UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended DecemberMarch 31, 20172022

OR

For the transition period from __________________ to  _________________

Commission file number: 001-35902000-54231

AMERICANN, INC

(Exact name of registrant as specified in its charter)

(303) 862-9000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

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

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

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑ 

As of February 12, 2018,May 9, 2022, the registrant had 19,366,00024,391,961 shares of common stock outstanding.

AmeriCann, Inc.AMERICANN, INC.

FORM 10-Q

TABLE OF CONTENTS

NOTE 1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

AmeriCann, Inc. ("the Company", “we”, “our” or "the Issuer") was organized under the laws of the State of Delaware on June 25, 2010.

On January 17, 2014, a privately held limited liability company acquired approximately 93% of the Company's outstanding shares of common stock from several of the Company's shareholders, which resulted in a change in control of the Company.

The Company's business plan is to offer a comprehensive, turnkey package of services that includes consulting, design, constructiondevelop, lease and financing to approvedoperate state-of-the-art cultivation, processing and manufacturing facilities for licensed marijuana operatorscannabis businesses throughout the United States. The Company's business plan is based on the anticipated growth of the regulated marijuana market in the United States.

The Company's activities are subject to significant risks and uncertainties including the potential failure to secure funding to properly expandcontinue its operations.

Basis of Presentation

The (a) consolidated balance sheet as of September 30, 20130,7,2021, which has been derived from audited financial statements, and (b) the unaudited financial statements as of and for the threesix months ended DecemberMarch 31, 20172022 and 2016,2021, have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Form 10-K filed with the SEC on December 4, 2017.6, 2021. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for future quarters or for the full year. Notes to the financial statements which substantially duplicate the disclosure contained in the audited financial statements for fiscal 20172021 as reported in the Form 10-K have been omitted.

Certain prior period amounts have been reclassified to conform with current period presentation. These reclassifications have no impact on net loss.

Significant Accounting Policies

Restricted CasCashh

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts in the consolidated statements of cash flows:flows:

Amounts included in restricted cash represent those required to be set aside by a contractual agreement with a lenderthe Cannabis Control Commission in Massachusetts.

NOTE 2. GOING CONCERN 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $10,051,189$20,094,233 and $8,676,825$19,585,445 at DecemberMarch 31, 20172022 and September 30, 2017,2021, respectively, and had a net loss of $1,374,364$508,788 for the threesix months ended DecemberMarch 31, 2017.2022. Further, the amount due from WGP of $1,251,829 (before an allowance of $469,699) may not be collectible. These matters, among others, raise substantial doubt about the Company’sCompany's ability to continue as a going concern. While the Company is attempting to increase operations and generate additional revenues, the Company's cash position may not be significant enough to support the Company's daily operations. Management intends to may raise additional funds through the sale of its securities. The Company filed a Demand for Arbitration against WGP on April 7, 2017. There are no indicators to suggest that the amounts due from WGP will not be collectible. On January 18, 2018, the arbitration panel awarded us $1,045,000 plus interest at the rate of 18% per yearsecurities or borrowings from April 18, 2015 to January 18, 2018 for $523,023.third In addition to the principal and interest awarded of $1,568,023, we were also awarded our attorneys’ fees and arbitration fees. The Company has not collected on the award as of the filing date.parties.

NOTE 3. NOTES AND OTHER RECEIVABLES

Notes and other receivables as of DecemberMarch 31, 20172022 and September 30, 2017,2021, consisted of the following: 

NOTE 4. LANDNOTES PAYABLE

Unrelated

On July 31, 2014,February 25, 2021, the Company purchased a five-acre parcel of land located at 4200 Monaco Street, Denver, Colorado for $2,250,809. The property is currently zoned for cannabis cultivation and processing by the City and County of Denver. On October 5, 2017, the Company entered into a purchase and sale agreement to sell the parcel of land for $1,760,000 toborrowed $300,000 from an unrelated thirdparty. An impairment lossThe loan was recognized for the year ended September 30, 2017 to adjust the carrying value to $1,611,312, netunsecured, had an interest at a rate of estimated selling costs. The property11% and was reported in the Company’s consolidated balance sheet at September 30, 2017 as Land Held for Sale of $1,611,312.

The land sale was completeddue and payable on December 4, 2017August 2, 2021. and a loss ofThis loan was fully paid in $2,861July 2021. was recognized during the quarter ended December 31, 2017 based on the difference between the net proceeds and the carrying amount of the land at the date of sale. The proceeds were used to repay a $990,000 loan and interest of $17,088 secured by the property and $601,363 was used to partially repay an $800,000 loan that was secured by a second lien on the property.

NOTE 5.  NOTES PAYABLE

Unrelated

The Company maintained a loan secured by a first lien on the five-acre parcel of land in Denver. During the quarter ended December 31, 2017, the land was sold and the related loan balance of $990,000 was repaid. See Note 4.

On August 25, 2017, we entered into a Promissory Note with an unrelated party that provides financing of up to $150,000. The note bears interest at 12% and is due and payable on May 31, 2018. As of December 31, 2017, we had borrowed $89,677 and accrued interest on this note payable was $4,311. Interest expense was $3,057 and $0 for the three months ended December 31, 2017 and 2016, respectively.

Convertible loans

On October 5, 2017,2020, the Company borrowed $128,000$153,000 from an unrelated party. The loan bearswas unsecured, had an interest at a rate of 12%10% per year and iswas due and payable on October 5, 2018.August 25, 2021.  At any time on or beforeIn April 5, 2018February 2021, the Company may prepaypaid off the loan by paying the Lender the outstanding loan principal balance of $153,000 and accrued interest plus premiums ranging from 15% to 35%. After April 5, 2018, the Company may not repay the loan with the consentpaid a prepayment fee of the Lender. At any time afterApril 5, 2018, the full value of any unpaid principal is convertible into the Company’s common stock at a variable conversion price. The conversion price is equal to: (a) if the market price is greater than or equal to $1.35, the greater of (1) the variable conversion price (defined as market price multiplied by 65 percent) and (2) the fixed conversion price of $1.00, and (b) if the market price is less than $1.35, the lessor of (1) the variable conversion price and (2) the fixed conversion price. Market price is defined as the average of the lowest two daily dollar volume-weighted average sales price for the common stock during the fifteen day trading period ending on the latest complete trading day prior to the conversion date. $47,941. The Company incurred debt issuance costs of $3,000$3,000 which is reflectedwas recorded as a debt discount in the accompanying consolidated balance sheet at December 31, 2017. As the instrument is not yet convertible, no beneficial conversion feature has been recognized at December 31, 2017. discount. Amortization expense related to the debt discount was $750 and $0 for$0 during the threesix months ended DecemberMarch 31, 2017 2022.and 2016, respectively.

On November 13, 2017,August 2, 2019 the Company borrowed $68,000secured a $4,000,000 investment from an unrelated party. The loan bears interest at a rate of 12%third and is due and payable on November 13, 2018. At any time on or before May 13, 2018 the Company may prepay the loan by paying the Lender the outstanding loan principal and accrued interest plus premiums ranging from 15% to 35%. After May 13, 2018, the Company may not repay the loan with the consent of the Lender. At any time afterMay 13, 2018, the full value of any unpaid principal is convertible into the Company’s common stock at a variable conversion price. The conversion price is equal to: (a) if the market price is greater than or equal to $1.35, the greater of (1) the variable conversion price (defined as market price multiplied by 65 percent) and (2) the fixed conversion price of $1.00, and (b) if the market price is less than $1.35, the lessor of (1) the variable conversion price and (2) the fixed conversion price. Market price is defined as the average of the lowest two daily dollar volume-weighted average sales price for the common stock during the fifteen day trading period ending on the latest complete trading day prior to the conversion date. The Company incurred debt issuance costs of $3,000 which is reflected as a debt discount in the accompanying consolidated balance sheet at December 31, 2017. As the instrument is not yet convertible, no beneficial conversion feature has been recognized at December 31, 2017. Amortization expense related to the debt discount was $500 and $0 for the three months ended December 31, 2017 and 2016, respectively.

Construction loan

On October 30, 2017 the Company secured $800,000 in financing from three unrelated parties (the “Lenders”)party in the form of a loan. The primary use of the loans proceeds will be to prepare the Company’s Massachusetts Medical Cannabis Center (the “MMCC”) for the first phase of development,loan was evidenced by a note which will include a pad-ready site for Building 3 and the improvements to the entrance and roadways for the entire project. The remaining loan proceeds will be used to pay lease payments, thru Nov 17, 2017, to Medical Massachusetts Properties, LLC, owner of the land on which the MMCC will be built, and for working capital.

The loan bears interest at 8%the rate of 11% per year and iswas due and payable on April 30, 2018.August 2, 2022 At the options of the Lenders upon the sale of the Denver property orand is secured by a first lien on Building 1 at the Company’s noticeMassachusetts Cannabis Center (“MCC”).

The note holder also received a warrant which allows the holder to prepay the note, all or any portion of the outstanding loan balance is convertible into shares of the Company’s common stock. The number ofpurchase 600,000 shares of the Company’s common stock which will be issued upon any conversion will be determined by dividing the amount to be converted by $1.50, which amount will be proportionately adjusted in the event of any stock split or capital reorganization. The loan may be prepaid at any time, without penalty on 5 days’ notice to the Lenders.

As further consideration for the loan, the Company issued warrants to the Lenders which allow the Lenders to purchase up to 660,000 shares of the Company’s common stock. The warrants are exercisable at a price of $1.50 per share. The warrant will expire on the earlier of (i) $1.50August 2, 2024 or (ii) twenty per share any time on or beforedays after written notice to the holder that the daily Volume Weighted Average Price of the Company’s common stock was at least $4.00 for October 30, 2022. twentyThe Company allocated the proceeds between the note consecutive trading days and the warrants based on their relative fair values. The relative fair valueaverage daily trading volume of the 660,000 warrants was $442,388 which was recognized as additional paid in capital and a corresponding debt discount. After such allocation, the effective conversion price on the issuance date was less than the fair value of theCompany’s common stock into which the note is convertible, giving rise to a beneficial conversion feature of $357,612 which is recognized as additional paid in capital and a corresponding debt discount.

As described in Note 4, on December 4, 2017, the Company sold its property in Denver, Colorado and used $601,363 of the sale proceeds to partially repay this loan. triggering the conversion option described above and the lenders elected not to exercise their conversion option. As the conversion period had passed, the Company’s has fully expensed the debt discount associated with the beneficial conversion feature. The remaining debt discount is being recognized on a straight line basis over the life of the note. Amortization expense related to the debt discounts were $712,736 and $0 forduring the threetwenty months ended December 31, 2017 and 2016, respectively.

Convertible Note Offering

On December 29, 2017 the Company sold convertible notes in the principal amount of $800,000 to a group of accredited investors. The notes bear interesttrading days was at 8% per year, are unsecured, and are due and payable on December 31, 2018. At the option of the note holders, the notes may be converted at any time into shares of the Company's common stock at an initial conversion price of $1.50 per share.least 150,000 shares.

The note holders alsobroker for the loan received a cash commission of $320,000 plus warrants which entitle the note holders to purchase up to 533,33348,000 shares of the Company's common stock. The warrants are exercisable at a price of $1.50$1.50 per share and expire on October 17, 2022.August 2, 2024. 

GVC Capital LLC acted as the placement agent for the offering and received aThe cash commission of $64,000, plus warrants to purchase 106,667 sharesand the fair value of the Company's common stock. The warrants are exercisable atamounting to $52,392 were recognized as a price of $1.50 per share and expire on December 29, 2022.discount to the note.

The Company allocated the proceeds between the note and the warrants based on their relative fair values. The relative fair value of the 640,000600,000 warrants was $607,024$562,762 which was recognized as additional paid in capital and a corresponding debt discount. After such allocation,

NOTE 65.. RELATED PARTY TRANSACTIONS

Strategic Capital Partners. At December 31, 2017 and September 30, 2017, we had outstanding notes payable to SCP of $1,931,646 and $1,978,683, respectively.

Interest expense was $37,390 and $32,968 for the three months ended December 31, 2017 and 2016, respectively. Interest payable – related party of $106,596 and $84,998 was included in the accompanying consolidated balance sheets at December 31, 2017 and September 30, 2017, respectively.  We made interest payments of $21,133 during the quarter ended December 31, 2017. 

BASK (formerly Coastal Compassion.Compassion, Inc). On April 7, 2016, we signed agreements with Coastal Compassion Inc. (“CCI”). CCIBASK. BASK is one of a limited number of non-profit organizations that has received a provisional or final registration to cultivate, process and sell medical and adult use cannabis by the Massachusetts Department of Public Health. CCI has agreed to become the initial tenant in our planned MMCC. Tim Keogh, our Chief Executive Officer, is a Board Member of CCI.Cannabis Control Commission.

Pursuant to the agreements, we agreed to provide CCIBASK with financing of up to $2.5 million for a five-year term at 18% interest per year for construction and working capital required for CCI’sBASK’s approved dispensary and cultivation center in Fairhaven, MA. For a three- year period beginning April 1, 2016, we agreed to consult with CCI in the design, construction and operation of the Fairhaven facility. CCI will pay us $10,000 each month for these consulting services. Although the DPH has approved our agreement with CCI relating to the development and lease terms of the MMCC, the actual lease agreement with CCI has not been finalized or approved by the DPH. We will need to secure significant capital to provide the financing to CCI.

As ofOn December 31,August 15, 2018, 2017, we have provided financing to CCI of $131,589, which includesthe Company combined the construction and working capital advances of $119,635,$129,634 and accrued interest of $44,517 into a new loan with payments over 5 years with 18% interest. At $11,954.March 31, 2022 and September 30, 2021, the outstanding balance on the note receivable was $64,895 and $84,749, respectively.

NOTE 76.. INCOME/LOSS PER SHARE

The following table sets forth the computation of basic and diluted net lossincome (loss) per share:

NOTE 7.COMMITMENTS AND CONTINGENCIES

Massachusetts Cannabis Center. On 8January 14, 2015, we entered into an agreement to purchase a 52.6 acre parcel of undeveloped land in Freetown, Massachusetts. The property is located approximately 47 miles southeast of Boston. We are developing the property as the Massachusetts Cannabis Center. Plans for the MCC include the construction of sustainable greenhouse cultivation and processing facilities that will be leased or sold to Registered Marijuana Dispensaries under the Massachusetts Medical Marijuana Program. We paid the seller $100,000 upon the signing of the agreement which amount was applied toward the purchase price at the closing. 

NOTE 9. STOCK BASED COMPENSATION

Restricted Stock Awards.We use restricted stock awards to compensate certain key executives and other individuals.  At December 31, 2017, we had no outstanding unvested restricted stock awards. Stock-based compensation expense associated with restricted stock awards was $0 and $18,725 for the three months ended December 31, 2017 and 2016, respectively. As of December 31, 2017, there is no remaining unrecognized stock-based compensation associated with restricted stock awards.

Stock Options. There was no stock option activity for the quarter ended December 31, 2017. Stock option details are as follows: 

There was no stock-based compensation expense associated with stock options for the three months ended December 31, 2017 and 2016. At December 31, 2017, there is no remaining unrecognized stock-based compensation associated with stock options.