Results of Operations

Year ended December 31, 2022 compared to year ended December 31, 2021





  Revenues



We had revenues of $685,379 for the year ended December 31, 2022, as compared to revenues of $889,899 for the year ended December 31, 2021.





Cost of Sales


We had a cost of sales of $225,107 on revenues of $685,379 for the year ended December 31, 2022 versus a cost of sales of $279,333 on revenues of $889,899 for the year ended December 31, 2021

Operating Expenses

General and administrative were $525,855 for the year ended December 31, 2022, as compared to $780,462 for the year ended December 31, 2021. Salaries and wages were $383,762 for the year ended December 31, 2022 as compared to $370,034 for the year ended December 31, 2021. The decrease in general and administrative expense categories from 2021 to 2022 reflects our shift of focus to overseas development of operations and impairment expense related to our Greek operations of $74,509. Salaries and wages remained fairly consistent and vary depending on personnel changes.

Professional fees were $1,262,095 for the year ended December 31, 2022, as compared to $889,912 for the year ended December 31, 2021, reflecting an increase of $372,183. After giving effect to all of the foregoing, total operating expenses were $2,171,712 for the year ended December 31,2022, as compared to $2,040,408 for the year ended December 31, 2021. Accordingly, our operating loss was $1,711,440 for the year ended December 31, 2022, as compared to $1,429,842 for the year ended December 31, 2021.





Interest expense


Interest expense was $629,386 for the year ended December 31, 2022, as compared to $635,810 for the year ended December 31, 2021, reflecting an increase of additional debt incurred in 2022.

Net Income (Loss)

After giving effect to an operating loss of $1,711,440 interest expense of $629,386, amortization of debt discount of $303,398, derivative liabilities expense of $0, gain on disposal/impairment of fixed assets of $17,177, change in derivative liabilities expense of $1,010,737 arising from the decrease of our stock prices which increased the volatility factors used in the derivative calculations, we had net loss from non-controlling interest of $155,080 for the year ended December 31, 2022. Additionally, the Company has accrued a tax liability of $876,017 related to potential taxes due under the IRS Code 280E.

This compares to a net loss from non-controlling interest of $331,009 for the year ended December 31, 2021, after giving effect to an operating loss of $1,429,842, interest expense of $635,810, amortization of debt discount of $333,296, derivative liabilities expense of $333,296 and gain on extinguishment of debt of $6,155 offset by other income from a change in derivative liabilities income of $12,947,095 arising from the increase of our stock prices which reduced the volatility factors used in the derivative calculations. The net income attributable to the Company for 2022 and net loss attributable to the Company for 2021 was $3,559,663 and net income of $9,724,262, respectively.

Liquidity and Capital Resources

During 2022 our cash position decreased by $541,669 to $18,330 and our negative working capital deficit was $10,359,344.

As of December 31, 2022, our working capital consisted of cash of $18,330, inventories of $11,990 and prepaid expenses of $28,158 as compared to cash of $565,979, inventories of $51,484 and prepaid expenses of $13,967 as of December 31, 2021.

Our current liabilities include accounts payable and accrued expenses of $961,396, accounts payable and accrued expenses-related parties of $23,190, accrued interest of $1,759,669, current portion of lease liability of $93,067, tax liability of $876,017, convertible notes payable- net of discount of $240,293, notes payable of $9,312 and derivative liabilities of $6,204,878 as compared to current liabilities include accounts payable and accrued expenses of $918,148, accounts payable and accrued expenses-related parties of $141,990 accrued interest of $1,152,783 current portion of lease liability of $79,875, tax liability of $782,107 convertible notes payable- net of discount of $25,000, notes payable of $9,312 and derivative liabilities of $4,980,563 as of December 31, 2021.





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The following table sets forth the major sources and uses of cash for the years ended December 31, 2022 and 2021:







                                                2022            2021

Net cash (used in) operating activities $ (918,799 ) $ (1,043,482 ) Net cash provided by investing activities $ 17,177 $ 1,274,018 Net cash provided by financing activities $ 370,000 $ 296,000 Net increase in cash

$  531,622     $    526,536

Cash Used in Operating Activities

During 2022, we had cash of $928,846 used in operating activities, as compared to cash used in operations of $1,043,482 in 2021.

Cash Provided by (Used in) Investing Activities

During 2022, we had cash of $17,177 provided by investing activities, as compared to $1,274,018 used in investing activities in 2021. Expenditures in 2022 and 2021 consisted of property and equipment.

Cash Provided by Financing Activities

During 2022, $370,000 of convertible debt was issued, as compared to $466,000 of convertible debt issued, with repayment of $205,000 and we sold $35,000 of restricted stock in 2021.

Additional Capital

As of December 31, 2022 we had cash of $18,330 and a working capital deficiency of $10,359,344 as compared to cash of $565,979 and a working capital deficiency of $7,458,348 at December 31, 2021.

Management believes that it will require additional capital, in addition to anticipated revenues from operations to fund expansion of the Company's operations and ultimately achieve profitability. The Company intends to seek such additional capital from further private offerings of equity and/or debt securities. However, we may not be successful in raising additional capital on commercially reasonable terms, if and when needed, in which case our business, financial condition, cash flows and results of operations may be materially and adversely affected.



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Critical Accounting Estimates

The following are deemed to be the most significant accounting estimates affecting us and our results of operations:





Revenue Recognition


Effective January 1, 2018, the Company adopted ASC 606 - Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 - Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured.

To confirm, all of our OLCC licensed cannabis retail sales operations are conducted and operated on a "cash and carry" basis- product(s) from our inventory accounts are sold to the customer(s) and the customer settles the account at time of receipt of product via cash payment at our retail store; the transaction is recorded at the time of sale in our point of sale software system. Revenue is only reported after product has been delivered to the customer and the customer has paid for the product with cash.

To date the only other revenue we have received is for ATM transactions and revenue from this activity is only reported after we receive payment via check from the ATM service provider company.

Fair value of financial instruments

The Company follows the provisions of ASC 820. This Topic defines fair value, establishes a measurement framework and expands disclosures about fair value measurements. We apply these provisions to estimate the fair value of our financial instruments including cash, accounts payable and accrued expenses, and notes payable.





Income Taxes


The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes, as clarified by ASC 740-10, Accounting for Uncertainty in Income Taxes. Our deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which the Company operates, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the "more likely than not" criteria of ASC 740.

ASC 740-10 requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the "more-likely-than-not" threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

Section 280E of the Internal Revenue Code, as amended, prohibits businesses from deducting certain expenses associated with trafficking controlled substances (within the meaning of Schedule I and II of the Controlled Substances Act). The IRS has invoked Section 280E in tax audits against various cannabis businesses in the U.S. that are permitted under applicable state laws. Although the IRS issued a clarification allowing the deduction of certain expenses, the scope of such items is interpreted very narrowly and the bulk of operating costs and general administrative costs are not permitted to be deducted. While there are currently several pending cases before various administrative and federal courts challenging these restrictions, there is no guarantee that these courts will issue an interpretation of Section 280E favorable to cannabis businesses.



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Provision for Income Taxes


We recorded a provision for income taxes in the amount of $876,017 during the year ended December 31, 2022 compared to $782,107 during the year ended December 31, 2021. Although we have net operating losses that we believe are available to us to offset this entire tax liability, which arises under Section 280E of the Code because we are a cannabis company, as a conservative measure, we have accrued this liability.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the effect of recently issued standards that are not yet effective will not have a material effect on its consolidated financial position or results of operations upon adoption.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02). Under ASU No. 2016-2, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU No. 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, the Company adopted this standard on January 1, 2019 using the modified retrospective method. The new standard provides a number of optional practical expedients in transition. The Company elected the package of practical expedients', which permitted the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs; and all of the new standard's available transition practical expedients. On adoption, the Company recognized a right of use asset of $638,593, operating lease liabilities of $638,593, based on the present value of the remaining minimum rental payments under current leasing standards for its existing operating lease. The new standard also provides practical expedients for a company's ongoing accounting. The Company elected the short-term lease recognition exemption for its leases. For those leases with a lease term of 12 months or less, the Company will not recognize ROU assets or lease liabilities.

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception" to simply the accounting for certain instruments with down round features. The amendments require companies to disregard the down round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. Further, companies that provide earnings per share ("EPS") data will adjust the basic EPS calculation for the effect of the feature when triggered and will also recognize the effect of the trigger within equity. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company adopted this new standard on January 1, 2019 and did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820)." This standard modifies disclosure requirements related to fair value measurement and is effective for all entities for fiscal years, and interim periods within those There are no other recently issued accounting pronouncements that the Company has yet to adopt that are expected to have a material effect on its financial position, results of operations, or cash flows. fiscal years, beginning after December 15, 2019. Early adoption is permitted. Implementation on a prospective or retrospective basis varies by specific disclosure requirement. The standard also allows for early adoption of any removed or modified disclosures upon issuance while delaying adoption of the additional disclosures until their effective date. The Company is currently assessing the impact of adopting this standard on its consolidated financial statements.



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In December 2019, the FASB issued ASU No. 2019-12, "Simplifying the Accounting for Income Taxes (Topic 740)". This standard simplifies the accounting for income taxes. This standard is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted for all entities, The Company is currently assessing the impact of adopting this standard on its consolidated financial statements.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

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