 2020 and 2019, the Company had outstanding receivables from the subleases totaling $523,958 and $391,273, respectively, and during 2020 and 2019 the Company’s subleases with RAM accounted for 100% and 93% of the Company’s revenues, respectively.

In addition to the receivables from the subleases, the Company has agreed to provide RAM and affiliates of RAM up to an aggregate amount of $1,030,000 in financing. These notes accrue interest at the rates ranging from 12% to 18% per annum. As of December 31, 2020 and 2019, the outstanding balance of these notes receivable total $1,030,422 and $788,177, respectively, including accrued interest of $300,422 and $153,509, respectively. The amount presented in our balance sheet at December 31, 2019 is $788,177, which represents $1,017,143 due to us, less $228,966 that we owed to RAM for leasehold improvements. At December 31, 2020 it was determined that we did not owe the $228,966 amount to RAM for the improvements, and we included the increase in the notes balance as Other Income in the consolidated financial statements for the year ended December 31, 2020. The notes are secured by a UCC filing and also $400,000 of the balance is personally guaranteed by the managing member of RAM. Our position is subordinate to the CEO’s note described in Note 7. We have recorded interest income of $146,913 and $153,509 during the years ended December 31, 2020 and 2019, respectively.

F-10

If we do consummate any agreement to acquire Royal Asset Management, part of the purchase price will be paid through receivables that are owed to us (see below).

On September 9, 2020, we closed on a Membership Interest Purchase Agreement dated September 4, 2020, and obtained the right to acquire a 15.13% membership interest in Blue Bronco, LLC. The purchase of the 15.13% interest in Blue Bronco LLC is subject to the approval of the Colorado Marijuana Enforcement Division. Necessary approval by governing authorities is expected to be received in the second quarter of 2021. As part of these transactions, we received full payment of a promissory note receivable in the principal amount of $300,000, as well as full payment of an outstanding promissory note receivable, dated February 27, 2020, in the principal amount of $50,000. Upon receipt of this payment of $50,000, we made a payment of $34,265 in order to “true up” our obligations under that certain promissory note, dated July 25, 2019, in the principal amount of $400,000 made in favor of the Company. Additionally, accrued interest receivable under the $300,000 note of approximately $68,000 will be applied to the purchase of the membership interest upon approval of the purchase by the Colorado Marijuana Enforcement Division.

During the year ended December 31, 2020 we made additional advances under the note aggregating $254,448 and we received payments on the notes aggregating $388,082. These amounts include those transactions discussed in the preceding paragraph.

Lease Termination

On October 1, 2020, the master and sublease associated with the 18,600 sq. cultivation warehouse in Denver were terminated. In connection with that termination, we entered into a Sublease Termination Agreement (“Termination Agreement”) with RAM and an affiliate of RAM Venture Product Consulting, LLC (“VPC”). Pursuant to this agreement, RAM acknowledged a debt of deferred rent to the Company in the amount of $1,418,480 and VPC acknowledged a debt of deferred rent to the Company in the amount of $64,344. RAM and VPC executed promissory notes for these amounts, respectively. The notes accrue interest on the unpaid balance at a rate equal to the Applicable Federal Rate for mid-term obligations as published by the Internal Revenue Service. No payment under the promissory notes will be due to the Company until the earlier of (i) the date on which RAM and the Company consummate a change of control event, which is defined as: the acquisition of RAM by the Company or an affiliated entity by means of any transaction or series of related transactions to which RAM is a party (including, without limitation, any membership interest acquisition, reorganization, merger or consolidation, (generally, a “Merger”), or, (ii) the date one (1) business day following the earlier of (x) at any time, receipt by the Company from RAM or VPC of a written notice stating such party no longer desires to pursue the Merger, or (y) beginning eighteen (18) months after the date of this Agreement, receipt by RAM or VPC from ~~The~~the Company of a written notice stating that the Company no longer desires to pursue the Merger (the “Maturity Date”).

We have recorded the promissory notes as long term notes receivable of $1,482,824 at December 31, 2021 and 2020. Due to the uncertainty of the collectability, we have also recorded a long term deferred credit in the same amount. We will record income under the deferred rent notes as payments are received or deemed collectible. This asset and related credit have been netted on the accompanying condensed consolidated balance sheet.

F-10

Additionally, in connection with the termination of the sublease, RAM will continue to pay the remaining future sublease premium payments due to the company on the Denver sublease (the “Future Rent Debt”) beginning on the termination date, and until the earlier of the Maturity Date or June 30, 2024, notwithstanding the termination of the Subleases. However, no payment under the Future Rent Debt agreement will be due to the Company until the Maturity Date, at which time the entire Future Rent Debt shall be due and payable in full, except for any month in which RAM earns $725,000 of gross sales revenue, including taxes, at its Alameda location, in which case RAM shall pay the Future Rent Debt for the following month to the Company on or before the 5th day of the following month, and such amount will not accrue as a Future Rent Debt. RAM shall continue to accrue debt to the company, assessed on the first day of each month, according to the schedule below:

Monthly Payments Accrued
October 1, 2020 to June 30, 2021	$	11,284
July 1, 2021 to June 30, 2022		11,622
July 1, 2022 to June 30, 2023		11,971
July 1, 2023 to June 30, 2024		12,330

We will record income pursuant to the Future Rent Debt as payments are received based on the Company’s analysis of collectability including, but not limited to, the potential application toward the purchase price. During ~~2020,~~the weyears ~~received~~ended ~~three~~December ~~months~~31, of2021 ~~payments~~ and 2020, we have recorded $137,434 and $33,851 as Lease Termination Payments in the Statement of Operations.

~~Note 6 – Other~~Notes ~~Assets~~Receivable

~~Security deposits:~~During ~~Security~~2021, ~~deposits reflect~~ the ~~deposits~~Company onentered ~~various~~into ~~property~~three ~~leases,~~promissory ~~most~~notes ofwith ~~which~~an ~~require~~unrelated ~~two months’ rental expense in the form of a deposit. On May 6~~party, ~~2019,~~aggregating a $20124,000 (see ~~security~~Note ~~deposit~~12). The ~~related~~notes toall ~~the~~mature ~~Seattle~~11 ~~leased~~months ~~location~~after ~~was~~issuance ~~expensed~~and ~~due~~have toan ~~the~~effective ~~sale~~interest rate of ~~the Seattle~~8.33%. ~~leased~~Payments ~~location.~~of ~~During~~principal ~~2020,~~and ~~upon~~interest ~~termination~~are ofdue ~~a lease~~monthly, webeginning ~~received~~30 adays ~~refund~~after ofthe adate ~~security deposit~~ of ~~$60,000~~issuance. AsPrincipal ofrepayments ~~December 31~~of $11,200 ~~2020~~were ~~and~~received ~~December~~during ~~31, 2019,~~ the ~~remaining~~year ~~balances~~ended ~~were~~December ~~$90~~31,~~000~~ ~~and $150,000, respectively~~2021.

Note 5 – Other Assets

Security deposits: Security deposits reflect the deposits on various property leases, most of which require two months’ rental expense in the form of a deposit. During 2020, upon termination of a lease, we received a refund of a security deposit of $60,000. As of December 31, 2021 and December 31, 2020, the remaining balances were $90,000.

Note 6 – Related Party Transactions

As of December 31, 2021 and 2020, the Company has accrued compensation to its CEO and director and to its CFO aggregating $263,289 and $289,897, respectively. As of December 31, 2021 and 2020, accrued payable due to former officers was $946,986 and $1,042,859, respectively. For the years ended December 31, 2021 and 2020, total cash-based compensation to related parties was $360,000 and $360,000, respectively. For the years ended December 31, 2021 and 2020, total share-based compensation to related parties was $162,505 and $192,474, respectively. These amounts are included in general and administrative expenses in the accompanying financial statements.

From 2017 to 2019, Mr. Gonfiantini, CEO, personally and through his Company, Crystal Bay Financial LLC, loaned an aggregate amount of $1,020,000 to Royal Asset Management. These notes accrue interest at 17% - 18% per annum, and require monthly payment approximately from $5,000 to $20,000. These notes are personally guaranteed by the managing member of Royal Asset Management, and are secured by certain equipment and other tangible properties of Royal Asset Management. Among these notes, $500,000 is also secured by the medical marijuana licenses held by Royal Asset Management. As of October 20, 2021 these notes were fully paid by Royal Asset Management and the security was released.

At December 31, 2021 and 2020, the Company owed Mr. Throgmartin, former CEO (See Note 11), $140,958 pursuant to a promissory note dated August 12, 2016. This note accrues interest at the rate of 8% per annum and was past the maturity date, however the Company has not yet received a default notice. The balance of related party note was $140,958 at December 31, 2021 and December 31, 2020 and accrued interest on the note was $60,677 and $49,401 at December 31, 2021 and 2020, respectively.

The Company leases its office space from an entity controlled by its CEO. The lease may be terminated by either party with 30 days’ notice. Rent expense pursuant to the lease was $18,000 for each of the years ended December 31, 2021 and 2020.

Note 7 – Notes Payable

On August 31, 2015, the Company issued a note in the amount of $126,000 to a third party for use as operating capital. The note was amended to include accrued interest on October 31, 2016 and extend the maturity date to October 31, 2018. As of December 31, 2021 and 2020 the outstanding principal balance of the note was $133,403, and accrued interest on the note was $76,772 and $70,101 at December 31, 2021 and 2020, respectively. As of December 31, 2021 the note was past the maturity date, however the Company has not yet received a default notice.

On April 22, 2020, the Company was granted a loan from Numerica Credit Union, in the aggregate amount of $56,444, pursuant to the Paycheck Protection Program, (the “PPP”) under Division A, Title I of the CARES Act. The loan, which was in the form of a note dated April 22, 2020 issued by the Borrower, was scheduled to mature on April 22, 2022 and bore interest at a rate of 1.0% per annum, payable monthly commencing October 22, 2020. There have not been any payments made towards this loan, as the full amount of the loan and accrued interest was forgiven in full during February 2021 and the Company recorded income of $56,908.

On June 30, 2020, the Company was granted a loan from the Small Business Association, in the aggregate amount of $150,000, pursuant to the Economic Injury Disaster Loan, (the “EIDL”) under Division A, Title I of the CARES Act. The loan, which is in the form of a note dated June 30, 2020 issued by the Borrower, matures on June 30, 2050 and bears interest at a rate of 3.75% per annum, payable monthly commencing July 1, 2023.

Note 8 – Convertible Notes Payable

The Company has issued several convertible notes which are outstanding. The note holders have the right to convert principal and accrued interest outstanding into shares of common stock at a discounted price to the market price of our common stock. The conversion features were recognized as embedded derivatives and are valued using a Binomial Option Pricing Model that resulted in a derivative liability of $2,733,803 and $5,997,865 at December 31, 2021 and 2020, respectively. All notes accrue interest at 10% and the majority of the notes had matured at December 31, 2021. In connection with the issuance of certain of these notes, the Company also issued warrants to purchase its common stock.

F-11

~~Note~~Several convertible 7note –holders ~~Related~~elected to convert their notes to stock during the years ended December 31, 2021 and 2020. The table ~~Party~~below ~~Transactions~~provides the note payable activity for the years ended December 31, 2021 and 2020, and also a reconciliation of the beginning and ending balances for the derivative liabilities measured using fair significant unobservable inputs (Level 3) for the years ended December 31, 2021 and 2020:

As of December 31, 2020 and 2019, the Company has accrued compensation to its CEO and director and to its CFO aggregating $289,897 and $155,841, respectively. As of December 31, 2020 and 2019, accrued payable due to former officers was $1,042,859 and $1,137,397, respectively. For the years ended December 31, 2020 and 2019, total cash-based compensation to related parties was $360,000 and $507,430, respectively. For the years ended December 31, 2020 and 2019, total share-based compensation to related parties was $192,474 and $894,408, respectively. These amounts are included in general and administrative expenses in the accompanying financial statements.

	Convertible Notes			Discount		Convertible Notes, Net of Discount			Derivative Liabilities
Balance, December 31, 2020	$	3,239,274		$	—	$	3,239,274		$	5,997,865
Issuance of convertible notes		2,000			—		2,000			317,896
Conversion of convertible notes		(100,000	)		—		(100,000	)		(661,087	)
Repayment of convertible notes		(200,000	)		—		(200,000	)		(243,478	)
Change in fair value of derivatives		—			—		—			(2,677,393	)
Amortization		—			—		—			—
Balance December 31, 2021	$	2,941,274		$	—	$	2,941,274		$	2,733,803

From 2017 to 2019, Mr. Gonfiantini, CEO, personally and through his Company, Crystal Bay Financial LLC, loaned an aggregate amount of $1,020,000 to Royal Asset Management. These notes accrue interest at 17%-18% per annum, and require monthly payment approximately from $5,000 to $20,000. These notes are personally guaranteed by the managing member of Royal Asset Management, and are secured by certain equipment and other tangible properties of Royal Asset Management. Among these notes, $500,000 note was also secured by the medical marijuana licenses held by Royal Asset Management.

	Convertible Notes			Discount			Convertible Notes, Net of Discount			Derivative Liabilities
Balance, December 31, 2019	$	3,266,775		$	914,245		$	2,352,530		$	4,834,190
Issuance of convertible notes		103,000			103,000			—			518,678
Extensions of convertible notes		100,000			—			100,000			149,500
Conversion of convertible notes		(180,922	)		(53,567	)		(127,355	)		(177,037	)
Repayment of convertible notes		(49,579	)		(21,075	)		(28,504	)		(28,930	)
Change in fair value of derivatives		—			—			—			701,464
Amortization		—			(942,603	)		942,603			—
Balance December 31, 2020	$	3,239,274		$	—		$	3,239,274		$	5,997,865

~~At December 31, 2020~~During ~~and 2019,~~ the ~~Company~~year ~~owed~~ended ~~Mr.~~December ~~Throgmartin~~31, ~~former CEO (See Note 11)~~2021, $~~140~~100,~~958~~000 ~~pursuant~~of tonotes awere ~~promissory~~converted ~~note~~into ~~dated August 12~~4,444,444 ~~2016.~~shares ~~This note accrues interest at the rate~~ of 8%common ~~per~~stock ~~annum~~with ~~and was past the maturity date, however the Company has not yet received~~ a ~~default notice.~~value ~~The balance~~ of ~~related party note was~~ $~~140~~697,~~958~~779. A atgain ~~December~~on ~~31,~~extinguishment ~~2020~~of ~~and~~debt ~~December~~of 31$59,999 ~~2019~~ and ~~accrued~~reduction ~~interest~~of onderivative ~~the~~liabilities ~~note~~of ~~was~~ $49657,~~401~~778 ~~and~~have ~~$38,124~~been atrecorded ~~December~~related ~~31,~~to these ~~2020 and 2019, respectively~~conversions.

~~Note~~During year 8ended –December ~~Notes~~31, 2021, $6,256 of accrued interest was converted into 581,969 shares of common stock with a value of $7,856. ~~Payable~~A gain on extinguishment of debt of $1,709 and reduction of derivative liabilities of $3,309 have been recorded related to these conversions.

OnDuring the ~~August~~year ended December 31, ~~2015~~2021, ~~the~~ ~~Company~~we ~~issued~~repaid aan ~~note~~aggregate ~~in the amount~~ of $~~126~~200,000 toof anote ~~third party for use as operating capital~~principal. ~~The~~A ~~note~~gain ~~was amended to include accrued interest~~ on ~~October~~extinguishment ~~31, 2016 and extend the maturity date to October 31, 2018. As~~ of ~~December~~debt ~~31, 2020 and 2019 the outstanding principal balance~~ of ~~the note was~~ $~~133~~118,~~403,~~ 142 and ~~accrued~~reduction ~~interest~~of onderivative ~~the~~liabilities ~~note~~of ~~was~~ $70118,~~101~~142 ~~and~~have ~~$63,413~~been atrecorded ~~December~~related ~~31,~~to ~~2020~~these ~~and 2019, respectively~~payments. ~~As of December 31, 2020 the note was past the maturity date, however the Company has not yet received a default notice.~~

~~On April 22, 2020, the~~During ~~Company was granted a loan from Numerica Credit Union, in~~ the ~~aggregate~~year ~~amount~~ended ofDecember ~~$56~~31,~~444,~~ ~~pursuant to the Paycheck Protection Program~~2021, ~~(the~~ ~~“PPP”)~~we ~~under~~paid ~~Division~~an A,aggregate ~~Title I~~ of ~~the CARES Act~~$70,000 ~~which was enacted March 27, 2020. The loan, which was~~ in ~~the~~settlement ~~form~~ of a ~~note~~accrued ~~dated April 22, 2020 issued by the Borrower, matures on April 22, 2022 and bears~~ interest atin ~~a rate of 1.0% per annum, payable monthly commencing October 22, 2020. There have not been any payments made towards this loan, as~~ the ~~full~~ amount of ~~the loan expects~~$95,390. toA begain ~~forgiven~~on ~~when~~extinguishment ~~the company applies for forgiveness. Application for loan forgiveness is due ten months from the last day~~ of ~~the twenty-four~~debt ~~week window that the company has to spend the money from the disbursement date~~ of ~~the loan on April 22~~$150,726 2020. The loan may be prepaid by the Borrower at any time prior to maturity with no prepayment penalty. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and ~~interest~~reduction onof ~~other~~derivative ~~debt~~liabilities ~~obligations incurred before February 15, 2020. The Company used the entire Loan amount for qualifying expenses. Under the terms~~ of ~~the PPP~~$125,336 ~~certain amounts~~have ofbeen ~~the~~recorded ~~Loan~~related ~~may be forgiven if they are used for qualifying expenses as described in the CARES Act. The PPP loan was fully forgiven~~to inthese ~~February 2021~~payments.

~~On June 30, 2020, the~~During ~~Company was granted a loan from~~ the ~~Small~~year ~~Business~~ended ~~Association,~~December ~~in the aggregate amount of $150~~31,~~000,~~ ~~pursuant to the Economic Injury Disaster Loan~~2021, ~~(the~~we ~~“EIDL”)~~recorded ~~under~~noncash ~~Division~~additions A,to ~~Title~~convertible Inotes ofaggregating ~~the CARES Act. The Company received the net funds of~~ $~~149,900 on July~~ 2, ~~2020~~000. The loan, which is in the form of a note dated June 30, 2020 issued by the Borrower, matures on June 30, 2050 and bears interest at a rate of 3.75% per annum, payable monthly commencing June 30, 2021. The loan may be prepaid by the Borrower at any time prior to maturity with no prepayment penalty. Funds from the Loan may be used solely for working capital to alleviate economic injury caused by disaster occurring in the month of January 31, 2020 and continuing thereafter and to pay Uniform Commercial Code (UCC) lien filing fees and a third-party UCC handling charge of $100 which was deducted from the loan amount stated above. The Company used the entire Loan amount for qualifying expenses.

~~Note~~As of 9December –31, ~~Convertible~~2021, convertible notes in the aggregate principal amount of $2,941,274 were past their maturity dates; however ~~Notes~~the ~~Payable~~Company has not yet received any default notices. No default or penalty was paid or required to be paid.

The Company has issued several convertible notes which are outstanding. The note holders have the right to convert principal and accrued interest outstanding into shares of common stock at a discounted price to the market price of our common stock. The conversion features were recognized as embedded derivatives and are valued using a Binomial Option Pricing Model that resulted in a derivative liability of $5,997,865 and $4,834,190 at December 31, 2020 and 2019, respectively. All notes accrue interest at rates ranging from 8% to 12% and the majority of the notes had matured at December 31, 2020. In connection with the issuance of certain of these notes, the Company also issued warrants to purchase its common stock.

F-12

Several convertible note holders elected to convert their notes to stock during the years ended December 31, 2020 and 2019. The table below provides the note payable activity for the years ended December 31, 2020 and 2019, and also a reconciliation of the beginning and ending balances for the derivative liabilities measured using fair significant unobservable inputs (Level 3) for the years ended December 31, 2020 and 2019:

	Convertible Notes			Discount			Convertible Notes, Net of Discount			Derivative Liabilities
Balance, December 31, 2019	$	3,266,775		$	914,245		$	2,352,530		$	4,834,190
Issuance of convertible notes		103,000			103,000			—			518,678
Extensions of convertible notes		100,000			—			100,000			149,500
Conversion of convertible notes		(180,922	)		(53,567	)		(127,355	)		(177,037	)
Repayment of convertible notes		(49,579	)		(21,075	)		(28,504	)		(28,930	)
Change in fair value of derivatives		—			—			—			701,464
Amortization		—			(942,603	)		942,603			—
Balance December 31, 2020	$	3,239,274		$	—		$	3,239,274		$	5,997,865
	Convertible Notes			Discount			Convertible Notes, Net of Discount			Derivative Liabilities
Balance, December 31, 2018	$	3,324,487		$	2,151,168		$	1,173,319		$	6,000,830
Issuance of convertible notes		905,500			905,500			—			1,803,495
Conversion of convertible notes		(842,712	)		(233,571	)		(609,141	)		(940,382	)
Repayment of convertible notes		(120,500	)		(3,659	)		(116,841	)		(56,197	)
Change in fair value of derivatives		—			—			—			(1,973,556	)
Amortization		—			(1,905,193	)		1,905,193			—
Balance December 31, 2019	$	3,266,775		$	914,245		$	2,352,530		$	4,834,190

During 2020, the Company entered into a convertible note in an aggregate amount of $103,000 with a twelve month maturity, bearing 12% interest per year. The note is convertible at a 35% discount to the average of the two lowest Volume Weighted Average Prices (VWAPs) during the previous ten trading days to the date of a Conversion Notice. This note was partially converted to common stock in the amount of $60,922 during 2020 along with accrued interest in the amount of $1,884, for a total of 14,079,305 shares issued upon conversion, with a value of $98,080. A loss on extinguishment of debt of $11,761, extinguishment of debt discount of $28,190 and reduction of derivative liabilities of $51,703 have been recorded related to the conversion. The remaining balance on this convertible loan of $42,078 was paid in cash along with accrued interest in the amount of $6,736. A loss on extinguishment of debt of $21,460, extinguishment of debt discount of $21,075 and reduction of derivative liabilities of $18,551 have been recorded related to the payment of $67,750.

During 2020, an additional $120,000 of notes and $12,818 of accrued interest and fees was converted into 25,409,794 shares of common stock with a value of $230,807. A gain on extinguishment of debt of $1,968, extinguishment of debt discount of $25,377 and reduction of derivative liabilities of $125,334 have been recorded related to these conversions.

During 2020, an additional $7,500 of note principal and $819 of accrued interest were repaid to debt holders. We recorded gain on extinguishment of debt of $3,925.

During 2020, we recorded noncash additions to convertible notes aggregating $100,000 as a result of extensions to the maturity dates.

AsThe following ofassumptions ~~December~~were ~~31,~~used ~~2020, convertible notes~~ in the ~~aggregate~~Binomial ~~principal~~Option ~~amount~~Pricing ofModel ~~$2,839,274~~in ~~were~~calculating ~~past their maturity dates; however~~ the ~~Company~~embedded ~~has~~conversion ~~not~~features ~~yet~~and ~~received~~current ~~any~~liabilities ~~default~~for ~~notices.~~the Noyears ~~default~~ended orDecember ~~penalty~~31, ~~was~~2021 ~~paid~~and ~~or required to be paid.~~2020:

During the year ended December 31, 2019, the Company entered into several convertible notes in an aggregate amount of $905,500, bearing interest ranging from 10% to 12% per annum.

	December 31, 2021		December 31, 2020
Risk-free interest rates	0.02 - 0.09	%	0.08 - 1.58	%
Expected life (years)	0.25		0.25 – 1.0
Expected dividends	0	%	0	%
Expected volatility	133 -544	%	140 - 214	%

~~During the year ended December 31, 2019, $120,500 of notes principal and $14,195 of accrued interest were repaid to a debt holder.~~ F-12

~~During the year ended~~Note ~~December~~9 ~~31,~~– ~~2019,~~Stockholders’ ~~$842,712~~Equity of notes and $60,627 of accrued interest was converted into 48,684,667 shares of common stock and 434,783 shares were issued which had been authorized as of December 31, 2018. A gain on extinguishment of debt of $159,233, extinguishment of debt discount of $233,571 and reduction of derivative liabilities of $940,382 have been recorded related to these conversions.(Deficit)

On July 17, 2018, the Company entered into a certain Equity and Debt Restructure Agreement with two long-time investors in the Company (the “Restructure Agreement”). Pursuant to the material terms of the Restructure Agreement, the investors agreed to return and cancel their collective 2,774,093 restricted Company common shares, which had been received from the prior conversion of their older convertible notes, in exchange for the Company’s issue to them of recast convertible promissory notes. Accordingly, on the same date, these investors were each issued a First Priority Secured Promissory Note (the “Note” or “Notes”), in the principal amount of $1,683,558 and $545,607, respectively. In connection with this transaction, one of these investors agreed to loan the Company an additional $700,000. In 2018, the Company received $220,000 cash proceeds of the additional $700,000 loan. Fair value of the 2,774,093 restricted Company common shares was determined to be $443,855 using market price and the fair value of the embedded conversion feature was determined to be $3,555,888 using Black Sholes Option Model. As a result of the transaction, the Company recorded $2,892,033 in financing costs and $2,449,275 as debt discount during year ended December 31, 2018. On March 29, 2019, the Company received $100,000 cash proceeds from the additional $700,000 loan. The conversion feature related to $100,000 was determined to be $154,861 using the Binomial Option Pricing Model. During year ended December 31, 2019, the Company received $380,000 cash proceeds from the additional $700,000 loan. The conversion feature related to $380,000 was determined to be $586,710 using the Binomial Option Pricing Model. During the year ended December 31, 2019, we recorded $206,710 of expense related to financing costs and $380,000 as debt discount.

F-13

The following assumptions were used in the Binomial Option Pricing Model in calculating the embedded conversion features and current liabilities for the years ended December 31, 2020 and 2019:

	December 31, 2020			December 31, 2019
Risk-free interest rates		0.08	%		1.53 – 2.60	%
Expected life (years)		0.25			0.08 – 1.25
Expected dividends		0	%		0	%
Expected volatility		164	%		70-557	%

Note 10 – Stockholders’ Equity (Deficit)

Series C Preferred Stock

On February ~~December 16~~24, ~~2019~~2021, the Company sold ~~140~~179,~~000~~850 of its Series C Convertible Preferred Shares, with an annual accruing dividend of 10 8%, to Geneva Roth Remark Holdings, Inc. (“Geneva”), for $~~130~~163,~~000~~500 pursuant to a Series C Preferred Purchase Agreement with Geneva. ~~To accommodate this transaction,~~ The Company’s ~~Board~~may ofredeem ~~Directors approved and filed a certain Certificate of Designations with~~ the ~~Secretary of State of Delaware, designating 1,500,000 of its available preferred shares as~~ Series C Preferred Convertible Stock, Stated Value of $1.00 per share, and with a par value of $0.0001 per share. This Certificate of Designation provides the Company with the opportunity to redeem the Series C Shares at various increased prices at time intervals up to the 6-month anniversary of the closing and ~~mandates~~must ~~full~~redeem ~~redemption~~ any outstanding shares on the 24-month anniversary. Geneva may convert the Series C Shares into our common shares, commencing on the 6-month anniversary of the closing at a 3025% discount to the public market price. The Company recorded a derivative liability associated with Series C Preferred Shares of $~~165~~1,~~218~~208,971, valued using a Binomial Option Pricing Model. On ~~December~~March 3116, ~~2019~~2021, the ~~fair~~Company ~~value~~sold ofan ~~the~~additional ~~conversion~~113,850 ~~feature~~shares ~~associated with~~for ~~Series~~$103,500 Cand ~~Preferred~~recorded ~~Shares was~~ a derivative ~~liability~~ of $~~190~~165,~~131, valued using a Binomial Option Pricing Model~~142. The Series C Preferred Stock is classified as temporary equity due to the fact that the shares are ~~immediately~~redeemable ~~convertible~~ at the option of the ~~note~~ holder. ~~During~~ ~~the~~The ~~year~~holder ~~ended~~converted ~~December~~the ~~31,~~entire ~~2019,~~amount weof ~~recorded~~ $8293,~~750~~700 ~~accretion~~ of ~~discount.~~the AsFebruary ofand ~~December~~March ~~31,~~preferred ~~2019, there were 140,000~~ shares ~~outstanding~~ ~~and~~plus aaccrued ~~discount~~dividends of $~~131~~11,~~250.~~748 ~~For the year ended December 31, 2020, the holders converted 140,000 shares of series C preferred stock along with related discount~~ into 2126,~~744~~159,~~479~~396 shares of common stock ~~per~~during the ~~terms~~year ofended ~~the~~December ~~Agreement~~31, 2021. As of December 31, ~~2020~~2021, there were no shares outstanding related to this issuance.

On December 16, 2019, the Company sold 140,000 of its Series C Convertible Preferred Shares, with an annual accruing dividend of 10%, to Geneva for $130,000 pursuant to a Series C Preferred Purchase Agreement with Geneva. To accommodate this and future transactions, The Company’s Board of Directors approved and filed a certain Certificate of Designations with the Secretary of State of Delaware, designating 1,500,000 of its available preferred shares as Series C Preferred Convertible Stock, Stated Value of $1.00 per share, and with a par value of $0.0001 per share. This Certificate of Designation provides the Company with the opportunity to redeem the Series C Shares at various increased prices at time intervals up to the 6-month anniversary of the closing and mandates full redemption on the 24-month anniversary. Geneva may convert the Series C Shares into our common shares, commencing on the 6-month anniversary of the closing at a 30% discount to the public market price. The Company recorded a derivative liability associated with Series C Preferred Shares of $165,218, valued using a Binomial Option Pricing Model. On December 31, 2019, the fair value of the conversion feature associated with Series C Preferred Shares was a derivative liability of $190,131, valued using a Binomial Option Pricing Model. The Series C Preferred Stock is classified as temporary equity due to the fact that the shares are immediately convertible at the option of the note holder. During the year ended December 31, 2019, we recorded $8,750 accretion of discount. As of December 31, 2019, there were 140,000 shares outstanding and a discount of $131,250. For the year ended December 31, 2020, the holders converted 140,000 shares of series C preferred stock along with related discount into 21,744,479 shares of common stock per the terms of the Agreement. As of December 31, 2020, there were no shares outstanding related to this issuance.

On March 3, 2020, the Company sold 55,800 of its Series C Convertible Preferred Shares, with an annual accruing dividend of 10%, to Geneva for $50,000, pursuant to a Series C Preferred Purchase Agreement with Geneva. The Company recorded a derivative liability associated with Series C Preferred Shares of $88,868, valued using a Binomial Option Pricing Model. During the year ended December 31, 2020, the holder converted 55,800 shares of series C preferred stock along with related discount into 10,598,864 shares of common stock per the terms of the Agreement. As of December 31, 2020, there were no shares outstanding related to this issuance. The Series C Preferred Stock was classified as temporary equity due to that the shares are immediately convertible at the option of the note holder.

On April 14, 2020, the Company sold 55,800 of its Series C Convertible Preferred Shares, with an annual accruing dividend of 10%, to Geneva for $50,000, pursuant to a Series C Preferred Purchase Agreement with Geneva. The Company recorded a derivative liability associated with Series C Preferred Shares of $82,028 valued using a Binomial Option Pricing Model. During the year ended December 31, 2020, the holder converted 55,800 shares of series C preferred stock along with related discount into 15,292,885 shares of common stock per the terms of the Agreement. As of December 31, 2020, there were no shares outstanding related to this issuance. The Series C Preferred Stock was classified as temporary equity due to that the shares are immediately convertible at the option of the note holder.

	Preferred Stock and Accrued Dividends			Discount			Preferred Stock and Accrued Dividends, Net of Discount			Derivative Liabilities
Balance , January 1, 2019	$	—			—			—			—
Issuance of Series C Preferred shares		140,000			140,000			—			165,218
Accretion of discount		—			(8,750	)		8,750			—
Change in fair value of derivatives		—			—			—			24,913
Balance, December 31, 2019		140,000			131,250			8,750			190,131
Issuance of Series C Preferred shares		111,600			111,600			—			170,896
Conversion of Series C Preferred shares and accrued dividend		(265,115	)		(175,820	)		(89,295	)		(353,005	)
Accretion of conversion feature on Series C preferred stock		13,515			(67,030	)		80,545			23,290
Change in fair value of derivatives		—			—			—			(31,312	)
Balance December 31, 2020	$	—		$	—		$	—		$	—

The tables below provide the preferred stock activity for the year ended December 31, 2021 and 2020, and also a reconciliation of the beginning and ending balances for the derivative liabilities measured using Level 3 fair value inputs for the year ended December 31, 2021 and 2020

F-14

	Preferred Stock and Accrued Dividends			Discount			Preferred Stock and Accrued Dividends, Net of Discount			Derivative Liabilities
Balance , January 1, 2020	$	140,000		$	131,250		$	8,750		$	190,131
Issuance of Series C Preferred shares		111,600			111,600			—			170,896
Conversion of Series C Preferred shares and accrued dividend		(265,115	)		(175,820	)		(89,295	)		(353,005	)
Accretion of discount					(67,030	)		67,030			—
Accretion of conversion feature on Series C preferred stock		13,515			—			13,515			23,290
Change in fair value of derivatives		—			—			—			(31,312	)
Balance, December 31, 2020		—			—			—			—
Issuance of Series C Preferred shares		293,700			293,700			—			1,374,113
Conversion of Series C Preferred shares and accrued dividend		(305,448	)		(210,121	)		(95,327	)		(338,228	)
Accretion of discount		—			(83,579	)		83,579			—
Accretion of dividend on Series C preferred stock		11,748			—			11,748			13,948
Change in fair value of derivatives		—			—			—			(1,049,833	)
Balance December 31, 2021	$	—		$	—		$	—		$	—

The following assumptions were used in the Binomial Option Pricing Model in calculating the embedded conversion features and current liabilities for the years ended December 31, ~~2020~~2021 and ~~2019~~2020:

	2020	2019
	2021	2020
Risk-free interest rates	0.1112 – 0.2328%	10.5811 – 10.6623%
Expected life (years)	1.54 – 2.0	1.955 – 2.0
Expected dividends	0%	0%
Expected volatility	~~172~~184 – ~~262~~196%	~~248~~172 - ~~250~~262%

F-13

Common Stock

2021 Transactions

During the year ended December 31, 2021, $100,000 of notes and $6,256 of accrued interest and fees were converted into 5,026,413 shares of common stock with a value of $705,635.

During the year ended December 31, 2021, 6,498,837 shares of common stock, valued at $162,505, were accrued for related party services, and 7,635,992 shares of common stock, valued at $172,283, were issued. At December 31, 2021 and 2020, shares to be issued for related party services were 594,532 and 1,731,687, respectively, and the value of shares to be issued at December 31, 2021 and 2020 was $3,586 and $13,364, respectively.

During the year ended December 31, 2021, 527,085 shares of common stock, valued at $8,000, were accrued for services, and 1,137,826 shares of common stock, valued at $16,000, were issued. At December 31, 2021 and 2020, shares to be issued for services were 495,116 and 1,105,857, respectively, and the value of shares to be issued at December 31, 2021 and 2020 was $6,000 and $14,000, respectively.

At December 31, 2021 and 2020, shares to be issued for debt conversions were 31,960, and the value of shares to be issued was $21,861.

During the year ended December 31, 2021, 26,159,396 shares of common stock were issued as a result of the conversion of 293,700 shares of Series C Preferred stock and $11,748 of related accrued dividends.

During the year ended December 31, 2021, we issued 30,000 shares of common stock, valued at $1,915, for consulting services.

2020 Transactions

During the year ended December 31, 2020, $180,922 of notes and $14,702 of accrued interest and fees were converted into 39,489,099 shares of common stock with a value of $328,887. A loss on extinguishment of debt of $5,835, extinguishment of debt discount of $53,567 and reduction of derivative liabilities of $180,995 have been recorded related to these conversions.

During the year ended December 31, 2020, 10,935,040 shares of common stock, valued at $117,887, were accrued for related party services. We issued 12,219,836 shares of common stock, valued at $177,323 during 2020, and these shares have been removed from shares to be issued at December 31, 2020. Additionally, we reversed the over accrual of 283,182 common shares, valued at $6,914, and reduced ~~shares to be issued at December 31, 2020. At December 31, 2020~~ ~~and 2019,~~ shares to be issued ~~for related party services were 1,731,687 and 3,299,665, respectively, and the value of shares to be issued~~ at December 31, 2020 ~~and 2019 was $13,364 and $79,817, respectively~~.

During the year ended December 31, 2020, 905,658 shares of common stock, valued at $8,003, were accrued for services. We issued no shares during 2020 for this accrual. We reversed the over accrual of 9,583 common shares, valued at $5,601 and reduced shares to be issued at December 31, 2020. At December 31, 2020 and 2019, shares to be issued for services were 1,105,857 and 209,782, respectively, and the value of shares to be issued at December 31, 2020 and 2019 was $14,000 and $11,598, respectively.

During the year ended December 31, 2020, we reversed the over accrual of 3,884 common shares, valued at $13,983, related to notes payable that were converted in prior years, and reduced shares to be issued at December 31, 2020. We recorded the reversal of the value of the shares as gain on extinguishment of debt. At December 31, 2020 and 2019, shares to be issued for debt conversions were 31,960 and 35,844, respectively, and the value of shares to be issued at December 31, 2020 and 2019 was $21,861 and $35,844, respectively.

During the year ended December 31, 2020, we issued 4,000,000 shares of common stock, valued at $51,200, for legal services.

During the year ended December 31, 2020, 47,636,228 shares of common stock were issued as a result of the conversion of 251,600 shares of Series C Preferred shares.

2019 Transactions

During the year ended December 31, 2019, $842,712 of notes and $60,627 of accrued interest was converted into 48,684,667 shares of common stock and 434,783 shares were issued which were authorized as of December 31, 2018. A gain on extinguishment of debt of $159,233, extinguishment of debt discount of $233,571 and reduction of derivative liabilities of $940,382 have been recorded related to these conversions. As of December 31, 2019, 35,844 shares, valued at $35,844 for debt conversion were authorized, but not issued as of December 31, 2019.

We issued 4,987,610 shares of common stock, valued at $170,348, for services. As December 31, 2019, 209,782 shares, valued at $11,598 for services were authorized, but not issued as of December 31, 2019, and included in stock to be issued in the accompanying consolidated balance sheet. In connection with Debt Restructure Agreements dated on July 17, 2018, 675,759 shares of common stock were cancelled, valued at $108,121.

We issued 24,566,400 shares of common stock, valued at $732,029, for related party services. As December 31, 2019, 3,299,665 shares, valued at $79,817 for services, were authorized but not issued as of December 31, 2019.

During the year ended December 31, 2019, 8,071,000 shares were issued for cashless warrant exercise.

During the year ended December 31, 2019, we issued 5,000 shares for $2,648, which were authorized in prior period.

F-15

Common stock warrant activity:

The Company has determined that certain of its warrants are subject to derivative accounting. The table below provides a reconciliation of the beginning and ending balances for the warrant liabilities measured using fair significant unobservable inputs (Level 3) for the years ended December 31, 2020 and 2019:

	Year ended December 31,
	2020			2019
	2021			2020
Balance at beginning of year	$	~~967~~476		$	~~16,576~~967
Additions to derivative instruments		—			—
Loss (gain) on change in fair value of derivative liability		(~~491~~38	)		(~~15,609~~491	)
Balance at end of year	$	~~476~~438		$	~~967~~476

	December 31, 2020				December 31, 2019
	December 31, 2021			December 31, 2020
Annual dividend yield	0	0%	%	0	%	0	%
Expected life (years)	1.0 – 6.13	~~0.42 – 7.38~~		0.42 – 7.38		~~0.42 – 8.13~~
Risk-free interest rate	0.09 – 1.26	~~0.10 – 1.83~~%	%	0.10 – 1.83	%	~~1.56 – 2.40~~	%
Expected volatility	189 - 243	~~186 - 240~~%	%	186 - 240	%	~~165 - 318~~	%

~~The following table summarizes stock warrant activity for the years ended December 31, 2020 and 2019:~~ F-14

	Number of shares			Weighted- average exercise price		Weighted- average remaining contractual term (in years)
Outstanding at December 31, 2018		263,866		$	12.04
Granted		—		$	—
Exercised		(12,500	)		2.95
Expired		(39,540	)	$	20.00
Outstanding at December 31, 2019		211,826		$	10.08		3.5
Granted		—		$	—
Expired		(78,031	)	$	18.72
Outstanding at December 31, 2020		133,795		$	5.04		4.4
Exercisable at December 31, 2020		133,795		$	5.04		4.4

The following table summarizes stock warrant activity for the years ended December 31, 2021 and 2020:

	Number of shares			Weighted- average exercise price		Weighted- average remaining contractual term (in years)

Outstanding at December 31, 2019		211,826		$	10.08
Granted		—		$	—
Expired		(78,031	)	$	18.72
Outstanding at December 31, 2020		133,795		$	5.04		4.4
Granted		—		$	—
Expired		(31,295	)	$	6.23
Outstanding at December 31, 2021		102,500		$	4.68		4.4

Exercisable at December 31, 2021		102,500		$	4.68		4.4

Common stock option activity:

The Company maintains an Equity Incentive Plan pursuant to which 124,000 shares of common stock are reserved for issuance thereunder. This Plan was established to award certain founding members, who were instrumental in the development of the Company, as well as key employees, directors and consultants, and to promote the success of the Company’s business. The terms allow for each option to vest immediately, with a term no greater than 10 years from the date of grant, at an exercise price equal to par value at date of the grant. As of December 31, ~~2020~~2021, 10,000 awards are outstanding pursuant to the plan. There remain 114,000 shares available for future grants.

During the years ended December 31, ~~2020~~2021 and ~~2019~~2020, the Company recorded total option expense of $~~86,606~~0 and $~~162~~86,~~381~~606, respectively. There was no unamortized stock option expense at December 31, ~~2020~~2021. The aggregate intrinsic value of stock options outstanding at December 31, ~~2020~~2021 is $0.

~~F-16~~ The following table summarizes stock option activity for the years ended December 31, 2021 and 2020:

The following table summarizes stock option activity for the years ended December 31, 2020 and 2019:

	Number of shares			Weighted- average exercise price		Weighted- average remaining contractual term (in years)

Outstanding at December 31, 2019		172,480		$	5.29
Granted		—		$	—
Expired		—		$	—
Outstanding at December 31, 2020		172,480		$	5.29		4.5
Granted		—		$	—
Expired		(50,000	)	$	6.00
Outstanding at December 31, 2021		122,480		$	5.00		5.1

Exercisable at December 31, 2021		122,480		$	5.00		5.1

	Number of shares			Weighted- average exercise price		Weighted- average remaining contractual term (in years)
Outstanding at December 31, 2018		294,959		$	5.17
Granted		—		$	—
Exercised		—			—
Expired		(122,480	)	$	5.00
Outstanding at December 31, 2019		172,479		$	5.29		5.5
Granted		—		$	—
Forfeited		—		$	—
Outstanding at December 31, 2020		172,479		$	5.29		4.5
Exercisable at December 31, 2020		172,479		$	5.29		4.5

Note 10 – COMMITMENTS AND CONTINGENCIES

Note 11 – COMMITMENTS AND CONTINGENCIES

Leases

The Company leases property under operating leases. Property leases include retail and warehouse space with fixed rent payments and lease terms ranging from three to five years. The Company is obligated to pay the lessor for maintenance, real estate taxes, insurance and other operating expenses on certain property leases. These expenses are variable and are not included in the measurement of the lease asset or lease liability. These expenses are recognized as variable lease expense when incurred.

~~The~~In August ~~Company~~2021, ~~records~~ the master lease ~~asset~~ and ~~lease~~sublease ~~liability~~associated atwith the ~~present~~14,800 ~~value of lease payments over the lease term~~sq. ~~The~~cultivation ~~leases~~warehouse ~~typically~~were doextended ~~not~~through ~~provide~~July ~~an implicit rate; therefore~~31, ~~the Company uses its estimated incremental borrowing rate at the time of lease commencement to discount the~~ ~~present~~2024. ~~value~~Monthly ofbase ~~lease~~rent payments. ~~The~~range ~~Company’s~~from ~~discount rate for operating leases at December 31~~$20,000 ~~2020~~to ~~was 12%~~$21,118. ~~Leases~~Monthly ~~often~~sublease ~~include rental~~base ~~escalation~~rent ~~clauses, renewal options and/or termination options that are factored into the determination of lease~~ payments ~~when appropriate.~~range ~~Lease~~from ~~expense~~$26,300 ~~is recognized on a straight-line basis over the lease term~~ to ~~the extent that collection is considered probable~~$28,622. ~~As a result the Company been recognizing rents as they become payable. Our weighted-average remaining lease term is 4.24 years.~~

AsThe Company records the lease asset and lease liability at the present value of ~~December~~lease ~~31,~~payments ~~2020~~over the lease term. The leases typically do not provide an implicit rate; therefore, the ~~maturities~~Company uses its estimated incremental borrowing rate at the time of ~~operating~~lease commencement to discount the present value of lease payments. The Company’s discount rate for operating leases ~~liabilities~~at December 31, 2021 was 12%. Leases often include rental escalation clauses, renewal options and/or termination options that are factored into the determination of lease payments when appropriate. Lease expense is recognized on a straight-line basis over the lease term to the extent that collection is considered probable. As a result the Company been recognizing rents as ~~follows~~they ~~(in~~become ~~thousands):~~payable. Our weighted-average remaining lease term is 2.91 years.

	Operating Leases
2021		427
2022		270
2023		270
2024		270
2025		45
Total		1,282
Less: amount representing interest		(239	)
Present value of future minimum lease payments		1,043
Less: current obligations under leases		328
Long-term lease obligations	$	715

F-15

~~The Company executed a series~~ As of ~~agreements~~December ~~that canceled~~31, ~~the master lease on its Elizabeth street cannabis cultivation facility in Denver on October 21~~2021, ~~2020. This has allowed~~ the ~~Company to~~maturities ~~reduce~~of ~~its~~operating ~~liability~~leases ~~exposure~~liabilities inare ~~the~~as ~~Elizabeth~~follows ~~Street cultivation facility while securing deferred rents due and future sublet payments for 3 years and 9 months, valued at $1,325,443~~ (~~see~~in ~~Note 5~~thousands)~~. In addition, a $60,000 deposit on the property has been returned to the Company.~~:

	Operating Leases
2022	$	513
2023		520
2024		419
2025		45
Total		1,497
Less: amount representing interest		(228	)
Present value of future minimum lease payments		1,269
Less: current obligations under leases		386
Long-term lease obligations	$	883

Rent expense is recognized on a straight-line basis over the life of the lease. Rent expense consists of the following:

	Year ended December 31,
	2020		2019
	2021		2020
Operating lease costs	$	~~610~~420,~~374~~979	$	~~756~~610,~~515~~374
Variable rent costs		~~396~~203,~~207~~640		~~432~~396,~~837~~207
Total rent expense	$	1624,~~006,581~~619	$	1,~~189~~006,~~352~~581

~~F-17~~As of December 31, 2021, the aggregate remaining minimal annual lease payments under these operating leases plus NNN were as follows: (in thousands):

As of December 31, 2020, the aggregate remaining minimal annual lease payments under these operating leases plus NNN were as follows: (in thousands):


2022	$	386
2023		443
2024		395
2025		45
Total	$	1,269

2021	$	328
2022		197
2023		222
2024		250
2025		46
Total	$	1,043

Other information related to leases is as follows:

	Year ended December 31, 2020
	Year ended December 31, 2021			Year ended December 31, 2020
Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	~~606~~398,~~870~~838		$	606,870
Lease liability related to termination of lease		1,325,445
Weighted-average remaining lease term - operating leases		2.91	yr		3.54	yr
Weighted-average remaining lease term - operating leases		3.54	yr
Weighted-average discount rate - operating leases		12	%		12	%
Weighted-average discount rate - operating leases		12	%
Right of use assets obtained in exchange for lease liabilities:
Operating lease asset	$	627,500		$	—
Lease liability	$	625,129		$	—

The Company recognized sublease income of $1768,~~265,137~~ 516 and $1,~~646~~265,~~369~~137 during the years ended December 31, ~~2020~~2021 and ~~2019~~2020, respectively.

These two leases have ~~six~~2.5 ~~months~~year and 43.21 year terms with optional ~~extension~~extensions, expiration dates range from July ~~2021~~2024 to ~~June~~February 2025, and monthly base rent of approximately $2220,000-$2522,~~000~~ 500 plus variable NNN.

As of December 31, ~~2020~~2021, the maturities of expected base sublease income are as follows (in thousands):

	~~Operating Leases~~	Operating Leases
2021	$	582
2022		$	678
2022		346
2023			693
2023		346
2024			555
2024		346
2025			59
2025 and beyond		58
Total		$	1,985
Total	$	1,678

F-16

Legal Proceedings

On May 10, 2021, a lawsuit was filed against the Company, along with other defendants, by plaintiff Erin Turoff in the District Court, City and County of Denver, State of Colorado. The specific allegations against the Company include civil theft and civil conspiracy and the plaintiff is seeking actual and compensatory damages. No specific monetary amount was demanded in the lawsuit. On July 8, 2021, the Company filed an answer to the complaint, denying the allegations. The Company believes that the suit is without merit and that the Company will ultimately prevail in any litigation.

On July 27, 2021, the Company filed a lawsuit against Royal Asset Management, LLC (“RAM”) and Neil Demers (“Demers”) in the District Court, City and County of Denver, State of Colorado, alleging breach of contract on subleases for which RAM has failed to make the required payments to the Company pursuant to the respective sublease agreements. The alleged damages under the sublease terms and other ancillary agreements amount to $1,480,881, $377,568, $1,027,635, and $1,418,480, respectively. In addition, the lawsuit alleges that RAM failed to make payments pursuant to a promissory note (the “Note”) in which the Company and RAM entered into on April 3, 2018. The Note was for the principal amount of $330,000 with interest at 18% per annum. The Note had a maturity date of April 2, 2019. The lawsuit seeks payment from RAM and Demers for the total balance due on the Note of $330,000 plus the interest due therein. On October 8, 2021, RAM and Demers filed a joint answer to the lawsuit, and the parties are now engaged in the discovery process.

COVID-19

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency in response to a new strain of of a coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. Management is actively monitoring the global situation and its effects on the Company’s industry, financial condition, liquidity, and operations. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for fiscal year ~~2021~~2022. However, if the pandemic continues, it may have a material adverse effect on the Company’s results of future operations, financial position, and liquidity in fiscal year ~~2021~~2022.

Employment Agreements

As a condition of their employment, the Board of Directors approved employment agreements with three key executives. These agreements provided that additional shares will be granted each year over the term of the agreements should their shares as a percentage of the total shares outstanding fall below prescribed ownership percentages. Nello Gonfiantini III, who became the Company’s CEO in October 2019 receives an annual grant of additional shares each year to maintain his ownership percentage at 10% of the outstanding stock. The Company’s CFO received a similar grant each to maintain his ownership percentage at 2% of the outstanding stock. In addition, prior to his departure in October 2019, Ron Throgmartin, the Company’s previous CEO, would receive a grant of additional shares to maintain his ownership at 7.5% of the Company’s outstanding stock. During the year ended December 31, ~~2020~~2021, the Company accrued compensation expense of approximately $~~118~~163,000 on 106,~~935~~498,~~040~~837 shares of common stock under these agreements. During the year ended December 31, ~~2019~~2020, the Company accrued compensation expense of approximately $~~593~~118,000 on 2010,~~782~~935,~~014~~040 shares of common stock under these agreements. As of December 31, ~~2020~~2021 and ~~2019~~2020, the ending balance of accrued compensation was $133,~~467~~586 and $7913,~~817~~364, respectively. The number of shares accrued to be issued was 1594,~~731,687~~ 532 at December 31, ~~2020~~2021.

Departure of Executive Officer

On January 30, 2019, the Company executed a Separation Agreement and Release with David Thompson, its former Senior Vice President- Finance, finalizing his departure from the Company as an employee. Pursuant to its material terms, the Company agreed to pay Mr. Thompson aggregate cash payments of $206,250, based upon the Company’s receipt of certain gross sales receipts derived from its Alameda Store in Colorado, and certain stock grants based upon the Company’s outstanding common shares as of February 1, 2019, including a stock grant of 53,717 restricted common shares for accrued salary and 122,934 restricted common shares in exchange for his approximate 122,000 of stock options. During the years ended December 31, ~~2020~~2021 and ~~2019~~2020, $3435,~~538~~873 and $934,~~450~~538, respectively, were paid under this agreement. As of December 31, ~~2020~~2021, the outstanding balance was $~~162~~126,~~262~~389, and is included in Accrued payable – related party in the accompanying consolidated balance sheet.

F-18

On October 29, 2019, the Company accepted the resignation of Ron Throgmartin from his positions as CEO, President and Director. Mr. Throgmartin’s resignation was not the result of any disagreements with Registrant’s plan of operations, policies or management. On the same date, we appointed Christopher D. Strachan, our Chief Financial Officer, to membership on our Board of Directors and appointed Nello Gonfiantini III, our Chief Operations Officer, to the additional post of Chief Executive Officer.

Ron Throgmartin signed a 5-year term Separation Agreement which, among other matters, terminated his Employment Agreement, as amended. On the date of the Separation Agreement, the Company acknowledged it owed Mr. Throgmartin the amount of $517,252 in principal and accrued interest of note payable, salary and fees, accrued during the 5 years of his employment. In addition, the Corporation further acknowledged that it will pay Mr. Throgmartin fifty (50%) percent of his compensation due under the remaining Employment Agreement, or $614,583 under certain conditions, which the Company accrued in full as the date of Mr. Throgmartin’s separation. This agreement provides that the Registrant will pay him $5,000 monthly against his accrued salary/fees and 50% of future compensation due under his terminated Employment Agreement, with certain accelerated payments in the event Registrant’s financial results attain certain EBITA benchmarks. Registrant shall have the right to require Mr. Throgmartin to provide consulting services to Registrant for a per diem fee of $500. During the years ended December 31, ~~2020~~2021 and ~~2019~~2020, $60,000 and $1560,000, respectively, were paid under this agreement. As of December 31, ~~2020~~2021, the outstanding balance was $~~880~~820,597, and is included in Accrued payable – related party in the accompanying consolidated balance sheet.

~~Note 12 – Deferred Tax Assets and Income Tax Provision~~ F-17

~~The reconciliation of income tax benefit at the~~Note ~~U.S.~~11 ~~statutory~~– ~~rate~~Deferred ofTax ~~21%~~Assets ~~for the years ended December 31, 2020~~ and ~~2019~~Income ~~respectively~~Tax ~~to the Company’s effective tax rate is as follows:~~Provision

	Year Ended			Year Ended
	December 31, 2020			December 31, 2019
Statutory federal income tax rate		(21	)%		(21	)%
State income tax, net of federal benefits		(5	)%		(5	)%
Change in federal tax rate		—	%		—	%
Change in valuation allowance		26	%		26	%
Income tax provision (benefit)		—	%		—	%

The reconciliation of income tax benefit at the U.S. statutory rate of 21% for the years ended December 31, 2021 and 2020 respectively to the Company’s effective tax rate is as follows:

	Year Ended			Year Ended
	December 31, 2021			December 31, 2020
Statutory federal income tax rate		(21	)%		(21	)%
State income tax, net of federal benefits		(5	)%		(5	)%
Change in federal tax rate		—	%		—	%
Change in valuation allowance		26	%		26	%
Income tax provision (benefit)		—	%		—	%

The benefit for income tax is summarized as follows:

	Year Ended December 31, 2020			Year Ended December 31, 2019
	Year Ended December 31, 2021			Year Ended December 31, 2020
Federal
Current	$	—		$	—
Deferred		7971,000			~~479~~79,000
State
Current		—			—
Deferred		1716,000			~~105~~17,000
Change in valuation allowance		(9687,000	)		(~~584~~96,000	)
Income tax provision (benefit)	$	—		$	—

Deferred tax assets (liabilities) consist of the following:

	Year Ended			Year Ended
	December 31, 2020			December 31, 2019
	December 31, 2021			December 31, 2020
Net operating loss carry forwards	$	(6,~~492~~563,~~759~~889	)	$	(6,~~413~~492,~~626~~759	)
Warrants issued for services		1,~~467~~503,~~413~~621			1,~~417~~467,~~025~~413
Impairment of investment		111,662			111,662
Depreciation		5448,~~066~~025			~~101~~54,~~728~~066
Interest expense on convertible notes		21,~~688~~981,~~874~~486			2,~~140~~688,~~769~~874
Total gross deferred tax asset/liabilities		(2,~~170~~913,~~744~~095	)		(2,~~642~~170,~~442~~744	)
Valuation allowance		(2,~~170~~913,~~744~~095	)		2,~~642~~170,~~442~~744
Net deferred taxes	$	—		$	—

~~F-19~~ As of December 31, 2021, the Company had accumulated Federal net operating loss carryovers (“NOLs”) of $31,256,612. These NOLs can be carried forward indefinitely and the utilization of NOLs may be subject to limitation under the Internal Revenue Code Section 382 should there be a greater than 50% ownership change as determined under the regulations.

As of December 31, 2020, the Company had accumulated Federal net operating loss carryovers (“NOLs”) of $30,917,902. These NOLs can be carried forward indefinitely and the utilization of NOLs may be subject to limitation under the Internal Revenue Code Section 382 should there be a greater than 50% ownership change as determined under the regulations.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against the entire deferred tax asset relating to NOLs for every period because it is more likely than not that all of the deferred tax asset will not be realized.

The Company files U.S. Federal and various State tax returns that are subject to audit by tax authorities beginning with the year ended December 31, 2017. The Company’s policy is to classify assessments, if any, for tax and related interest and penalties as tax expense.

Note 12 13 – Subsequent Events

The Company evaluated subsequent events and transactions that occur after the balance sheet date up to the date that the consolidated financial statements are available to be issued. Any material events that occur between the balance sheet date and the date that the consolidated financial statements were available for issuance are disclosed as subsequent events, while the consolidated financial statements are adjusted to reflect any conditions that existed at the balance sheet date. Based upon this review, except as disclosed within the footnotes or as discussed below, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements.

During the period from January 1, ~~2021~~2022 through ~~March~~April 3115, ~~2021~~2022:

~~The~~During ~~PPP~~January ~~loan~~2022, the Company loaned an additional $120,000 pursuant to a promissory note with the party described in Note 4. The note matures 11 months after issuance and has an effective interest rate of 8.33%. ~~was~~Payments ~~fully~~of ~~forgiven~~principal inand ~~February~~interest ~~2021~~are due monthly, beginning 30 days after the date of issuance (see below).

WeThe Company entered into two convertible ~~issued~~promissory 5notes with an investor in the aggregate amount of $330,~~026~~000,~~413~~ and received aggregate proceeds of $310,000. The notes mature one year from issue and bear interest at 8% per year. Upon a default, the holder shall have the right from time to time, and at any time following an event of default, and ending on the date of payment of the default amount (as defined), to convert all or any part of the outstanding and unpaid principal, interest, penalties, and all other amounts under the notes into fully paid and non-assessable shares of common stock ~~upon~~at a conversion price equal to 65% of the three lowest trading prices of the Company common stock for the 15 trading days immediately preceding the delivery of a notice of conversion resulting from such default. The Company agreed to issue a total of ~~$100~~3,400,000 ~~principal~~shares ~~amount~~of common stock to the investor in connection with the issuance of the notes. ~~plus~~These ~~$6,256~~shares ofwere ~~accrued~~issued ~~interest~~in March, 2022.

WeOn February 8, 2022, the Company entered ~~paid~~into ~~$200~~an Equity Purchase Agreement (the “Purchase Agreement”),~~000~~ inwith ~~principal~~Hemp ~~amount~~Choice Distribution, LLC, a Colorado limited liability company (“HCD”), its owners (the “Sellers”), and Gabriela Vergara (the “Sellers’ Representative”), pursuant to which Purchaser has agreed to acquire all of ~~notes~~the atissued ~~maturity~~and outstanding equity interests of HCD (“Membership Interests”). The closing of the transaction is expected to occur within 90 days from the date of the Purchase Agreement (the “Closing”).

WeThe purchase price for the Membership Interests ~~sold~~shall ~~293~~be the aggregate amount of $4,~~700~~400,000 payable at the Closing as follows: (i) $250,000 in cash by wire transfer of immediately available funds; (ii) the number of restricted shares of ~~Series~~the CCompany’s ~~preferred~~common stock ~~for~~that ~~net~~is ~~proceeds~~equal to $250,000 divided by the current market price at the time of Closing, but such price shall not be greater than $~~260~~.05 per share or less than $.02 per share: and (iii) three million nine hundred thousand dollars ($3,900,000) in the form of 390,000 shares of redeemable preferred stock (with a stated value of $10.00 per share) of the Purchaser. The terms of the redeemable preferred shares shall be specifically and fully set forth in a Certificate of Designations to be filed with the State of Delaware at the time of Closing. After the Closing, the Purchaser agrees to provide HCD with a line of credit or assist it in obtaining a line of credit from a third party of up to $1,000,000. In addition, the business of HCD shall continue to be managed by Sellers’ Representative subject to the conditions of an employment agreement to be entered into by the Company and Sellers’ Representative prior to the Closing. The Company has made loans to HCD in the aggregate original amount of $244,000, as described in Note 4 and above.

~~We issued 30,000 shares of common stock for services~~ F-18

F-20

Item 9. Changes in and Disagreement with Accountants on Accounting and Financial Disclosure.

On January 1, 2021, the audit practice of Hall & Company Certified Public Accountants and Consultants, Inc. (“Hall”), an independent registered public accounting firm, was combined with Macias Gini & O’Connell (“MGO”) in a transaction pursuant to which Hall combined its operations with MGO, and certain members of Hall joined MGO either as employees or partners of MGO. On January 7, 2021, Hall resigned as auditors of the Company, and with the approval of the Company’s Board of Directors, MGO was engaged as the Company’s independent registered public accounting firm.

Prior to engaging MGO, the Company did not consult with MGO regarding the application of accounting principles to a specific completed or proposed transaction or regarding the type of audit opinions that might be rendered by MGO on the Company’s financial statements, and MGO did not provide any written or oral advice that was an important factor considered by the Company in reaching a decision as to any such accounting, auditing or financial reporting issue

Item 9A. Controls and Procedures.

(a) Disclosure Controls and Procedures

We carried out an evaluation required by Rule 13a-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” and “internal control over financial reporting” as of the end of the period covered by this Annual Report.

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act that are designed to ensure that information required to be disclosed in our reports filed or submitted to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that information is accumulated and communicated to management, including the principal executive and financial officer as appropriate, to allow timely decisions regarding required disclosures. Our principal executive officer and principal financial officer evaluated the effectiveness of disclosure controls and procedures as of the end of the period covered by this Annual Report (the “Evaluation Date”), pursuant to Rule 13a- 15(b) under the Exchange Act. Based on that evaluation, our principal executive officer and principal financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure, due to material weaknesses in our control environment and financial reporting process.

Our management, including our principal executive officer and principal financial officer, does not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision- making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

(b) Management's Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). In evaluating the effectiveness of our internal control over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013). Internal control over financial reporting is a process designed 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 and includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (b) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorizations of the our management and directors; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

2122

Based on our evaluation under the framework described above, as of December 31, ~~2020~~2021, our management concluded that we had “material weaknesses” (as such term is defined below) in our control environment and financial reporting process consisting of the following as of the Evaluation Date:

	1)	lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal control and procedures;

	2)	inadequate segregation of duties consistent with control objectives;

	3)	ineffective controls over period end financial disclosure and reporting processes; and

	4)	lack of accounting personnel with adequate experience and training.

A “material weakness” is defined under SEC rules as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.

As of the date of this Annual Report, the Company does not intend to remedy the foregoing and therefore such material weaknesses in our control environment and financial reporting process will continue due to lack of available capital. A system of controls, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the system of controls are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

(c) Change in Internal Control over Financial Reporting

There were no significant changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our fourth fiscal quarter, that could materially affect, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

22Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Directors and Executive Officers

The following table sets forth the name and ages of our directors and executive officers, and their positions with us, as of ~~April~~the ~~12,~~date ~~2021~~of this filing:

Name	Age	Position
Nello Gonfiantini III	6364	Chief Executive Officer, Director
Christopher Strachan	57	Chief Financial Officer, Director

Business Experience

The following summarizes the occupation and business experience during the past five years for our officers, directors and key employees as of the date of this Report:

Officers and Directors

Nello Gonfiantini joined the Company as a consultant in 2016. In February 1, 2017, he was appointed as Vice President of Real Estate. He was elected as a director of the Company in March 2018, and was appointed as the Chief Executive Officer in October 2019. He has more than forty years of experience in the real estate and financial sector, including President and Chairman of the Board of Home Federal Saving Bank of Nevada which was later purchased by American Federal Savings Bank. He also formed Specialty Mortgage Trust, Inc., a real estate investment trust. In 2015 he founded Crystal Bay Financial to assist corporate and real estate clients find solutions to complex and multifaceted financial challenges.

Christopher Strachan joined the Company as Chief Financial Officer in January 2016, and was appointed a director of the Company in October 2019. Mr. Strachan is an accomplished professional with thirty years of experience in corporate operations, marketing, securities and finance, and twenty years of experience in executive management. For the past five years, Mr. Strachan has served as the President of Helisports LLC, a business development consulting company. In addition, he served as the Chief Executive Officer of Rhodes Architectural Stone from 2011 to 2012, Director of Marketing and Sales of Glasair Aviation from 2012 to 2014 and Director of Flight Operations and R&D at RotorWay Helicopters from 2009 to 2011.

Family Relationships

No family relationship has ever existed between any director, executive officer of the Company, and any person contemplated to become such.

Board Composition and Role in Risk Oversight

Our Board is currently comprised of two directors. The Board assesses on an ongoing basis the risks faced by the Company. These risks include financial, technological, competitive, and operational risks. The Board dedicates time at each of its meetings to review and consider the relevant risks faced by the Company at that time. In addition, since the Company does not have an Audit Committee, the Board is also responsible for the assessment and oversight of the Company’s financial risk exposures.

Committees

The board of directors has no standing committees.

Code of Ethics and Business of Conduct

The Company has not yet formally adopted a written code of ethics and business conduct to be applied to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Based on its small size, limited financial and human resources, the Company has not adopted written code of ethics.

2324

Involvement in Certain Legal Proceedings

To the best of the registrant’s knowledge, during the past five years, no director, executive officer, promoter or control person of the Company:

(1)

has filed a petition under the federal bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or present of such a person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer within two years before the time of such filing;

(2)	were convicted in a criminal proceeding or named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

(3)	were the subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of the following activities:

(i)

acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, associated person of any of the foregoing, or as an investment advisor, underwriter, broker or dealer in securities, or as an affiliated person, director of any investment company, or engaging in or continuing any conduct or practice in connection with such activity;

(ii)

engaging in any type of business practice;

(iii)

engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodity laws.

(4)

were the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity;

(5)

were found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any federal or state securities law and the judgment in such civil finding or find by the Securities and Exchange Commission has not been subsequently reversed, suspended or vacated;

(6)

were found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated.

Compliance with Section 16(A) of the Exchange Act

Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who beneficially own 10% or more of a class of securities registered under Section 12 of the Exchange Act to file reports of beneficial ownership and changes in beneficial ownership with the Securities and Exchange Commission. Directors, executive officers and greater than 10% stockholders are required by the rules and regulations of the Securities and Exchange Commission to furnish the Company with copies of all reports filed by them in compliance with Section 16(a).

Based solely on our review of certain reports filed with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, the reports required to be filed with respect to transactions in our common stock by each person who, at any time during the ~~2020~~2021 fiscal year, was a director, officer, or beneficial owner of more than 10% of our common stock, were filed during the most recent fiscal year.

2425

Item 11. Executive Compensation

Summary Compensation Table— Fiscal Years Ended December 31, ~~2020~~2021 and ~~2019~~2020

The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the named persons for services rendered in all capacities during the noted periods. No other executive officers received total annual salary and bonus compensation in excess of $100,000.

Name and Principal Position	Fiscal Year		Salary ($)		Bonus		Option Awards		All Other Compensation (1)		Total ($)
Nello Gonfiantini III – CEO/COO (1) (2)	2020	Accrued	$	240,000		-		-		95,697	$	335,697
Nello Gonfiantini III – CEO/COO (2) (3)	2021	Accrued	$	240,000		—		—		135,565	$	375,565
		Paid	$	~~114~~253,~~167~~000		-—		-—		-—	$	~~114~~253,~~167~~000
	2019	Accrued	$	182,500		-		-		253,143	$	435,643
	2020	Accrued	$	240,000		—		—		95,697	$	335,697
		Paid	$	~~142~~114,~~075~~167		-—		-—		-—	$	~~142~~114,~~075~~167
Christopher Strachan - CFO (3)	2020	Accrued	$	120,000		-		-		22,190	$	142,190
Christopher Strachan - CFO (4)	2021	Accrued	$	120,000		—		—		26,940	$	146,940
		Paid	$	~~111~~133,~~777~~609		-—		-—		-—	$	~~111~~133,~~777~~609
	2019	Accrued	$	81,600		-		-		134,786	$	216,386
	2020	Accrued	$	120,000		—		—		22,190	$	142,190
		Paid	$	72111,~~800~~777		-—		-—		-—	$	72111,~~800~~777

(1)

Represents value of stock issuable pursuant to employment contracts.

Employment Contracts, Termination of Employment, Change-in-Control Arrangements

(12) On October 29, 2019, the Company appointed Christopher D. Strachan, Chief Financial Officer, to membership on the Company’s Board of Directors and appointed Nello Gonfiantini III, Chief Operations Officer, to the additional post of Chief Executive Officer.

(23) On November 1, 2019, Nello Gonfiantini III entered into a restated agreement with the Company. The Company agreed to pay (i) a salary at a minimum rate of Two Hundred Forty Thousand Dollars ($240,000~~.00~~) per annum for the period beginning on the effective date through the October 31, 2024, (ii) an annual performance bonus to be determined by the corporation's board, (iii) a combination of stock grants and stock options so that the Executive shall have a beneficial stock ownership position equal to ten (10%) percent of the Corporation's outstanding common shares (the "Executive Ownership Position").

(34) On November 1, 2019, Christopher D. Strachan entered into a restated agreement with the Company. The Company agreed to pay (i) a salary at a minimum rate of One Hundred Twenty Thousand Dollars ($120,000~~.00~~) per annum for the period beginning on the effective date through the October 31, 2024, (ii) an annual performance bonus to be determined by the corporation’s board, (iii) a combination of stock grants and stock options so that the Executive shall have a beneficial stock ownership position equal to ten (2%) percent of the Corporation’s outstanding common shares (the “Executive Ownership Position”).

Outstanding Equity Awards at Fiscal Year End

	Option awards					Stock awards
Name	Number of securities underlying unexercised options (#) Exercisable	Number of securities underlying unexercised options (#) unexercisable	Equity incentive Plan awards: number of securities underlying unexercised unearned options (#)	Option exercise price ($)	Option expiration date	Number of shares or units of stock that have not vested (#)	Market value of shares or units of stock that have not vested ($)	Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#)	Equity Incentive plan awards: market or Payout value of unearned shares, units or other rights that have not vested ($)
Nello Gonfiantini III	1061,~~000~~240	-—	-—	65.00	7/2/~~2021~~1/2027
	10,000	-	-	6.00	7/2/2021
Nello Gonfiantini III	61,240	—	—	5.00	2/1/2027
	10,000	-	-	6.00	7/2/2021
	10,000	-	-	6.00	7/2/2021
	10,000	-	-	6.00	7/2/2021
	61,240	-	-	5.00	2/1/2027
	61,240	-	-	5.00	2/1/2027

The Company maintains an Equity Incentive Plan pursuant to which 124,000 shares of common stock are reserved for issuance thereunder. ~~This~~ This Plan was established to award certain founding members, who were instrumental in the development of the Company, as well as key employees, directors and consultants, and to promote the success of the Company’s business. The terms allow for each option to vest immediately, with a term no greater than 10 years from the date of grant, at an exercise price equal to par value at date of the grant. As of December 31, ~~2020~~2021, 10,000 awards are outstanding pursuant to the plan. There remain 114,000 shares available for future grants.

The following table sets forth our securities authorized for issuance under any equity compensation plans approved by our stockholders, as well as any equity compensation plans not approved by our stockholders, as of December 31, ~~2020~~2021:

	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Plan Category	(a)		(b)		(c)
Equity compensation plans approved by security holders		10,000	$	0.000001	$	114,000
Equity compensation plans not approved by security holders		-—	$	-—	$	-—
Total		10,000	$	0.000001		114,000

2526

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information as of the date hereof with respect to the beneficial ownership of our ordinary shares, the sole outstanding class of our voting securities, by (i) each stockholder known to be the beneficial owner of 5% or more of the outstanding ordinary shares of the Company, (ii) each executive officer and director, and (iii) all executive officers and directors as a group. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. ordinary shares subject to options, warrants or convertible securities exercisable or convertible within 60 days as of the date hereof are deemed outstanding for computing the percentage of the person or entity holding such options, warrants or convertible securities but are not deemed outstanding for computing the percentage of any other person and is based on shares issued and outstanding as of ~~March~~April 318, ~~2021~~2022.

The following table provides the names and addresses of each person known to us to own more than 5% of our outstanding shares of common stock as of ~~March~~April 318, ~~2021~~ 2022 and by the officers and directors, individually and as a group. Except as otherwise indicated, all shares are owned directly and the shareholders listed possesses sole voting and investment power with respect to the shares shown.

Name of Beneficial Owner and Address (1)	Amount and Nature of Beneficial Ownership of Common Stock			Percent of Common Stock (2)
Nello Gonfiantini		2025,~~289~~908,~~767~~045	(3)		9.19	%
Christopher Strachan		710,~~803~~443,~~583~~102	(4)		34.50	%
All directors and officers as a group (2 people)		36,351,147			1213.69	%
5% Shareholders
Ron Throgmartin		12,517,702			5.6	%
Chester Aldridge (7)		152,701,189	(5)		36.9	%
Chester Aldridge (6)		21,848,202	(4)		9.0	%
0851229 BC Ltd (8)		690,518,408	(6)		72.6	%
0851229 BC Ltd (7)		98,665,343	(5)		30.7	%

(1)

Unless otherwise noted, the address of each beneficial owner is c/o 6160 Plumas Street, Suite 100, Reno, Nevada 89519.

(2) Based on ~~222~~260,~~327~~661,~~908~~121 shares of common stock issued and outstanding as of ~~March~~April 318, ~~2021~~2022.

(3) Based on ~~222~~260,~~327~~661,~~908~~121 shares of common stock issued and outstanding as of ~~March~~April 318, ~~2021~~2022. Includes ~~172~~122,480 shares of our Common Stock issuable upon exercise of stock options that are vested or vesting within 60 days from ~~March~~April 318, ~~2021~~2022.

(4) Based on ~~222~~260,~~327~~661,~~908~~121 shares of common stock issued and outstanding as of ~~March~~April 318, ~~2021~~2022. Includes 21671,~~842,236~~805 shares of our Common Stock issuable ~~upon~~pursuant ~~conversion~~to ofthe ~~notes~~employment ~~and~~contract ~~accrued~~that ~~interest~~are vested or vesting within 60 days from ~~March~~April 318, ~~2021~~2022.

(5) Based on ~~222~~260,~~327~~661,~~908~~121 shares of common stock issued and outstanding as of ~~March~~April 318, ~~2021~~2022. Includes 98152,~~599~~670,~~644~~223 shares of our Common Stock issuable upon conversion of notes and accrued interest within 60 days from ~~March~~April 318, ~~2021~~2022 and 25,000 shares of our Common Stock issuable upon exercise of warrants within 60 days from April 8, 2022.

(6) ~~336~~Based ~~Bon~~on ~~Air~~260,661,121 ~~Ctr~~shares #of ~~418~~common stock issued and outstanding as of April 8, ~~Greenbrae~~2022. Includes 690,402,709 CAshares ~~94904-3017~~of our Common Stock issuable upon conversion of notes and accrued interest within 60 days from April 8, 2022 and 50,000 shares of our Common Stock issuable upon exercise of warrants within 60 days from April 8, 2022.

(7) PO336 ~~Box~~Bon ~~3200,~~Air ~~Abbotsford,~~Ctr BC# ~~Canada~~418, ~~V2S~~Greenbrae, ~~4P4~~CA 94904-3017

(8)

PO Box 3200, Abbotsford, BC Canada V2S 4P4

Item 13. Certain Relationships and Related Transactions, and Director Independence

Except as disclosed below, none of the following persons has any direct or indirect material interest in any transaction to which we are a party since our incorporation or in any proposed transaction to which we are proposed to be a party:

(A)

Any of our directors or officers;

(B)

Any proposed nominee for election as our director;

(C)

Any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our Common Stock; or

(D)

Any relative or spouse of any of the foregoing persons, or any relative of such spouse, who has the same house as such person or who is a director or officer of any parent or subsidiary of our Company.

2627

As of December 31, ~~2020~~ 2021 and ~~2019~~2020, the Company has accrued compensation to its CEO and director and to its CFO aggregating $~~289~~263,~~897~~ 289 and $~~155~~289,~~841~~897, respectively. As of December 31, ~~2020~~2021 and ~~2019~~2020, accrued payable due to former officers was $1946,~~042,859~~986 and $1,~~137~~042,~~397~~859, respectively. For the years ended December 31, ~~2020~~2021 and ~~2019~~2020, total cash-based compensation to related parties was $360,000 and $~~507~~360,~~430~~000, respectively. For the years ended December 31, ~~2020~~2021 and ~~2019~~2020, total share-based compensation to related parties was $~~192~~162,~~474~~506 and $~~894~~192,~~408~~474, respectively. These amounts are included in general and administrative expenses in the accompanying financial statements.

Director Independence

Because our common stock is not currently listed on a national securities exchange, we have used the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a) (2) provides that an “independent director” is a person other than an officer or employee of the Company or any other individual having a relationship which, in the opinion of the Company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:

	●	the director is, or at any time during the past three years was, an employee of the company;

	●	the director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service);

	●	a family member of the director is, or at any time during the past three years was, an executive officer of the company;

	●	the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions);

	●	the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the company served on the compensation committee of such other entity; or the director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit.

We do not have any independent directors. We do not have an audit committee, compensation committee or nominating committee. We currently do not have a code of ethics that applies to our officers, employees and director.

Item 14. Principal Accounting Fees and Services

Audit Fees

For the Company’s fiscal years ended December 31, ~~2020~~2021 and ~~2019~~2020, we were billed or expect to be billed approximately $~~110~~94,000 and $~~120~~110,000, respectively, for professional services rendered for the audit and quarterly reviews of our financial statements by MGO ~~and Hall & Company, respectively~~.

Audit Related Fees

There were no fees for audit related services rendered by our independent auditors for the years ended December 31, ~~2020~~2021 and ~~2019~~2020.

Tax Fees

For our fiscal years ended December 31, ~~2020~~2021 and ~~2019~~2020, there were no fees for professional services rendered by our independent auditors for tax compliance, tax advice, and tax planning.

All Other Fees

For our fiscal years ended December 31, ~~2020~~2021 and ~~2019~~2020, there were no other fees incurred.

Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

Given the small size of our Board as well as the limited activities of our Company, our Board acts as our Audit Committee. Our Board pre-approves all audit and permissible non-audit services. These services may include audit services, audit-related services, tax services, and other services. Our Board approves these services on a case-by-case basis.

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PART IV

Item 15. Exhibits and Financial Statement Schedules

Exhibit		Incorporated by Reference		Filed or Furnished
Number	Exhibit Description	Form	Exhibit	Filing Date	Herewith
2.1	Merger and Share Exchange Agreement, by and among the Company, Diego Pellicer World-Wide 1, Inc., and Jonathan White, dated March 13, 2015	8-K	2.1	03/19/2015
2.2	Amended and Restated Agreement and Plan of Merger of Diego Pellicer Inc., and the Company, dated April 19, 2014	8-K	10.5	3/19/2015
2.3	Merger Agreement, by and between the Company and Diego Pellicer, Inc., a Washington corporation, dated April 19, 2014	8-K/A	10.18	6/24/2015
2.4	Second Amended and Restated Agreement and Plan of Merger of Diego by and between Diego Pellicer, Inc., A Washington Corporation and Diego Pellicer Worldwide, Inc., A Delaware Corporation	8-K	10.1	2/6/2017
2.5	Amended and Restated Agreement and Plan of Merger by and between the Company and Diego Washington	8-K	10.2	7/25/2018
2.6	Membership Interest Purchase Agreement by and between the Company and Albatross Management Consulting, LLC	8-K	10.1	9/16/2020
2.7	Equity Purchase Agreement, dated as of February 8, 2022, by and between the Company and Hemp Choice Distribution, LLC	8-K	2.1	2/14/22
3.1	Certificate of Incorporation	S-1	3.1	7/1/2013
3.2	Restated Certificate of Incorporation	8-K	3.1	3/19/2015
3.3	Amendment to Certificate of Incorporation, dated February 26, 2015
3.4	Amendment to Certificate of Incorporation, dated August 6, 2018	8-K	10.1	08/10/2018
3.5	Certificate of Designations for Series C Convertible Preferred Stock, dated November 25, 2019	8-K	10.2	12/23/2019
3.6	Bylaws	8-K	3.2	3/19/2015
3.7	Amended and Restated Certificate of Designations for Series C Convertible Preferred Stock, dated February 24, 2021				x
4.1	8% Promissory Note, dated February 18, 2022, issued by the Company to GS Capital Partners, LLC	8-K	4.1	2/24/2022
4.2	8% Promissory Note, dated January 6, 2022, issued by the Company to GS Capital Partners, LLC				x
10.1	Commercial Agreement, by and between the Company and Diego Pellicer, Inc., dated April 19, 2014	8-K	10.4	03/19/2015
10.2	Sublease Agreement, by and between the Company and DPCO, Inc., dated August 14, 2014 (4242 Elizabeth Street property)	8-K	10.12	03/19/2015
10.3	Sublease Agreement, by and between the Company and DPCO, Inc., dated August 14, 2014 (2949 W. Alameda Avenue property)	8-K	10.13	03/19/2015
10.4	Sublease Agreement, by and between the Company and DPCO, Inc., dated August 14, 2014 (755 South Jason Street property)	8-K	10.14	03/19/2015
10.5	Line of Credit Agreement, by and between Neil Demers and the Company, dated December 30, 2014	8-K/A	10.16	06/24/2015
10.6	License Agreement, by and between Plandai Biotechnology, Inc. and the Company, dated January 28, 2014	8-K/A	10.17	06/24/2015
10.7	Sublease Assignment Agreement, by and between the Company and RME Group, LLC	10-K	10.7	04/12/2021	x
10.8	First Amendment to Sublease of Space, by and between the Company, RME Group, LLC and Royal Asset Management, LLC, dated October 4, 2017	10-K	10.8	04/12/2021	x
10.9	Equity and Debt Restructure Agreement, effective June 29, 2018	8-K	10.1	07/20/2018
10.10	First Priority Secured Convertible Promissory Note, effective June 29, 2018, made by the Company in the principal amount of $545,606.96, and payable to investor, Chester Aldridge	8-K	10.2	07/20/2018
10.11	First Priority Secured Convertible Promissory Note, effective June 29, 2018, made by the Company in the principal amount of $2,383,667.77, and payable to investor, 0851229 BC Ltd	8-K	10.3	07/20/2018
10.12	Option to Extend Commercial Sublease Agreement	10-K	10.12	04/12/2021	x
10.13	Office Space Occupancy Agreement, by and between the Company and Veezto Financial, dated January 1, 2019	10-K	10.13	04/12/2021	x
10.14	Separation Agreement and Release by and between David Thompson and the Company, dated January 30, 2019	8-K	10.1	02/06/2019
10.15	Separation Agreement by and between Ron Throgmartin and the Company, dated October 29, 2019	8/K	10.1	11/01/2019
10.16	Second Amendment to Master Lease Agreement by and between the Company and 2949, W. Alameda Avenue, LLC, dated July 31, 2019	10-K	10.16	04/12/2021	x
10.17*	Restated Employment Agreement for Nello Gonfiantini III, dated as of November 1, 2019	8-K	10.1	12/09/2019
10.18*	Restated Employment Agreement for Christopher D. Strachan, dated as of November 1, 2019	8-K	10.2	12/09/2019
10.19	Series C Preferred Purchase Agreement, dated February 26, 2020	8-K	10.1	03/05/2020
10.20	Series C Preferred Stock Purchase Agreement, dated April 13, 2020	8-K	10.1	04/20/2020
10.21	Paycheck Protection Program note, dated April 22, 2020	10-K	10.21	04/12/2021	x
10.22	SBA Loan Authorization and Agreement, dated June 30, 2020				x
10.23	Indemnity Agreement, dated August 31, 2020				x
10.24	Operating Agreement of Blue Bronco, LLC	8-K	10.2	09/16/2020
10.25	Intercreditor and Subordination Agreement	8-K	10.3	09/16/2020
10.26	Side Letter by and between the Company and E2T2, LLC	8-K	10.4	09/16/2020
10.27	Termination of Lease Agreement, by and between the Company and Colorado Group Trust, dated October 21, 2020				x
10.28	Sublease Termination Agreement by and between the Company and Royal Asset Management, LLC and Venture Product Consulting, LLC, dated as of October 1, 2020	8-K	10.1	10/22/2020
23.1	Consent of Independent Registered Public Accounting Firm – MGO CPAs				x
23.2	Consent of Independent Registered Public Accounting Firm – Hall & Company CPAs				x
31.1	Certification of Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				x
31.2	Certification of Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				x
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.				x
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				x
101.INS	XBRL Instance Document				x
101.SCH	XBRL Taxonomy Extension Schema Document				x
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.				x
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document				x
101.LAB	XBRL Taxonomy Extension Label Linkbase Document				x
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document				x

10.22	SBA Loan Authorization and Agreement, dated June 30, 2020	10-K	10.22	04/12/2021
10.23	Indemnity Agreement, dated August 31, 2020	10-K	10.23	04/12/2021
10.24	Operating Agreement of Blue Bronco, LLC	8-K	10.2	09/16/2020
10.25	Intercreditor and Subordination Agreement	8-K	10.3	09/16/2020
10.26	Side Letter by and between the Company and E2T2, LLC	8-K	10.4	09/16/2020
10.27	Termination of Lease Agreement, by and between the Company and Colorado Group Trust, dated October 21, 2020	10-K	10.27	04/12/2021
10.28	Sublease Termination Agreement by and between the Company and Royal Asset Management, LLC and Venture Product Consulting, LLC, dated as of October 1, 2020	8-K	10.1	10/22/2020
10.30	Securities Purchase Agreement, dated February 18, 2022, by and between the Company and GS Capital Partners, LLC	8-K	10.01	2/24/2022
10.31	Securities Purchase Agreement, dated January 6, 2022, by and between the Company and GS Capital Partners, LLC				x
10.32	Third Amendment to Lease of Space between the Company and 755 S Jason Street, LLC dated August 1, 2021 (755 South Jason Street property)				x
10.33	Second Amendment to Sublease of Space between the Company and Royal Asset Management, LLC dated August 1, 2021 (755 South Jason Street property)				x
23.1	Consent of Independent Registered Public Accounting Firm – MGO CPAs				x
31.1	Certification of Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				x
31.2	Certification of Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				x
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.				x
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				x
101.INS	XBRL Instance Document				x
101.SCH	XBRL Taxonomy Extension Schema Document				x
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.				x
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document				x
101.LAB	XBRL Taxonomy Extension Label Linkbase Document				x
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document				x

*	Indicates a management contract or compensatory plan or arrangement.

2830

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	DIEGO PELLICER WORLDWIDE, INC.
Date: April 12, 2021	By:	/s/ Nello Gonfiantini III
Date: April 15, 2022	By:	/s/ Nello Gonfiantini III
		Nello Gonfiantini III
		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Nello Gonfiantini III	Chief Executive Officer, Director	April 1215, ~~2021~~2022
Nello Gonfiantini III
/s/ Christopher Strachan	Chief Financial Officer, Director	April 1215, ~~2021~~2022
Christopher Strachan

2931

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