☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

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 check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “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 check mark 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 ~~November 9, 2020,~~May 17, 2021, ~~300,416,773~~322,725,060 shares of the registrant’s common stock were outstanding.

							March 31,			December 31,
	September 30, 2020			December 31, 2019			2021			2020
	(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	2,261,327		$	738,688		$	12,318,717		$	2,999,053
Accounts receivable, net		4,077,902			1,669,139			7,341,124			6,675,512
Deferred rents receivable		1,968,500			1,796,825			1,876,049			1,940,181
Due from third parties, net		9,937			-
Notes receivable, current portion		540,319			311,149			374,978			658,122
Inventory		6,802,291			1,219,429			7,454,328			6,830,571
Investments		1,002,659			1,449,144			1,312,028			1,357,193
Other current assets		250,045			192,368			1,016,162			582,589
Total current assets		16,912,980			7,376,742			31,693,386			21,043,221

Property and equipment, net		45,507,577			42,792,369			47,490,375			45,636,529
Intangibles, net		2,311,181			2,364,042			2,689,828			2,228,560
Investments		1,085,528			1,324,661			1,165,788			1,165,788
Notes receivable, less current portion		1,084,671			1,639,496			1,212,829			965,008
Right-of-use assets under operating leases		5,381,761			5,787,423			5,564,376			5,247,152
Right-of-use assets under finance leases		86,591			111,103			70,249			78,420
Other assets		80,493			175,905			97,951			80,493
Total assets	$	72,450,782		$	61,571,741		$	89,984,782		$	76,445,171

Liabilities, mezzanine equity, and stockholders’ equity
Current liabilities:
Accounts payable	$	6,292,958		$	4,719,069		$	6,050,126		$	5,044,918
Accrued expenses		3,111,373			5,395,996			4,663,951			3,621,269
Sales and excise taxes payable								1,286,349			1,053,693
Debentures payable								-			1,032,448
Notes payable, current portion		8,512,590			23,112,742			4,856			8,859,175
Mortgages payable, current portion		1,379,541			223,888			1,382,411			1,387,014
Debentures payable, current portion		2,928,047			-
Operating lease liabilities, current portion		1,002,171			917,444			1,129,611			1,008,227
Finance lease liabilities, current portion		38,412			38,412			36,618			38,412
Due to related parties		1,233,008			1,454,713			-			1,157,815
Other current liabilities		1,505,008			858,176			-			23,640
Total current liabilities		26,003,108			36,720,440			14,553,922			23,226,611

Notes payable, less current portion		11,653,775			-			3,235,972			10,682,234
Mortgages payable, less current portion		14,864,810			7,112,842			14,616,387			14,744,136
Debentures payable, less current portion		-			5,835,212
Operating lease liabilities, less current portion		4,967,583			5,399,414			5,013,417			4,822,064
Finance lease liabilities, less current portion		52,439			75,413			38,184			44,490
Other liabilities		100,200			100,200			100,200			100,200
Total liabilities		57,641,915			55,243,521			37,558,082			53,619,735

Mezzanine equity:
Series B convertible preferred stock, $0.001 par value; 4,908,333 and 0 shares authorized, issued and outstanding at September 30, 2020 and December 31, 2019, respectively		14,725,000			-
Series B convertible preferred stock, $0.001 par value; 4,908,333 shares authorized, issued and outstanding at March 31, 2021 and December 31, 2020								14,725,000			14,725,000
Series C convertible preferred stock, $0.001 par value; 6,216,216 and 0 shares authorized, issued and outstanding at March 31, 2021 and December 31, 2020, respectively								23,000,000			-
Total mezzanine equity								37,725,000			14,725,000

Stockholders’ equity:
Series A convertible preferred stock, $0.001 par value; 0 and 50,000,000 shares authorized at September 30, 2020 and December 31, 2019, respectively; 0 shares issued and outstanding at September 30, 2020 and December 31, 2019		-			-
No designation preferred stock, $0.001 par value; 45,091,667 and 0 shares authorized at September 30, 2020 and December 31, 2019, respectively; 0 shares issued and outstanding at September 30, 2020 and December 31, 2019		-			-
Common stock, $0.001 par value; 500,000,000 shares authorized at September 30, 2020 and December 31, 2019; 289,729,854 and 228,408,024 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		289,730			228,408
Common stock subscribed but not issued; 33,319 and 3,236,857 shares at September 30, 2020 and December 31, 2019, respectively		5,365			1,168,074
Undesignated preferred stock, $0.001 par value; 38,875,451 and 45,091,667 shares authorized at March 31, 2021 and December 31, 2020, respectively; 0 shares issued and outstanding at March 31, 2021 and December 31, 2020								-			-
Common stock, $0.001 par value; 500,000,000 shares authorized at March 31, 2021 and December 31, 2020; 322,499,699 and 314,418,812 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively								322,500			314,419
Common stock subscribed but not issued; 6,877 and 11,413 shares at March 31, 2021 and December 31, 2020, respectively								5,365			5,365
Additional paid-in capital		109,115,215			112,245,730			115,340,044			112,974,329
Accumulated deficit		(108,737,141	)		(106,760,527	)		(100,396,635	)		(104,616,538	)
Noncontrolling interests		(589,302	)		(553,465	)		(569,574	)		(577,139	)
Total stockholders’ equity		83,867			6,328,220			14,701,700			8,100,436
Total liabilities, mezzanine equity, and stockholders’ equity	$	72,450,782		$	61,571,741		$	89,984,782		$	76,445,171

	2020			2019			2020			2019			2021			2020
	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2020			2019			2020			2019			2021			2020

Revenues	$	13,461,504		$	4,209,328		$	30,537,829		$	11,382,942		$	24,642,564		$	7,466,019
Revenues from related party		-			7,014,371			-			29,029,249
Total revenues		13,461,504			11,223,699			30,537,829			40,412,191

Cost of revenues		4,781,677			6,523,283			10,831,763			24,523,626			11,456,646			2,597,917

Gross profit		8,679,827			4,700,416			19,706,066			15,888,565			13,185,918			4,868,102

Operating expenses:
Personnel		1,354,644			1,241,535			4,075,168			2,740,039			1,727,141			1,513,383
Marketing and promotion		103,327			91,562			281,329			286,521			224,369			112,384
General and administrative		2,931,684			2,394,692			7,515,721			6,752,168			3,170,724			2,235,009
Bad debts		892,029			-			1,342,029			-			1,025,415			-
Total operating expenses		5,281,684			3,727,789			13,214,247			9,778,728			6,147,649			3,860,776

Operating income		3,398,143			972,627			6,491,819			6,109,837			7,038,269			1,007,326

Non-operating income (expenses):
Interest expense		(1,921,312	)		(4,516,576	)		(7,581,648	)		(9,076,583	)		(1,512,022	)		(2,691,145	)
Interest income		34,818			79,016			121,712			425,770			34,027			46,031
Loss on obligations settled with equity		-			-			(44,678	)		-			(1,286	)		-
Equity in earnings of investments		51,511			(2,933,252	)		18,553			(1,020,310	)
Change in fair value of investments		217,374			-			(704,172	)		-			(45,165	)		(687,002	)
Other		(84,708	)		-			(84,708	)		2,948,917
Total non-operating income (expenses), net		(1,702,317	)		(7,370,812	)		(8,274,941	)		(6,722,206	)		(1,524,446	)		(3,332,116	)

Income (loss) before income taxes		1,695,826			(6,398,185	)		(1,783,122	)		(612,369	)		5,513,823			(2,324,790	)
Provision for income taxes					901,477			-			1,886,072			1,203,797			12,926
Net income (loss)	$	1,695,826		$	(7,299,662	)	$	(1,783,122	)	$	(2,498,441	)	$	4,310,026		$	(2,337,716	)

Net income (loss) attributable to noncontrolling interests	$	36,959		$	99,021		$	193,492		$	246,367		$	90,123		$	83,728
Net income (loss) attributable to MariMed Inc.	$	1,658,867		$	(7,398,683	)	$	(1,976,614	)	$	(2,744,808	)	$	4,219,903		$	(2,421,444	)

Net income (loss) per share
Basic	$	0.006		$	(0.034	)	$	(0.008	)	$	(0.013	)		0.01			(0.01	)
Diluted	$	0.005		$	(0.034	)	$	(0.008	)	$	(0.013	)		0.01			(0.01	)

Weighted average common shares outstanding
Basic		281,535,212			217,417,326			254,387,761			214,274,342			305,212,269			230,829,366
Diluted		346,091,840			217,417,326			254,387,761			214,274,342			340,825,940			230,829,366

The above statements do not show columns for ~~Series A convertible~~undesignated preferred stock ~~and no designation~~

~~preferred stock~~ as the balances were zero and there was no activity in the ~~periods presented.~~reported periods.

	2020			2019			2021			2020
	Nine Months Ended September 30,						Three Months Ended March 31,
	2020			2019			2021			2020
Cash flows from operating activities:
Net income (loss) attributable to MariMed Inc.	$	(1,976,614	)	$	(2,744,808	)	$	4,219,903		$	(2,421,444	)
Net income (loss) attributable to noncontrolling interests		193,492			246,367			90,123			83,728
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation		1,340,649			697,946			462,423			484,091
Asset write-off		84,708			-
Amortization of intangibles		307,861			154,167			177,302			79,079
Amortization of stock grants		16,094			193,710			5,365			5,365
Amortization of option grants		707,003			1,219,958			294,598			317,355
Amortization of stand-alone warrant issuances		2,179			139,016			55,786			-
Amortization of warrants attached to debt		631,895			1,836,892			539,273			223,363
Amortization of beneficial conversion feature		2,552,933			4,646,070			176,522			990,846
Amortization of original issue discount		286,353			107,256			51,753			56,808
Bad debt expense		1,342,029			-			1,025,415			-
Loss on obligations settled with equity		44,678			-			1,286			-
Equity in (earnings) losses of investments		(18,553	)		1,020,310
Change in fair value of investments		704,172			-			45,165			687,002
Changes in operating assets and liabilities:
Accounts receivable, net		(3,750,792	)		(4,788,303	)		(1,691,027	)		(842,914	)
Accounts receivable from related party, net					(33,200,000	)
Deferred rents receivable		(171,675	)		53,461			64,132			(204,253	)
Due from third parties		-			(174,516	)		-			(99,320	)
Inventory		(5,582,862	)		(942,399	)		(623,757	)		(1,496,168	)
Other current assets		(57,677	)		7,154			(433,573	)		19,314
Other assets		95,412			(262,981	)		(17,458	)		(32,000	)
Accounts payable		2,272,810			(178,223	)		1,035,208			21,180
Accrued expenses		1,872,692			3,339,325			1,074,913			855,127
Deferred rents payable		-			(105,901	)
Operating lease payments		58,559			424,129
Sales and excise taxes payable								232,656			619,489
Operating lease payments, net								(4,487	)		79,523
Finance lease interest payments		4,033			(1,824	)		1,504			2,087
Unearned revenue from related party		-			4,170,750
Other current liabilities		646,832			197,943			(23,640	)		164,637
Other liabilities		-			(238,000	)
Net cash provided by (used in) operating activities		1,606,211			(24,182,501	)		6,759,385			(407,105	)

Cash flows from investing activities:
Purchase of property and equipment		(4,116,053	)		(6,741,632	)		(2,308,098	)		(1,363,169	)
Purchase of cannabis licenses		(255,000	)		(150,000	)		(638,570	)		(25,000	)
Investment in notes receivable		-			(2,030,000	)
Interest on notes receivable		443,150			175,509			69,338			34,397
Acquisition		-			(655,804	)
Due from related parties		-			119,781
Net cash used in investing activities		(3,927,903	)		(9,282,146	)		(2,877,330	)		(1,353,772	)

Cash flows from financing activities:
Issuance of common stock		-			2,600,000
Issuance of promissory notes		5,249,763			17,000,000
Proceeds from issuance of preferred stock								23,000,000			-
Equity issuance costs								(386,983	)		-
Proceeds from issuance of promissory notes								-			4,517,500
Repayments of promissory notes		(10,770,011	)		-			(15,800,579	)		(2,400,000	)
Proceeds from issuance of debentures		935,000			9,600,000			-			935,000
Proceeds from mortgages		13,897,282			-			-			235,900
Payments on mortgages		(4,989,661	)		(142,170	)		(132,352	)		(60,381	)
Exercise of stock options		-			75,500
Exercise of warrants		-			612,442
Proceeds from exercise of warrants								7,500			-
Due to related parties		(221,705	)		139,402			(1,157,815	)		(240,547	)
Finance lease principal payments		(27,008	)		(11,167	)		(9,604	)		(9,603	)
Distributions		(229,329	)		(376,993	)		(82,558	)		(100,905	)
Net cash provided by financing activities		3,844,331			29,497,014			5,437,609			2,876,964

Net change to cash and cash equivalents		1,522,639			(3,967,633	)		9,319,664			1,116,087
Cash and cash equivalents at beginning of period		738,688			4,104,315			2,999,053			738,688
Cash and cash equivalents at end of period	$	2,261,327		$	136,682		$	12,318,717		$	1,854,775

Supplemental disclosure of cash flow information:
Cash paid for interest	$	1,236,464		$	699,582		$	1,091,927		$	380,084
Cash paid for income taxes	$	488,772		$	88,150		$	14,075		$	13,000

Non-cash activities:
Conversions of debentures payable	$	7,166,041		$	7,859,283		$	1,356,452		$	1,804,657
Conversion of promissory notes							$	1,009,792		$	-
Operating lease right-of-use assets and liabilities							$	466,105		$	-
Common stock issued to settle obligations							$	30,000		$	-
Issuance of common stock associated with subscriptions							$	5,365		$	1,168,074
Exchange of common stock to preferred stock							$	-		$	14,725,000
Conversion of accrued interest to promissory notes							$	-		$	1,500,000
Beneficial conversion feature on debentures payable	$	379,183		$	4,235,469		$	-		$	379,183
Discount on debentures payable	$	28,021		$	1,148,056		$	-		$	28,021
Issuance of common stock associated with subscriptions	$	1,168,074		$	169,123
Discount on promissory notes	$	638,927		$	600,621
Conversion of promissory notes	$	460,050		$	-
Extinguishment of promissory note	$	352,000		$	-
Common stock issued to settle obligations	$	698,922		$	-
Exchange of common stock to preferred stock	$	14,725,000		$	-
Conversion of accrued interest to promissory note	$	3,908,654		$	-
Conversion of debentures receivable to investment	$	-		$	30,000,000
Operating lease right-of-use assets and liabilities	$	-		$	7,142,150
Finance lease right-of-use assets and liabilities	$	-		$	134,193
Conversion of notes receivable to investment	$	-		$	257,687
Conversion of advances to notes receivable	$	-		$	855,913
MediTaurus acquisition	$	-		$	2,500,000
Terrace investment	$	-		$	1,590,000
Harvest payment	$	-		$	1,000
Exercise of stock options via the reduction of an obligation	$	-		$	350,000
Cashless exercise of stock options	$	-		$	1,762
Reclass of accrued interest from notes payable	$	-		$	127,450
Reclass of accrued interest from debentures payable	$	-		$	62,748

MariMed Inc. (the “Company”) is a multi-state operator in the United States cannabis industry. The Company develops, operates, manages, and optimizes over 300,000square feet of state-of-the-art, regulatory-compliant facilities for the cultivation, production and dispensing of medicinal and recreational cannabis. The Company also licenses its proprietary brands of cannabis and hemp-infused products, along with other top brands, in several domestic markets and overseas.

Upon its entry into the cannabis industry in 2014, the Company was an advisory firm that procured state-issued cannabis licenses on behalf of its clients, ~~leased its~~developed cannabis facilities which it leased to these newly-licensed companies, and provided industry-leading expertise and oversight in all aspects of their cannabis operations. The Company also provided its clients with as ongoing regulatory, accounting, real estate, human resources, and administrative services.

In 2018, the Company ~~commenced a~~made the strategic ~~plan~~decision to transition from a consulting business to a direct owner of cannabis licenses and operator of seed-to-sale ~~operations.~~operations (hereinafter referred to as the “Consolidation Plan”). The ~~Company’s strategic plan consists of~~Consolidation Plan calls for the acquisition of its cannabis-licensed clients located in ~~five states—~~Delaware, Illinois, Maryland, Massachusetts, and ~~Nevada—and~~Nevada. In addition, the ~~consolidation~~Consolidation Plan includes the potential acquisition of a Rhode Island asset. All of these acquisitions are subject to state approval, and once consolidated, the entities will operate under the MariMed banner.

To date, acquisitions of the licensed businesses in Massachusetts and Illinois have been completed and establish the Company as a fully integrated seed-to-sale multi-state operator. The acquisitions of the remaining entities located in Maryland, Nevada, and Delaware are at various stages of completion and subject to each state’s laws governing the ownership transfer of cannabis licenses, which in the case of Delaware requires a modification of current cannabis ownership laws to permit for-profit ownership. Meanwhile, the Company continues to expand these businesses and maximize the Company’s revenue from rental income, management fees, and licensing royalties.

A goal in completing this transition from a consulting business to a direct owner of cannabis licenses and operator of seed-to-sale operations is to present a simpler, more transparent financial picture of the full breadth of the Company’s efforts, with a clearer representation of the revenues, earnings, and other financial metrics the Company has generated for its clients. The Company has played a key role in the successes of these entities, from the securing of their cannabis licenses, to the development of facilities that are models of excellence, to providing ~~industry best practices~~operational and corporate guidance. Accordingly, the Company believes it is well suited to own these facilities and manage the continuing growth of their operations.

To date, acquisitions of the licensed businesses in Massachusetts and Illinois have been state-approved and completed, and establishes the Company as a fully integrated seed-to-sale multi-state operator. The acquisitions of the remaining entities located in Maryland, Nevada, and Delaware are at various stages of completion and subject to each state’s laws governing the ownership and transfer of cannabis licenses, which in the case of Delaware requires a modification of current cannabis ownership laws to permit for-profit ownership. Meanwhile, the Company continues to develop additional revenue and business in these states and plans to leverage its success to expand into other markets where cannabis is and becomes legal.

The Company has also created its own brands of cannabis flower, concentrates, and precision-dosed products utilizing proprietary strains and formulations. These products are developed by the Company in cooperation with state-licensed operators who meet the Company’s strict standards, including all natural—not artificial or synthetic—ingredients. The Company licenses its brands and product formulations only to certified manufacturing professionals who follow state cannabis laws and adhere to the Company’s precise scientific formulations and trademarked product recipes.

The Company’s ~~branded~~proprietary cannabis ~~products are licensed~~genetics produce flowers and concentrates under the brand ~~names including Kalm Fusion™,~~name Nature’s Heritage™, and ~~Betty’s Eddies™~~cannabis-infused products under the brand names Kalm Fusion®, ~~and are distributed~~ in the form of ~~dissolvable strips,~~chewable tablets ~~powders, microwaveable popcorn,~~and drink powder mixes, and the award-winning¹ Betty’s Eddies® brand of all natural fruit ~~chews,~~chews. Both cannabis-infused brands are top selling products in Maryland and ~~other varieties~~Massachusetts²and the Company intends to introduce additional products under these brands in ~~development.~~ 2021. The Company’s brand of hemp-infused cannabidiol (“CBD”) products, Florance™, is distributed in the United States and abroad.

The Company also has exclusive sublicensing rights in certain states to distribute the Binske® line of cannabis products crafted from premium artisan ingredients, the Healer™ line of medical full-spectrum cannabis tinctures, and the ~~clinically-tested~~clinically tested medicinal cannabis strains developed in Israel by global medical cannabis research pioneer Tikun Olam™. ~~The Company’s hemp division distributes hemp-derived CBD products, including its Florance™ brand, in the US and abroad.~~ The Company intends to continue licensing and distributing its brands as well as other top brands in the Company’s current markets and in additional legal markets worldwide.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. The spread of the virus in the United States and the measures implemented to contain it—including business shutdowns, indoor capacity restrictions, social distancing, and diminished travel—have negatively impacted the economy and have created significant volatility and disruption in financial markets. Consequently, the Company’s ~~expansion efforts and~~ implementation of its ~~strategic plan have~~aforementioned Consolidation Plan has been delayed. Additionally, while the cannabis industry has been deemed an essential business, and is not expected to suffer severe declines in revenue, the Company’s business, operations, financial condition, and liquidity have been ~~adversely affected,~~impacted, as further discussed in ~~Item 2.~~ ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~ ~~and the notes to the financial statements included in~~ this report.

Continued disruption to the global economy may materially and adversely affect the future carrying values of certain of the Company’s assets, including inventories, accounts receivables, and intangibles, as well as negatively impact the Company’s ability to raise working capital to support its operations. The full extent to which COVID-19 and the measures to contain it will impact the Company’s business, operations financial condition, and liquidity will depend on the continued severity and duration of the COVID-19 outbreak and other future developments in response to the virus, all of which are highly uncertain at this time. As a result, the Company cannot predict the ultimate impact of COVID-19 on its operational and financial performance.

The Company’s stock is quoted on the OTCQX market under the ticker symbol MRMD.

The Company was incorporated in Delaware in January 2011 under the name Worlds Online Inc. Initially, the Company developed and managed online virtual worlds. By early 2014, this line of business effectively ceased operating, and the Company pivoted into the legal cannabis industry.

¹Awards won by the Company’s Betty’s Eddies® brand include LeafLink 2020 Industry Innovator, Explore Maryland Cannabis 2020 Edible of the Year, and LeafLink 2019 Best Selling Medical Product.

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

In accordance with GAAP, interim financial statements are not required to contain all of the disclosures normally required in annual financial statements. In addition, the results of operations of interim periods may not necessarily be indicative of the results of operations to be expected for the full year. Accordingly, these interim financial statements should be read in conjunction with the Company’s most recent audited annual financial statements and accompanying notes for the year ended December 31, ~~2019.~~2020.

Certain reclassifications have been made to prior periods’ data to conform to the current period presentation. These reclassifications had no effect on reported income (losses) or cash flows.

In connection with the preparation of its financial statements for the nine months ended September 30, 2020, the Company’s management evaluated the Company’s ability to continue as a going concern in accordance with ASU 2014-15, ~~Presentation of Financial Statements–Going Concern (Subtopic 205-40)~~, which requires an assessment of relevant conditions or events, considered in the aggregate, that are known or reasonably knowable by management on the issuance dates of the financial statements which indicate the probable likelihood that the Company will be unable to meet its obligations as they become due within one year after the issuance date of the financial statements.

As part of its evaluation, management assessed known events, trends, commitments, and uncertainties, which at the time included the status of the Company’s consolidation plan, the continuing impact of the COVID-19 pandemic on its operations, developments concerning GenCanna’s bankruptcy proceedings, recent cannabis industry investment activity, price movements of public cannabis stock, actions and/or results of certain bellwether cannabis companies, the level of cannabis investor confidence, and changes to state laws governing recreational (adult-use) and medical cannabis.

Management also reviewed certain key liquidity metrics of the Company, as further described below, as well as other factors in its evaluation, and determined that there currently exists a substantial doubt that the Company will be able to continue as a going concern within one year after the issuance date of these financial statements without additional funding or the continued profitability growth of its cannabis operations in Illinois and Massachusetts.

~~The Company produced the following improvements to key liquidity metrics during the reported period:~~

~~For further discussion of the Company’s liquidity and capital resources, please refer to Item 2.~~ ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~ ~~of this Form 10-Q for the period ended September 30, 2020.~~

The accompanying condensed consolidated financial statements include the accounts of MariMed Inc. and the following majority-owned subsidiaries:

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts within the financial statements and disclosures thereof. Actual results could differ from these estimates or assumptions.

The Company considers all highly liquid investments with a maturity date of three months or less to be cash equivalents. The fair values of these investments approximate their carrying values.

The Company’s cash and cash equivalents are maintained with recognized financial institutions located in the United States. In the normal course of business, the Company may carry balances with certain financial institutions that exceed federally insured limits. The Company has not experienced losses on balances in excess of such limits and management believes the Company is not exposed to significant risks in that regard.

Accounts receivable consist of trade receivables and are carried at their estimated collectible amounts.

The Company provides credit to its clients in the form of payment terms. The Company limits its credit risk by performing credit evaluations of its clients and maintaining a reserve, if deemed necessary, for potential credit losses. Such evaluations include the review of a client’s outstanding balances with consideration towards such client’s historical collection experience, as well as prevailing economic and market conditions and other factors. Based on such evaluations, the Company maintained ~~an allowance for doubtful accounts~~a reserve of approximately $~~40.5~~40.9 million and $~~39.7~~40.0 million at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. Please refer to Note 1617 – Bad Debts for further discussion on receivable reserves.

Inventory is carried at the lower of cost or net realizable value, with the cost being determined on a first-in, first-out (FIFO) basis. The Company allocates a certain percentage of overhead cost to its manufactured inventory; such allocation is based on square footage and other industry-standard criteria. The Company reviews physical inventory for obsolescence and/or excess and will record a ~~reserve~~write-down if ~~necessary. As of the date of this report, no reserve was deemed~~ necessary.

Investments are comprised of equity ~~holding of~~holdings in private companies. These investments are recorded at fair value on the Company’s consolidated balance sheet, with changes to fair value included in income. Investments are evaluated for permanent impairment and are written down if such impairments are deemed to have occurred.

The Company recognizes revenue in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) 606, Revenue from Contract with Customers, as amended by subsequently issued Accounting Standards Updates. This revenue standard requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to in exchange for those goods or services. The recognition of revenue is determined by performing the following consecutive steps:

Additionally, when another party is involved in providing goods or services to the Company’s clients, a determination is made as to who—the Company or the other party—is acting in the capacity as the principal in the sale transaction, and who is merely the agent arranging for goods or services to be provided by the other party.

The Company is typically considered the principal if it controls the specified good or service before such good or service is transferred to its client. The Company may also be deemed to be the principal even if it engages another party (an agent) to satisfy some of the performance obligations on its behalf, provided the Company (i) takes on certain responsibilities, obligations and risks, (ii) possesses certain abilities and discretion, or (iii) other relevant indicators of the sale. If deemed an agent, the Company would not recognize revenue for the performance obligations it does not satisfy.

Property and equipment are stated at cost less accumulated depreciation, with depreciation recognized on a straight-line basis over the shorter of the estimated useful life of the asset or the lease term, if applicable. When assets are retired or disposed, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income. Repairs and maintenance are charged to expense in the period incurred.

The estimated useful lives of property and equipment are generally as follows: buildings and building improvements, ~~seven~~forty years to ~~thirty-nine~~ ~~years;~~; tenant improvements, the remaining duration of the related lease; furniture and fixtures, seven ~~years;~~to ten years; machinery and equipment, ~~five~~ten years to ~~ten~~ ~~years.~~. Land is not depreciated.

The Company’s property and equipment are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable from the undiscounted future cash flows of such asset over the anticipated holding period. An impairment loss is measured by the excess of the asset’s carrying amount over its estimated fair value.

Impairment analyses are based on management’s current plans, asset holding periods, and currently available market information. If these criteria change, the Company’s evaluation of impairment losses may be different and could have a material impact to the consolidated financial statements.

For the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ based on the results of management’s impairment analyses, there were 0no impairment losses.

The consolidated financial statements reflect the Company’s adoption of ASC 842, Leases, as amended by subsequent accounting standards updates, utilizing the modified retrospective transition ~~approach which calls for applying the new standard to all of the Company’s leases effective January 1, 2019, which is the effective date of adoption.~~approach.

ASC 842 is intended to improve financial reporting of leasing transactions. The most prominent change from previous accounting guidance is the requirement to recognize right-of-use assets and lease liabilities on the consolidated balance sheet representing the rights and obligations created by operating leases that extend more than twelve months in which the Company is the lessee. The Company elected the package of practical expedients permitted under ASC 842. Accordingly, the Company accounted for its existing operating leases that commenced before the effective date as operating leases under the new guidance without reassessing (i) whether the contracts contain a lease, (ii) the classification of the leases or (iii) the accounting for indirect costs as defined in ASC 842.

The Company determines if an arrangement is a lease at inception. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Non-lease components within lease agreements are accounted for separately. Right-of-use assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term, utilizing the Company’s incremental borrowing rate. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company evaluates the recoverability of its fixed assets and other assets in accordance with ASC 360-10-15, Impairment or Disposal of Long-Lived Assets. Impairment of long-lived assets is recognized when the net book value of such assets exceeds their expected cash flows, in which case the assets are written down to fair value, which is determined based on discounted future cash flows or appraised values.

The Company follows the provisions of ASC 820, Fair Value Measurement, to measure the fair value of its financial instruments, and ASC 825, Financial Instruments, for disclosures on the fair value of its financial instruments. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by ASC 820 are:

The carrying amounts of the Company’s financial assets and liabilities, such as cash and accounts payable, approximate their fair values due to the short maturity of these instruments.

The fair value of option and warrant issuances are determined using the Black-Scholes pricing model and employing several inputs such as the expected life of instrument, the exercise price, the expected risk-free interest rate, the expected dividend yield, the value of the Company’s common stock on issuance date, and the expected volatility of such common stock. The following table summarizes the range of inputs used by the Company during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019.~~

	Nine Months Ended September 30,
	2020		2019		2021		2020
Life of instrument		2.7 to 4.3 years		2.3 to 3.0 years		3.0 to 5.0 years		3.0 years
Volatility factors		1.059 to 1.180		1.059 to 1.106		1.230 to 1.266		1.059
Risk-free interest rates		0.26% to 1.30%		1.42% to 2.28%		0.36% to 0.85%		1.30%
Dividend yield		0%		0%		0%		0%

The expected life of an instrument is calculated using the simplified method pursuant to Staff Accounting Bulletin Topic 14, Share-Based Payment, which allows for using the mid-point between the vesting date and expiration date. The volatility factors are based on the historical two-year movement of the Company’s common stock prior to an instrument’s issuance date. The risk-free interest rate is based on U.S. Treasury rates with maturity periods similar to the expected instruments life on the issuance date.

The Company amortizes the fair value of option and warrant issuances on a straight-line basis over the requisite service period of each instrument.

The Company accounts for extinguishment of liabilities in accordance with ASC 405-20, Extinguishments of Liabilities. When the conditions for extinguishment are met, the liabilities are written down to zero and a gain or loss is recognized.

The Company accounts for stock-based compensation using the fair value method as set forth in ASC 718, Compensation—Stock Compensation, which requires a public entity to measure the cost of employee services received in exchange for an equity award based on the fair value of the award on the grant date, with limited exceptions. Such value will be incurred as compensation expense over the period an employee is required to provide service in exchange for the award, usually the vesting period. No compensation cost is recognized for equity awards for which employees do not render the requisite service.

The Company ~~accounts~~uses the asset and liability method to account for income taxes in accordance with ASC 740, Income Taxes. ~~Deferred~~Under this method, deferred income tax assets and liabilities are ~~determined based upon~~recorded for the future tax consequences of differences between the tax basis and 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. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of operations in the period that includes the enactment date.

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. The Company did not take any uncertain tax positions and had 0 adjustments to unrecognized income tax liabilities or benefits for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019.~~2020.

The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.

In accordance with ASC 850, the Company’s financial statements include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business, as well as transactions that are eliminated in the preparation of financial statements.

The Company reports comprehensive income and its components following guidance set forth by ASC 220, Comprehensive Income, which establishes standards for the reporting and display of comprehensive income and its components in the consolidated financial statements. There were no items of comprehensive income applicable to the Company during the period covered in the financial statements.

Earnings per common share is computed pursuant to ASC 260, Earnings Per Share. Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the sum of the weighted average number of shares of common stock outstanding plus the weighted average number of potentially dilutive securities during the period.

~~At September 30,~~As of March 31, 2021 and 2020, ~~and 2019,~~ there were~~24,860,857~~ ~~and~~ ~~16,815,107, respectively, of~~ potentially dilutive securities ~~in the form~~convertible into shares of ~~outstanding~~common stock comprised of (i) stock options ~~and warrants. Also as of such dates, there were (i) $4.2~~ ~~million and $11.1~~ ~~million, respectively, of outstanding~~– convertible ~~debentures payable, (ii)~~into ~~4,908,333~~11,017,750 and 06,241,250 shares, respectively, of(ii) warrants – convertible into 32,282,708 and 11,960,107 shares, respectively, (iii) Series B ~~convertible~~ preferred stock ~~outstanding, and (iii) approximately $5.2~~ ~~million and $350,000, respectively, of outstanding convertible promissory notes. All of these potentially dilutive securities are~~– convertible into ~~common~~4,908,333 shares in both periods, (iv) Series C preferred stock ~~based on either (i) a predetermined price, subject to adjustment, or (ii) the market value of common stock on or about the future conversion date.~~– convertible into 31,081,080 and 0 shares, respectively, (v) debentures payable – convertible into 0 and 79,324,861 shares, respectively, and (vi) promissory notes – convertible into 10,705,513 and 1,464,435 shares, respectively.

For the three months ended ~~September 30, 2020, all such~~March 31, 2021, the aforementioned potentially dilutive securities ~~were convertible into approximately~~ ~~64.6~~ ~~million net shares of common stock, which were included in~~increased the number of weighted average common shares outstanding on a diluted basis ~~and~~by 35,613,671 million shares, determined in accordance with ASC 260, which are included in the calculation of diluted net income per share for this ~~period as shown in the statement of operations.~~period. For the ~~nine~~three months ended ~~September 30,~~March 31, 2020, ~~and for the three and nine months ended Septembers 30, 2019,~~ the potentially dilutive securities had an anti-dilutive effect on earnings per share, and in accordance with ASC 260, were excluded from the diluted net income per share calculations, resulting in identical basic and fully diluted net income per share for ~~these periods.~~that period.

The Company follows ASC 450, Contingencies, which requires the Company to assess the likelihood that a loss will be incurred from the occurrence or non-occurrence of one or more future events. Such assessment inherently involves an exercise of judgment. In assessing possible loss contingencies from legal proceedings or unasserted claims, the Company evaluates the perceived merits of such proceedings or claims, and of the relief sought or expected to be sought.

If the assessment of a contingency indicates that it is probable that a material loss will be incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

While not assured, management does not believe, based upon information available at this time, that a loss contingency will have material adverse effect on the Company’s financial position, results of operations or cash flows.

Convertible instruments that are not bifurcated as a derivative pursuant to ASC 815, Derivatives and Hedging, and not accounted for as a separate equity component under the cash conversion guidance are evaluated to determine whether their conversion prices create an embedded beneficial conversion feature at inception, or may become beneficial in the future due to potential adjustments.

A beneficial conversion feature is a nondetachable conversion feature that is “in-the-money” at the commitment date. The in-the-money portion, also known as the intrinsic value, ~~of the option,~~ is recorded in equity, with an offsetting discount to the carrying amount of convertible debt to which it is attached. The discount is amortized to interest expense over the life of the debt with adjustments to amortization upon full or partial conversions of the debt.

The Company is subject to risks common to companies operating within the legal and medical marijuana industries, including, but not limited to, federal laws, government regulations and jurisdictional laws.

Noncontrolling interests represent third-party minority ownership of the Company’s consolidated subsidiaries. Net income attributable to noncontrolling interests is shown in the consolidated statements of operations; and the value of net assets owned by noncontrolling interests are presented as a component of equity within the balance sheets.

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements, and does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations.

~~Effective October 1, 2019, the Illinois Department of Financial and Professional Regulation approved the Company’s acquisition of (i)100~~% of the ownership interests of KPG of Anna LLC and KPG of Harrisburg LLC, the Company’s two cannabis-licensed clients that operate medical marijuana dispensaries in the state of Illinois (both entities collectively, the “KPGs”), and (ii) the 40% ownership interests not already owned by the Company of Mari Holdings IL LLC, the Company’s subsidiary which owns the real estate in which the KPGs’ dispensaries are located (“Mari-IL”). On such date, ~~1,000,000~~ ~~shares of the Company’s common stock, representing the entire purchase price, were issued to the sellers of the KPGs and Mari-IL, and these entities became wholly-owned subsidiaries of the Company.~~

The acquisition was accounted for in accordance with ASC 805. The following table summarizes the allocation of the purchase price to the fair value of the assets acquired and liabilities assumed on the acquisition date:

~~Based on an impairment analysis performed shortly before the filing date of this report, the Company determined the intangibles of approximately $2.1~~ ~~million arising from this transaction were not impaired.~~

In August 2019, the Company entered into a purchase agreement to acquire ~~100~~100%% of the ownership interests of The Harvest Foundation LLC (“Harvest”), the Company’s cannabis-licensed client in the state of Nevada. The acquisition is conditioned upon legislative approval of the transaction. At this time, the state has paused the processing of cannabis license transfers, without indicating when it will resume. Upon the resumption of these activities and the ensuing approval by the state, the Company expects to consummate this ~~agreement will be consummated and~~transaction whereby the operations of Harvest will be consolidated into the Company’s financial statements.

The purchase price is comprised of the issuance of (i) 1,000,000 shares of the Company’s common stock, in the aggregate, to two owners of Harvest, which as a good faith deposit, were issued upon execution of the purchase agreement, (ii) $1.2 million of the Company’s common stock at closing, based on the closing price of the common stock on the day prior to legislative approval of the transaction, and (iii) warrants to purchase 400,000 shares of the Company’s common stock at an exercise price equal to the closing price of the Company’s common stock on the day prior to legislative approval of the transaction. ~~These~~The issued shares were recorded at par value. Such shares are restricted and will be returned to the Company in the event the transaction does not close by a date certain. ~~As the transaction has not been consummated, the issued shares were recorded at par value.~~

In ~~December 2018,~~ the ~~Company entered into a memorandum~~fall of ~~understanding (the “MOU”) to acquire~~2016, the members of Kind Therapeutics USA Inc. ~~(“Kind”)~~, ~~its~~the Company’s cannabis-licensed client in Maryland that holds licenses for the cultivation, production, and dispensing of medical ~~cannabis.~~cannabis (“Kind”), and the Company agreed to a partnership/joint venture whereby Kind would be owned 70% by the Company and 30% by the members of Kind, subject to approval by the Maryland Medical Cannabis Commission (“MMCC”). Prior to finalizing the documents confirming the partnership/joint venture, in December 2018, the Company and the members of Kind negotiated and entered into a memorandum of understanding (“MOU”) for the Company to acquire 100% of the membership interests of Kind. The MOU provides for a total purchase price of $6.3million in cash, 2,500,000shares of the Company’s common stock, and other consideration. The acquisition is subject to ~~the~~ approval by the ~~Maryland Medical Cannabis Commission,~~MMCC, which ~~approval can~~will be applied for ~~starting in March 2021.~~following the resolution of the litigation with Kind discussed below.

Also in December 2018, (i) MariMed Advisors ~~Inc,~~Inc., the Company’s wholly owned subsidiary, and Kind entered into a management services agreement ~~pursuant~~ to ~~which the Company provides~~provide Kind with comprehensive management services in connection with the business and operations of Kind (“the MSA”), and (ii) Mari Holdings MD LLC, the Company’s majority-owned subsidiary, entered into a ~~20-year~~20-year lease with Kind for ~~its~~Kind’s utilization of the Company’s 180,000 square foot cultivation and production facility in Hagerstown, ~~MD.~~MD (“the Lease”), which the Company purchased, designed, and developed for occupancy and use by Kind commencing in late 2017. Additionally, in October 2019, Mari Holdings MD LLC purchased a 9,000 square foot building in Anne Arundel County, MD, which is currently under constructions, for the development of a dispensary which would be leased to Kind.

~~The sellers~~In 2019, the members of Kind ~~have attempted~~sought to renegotiate the terms of the ~~MOU. Even though~~MOU and have subsequently sought to renege on both the ~~MOU contains all~~original partnership/joint venture and the ~~definitive material terms with respect to the acquisition transaction and confirms the management and lease agreements, the selling parties now allege that the MOU is not an enforceable agreement.~~MOU. The Company engaged with ~~the sellers~~Kind in good faith in an attempt to reach updated terms acceptable to both parties, however ~~the sellers~~Kind failed to reciprocate in good faith, resulting in an impasse. Incrementally, both parties through counsel further sought to resolve the impasse, ~~and~~however such initiative resulted in both parties commencing legal ~~proceedings which are pending~~proceedings. As a result, the consummation of this acquisition has been delayed and may not ultimately be completed. The litigation is further discussed in ~~the Circuit Court for Washington County, Maryland. For further information, see~~ Note 1819 – Commitments and Contingencies~~and Part II, Item 1.~~ ~~Legal Proceedings~~ ~~in this report.~~.

In May 2019, the Company entered into a purchase agreement to acquire MediTaurus LLC (“MediTaurus”), a company formed and owned by Jokubas Ziburkas PhD, a neuroscientist and leading authority on CBD and ~~its interactions with~~ the ~~brain and~~ endocannabinoid system. The Company sells CBD products developed by MediTaurus ~~currently operates~~ in the United States and Europe ~~and has developed proprietary CBD formulations sold~~ under its Florance™ brand.

Pursuant to the purchase agreement, the Company acquired 7070%% of MediTaurus on June 1, 2019. The purchase price was $2.8 million, comprised of cash payments totaling $720,000 and 520,000 shares of the Company’s common stock valued at $2,080,000. The ~~parties are currently in negotiations regarding~~Company expects to complete the ~~Company’s~~ acquisition of the ~~remaining~~remining 3030%% of ~~MediTaurus.~~MediTaurus in 2021.

The acquisition was accounted for in accordance with ASC 10. The following table summarizes the allocation, adjusted in September 2019, of the purchase price to the fair value of the assets acquired and liabilities assumed on the acquisition date:

Based on a valuation of MediTaurus in late 2019, the goodwill onrecorded in connection with the transaction was ~~adjusted to approximately $2.7~~ ~~million, which was~~ written ~~off due to the impact of the COVID-19 pandemic on MediTaurus’ business.~~

~~In July 2018, the Company entered into a purchase agreement to acquire~~ ~~100~~% of the ownership interests of AgriMed Industries of PA LLC (“AgriMed”), an entity that holds a license from the state of Pennsylvania for the cultivation of cannabis. The purchase price was comprised of $~~8.0~~ million, payable in stock and cash, and the assumption of certain liabilities of AgriMed. In February 2019, the Company commenced legal proceedings against AgriMed seeking specific performance of the purchase agreement.

~~In May 2019, the dispute between the parties was resolved through the cash payment to the Company of $3.1~~ million and other good and valuable consideration, in exchange for the Company relinquishing its rights under the purchase agreement and releasing its claims against AgriMed. The net amount of approximately $~~2,949,000, representing the cash payment less legal fees and write-offs of assets and supplies, was recorded in~~ ~~Other Non-Operating Income~~ ~~in the Company’s consolidated statement of operations for the year ended December 31, 2019.~~off.

At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company’s investments were comprised of the following:

In ~~May 2019, the Company issued~~ ~~500,000~~ ~~shares of its common stock, valued at $1.59~~ ~~million on the date of issuance, to purchase an~~ ~~8.95% interest in~~December 2020, Terrace Inc. ~~(“Terrace”)~~, a Canadian cannabis entity ~~that develops~~in which the Company had an ownership interest of 8.95% (“Terrace”), was acquired by Flowr Corp. (TSX.V: FLWR; OTC: FLWPF), a Toronto-headquartered cannabis company with operations in Canada, Europe, and ~~acquires international cannabis assets. The Company has no board representation, nor does it have~~Australia (“Flowr”). Under the ~~ability to exert operational or financial control over~~terms of the ~~entity.~~deal, each shareholder of Terrace received 0.4973 of a share in Flowr for each Terrace share held.

~~In November 2019, the common stock of Terrace commenced public trading on the Toronto Stock Venture Exchange. In accordance with ASC 321,~~ ~~Investments – Equity Securities~~~~, this~~This investment is carried at fair value, with changes to fair value recognized in net income. Prior to Terrace becoming publicly traded, the Company had elected the measurement alternative to value this equity investment without a readily determinableit fair value.

~~At September 30,~~ During the three months ended March 31, 2021 and 2020, the ~~carrying amount~~decrease in fair value of this investment ~~approximated $1,003,000, based on its publicly traded stock price on such date, which required the Company to record a charge to net income~~ of approximately $~~447,000~~ 45,000 and $687,000~~for the nine months then ended that is~~, respectively, was reflected ~~under~~in Change In Fair Value Of Investments on the statement of operations.

In August 2018, the Company invested $300,000~~, of a total contracted cash investment of $500,000~~, and issued 378,259 shares of its common stock, valued at approximately $915,000, in exchange for a 2323%% ownership in MembersRSVP LLC (“MRSVP”), an entity that has developed acannabis-specific customer relationship management ~~and marketing platform,~~software, branded under the name ~~Sprout, that is designed for and licensed to companies in the cannabis industry.~~Sprout.

~~The~~During the three months ended March 31, 2020, the investment iswas accounted for under the equity method. ~~During the nine months ended September 30, 2020 and 2019, the Company recorded earnings of approximately $19,000~~ ~~and a charge of approximately $105,000~~, respectively, based on the Company’s equity in MRSVP’s net income and losses during such periods. Since the inception of the investment, the Company has recorded cumulative equity in net losses of approximately $~~130,000, reducing~~There was no change to the carrying value of the investment ~~to approximately $1,086,000~~ ~~at September 30, 2020.~~

In January ~~2019,~~2021, the ~~entire principal~~Company and ~~accrued~~MRSVP entered into an agreement whereby the Company assigned and transferred membership interests comprising an 11% ownership in MRSVP in exchange for a release from all further obligation by the Company to make future investments or payments and certain other non-monetary consideration. Following the interest ~~balance of a note receivable from Chooze Corp. of approximately $258,000~~ ~~was converted into a~~ ~~2.7% equity~~transfer, the Company’s ownership interest in ~~Chooze.~~ MRSVP was reduced to 12% on a fully diluted basis.

As part of the agreement, the Company relinquished its right to appoint a member to the board of MRSVP. In light of the Company no longer having the ability to exercise significant influence over MRSVP, the Company no longer accounts for this investment under the equity method. The Company’s share of MRSVP’s future earnings or losses shall not be recorded, and the earnings and losses previously recorded will remain part of the carrying amount of the investment of approximated $1,166,000.

In accordance with ASC 321,Investments – Equity Securities, the Company elected the measurement alternative to value this equity investment without a readily determinable fair value. Following the termination of equity accounting, there has been no impairment to this investment, nor any observable price changes to investments in the entity. Accordingly, ~~the~~this investment ~~was~~continued to be carried at ~~its cost until June 2020 when the investment was fully reserved due to the Company’s determination that the investment was impaired. This reserve of~~ approximately $~~258,000~~1,166,000 ~~is reflected under~~ ~~Change In Fair Value Of Investments~~ ~~on the statement of operations.~~at March 31, 2021.

~~During 2018, in a series of transactions,~~The Company will continue to apply the ~~Company purchased $~~30 million of subordinated secured convertible debentures (the “GC Debentures”) of GenCanna. In February 2019, the Company converted the GC Debentures, plus unpaid accrued interest through the conversion date of approximately $~~229,000, into common stock of GenCanna equal to a~~ ~~33.5~~% ownership interest in GenCanna on a fully diluted basis. Concurrent with the conversion, the Company’s CEO was appointed to GenCanna’s board and the Company was granted certain rights, including the rights of inspection, financial information, and participation in future security offerings of GenCanna. At conversion, the Company commenced accounting foralternative measurement guidance until this investment ~~under the equity method.~~

In late January 2020, an involuntary bankruptcy proceeding under Chapter 11 was filed against GenCanna USA, GenCanna’s wholly-owned operating subsidiary, with the U.S. Bankruptcy Court in the Eastern District of Kentucky (the “Bankruptcy Court”). In the months leading updoes not qualify to the filing, GenCanna had faced several challenges including defaults under its senior credit facility with MGG Investment Group LP (“MGG”), a fire at its main processing and lab facility, the domestic decline of CBD selling prices, and the contraction of the cannabis capital markets. On February 6, 2020, GenCanna USA, under pressure from certain of its creditors and MGG, agreedbe so measured. The Company may subsequently elect to convert the involuntary bankruptcy proceeding into a voluntary Chapter 11 proceeding. In addition, GenCanna and GenCanna USA’s subsidiary, Hemp Kentucky LLC (collectively with GenCanna and GenCanna USA, the “GenCanna Debtors”), filed voluntary petitions under Chapter 11 in the Bankruptcy Court. As a result, the Company recorded a charge to net income of approximately $~~30.2~~ ~~million in December 2019, which reduced the carrying value of~~measure this investment to 0.

On February 18, 2020, the GenCanna Debtors sought permission from the Bankruptcy Court to sell all or substantially all of their assets. After the entry of various orders to establish the bidding procedures and criteria for such sale, the GenCanna Debtors received only four proposals (including a credit bid from MGG) for the purchase of the GenCanna Debtors’ assets and a single proposal for a plan of reorganization which was submitted by the Company.

On May 19, 2020, after an abbreviated solicitation/bid/sale process, the Bankruptcy Court, over numerous objections by creditors and shareholders of the GenCanna Debtors which included the Company, entered an order authorizing the sale of all or substantially all of the assets of the GenCanna Debtors to MGG for its credit bidat fair value, with changes in ~~the amount of $73.5~~ ~~million and cash~~fair value recognized in ~~the amount of $3.5~~ ~~million.~~

Based on recent filings with the Bankruptcy Court, the GenCanna Debtors are proposing to file a liquidating plan of reorganization to collect various prepetition payments and commercial claims against third parties, liquidate the remaining assets of the GenCanna Debtors, and make payments to creditors. The Company and the unsecured creditors committee are exploring options, including litigation against MGG for lender liability, equitable subordination, and return of preference. In connection with this liquidation process, the Company has filed its proofs of claim for the $~~33.2~~ ~~million of hemp seeds sold to GenCanna, which transaction is further discussed in Note 17 –~~ ~~Related Party Transactions~~.

~~In December 2018, the Company purchased~~ ~~2,500,000~~ ~~shares of common stock of Iconic Ventures Inc. (“Iconic”), which equated to an ownership interest in Iconic of approximately~~ ~~10%, for an aggregate cash payment of $500,000~~. Iconic has developed DabTabs™, a unique solution for cannabinoid vaporization. The Company has no board representation, nor does it have the ability to exert operational or financial control over the entity. In 2019, the Company wrote off the investment after an impairment review that considered the viability of the entity in light of the current economic climate.

~~In July 2019, the Company entered into a licensing agreement for the exclusive manufacturing and distribution in several eastern U.S. states of the Binske~~^® portfolio of products, a brand known for utilizing best-in-class proprietary strains and craft ingredients in its edibles, concentrates, vaporizers, and topicals. In consideration for the license and other rights, the Company agreed to pay a royalty of ~~10.0% to~~ ~~12.5% of gross revenue, as defined, derived from the sale of Binske~~^®~~products, subject to an annual minimum royalty.~~ No ~~gross revenue was generated as of September 30, 2020.~~net income.

The Company is the lessor under ~~several~~ operating leases which contain rent holidays, escalating rents over time, options to renew, requirements to pay property taxes, insurance and/or maintenance costs, and contingent rental payments based on a percentage of monthly tenant revenues. The Company is not the lessor under any finance leases.

The Company recognizes fixed rental receipts from such lease agreements on a straight-line basis over the expected lease term. Differences between amounts received and amounts recognized are recorded under Deferred Rents Receivable on the balance sheet. Contingent rentals are recognized only after tenants’ revenues are finalized and if such revenues exceed certain minimum levels.

~~During the reporting periods, the~~The Company ~~leased to third parties~~leases the following owned properties:

~~During the reporting periods, the~~The Company ~~subleased to a third party~~subleases the following ~~property:~~properties:

As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, cumulative fixed rental receipts under such leases approximated $~~12.8~~15.1 million and $~~9.5~~13.9 million, respectively, compared to revenue recognized on a straight-line basis of approximately $~~14.8~~17.0 ~~million~~ and $~~11.3~~15.8 million. Accordingly, the deferred rents receivable ~~balances~~balance approximated $1.9 million at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019 approximated $2.0~~ ~~million and $1.8~~ ~~million, respectively.~~2020.

Future minimum rental receipts for non-cancelable leases and subleases as of ~~September 30, 2020~~March 31, 2021 were:

SCHEDULE OF FUTURE MINIMUM RENTAL RECEIPTS FOR NON-CANCELABLE LEASES AND SUBLEASES

2020	$	1,130,989
				2021
2021		4,667,497	$	3,593,589
2022		4,590,656		4,712,200
2023		4,292,769		4,417,620
2024		4,348,027		4,476,205
2025				4,543,917
Thereafter		43,995,612		39,589,047
Total	$	63,025,550	$	61,332,578

At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, notes receivable, ~~were comprised~~including accrued interest, consisted of the following:

	September 30, 2020		December 31, 2019		March 31, 2021		December 31, 2020
First State Compassion Center	$	484,240	$	527,261	$	453,248	$	468,985
Healer LLC		885,871		846,985		879,640		899,226
High Fidelity Inc.		254,879		252,873		254,919		254,919
Maryland Health & Wellness Center Inc.		-		323,526
Atalo Holdings Inc.		-		-
Total notes receivable		1,624,990		1,950,645		1,587,807		1,623,130
Notes receivable, current portion		540,319		311,149		374,978		658,122
Notes receivable, less current portion	$	1,084,671	$	1,639,496	$	1,212,829	$	965,008

The ~~Company loaned approximately $700,000~~ toCompany’s cannabis-licensed client in Delaware, First State Compassion Center, ~~its Delaware cannabis-licensee client, during the period from October 2015 to April 2016. In May 2016, this client~~ issued a 10-year promissory note ~~as subsequently amended,~~ to the Company in May 2016 in the amount of $700,000 bearing interest at a rate of ~~12.5~~12.5%% per ~~annum.~~annum, as amended. The monthly payments of approximately $~~10,100~~10,000 will continue through April 2026, at which time the note will ~~become due.~~be fully paid down. At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the current portion of this note ~~was approximately~~approximated $~~64,000~~68,000 and $~~58,000~~66,000, respectively, and iswas included in Notes Receivable, Current Portion on the respective balance sheets.

In 2018 ~~to June~~and 2019, the Company loaned an aggregate of $800,000to Healer LLC, ~~(“Healer”),~~ an entity that provides cannabis education, dosage programs, and products developed by Dr. Dustin Sulak, an integrative medicine physician and nationally renowned cannabis ~~practitioner. The loans~~practitioner (“Healer”). Healer issued promissory notes to the Company for the aggregate amount loaned that bear interest at 66%% per annum, with principal and interest payable on ~~the~~ maturity dates ~~which are~~ three years from the respective loan ~~dates~~dates.

In March 2021, the Company was issued a revised promissory note from Healer in the principal amount of approximately $894,000 representing the previous loans extended to Healer by the Company plus accrued interest through the revised promissory note issuance date. The revised promissory note bears interest at a rate of 6% per annum and requires quarterly payments of interest from April 2021 through the maturity date in April 2026.

Additionally, the Company has the right to offset any licensing fees owed to Healer by the Company in the event Healer fails to make any timely payment. In March 2021, the Company offset approximately $28,000 of licensing fees payable to Healer against the principal balance of the revised promissory note, reducing the principal amount to approximately $866,000.

At ~~September~~March 31, 2021 and December 30, 2020, the ~~current portion~~total amount of ~~this note~~principal and accrued interest due under the aforementioned promissory notes approximated $~~221,000~~880,000 ~~. No portion~~ and $899,000, respectively, of which approximately $52,000 and $337,000 was current, ~~at December 31, 2019.~~respectively.

In August 2019, the Company loaned $250,000to High Fidelity Inc., ~~a company~~an entity that owns and operates two seed-to sale medical marijuana facilities in the state of Vermont and produces its own line of CBD products. ~~Prior to the note’s~~The note bears interest at a rate of 10.0% per annum, with interest-only month payments through its extended maturity in ~~August 2020,~~June 2021, at which time the ~~parties agreed to continue the note on a month-to-month basis, with interest-only monthly payments ongoing at the rate of~~ principal amount is due.

In ~~January~~ 2019, the Company provided Maryland Health & Wellness Center Inc. (“MHWC”), an entity that has been pre-approved by the state of Maryland for a cannabis dispensing license, with a $300,000 construction loan bearing interest at a rate of 88%% per annum. In June 2020, MHWC repaid the principal and accrued interest thereon, at which time the parties agreed to terminate their business relationship and release each other from all other previously executed agreements.

~~From May 2019 to July 2019, the Company extended loans aggregating $980,000~~ to Atalo Holdings Inc. (“Atalo”), an agriculture and biotechnology firm specializing in research, development, and production of industrial hemp and hemp-derived CBD products. The loans initially bore interest at 6% per annum and matured in April 2020. The Company wrote off the entire carrying value of the Atalo note receivable balance as of December 2019, based upon the expectation that Atalo would be critically impacted by the COVID-19 pandemic. In 2020, Atalo filed for bankruptcy.

At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, inventory was comprised of ~~approximately (i) $3.1~~ ~~million and $395,000, respectively, of plants and other raw materials, (ii) $188,000~~ ~~and $226,000, respectively, of CBD isolate and hemp extract, and (iii) $3.5~~ ~~million and $599,000~~ ~~of work-in-process and finished cannabis and CBD products.~~the following:

At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, property and equipment consisted of the following:

	September 30, 2020			December 31, 2019			March 31, 2021			December 31, 2020
Land	$	3,988,810		$	3,887,710		$	3,988,810		$	3,988,810
Buildings and building improvements		27,334,283			27,063,235			29,447,594			29,309,856
Tenant improvements		8,607,282			7,762,991			8,825,911			8,844,974
Furniture and fixtures		555,766			299,645			671,986			619,880
Machinery and equipment		4,490,186			4,086,691			5,111,005			4,620,924
Construction in progress		4,977,181			2,827,940			4,788,041			3,140,807
		49,953,508			45,928,212			52,833,347			50,525,251
Less: accumulated depreciation		(4,445,931	)		(3,135,843	)		(5,342,972	)		(4,888,722	)
Property and equipment, net	$	45,507,577		$	42,792,369		$	47,490,375		$	45,636,529

During the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and December 31, 2020, ~~and 2019,~~ additions to property and equipment ~~were approximately~~approximated $~~4.1~~2,308,000 ~~million~~ and $~~6.7~~572,000 ~~million,~~, respectively.

~~Additions during the nine months ended September 30,~~The 2021 and 2020 ~~consisted~~additions were primarily comprised of (i) ~~the commencement of~~ construction in Mt. Vernon, IL, and (ii) machinery and equipment purchases for facilities in Massachusetts, Maryland, Illinois, and Delaware. ~~Additions during the nine months ended September 30,~~The 2019 additions consisted primarily of (i) the commencement of construction in Milford, DE and Annapolis, MD, (ii) the continued buildout of properties in ~~Maryland~~Hagerstown, MD, New Bedford, MA, and ~~Massachusetts,~~Middleborough, MA, and ~~(iii)~~(ii) improvements to the Wilmington, DE and Las Vegas, NV properties.

~~During the nine months ended September 30, 2020, the Company disposed of an asset with a cost~~The construction in progress balances of approximately $~~91,000~~4.8 million and ~~accumulated depreciation through~~$3.1 million at March 31, 2021 and December 31, 2020, respectively, consisted of the ~~disposal date~~commencement of ~~approximately $6,000. The loss on disposal~~construction of ~~approximately $85,000~~ ~~is reflected~~properties in ~~Other Non-Operating Expenses~~ ~~in the statement of operations at September 30, 2020. There were~~ 0 ~~disposals in 2019.~~Metropolis, IL, Milford, DE, and Annapolis, MD.

Depreciation expense for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ approximated $~~1,341,000~~462,000 and $~~698,000~~484,000, respectively.

At March 31, 2021 and December 31, 2020, intangible assets were comprised of (i) the carrying value of cannabis license fees, and (ii) goodwill arising from the Company’s acquisitions.

The Company’s cannabis licenses are issued from the states of Illinois and Massachusetts and require the payment of annual fees. These fees, comprised of a fixed component and a variable component based on the level of operations, are capitalized and amortized over the respective twelve-month periods. At March 31, 2021 and December 31, 2020, the carrying value of these cannabis licenses approximated $622,000 and $161,000, respectively.

The goodwill associated with acquisitions is reviewed on a quarterly basis for impairment. Based on this review and other factors, the goodwill of approximately $2.1 million at March 31, 2021 and December 31, 2020 was deemed to be unimpaired.

At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, mortgage balances, including accrued ~~but unpaid~~ interest, were comprised of the following:

	September 30, 2020			December 31, 2019			March 31, 2021			December 31, 2020
Bank of New England – Massachusetts properties	$	12,912,723		$	4,825,226		$	12,749,474		$	12,834,090
Bank of New England – Delaware property		1,602,730			1,682,275			1,547,757			1,575,658
DuQuoin State Bank – Illinois properties		822,245			829,229			806,980			814,749
South Porte Bank – Illinois property		906,653			-			894,587			906,653
Total mortgages payable		16,244,351			7,336,730			15,998,798			16,131,150
Mortgages payable, current portion		(1,379,541	)		(223,888	)		(1,382,411	)		(1,387,014	)
Mortgages payable, less current portion	$	14,864,810		$	7,112,842		$	14,616,387		$	14,744,136

In November 2017, the Company entered into a 10-year mortgage agreement with Bank of New England in the amount of $4,895,000~~(the~~ (the “Initial Mortgage”) for the purchase of a 138,000square foot industrial property in New Bedford, Massachusetts, within which the Company has built a 70,000square foot cannabis cultivation and processing facility. Pursuant to the Initial Mortgage, the Company made monthly payments of (i) interest-only from the mortgage date through May 2019 at a rate equal to the prime rate plus 22%%, with a floor of ~~6.25~~6.25%% per annum, and (ii) principal and interest payments from May 2019 to July 2020 at a rate equal to the prime rate on May 2, 2019 plus 22%%, with a floor of ~~6.25~~6.25%% per annum. In July 2020, at which time the Initial Mortgage had a remaining principal balance of approximately $4.8million, the parties consummated an amended and restated mortgage agreement, secured by the Company’s properties in New Bedford and Middleboro in the amount of $13.0million bearing interest at a rate of ~~6.5~~6.5%% per annum that matures in August 2025~~(the~~ (the “Refinanced Mortgage”). Proceeds from the Refinanced Mortgage were used to pay down the Initial Mortgage and approximately $7.2million of promissory notes as further described below. ~~The~~At March 31, 2021 and December 31, 2020, the outstanding principal balance of the Refinanced Mortgage approximated $~~12.9~~ 12.7million ~~on September 30, 2020,~~and $12.8 million, respectively, of which approximately $~~330,000~~ 341,000~~was current. The outstanding principal balance of the Initial Mortgage approximated~~ and $~~4.8~~ 335,000~~million on December 31, 2019, of which approximately $94,000~~ , respectively, was current.

The Company maintains another mortgage with Bank of New England for the 2016 purchase of a 45,070square foot building in Wilmington, Delaware which was developed into a cannabis seed-to-sale facility and is currently leased to the Company’s cannabis-licensed client in that state. The mortgage matures in 2031with monthly principal and interest payments at a rate of ~~5.25~~5.25%% per annum through September 2021, and thereafter the rate adjusting every five years to the then prime rate plus ~~1.5~~1.5%% with a floor of ~~5.25~~5.25%% per annum. At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the outstanding principal balance on this mortgage ~~was approximately~~approximated $~~1,603,000~~ 1.5 million and $~~1,682,000~~1.6, million, respectively, of which approximately $~~112,000~~ 115,000and $~~105,000~~114,000, respectively, was current.

In May 2016, the Company entered into a mortgage agreement with DuQuoin State Bank (“DSB”) for the purchase of two properties which the Company developed into two 3,400 square foot free-standing retail dispensaries in Illinois. On May 5^thof each year, this mortgage is due to be repaid unless it is renewed for another year at a rate determined by DSB’s executive committee. The mortgage was renewed in May ~~2020~~2021 at a rate of 6.75% per annum. At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the outstanding principal balance on this mortgage ~~was approximately~~approximated $~~822,000~~807,000 and $~~829,000~~815,000 respectively, of which approximately $~~31,000~~32,000 and $~~24,000~~31,000, respectively, was current.

In February 2020, the Company entered into a mortgage agreement with South Porte Bank for the purchase and development of a property in Mt. Vernon, IL. Pursuant to amendments to the mortgage agreement, the Company ~~made~~is making interest-only monthly payments at a rate of 5.5% per annum through ~~its initial~~the amended maturity date in ~~August 2020~~May 2021~~. At that~~, at which time the parties ~~amended the mortgage agreement~~are expected to ~~extend~~ ~~the maturity date through November 2020,and requiring continuing monthly interest-only payments at~~ ~~5.5% per annum.~~enter into a one-year renewal agreement.

In February 2020, pursuant to an exchange agreement as further described in Note 1112 – Mezzanine Equity, the Company issued two promissory notes in the aggregate principal amount of approximately $4.4 million, bearing interest at 16.5% per annum and maturing in August 2021 (the “$4.4M Notes”), in exchange for a loan in the same amount. ~~The Company has the right to extend the maturity date through February 2022 upon payment of an extension fee equal to 2.5% of~~At December 31, 2020, the principal ~~amount~~and accrued interest balance of ~~the loan~~. ~~As of September 30, 2020,~~ no ~~principal payments were made on~~ the $4.4M Notes ~~and~~approximated $4.6 million. In March 2021, utilizing a portion of the proceeds from the Hadron transaction discussed in Note 12 – Mezzanine Equity, the $4.4M Notes were fully paid down, along with accrued interest through ~~such date of approximately $439,000~~ ~~was paid.~~the repayment date.

In June 2019, the Company and MariMed Hemp Inc., its wholly-owned subsidiary (“MMH”), issued a secured promissory note in the principal amount of $10.0million (the “$10M Note”) to an unaffiliated party (the “Noteholder”)~~. The proceeds from the $10M Note were used to finance a portion of the purchases of hemp seed inventory that was sold to GenCanna (the “Seed Transactions”) as further discussed in Note 17 –~~ ~~Related Party Transactions~~. The $10M Note provided for the repayment of principal plus a payment of $1.5million (the “$1.5M Payment”) on the maturity date of January 31, 2020. Such payment was charged to interest expense over the life of the $10M Note.

As part of the $10M Note transaction, the Company issued three-year warrants to purchase up to 375,000 shares of common stock at an exercise price of $4.50 per share to the Noteholder. The fair value of these warrants on the issuance date of approximately $601,000 was recorded as a discount to the $10M Note. Approximately $523,000 of the warrant discount was amortized to interest expense in 2019, with the remainder in January 2020. ~~Accordingly, the carrying value of the $10M Note approximated $9.9~~ ~~million at December 31, 2019.~~

The Company entered into an amendment agreement with the Noteholder in February 2020, whereby the Company and ~~MariMed Hemp~~MMH issued an amended and restated promissory note maturing in June 2020 in the principal amount of $11,500,000(the “$11.5M Note”), comprised of the principal amount of the $10M Note and the $1.5M ~~Payment (which the Company had accrued).~~Payment. The $11.5M Note bore interest at a rate of 15% per annum, requiring periodic interest payments and minimum amortization payments of $3,000,000in the aggregate, which the Company ~~made.~~made in the first half of 2020.

The Company entered into a second amendment agreement with the Noteholder in June 2020, whereby (i) $352,000 of outstanding principal of the $11.5M Note was converted into 1,900,000 shares of the Company’s common stock (which did not result in ana material extinguishment gain or loss as the conversion price ~~was higher than~~approximated the price of the Company’s common stock on the ~~conversion~~agreement date), and (ii) the Company and ~~MariMed Hemp~~MMH issued a second amended and restated promissory note in the principal amount of approximately $8.8 million (the “$8.8M Note”), comprised of the outstanding principal and unpaid interest balances of the $11.5M Note, plus an extension fee of approximately $330,000. In addition, the Company issued ~~three-year~~three-year warrants to the Noteholder to purchase up to 750,000 shares of common stock at an exercise price of $0.50 per share. The fair value of these warrants on the issuance date of approximately $66,000 was recorded as a discount to the $8.8M Note, ~~to be~~which is being amortized to interest expense over the life of the $8.8M Note.

The $8.8M Note bears interest at a rate of 15% per annum, matures in June 2022, and required a minimum amortization payment of $4,000,000 in July 2020, which the Company paid with a portion of proceeds of the Refinanced ~~Mortgage.~~Mortgage discussed earlier in this footnote. The Company can prepay all, or a portion, of the outstanding principal and unpaid interest of the $8.8M Note, however if any prepayment is made prior to December 25, 2021, the Company shall be required to pay a prepayment premium equal to 10% of the principal amount being prepaid. The Noteholder has the right to require the redemption of up to $250,000 of principal and unpaid interest thereon per calendar ~~month. Such monthly redemptions~~month (the “Discretionary Monthly Redemptions”), which shall be paid in common stock if certain defined conditions of the $8.8M Note and of the Company’s common stock are met, or else in cash. As of December 31, 2020, the Company paid Discretionary Monthly Redemptions of $600,000 in the aggregate, and accrued interest through such date of approximately $405,000, all in cash. Accordingly, the carrying value of the $8.8M Note was approximately $4.2 million at December 31, 2020.

The Noteholder has the option to convert the $8.8M Note, in whole or in part, into shares of the Company’s common stock at a conversion price of $0.30, per share, subject to certain conversion limitations. This non-detachable conversion feature of the $8.8M Note had no intrinsic value on the agreement date, and therefore 0 beneficial conversion feature arose.

During the three months ended March 2021, the Noteholder converted $1,000,000 of principal and approximately $10,000 of accrued interest into 3,365,972 shares of the Company’s common stock. Also during this period, the Company paid accrued interest of approximately $104,000 in cash. Accordingly, the principal balance of the $8.8M Note was approximately $3.2 million at March 31, 2021.

The ~~$8.8M Note is secured by~~Company entered into a ~~first priority security interest~~third amendment agreement with the Noteholder in April 2021 whereby the Company and MMH issued a third amended and restated promissory note in the ~~assets~~principal amount of approximately $3.2 million (the “$3.2M Note”), comprised of the remaining principal balance on the $8.8M Note. The $3.2M Note bears interest at a rate of 0.12% per annum and matures in April 2023. The Noteholder has the option to convert, subject to certain conversion limitations, all or a portion of the $3.2M Note into shares of the Company’s ~~subsidiaries and brands, and~~common stock at a ~~pledge~~conversion price of $0.35 per share, such conversion price subject to adjustment in the event of certain transactions by the Company. On or after the one-year anniversary of the ~~Company’s ownership interest in certain of its subsidiaries. The $8.8M~~$3.2M Note, ~~imposes certain covenants on~~upon twenty days prior written notice to the ~~borrowers,~~Noteholder, the Company can prepay all of ~~which were complied with as of September 30, 2020. On such date,~~ the ~~carrying value~~outstanding principal and unpaid interest of the ~~$8.8M note approximated~~$3.2M Note, along with a prepayment premium equal to 10% of the principal amount being prepaid. The Noteholder shall remain entitled to convert the $3.2M Note during such notice period. On or after the one-year anniversary of the $3.2M Note, the Noteholder has the right to require the redemption in cash of up to $~~4.8~~125,000 ~~million.~~of principal and unpaid interest thereon per calendar month.

In April 2019, ~~MariMed Hemp~~MMH issued a secured promissory note in the principal amount of $1,000,000 (the “$1M Note”) to an unaffiliated party. ~~The proceeds of the $1M Note were used to finance a portion of the Seed Transactions as further discussed in Note 17 –~~ ~~Related Party Transactions~~~~. The $1M Note is secured by the collateral assignment of certain receivables from GenCanna and certain obligations of GenCanna to MariMed Hemp.~~ The principal balance plus a payment of $180,000, initially due in December 2019, was extended to March 2020 in accordance with the terms of the $1M Note, requiring an additional payment of $30,000 (the “$30,000 Fee”). Prior to the extended due date, the parties agreed that the $1M Note would continue on a month-to-month basis bearing interest at a rate of 15% per annum. In September 2020, the Company paid down $500,000of principal on the $1M Note. At ~~September 30,~~December 31, 2020, the outstanding balance consisted of $500,000 of principal and approximately $~~403,000~~467,000 of unpaid accrued interest which included the $30,000 Fee. In March 2021, utilizing a portion of the proceeds from the Hadron transaction discussed in Note 12 – Mezzanine Equity, the remaining principal of $500,000 was paid down, along with $200,000 of accrued interest.

In March 2019, the Company raised $6.0million through the issuance of a secured promissory note (the “$6M Note”) to an unaffiliated party (the “Holding Party”) bearing interest at a rate of 13% per annum and a service fee of $900,000~~(the~~ (the “Service Fee”). ~~The proceeds of the note were used to finance a portion of the Seed Transactions as further discussed in Note 17 –~~ ~~Related Party Transactions~~~~. The $6M Note is secured by the collateral assignment of certain receivables from and obligations of GenCanna to MariMed Hemp.~~ The $6M Note’s initial maturity date of December 31, 2019 was extended to April ~~30,~~ 2020in accordance with its terms, with the Company paying a $300,000 extension fee in December 2019 which was charged to interest expense.

The Company and the Holding Party entered into a note extension agreement in April 2020 (the “Initial Extension Agreement”) pursuant to which (i) the $6M Note’s due date was extended to September 2020, and the $6M Note was modified to include unpaid accrued interest of $845,000 through the modification date and interest at a rate of 10% per annum (the “$6.8M Note”), and (iii) a new convertible note in the amount of $900,000 (the “$900k Note”) was issued evidencing the Service Fee, bearing interest at a rate of 12% per annum. The Company satisfied the ~~$900k~~$900k Note and accrued interest of $20,100 in full as of the June 2020 maturity date by the payment in July 2020 of $460,050 in cash, representing one-half of the principal and accrued interest, and the issuance in June 2020 of 2,525,596 shares of the Company’s common stock, ~~representing~~in payment of the other half of the principal and accrued interest.

In September 2018, the Company raised $3.0 million from the issuance of a secured promissory note to the Holding Party, bearing interest at a rate of 10% per annum (the “$3M Note”). The maturity date of the $3M Note, initially in March 2020, was extended for an additional six months in accordance with its terms, with the interest rate increasing to 12% per annum during the extension period. Pursuant to the Initial Extension Agreement, the maturity date of the $3M Note was extended to December ~~2020~~2020.~~. The Company may elect to prepay the $3M Note in whole or part without premium or penalty provided the Holding Party is given proper notice and the Company is not in default of the note agreement.~~

~~In consideration of the Initial Extension Agreement, the Company (i) paid the Holding Party a fee of $50,000~~, (ii) extended the security interest in the Company’s properties in Maryland to secure each note held by the Holding Party, and (iii) granted the Holding Party certain security interests in equity interests held by the Company. Each of the notes held by the Holding Party provides for cross-default and imposes certain covenants on the Company, all of which were complied with as of September 30, 2020.

As part of the $3M Note transaction, the Company issued three-year warrants to the Holding Party’s designees to purchase 750,000shares of the Company’s common stock at an exercise price of $1.80per share. The Company recorded a discount on the $3M Note of approximately $1,511,000from the allocation of note proceeds to the warrants based on the fair value of such warrants on the issuance date. ~~Approximately $882,000~~ ~~of the warrant~~This discount was amortized to interest expense ~~during~~in 2018 and ~~the remaining $629,000~~ ~~was amortized during~~ 2019.

In October 2020, the Company and the Holding Party entered into a second note extension agreement ~~effective September 30, 2020~~ (the “Second Extension Agreement”), whereby the Company (i) paid ~~in October 2020,~~ $1million of principal and all outstanding accrued interest of approximately $333,000on the $6.8M Note; (ii) issued an amended and restated senior secured promissory note in the principal amount of $5,845,000~~(the~~ (the “$5.8M Note”) to replace the $6.8M Note; and (iii) amended and restated the $3M Note (the “New $3M Note”, and together with the $5.8M Note, the “Amended Notes”). ~~At September 30, 2020, the $~~1 ~~million of principal and approximately $333,000~~ ~~of accrued interest on the $6.8M Note, both of which were paid in October 2020, were reflected in the current portion of outstanding notes payable and in accrued interest, respectively.~~

The Amended Notes bear interest at a rate of 12% per annum ~~and~~with ~~mature~~maturity dates in September 2022. ~~If all principal~~, and accrued interest on either or both of the Amended Notes are not paid on or prior to their respective maturity dates, the Holding Party shall have the right, exercisable in its sole discretion at any time from September 2022 through March 2023, to convert all or a portion of the principal and interest owed into shares of the Company’s common stock at a conversion price equal to the average closing price for the 20 consecutive trading days prior to the date of conversion.~~The $5.8M Note requires mandatory principal payments of $400,000~~ ~~in February 2021, and $500,000~~ ~~per quarter during the period from May 2021 to August 2022 (such quarterly payments amounting to $3.0~~ ~~million in the aggregate).~~ ~~The $5.8M Note~~ can be prepaid in whole or in part at any ~~time without penalty.~~ ~~The New $3M Note can be prepaid in whole or in part without penalty only after the $5.8M Note has been fully repaid.~~time.

In consideration of the Second Extension Agreement, the Company (i) issued four-year warrants to the Holding Party’s designees to purchase up to 5,000,000shares of the Company’s common stock at an exercise price of $0.25per share; (ii) paid the Holding Party a fee of $100,000; and (iii) extended the security interest in certain Company properties and the pledge of certain equity interests to secure the Amended Notes. The Company recorded a discount on the Amended Notes of approximately $573,000based on the fair value of such warrants on the issuance date, of which approximately $~~1,000~~75,000 was amortized as of the end of ~~the quarter,~~2020, and the remainder to be amortized over the life of the Amended Notes. Accordingly, the carrying value of the Amended Notes approximated $8.3million at ~~September 30,~~December 31, 2020, of which $~~1.4~~ 1.9million was current.

The Company made a required principal payment of $400,000 on the $5.8M note in February 2021. In March 2021, utilizing a portion of the proceeds from the Hadron transaction discussed in Note 12 – Mezzanine Equity, the Amended Notes were fully paid down, along with accrued interest through the repayment date. In addition, the remaining discount of approximately $450,000 on this note was fully amortized on the payment date.

In August 2020, the Company entered into a note agreement with First Citizens’ Federal Credit Union for the purchase of a commercial vehicle. The note bears interest at 5.74% per annum and matures in July 2026. At March 31, 2021 and December 31, 2020, the balance of this note approximated $24,000 and $26,000, respectively.

In addition to the above transactions, at the start of 2020, the Company ~~raised~~was carrying $~~800,000~~3,190,000 ~~and $2,760,000~~ ~~during~~ ~~the nine months ended September 30, 2020 and December 31, 2019, respectively, from the issuance~~ of principal on promissory notes issued to accredited investors bearing interest at rates ranging from 6.5% to 18% per annum ~~and~~ ~~maturing in 2020 and 2021(the “Third Party~~(the “Existing Notes”). During 2020, the Company (i) raised approximately $~~2,800,000~~2,147,000 from the issuance of new promissory notes to accredited investors bearing interest at 12% and 15% per annum (the “New 2020 Notes”), (ii) repaid $2,100,000 of the ~~Third Party~~Existing Notes, ~~was~~(iii) retired $500,000 of the Existing Notes through the issuance of common stock at a conversion price equal to the market price of the Company’s common stock on the conversion date of $0.32 per share, and (iv) repaid ~~in 2020, and accordingly,~~ $~~760,000~~700,000 ~~remained outstanding~~of the New 2020 Notes. Accordingly, the remaining balance on the Existing Notes and New 2020 Notes approximated $2,037,000 in the aggregate at ~~September 30, 2020~~December 31, 2020. This balance along with ~~related~~ accrued interest through the repayment date of approximately $~~48,000~~200,000 were fully paid down in March 2021 utilizing a portion of the proceeds from the Hadron transaction discussed in Note 12 – Mezzanine Equity.

As of ~~September 30, 2020,~~March 31, 2021, the aggregate scheduled maturities of the Company’s total debt outstanding ~~inclusive of the promissory notes and mortgages described within this Note 9 –~~ ~~Debt~~~~, and the convertible debentures described in the following Note 10~~ ~~– Debentures Payable,~~ were:

In a series of transactions from the period October 2018 through February 2020, the Company sold an aggregate of $21.0 million of convertible debentures (the “$21M Debentures”) to an accredited investor pursuant to an amended securities purchase agreement (the “SPA”). The following table as of March 31, 2021 summarizes the purchase dates and selected terms of each debenture transaction that comprises the $21M Debentures:

Issue Date	Maturity Date	Initial Principal		Interest Rate		Issue Discount		Warrant Discount		Ben. Conv. Feature		Converted To Common Stk.		Outstanding Principal		Maturity Date	Initial Principal		Interest Rate		Issue Discount		Warrant Discount		Beneficial Conversion Feature		Converted To Common Stock
10/17/18	10/16/20	$	5,000,000	6.0	%	1.0	%	$	457,966	$	1,554,389	$	5,000,000	$	-	10/16/20	$	5,000,000		6.0%		1.0%	$	457,966	$	1,554,389	$	5,000,000
11/07/18	11/06/20		5,000,000	6.0	%	1.0	%		599,867		4,015,515		5,000,000		-	11/06/20		5,000,000		6.0%		1.0%		599,867		4,015,515		5,000,000
05/08/19	05/07/21		5,000,000	6.0	%	1.0	%		783,701		2,537,235		3,250,000		1,750,000	05/07/21		5,000,000		6.0%		1.0%		783,701		2,537,235		5,000,000
06/28/19	06/27/21		2,500,000	0.0	%	7.0	%		145,022		847,745		1,050,000		1,450,000	06/27/21		2,500,000		0.0%		7.0%		145,022		847,745		2,500,000
08/20/19	08/19/21		2,500,000	0.0	%	7.0	%		219,333		850,489		2,500,000		-	08/19/21		2,500,000		0.0%		7.0%		219,333		850,489		2,500,000
02/21/20	02/20/21		1,000,000	6.5	%	6.5	%		28,021		379,183		-		1,000,000	02/20/21		1,000,000		6.5%		6.5%		28,021		379,183		1,000,000

~~The~~As of March 31, 2021, the holder of the $21M Debentures (the “Holder”) ~~has the right at any time to convert~~had converted all ~~or a portion~~ of the $21M Debentures, along with accrued ~~and unpaid~~ interest, into the Company’s common stock at conversion prices equal to 80% of a calculated average, as determined in accordance with the terms of the $21M Debentures, of the daily volume-weighted price during the ten consecutive trading days preceding the date of conversion. The conversion ~~subject to a cap in certain conversions. Notwithstanding this conversion right, the Holder shall limit conversions~~were limited in any given month to certain agreed-upon amounts based on the conversion price, and the Holder ~~shall~~was also be limited from beneficially owning more than 4.99% of the Company’s outstanding common ~~stock (potentially further limiting the Holder’s conversion right).~~

~~The Company has the right to redeem all or a portion of the $21M Debentures, along with accrued and unpaid interest, at a~~ 10% premium, provided that the Company first delivers advance written notice to the Holder of its intention to make a redemption, with the Holder allowed to effect certain conversions of the $21M Debentures during such notice period.

~~Upon a change in control transaction, as defined, the Holder may require the Company to redeem all or a portion of the $21M Debentures at a price equal to~~ ~~110~~% of the outstanding principal amount of the $21M Debentures, plus all accrued and unpaid interest thereon. So long as the $21M Debentures are outstanding, in the event the Company enters into a Variable Rate Transaction (“VRT”), as defined in the SPA, the Holder may cause the Company to revise the terms of the $21M Debentures to match the terms of the convertible security issued in such VRT.stock.

In conjunction with the issuance of the $21M Debentures, the Company issued the Holder three-year warrants to purchase an aggregate of 1,354,675 shares of the Company’s common stock at exercise prices ranging from $0.75 to $5.50 per share, of which warrants to purchase 180,000 shares of common stock at an exercise price of $0.75 were issued in ~~the nine months ended September 30,~~ 2020. The fair value of the warrants of approximately $2.2 million was recorded as a discount to the carrying amount of the $21M Debentures and are amortized to interest expense over the respective term of the individual debentures comprising the $21M Debentures.

Based on the conversion prices of the $21M Debentures in relation to the market value of the Company’s common stock, the $21M Debentures provided the Holder with a beneficial conversion feature, as the embedded conversion option was in-the-money on the commitment date. The aggregate intrinsic value of the beneficial conversion feature of approximately $10.2 million was recorded as a discount to the carrying amount of the $21M Debentures, ~~with an offset to additional paid-in-capital. The beneficial conversion feature is~~and amortized to interest expense over the respective term of the individual debentures comprising the $21M Debentures.

Pursuant to the terms of a registration rights agreement with the Holder, entered into concurrently with the SPA, the Company agreed to provide the Holder with certain registration rights with respect to ~~any potential~~ shares issued pursuant to the terms of the SPA and the $21M Debentures. ~~An addendum to~~

Over the ~~SPA stipulates that the Holder has agreed not to undertake a conversion of all or a portion~~life of the $21M Debentures, ~~that would require~~ the ~~Company to issue more shares than the amount of available authorized shares at the time of conversion, which amount of authorized shares shall not be less than the~~ ~~current authorized number of 500 million shares of common stock, thereby eliminating the requirement to bifurcate and account for the conversion feature of the $21M Debentures as a derivative.~~

~~The~~ Holder converted, in several transactions, ~~from November 2018 through September 2020,~~ an aggregate of $~~16.8 m~~21.0 ~~illion~~million of principal and approximately $~~768,000~~836,000 of accrued interest into ~~64,470,063~~92,704,035 shares of common stock at conversion prices ranging from $0.11 to $3.06 per share. Of these conversions, (i) during 2020, an aggregate of $~~6.8~~9.7 million of principal and approximately $~~356,000~~365,000 of accrued interest was converted into ~~54,143,232~~77,766,559 shares of common stock at ~~exercise~~conversion prices ofranging from $0.11 and $0.34 per share, and (ii) during ~~the nine months ended September 30, 2020.~~2021, an aggregate of $1.3 million of principal and approximately $56,000 of accrued interest was converted into 4,610,645 shares of common stock at a conversion price of $0.29 per share.

All of the aforementioned conversions were ~~performed~~effected in accordance with the terms of ~~their~~the respective convertible debenture ~~agreements,~~agreement, and therefore the Company was not required to record a gain or loss on such conversions.

During the ~~nine months~~year ended ~~September 30,~~December 31, 2020, ~~and 2019,~~ amortization of the beneficial conversion features, after adjustment for the aforementioned conversions, approximated $~~2,553,000~~ 3.2~~and $4,646,000, respectively;~~ million; amortization of the warrant discounts approximated $~~545,000~~ 805,000~~and $913,000~~ ~~respectively; and the~~; amortization of original issue discounts approximated $~~267,000~~ 321,000; and $~~107,000, respectively. Additionally, accrued~~ interest expense ~~for such periods~~ approximated $~~234,000~~ 224,000~~and $421,000, respectively.~~

. At ~~September 30,~~December 31, 2020, the aggregate outstanding principal balance of the $21M Debentures was $~~4,200,000~~1.3. million. Also on such date, the unamortized balances of the beneficial conversion features, the warrant discounts, and original issue discounts were approximately $~~867,000~~177,000, $~~300,000~~39,000, and $~~105,000~~52,000, respectively. Accordingly, at ~~September 30,~~December 31, 2020, the carrying value of the $21M Debentures ~~was approximately~~approximated $~~2,928,000~~1.0, million, all of which was current.

~~At December~~During the three months ended March 31, ~~2019, the aggregate outstanding principal balance on the $21M Debentures was $10,000,000. Also on such date, the unamortized balances~~2021, amortization of the beneficial conversion features, after adjustment for the aforementioned conversions, approximated $177,000; amortization of the warrant discounts ~~and~~approximated $39,000; amortization of original issue discounts ~~were approximately~~approximated $~~3,041,000~~52,000,; and interest expense approximated $~~817,000~~1,000~~, and $307,000, respectively. Accordingly, at December 31, 2019, the carrying value of the $21M Debentures was approximately $5,835,000, all of which was long term.~~.

In February 2020, the Company entered into an exchange agreement with two institutional shareholders (the “TIS Exchange Agreement”) whereby the Company (i) exchanged 4,908,333 shares of the Company’s common stock previously acquired by the two institutional shareholders for an equal number of shares of newly designated Series B convertible preferred stock, and (ii) issued the $4.4M Notes previously discussed in Note 911 – Debt.

In connection with the TIS Exchange Agreement, the Company filed (i) a certificate of designation with respect to the rights and preferences of the Series B convertible preferred stock, and (ii) a certificate of elimination to return all shares of the Series A convertible preferred stock, of which no shares were issued or outstanding at the time of filing, to the status of authorized and unissued shares of undesignated preferred stock.

The holders of Series B convertible preferred stock (the “Series B Holders”) are entitled to cast the number of votes equal to the number of shares of common stock into which the shares of Series B convertible preferred stock are convertible, together with the holders of common stock as a single class, on most matters. However, the affirmative vote or consent of the Series B Holders voting separately as a class is required for certain acts taken by the Company, including the amendment or repeal of certain charter provisions, liquidation or winding up of the Company, creation of stock senior to the Series B convertible preferred stock, and/or other acts defined in the certificate of designation.

The Series B convertible preferred stock shall, with respect to dividend rights and rights on liquidation, winding up and dissolution, rank senior to the Company’s common stock. The Company shall not declare, pay, or set aside any dividends on shares of any other class or series of capital stock of the Company unless the Series B Holders then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series B convertible preferred stock in an amount calculated pursuant to the certificate of designation.

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the Series B Holders then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders before any payment shall be made to the holders of common stock by reason of their ownership thereof, an amount per share equal to $3.00, plus any dividends declared but unpaid thereon, with any remaining assets distributed pro-rata among the holders of the shares of Series B convertible preferred stock and common stock, based on the number of shares held by each such holder, treating for this purpose all such securities as if they had been converted to common stock.

At any time on or prior to the six-year anniversary of the issuance date of the Series B convertible preferred stock, (i) the Series B Holders have the option to convert their shares of Series B convertible preferred stock into common stock at a conversion price of $3.00 per share, without the payment of additional consideration, and (ii) the Company has the option to convert all, but not less than all, shares of Series B convertible preferred stock into common stock at a conversion price of ~~$3.00~~$3.00 if the daily volume weighted average price of common stock (the “VWAP”) exceeds $4.00 per share for at least twenty consecutive trading days prior to the date on which the Company gives notice of such conversion to the Series B Holders.

On the day following the six-year anniversary of the issuance of the Series B convertible preferred stock, all outstanding shares of Series B convertible preferred stock shall automatically convert into common stock as follows:

If the sixty-day VWAP is less than or equal to $0.50 per share, the Company shall have the option to (i) convert all shares of Series B convertible preferred stock into common stock at a conversion price of $1.00 per share, and pay cash to the Series B Holders equal to the difference between the 60-day VWAP and $3.00 per share, or (ii) pay cash to the Series B Holders equal to $3.00 per share.

If the sixty-day VWAP is greater than $0.50 per share, the Company shall have the option to (i) convert all shares of Series B convertible preferred stock into common stock at a conversion price per share equal to the quotient of $3.00 per share divided by the sixty-day VWAP, or (ii) pay cash to the Series B Holders equal to $3.00 per share, or (iii) convert all shares of Series B convertible preferred stock into common stock at a conversion price per share equal to the sixty-day VWAP per share and pay cash to the Series B Holders at the difference between $3.00 per share and the sixty-day VWAP per share.

The Company shall at all times when the Series B convertible preferred stock is outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Series B convertible preferred stock, such number of its duly authorized shares of common stock as shall from time to time be sufficient to effect the conversion of all outstanding Series B convertible preferred stock.

In March 2021, the Company entered into a securities purchase agreement with Hadron Healthcare Master Fund (“Hadron”) with respect to a financing facility of up to $46.0 million in exchange for newly-designated Series C convertible preferred stock of the Company and warrants to purchase the Company’s common stock.

At the closing of the transaction in March 2021, Hadron purchased $23.0 million of Units at a price of $3.70 per Unit. Each Unit is comprised of one share of Series C preferred stock and a four-year warrant to purchase two and one-half shares of common stock. Accordingly, the Company issued to Hadron 6,216,216 shares of Series C preferred stock and warrants to purchase up to an aggregate of 15,540,540 shares of common stock. Each share of Series C preferred stock is convertible, at Hadron’s option, into five shares of common stock, and each warrant is exercisable at an exercise price of $1.087 per share. The warrants shall be subject to early termination if certain milestones are attained and the market value of the Company’s common stock reaches certain predetermined levels. The fair value of the warrants of approximately $9.5 million on the issuance date was allocated to the proceeds and recorded as additional paid-in capital. The Company incurred costs of approximately $387,000 relative to the issuance of the aforementioned shares to Hadron which was recorded as a reduction to additional paid-in capital in March 2021.

In connection with the closing of the transaction, the Company filed a certificate of designation with respect to the rights and preferences of the Series C convertible preferred stock. Such stock is zero coupon, non-voting. and has a liquidation preference equal to its investment amount plus declared but unpaid dividends. Holders of Series C convertible preferred stock are entitled to receive dividends on an as-converted basis.

Of the $23.0million of proceeds received by the Company in March 2021, approximately (i) $7.8 million is designated to fund construction and upgrades of certain of the Company’s owned and managed facilities, of which approximately $2.0 million was expended during the three months ended March 31, 2021, and (ii) $15.2 million was used to pay down debt and obligations, comprised of principal and interest on the $4.4M Notes, the $1M Note, the New $3M Note, the $5.8M Note, the Existing Notes, the New 2020 Notes (all referred to in Note 10 – Debt), and a portion of the Due To Related Parties balance discussed in Note 18 – Related Party Transactions.

The balance of the committed facility of up to an additional $23.0 million is intended to fund the Company’s specific targeted acquisitions provided such acquisitions are contracted in 2021 and consummated, including obtaining the necessary regulatory approvals, no later than the end of 2022. Such funds shall be provided by Hadron on the same aforementioned terms as the initial proceeds.

Provided that as at least 50% of the shares of Series C convertible preferred stock remain outstanding, the holders shall have the right to appoint one observer to the Company’s board and to each of its board committees, and appoint a member to the Company’s board if and when a seat becomes available, at which time the observer roles shall terminate.

The transaction imposes certain covenants on the Company with respect to the incurrence of new indebtedness, the issuance of additional shares of any designation of preferred stock, and the payment of distributions.

In February 2020, the Company filed a certificate of elimination to return all shares of the Series A convertible preferred stock to the status of authorized and unissued shares of undesignated preferred stock.

In February 2020, pursuant to the TIS Exchange Agreement discussed in Note 12 – Mezzanine Equity, the 4,908,333shares of common stock exchanged for shares of Series B convertible preferred stock were treated as an increase to treasury stock of $14,725,000 ($($3.00 per share), and then immediately cancelled, thereby reducing treasury stock to zero, with corresponding reductions to common stock of approximately $55,000 ~~,000 (the~~(the par value of the exchanged common shares) and additional paid-in capital of approximately $14,720,000.

~~During~~In the ~~nine~~three months ended ~~September 30, 2020, the Company issued~~ ~~4,400,000~~ ~~shares of common stock to settle approximately $699,000~~ ~~of obligations. Based on the price of the Company’s common stock on the settlement date, the Company incurred a loss of approximately $45,000~~ ~~which is reflected under~~ ~~Loss On Obligations Settled With Equity~~ ~~on the statement of operations.~~ ~~NaNsuch settlements occurred during the nine months ended September 30, 2019.~~

~~During the nine months ended September 30, 2020,~~March 31, 2021, the Company granted ~~97,797~~6,877 shares of common stock to a current employee. The fair value of the shares of approximately $~~16,000~~5,000 was charged to employee ~~compensation during the period. At September 30, 2020,~~ ~~33,319~~ ~~of these~~compensation. These granted shares were yet to be ~~issued. During~~issued by the ~~nine months ended September 30, 2019,~~end of the quarter, and were reflected in Common Stock Subscribed But Not Issued on the related balance sheet.

In 2020, the Company granted ~~108,820~~109,210 shares of common stock to a current ~~employees.~~employee. The fair value of the shares of approximately $~~194,000~~21,000 was charged to employee compensation during the period. Of these granted shares, 11,413 were yet to be issued at December 31, 2020 and were reflected in Common Stock Subscribed But Not Issued on the related balance sheet.

In February 2021, the Company issued 42,857 shares of common stock to settle a $30,000 obligation. Based on the price of the Company’s common stock on the date of issuance, the Company incurred a non-cash loss of approximately $1,300 which was reflected under Loss On Debt Settlements on the statement of operations. No stock was issued to settle obligations during the same period in 2020.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020,~~40,000~~ ~~shares of common stock granted to an employee in 2019 were forfeited. The Company recorded these returned shares at par value.~~ ~~NaN~~ ~~common stock forfeitures occurred in 2019.~~

~~During the nine months ended September 30, 2020 and 2019,~~ the Company issued ~~3,236,857~~11,413 and ~~97,136~~3,236,857 shares of common stock, respectively, associated with previously issued subscriptions on common stock with a value of approximately $~~1,168,000~~5,000 and $~~169,000~~1,168,000, respectively.

~~During the nine months ended September 30, 2019, the Company sold~~ ~~799,995~~ ~~shares of common stock at a price of $3.25~~ ~~per share, resulting in total proceeds of $2,600,000~~. ~~NaN~~ ~~common stock was sold during the nine months ended September 30, 2020.~~

~~As previously disclosed in Note 3~~ ~~– Acquisitions~~~~, the Company issued in 2019 (i)~~ ~~1,000,000~~ ~~shares of common stock in connection with the acquisition of the KPGs and Mari-IL, (ii)~~ ~~1,000,000~~ ~~shares of common stock as a good faith deposit on the Harvest acquisition, and (iii)~~ ~~520,000~~ ~~shares of common stock in connection with the acquisition of MediTaurus.~~

~~As previously disclosed in Note 4~~ ~~– Investments~~~~, the Company issued~~ ~~500,000~~ ~~shares of common stock in 2019 to purchase a minority interest in Terrace, and~~ ~~378,259~~ ~~shares of common stock in 2018 to purchase a minority interest in MRSVP.~~

~~As previously disclosed in Note 9 –~~ ~~Debt~~~~, the Company issued~~ ~~4,425,596~~ ~~shares of common stock during the nine months ended September 30, 2020 to retire approximately $812,000~~ ~~of promissory notes (principal and accrued interest).~~

As previously disclosed in Note 10 – Debt, the Company issued (i) 3,365,972 shares of common stock in 2021 upon the conversion of approximately $1,010,000 of principal and interest on the $8.8M Note, (ii) 1,900,000 shares of common stock in June 2020 upon the conversion of $352,000 of principal on the $11.5M Note, and (iii) 2,525,596 shares common stock in June 2020 upon the conversion of $460,050 of principal and interest on the $900k Note.

As previously disclosed in Note 11 – Debentures Payable, ~~during the nine months ended September 30, 2020,~~ the holder of the $21M Debentures converted (i) approximately $~~7.2~~1.4 million of principal and interest in 2021 into ~~54,143,232~~4,610,645 shares of common ~~stock. During the nine months ended September 30, 2019, the holder of the $21M debentures converted~~stock, and (ii) approximately $~~7.9~~10.1 million of principal and interest in 2020 into ~~6,798,339~~77,766,559 shares of common stock.

As further disclosed in Note 1315 – ~~Stock Options~~Warrants, ~~during the nine months ended September 30, 2019,~~warrants to purchase ~~417,352~~50,000 shares of common stock were ~~issued in connection with the exercise of stock options.~~ ~~NaN~~ ~~stock options were~~ exercised during the ~~nine~~three months ended ~~September 30, 2020.~~

~~As further disclosed in Note 14~~ ~~– Warrants~~~~, during the nine months ended September 30, 2019, warrants to purchase~~ ~~686,104~~ ~~shares of common stock were exercised.~~ ~~NaN~~ ~~warrants were exercised during the nine months ended September 30, 2020.~~March 31, 2021.

At ~~September 30,~~March 31, 2021 and 2020, the Company was obligated to issue ~~33,319~~6,877 and 30,302 shares of common stock, respectively, valued at approximately $5,000,in both periods, in connection with a stock grant to a current employee. ~~Such shares were subsequently~~The 2021 obligation was issued April 2021; the 2020 obligation was issued in ~~October~~May 2020. ~~At September 30, 2019, the Company was obligated to issue~~ ~~6,603,532~~ ~~shares of common stock, valued at approximately $5.0~~ ~~million, in connection with the MediTaurus acquisition, stock option exercises, and debenture conversions. Such shares were subsequently issued in the fourth quarter of 2019.~~

In August 2019, the Company’s board of directors approved the Amended and Restated 2018 Stock Award and Incentive Plan (the “Incentive Plan”), based on the board’s belief that awards authorized under the Incentive Plan provide incentives for the achievement of important performance objectives and promote the long-term success of the Company. In September 2019, the Incentive Plan was approved by the stockholders at the Company’s annual stock-holders meeting.

The Incentive Plan is an omnibus plan, authorizing a variety of equity award types as well as cash and long-term incentive awards. The Incentive Plan amends and restates the Company’s 2018 Stock Award and Incentive Plan (the “Previous Plan”), which was approved by the board of directors in July 2018 but never presented to stockholders for approval. Any grants made under the Previous Plan prior to the approval date of the Incentive Plan shall continue to be governed by the terms of the Previous Plan.

The Incentive Plan authorizes a broad range of awards, including stock options, stock appreciation rights, restricted stock, deferred stock, dividend equivalents, performance shares, cash-based performance awards, and other stock-based awards. Such awards can be granted to employees, non-employee directors and other persons who provide substantial services to the Company and its affiliates. Nothing in the Incentive Plan precludes the payment of other compensation to officers and employees, including bonuses based upon performance, outside of the Incentive Plan.

~~An aggregate of~~ ~~40,000,000~~ shares are reserved for delivery to participants and may be used for any type of award under the Incentive Plan. Shares actually delivered in connection with an award will be counted against such number of reserved shares. Shares will remain available for new awards if an award under the Incentive Plan expires, is forfeited, canceled, or otherwise terminated without delivery of shares or is settled in cash. Each award under the Incentive Plan is subject to the Company’s claw back policy in effect at the time of grant of the award.

The board of directors may amend, suspend, discontinue, or terminate the Incentive Plan or the authority to grant awards thereunder without stockholder approval, except as required by law or regulation or under rules of the stock exchange, if any, on which the Company’s stock may then be listed. Unless earlier terminated, grants under the Incentive Plan will terminate ten years after stockholder approval of the Incentive Plan, and the Incentive Plan will terminate when no shares remain available and the Company has no further obligation with respect to any outstanding award.

During the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, the Company granted five-yearoptions to purchase up to ~~1,064,500~~1,262,000 shares of common stock at exercise prices ~~of $0.15~~ ~~and $0.30~~ ~~per share. During the same period in 2019, the Company granted options to purchase up to~~ ~~900,000~~ ~~shares of common stock, expiring four and five years from their grant dates, at exercise prices~~ ranging from $~~0.99~~0.51 toand $~~1.95~~0.90 per share.

The fair values of ~~the aforementioned~~these options ~~granted in 2020 and 2019~~ of approximately $~~117,000~~541,000 ~~and $876,000, respectively,~~in the aggregate are being amortized to compensation expense over their vesting periods, of which approximately $~~100,000~~170,000 ~~and $101,000~~was amortized during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021. Additionally, compensation expense in the first quarter of 2021 for options issued in previous years, and ~~2019, respectively.~~continuing to be amortized over their respective vesting periods, approximated $124,000.

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, 0 options were granted. Compensation expense in the first quarter of 2021 for options issued in previous years, and continuing to be amortized over their respective vesting periods, approximated $330,000.

During the three months ended March 31, 2021 and 2020, options to purchase ~~3,585,000~~ ~~shares of common stock were exercised at prices ranging from $0.08~~ ~~to $0.77~~ ~~per share. Of these exercised options,~~ ~~2,285,000~~ ~~were exercised on a cashless basis with the exercise prices paid via the surrender of~~ ~~523,192~~ ~~shares of common stock. No options were exercised during the nine months ended September 30, 2020.~~

~~During the nine months ended September 30, 2020 and 2019, options to purchase~~ ~~210,000~~50,000 and ~~80,000~~30,000 shares of common stock, respectively, were forfeited or expired, resulting in an aggregate reduction of amortized compensation expense of zero in 2021 and approximately $~~208,000~~19,000 ~~and $170,000, respectively.~~in 2020.

Stock options outstanding and exercisable as of ~~September 30, 2020~~March 31, 2021 were:

During the ~~nine~~three months ended ~~September 30,~~March 31, 2021, the Company issued warrants to an individual to purchase up to 100,000 shares of common stock at an exercise price of $0.82 per share, expiring threeyears from issuance. The fair value of this warrant on the issuance date approximated $56,000 which was charged to compensation expense. Also during this period, the Company issued warrants to Hadron to purchase up to 15,540,540 shares of common stock at an exercise price of $1.087 per share, expiring four years from issuance, as part of the Hadron transaction previously discussed in Note 12 – Mezzanine Equity. The fair value of these warrants on the issuance date approximated $9.5 million, and this amount was allocated to the warrant from the $23.0 million proceeds from the Hadron transaction and recorded in additional paid in capital.

During the three months ended March 31, 2020, in conjunction with the $21M Debentures ~~previously disclosed~~discussed in Note 1011 – Debentures Payable, the Company issued three-year warrants to purchase up to 180,000shares of common stock at an exercise price of $0.75per share. The fair value of these warrants on the issuance date approximated $~~28,000~~1,148,000, ~~with~~of which approximately $~~17,000~~24,000 ~~of this amount~~was amortized to interest expense ~~during~~in the ~~period~~quarter and the remainder to be amortized over the term of the respective ~~debentures.~~

~~Also during this period, as previously disclosed in Note 9 –~~ ~~Debt,~~ ~~(i) as part of the $8.8M Note transaction, the Company issued~~ ~~three-year~~ ~~warrants to purchase up to~~ ~~750,000~~ ~~shares of common stock at an exercise price of $0.50~~ ~~per share, and (ii) in consideration of the Second Extension Agreement, the Company issued four-year warrants to purchase up to~~ ~~5,000,000~~ ~~shares of the Company’s common stock at an exercise price of $0.25~~ ~~per share. The fair value of these warrants on their issuance dates approximated $639,000, with approximately $10,000~~ ~~of this amount amortized to interest expense during the period and the remainder to be amortized by the maturity dates of the respective promissory notes.~~debenture.

During the ~~nine~~three months ended ~~September 30, 2019, in conjunction with the $21M Debentures previously disclosed in Note 10~~ ~~– Debentures Payable~~~~, the Company issued~~ ~~three-year warrants~~ ~~to purchase~~ ~~850,000~~ ~~shares of common stock at exercise prices of $3.00~~ ~~and $5.00~~ ~~per share. The fair value of these warrants at issuance approximated $1,148,000, with approximately $517,000 of this amount amortized to interest expense during the period and the remainder to be amortized over the remaining term of the respective debentures.~~

~~Also during this period, as part of the $10M Note transaction previously disclosed in Note 9 –~~ ~~Debt,~~ ~~the Company issued three-year~~March 31, 2021, warrants to purchase ~~375,000~~ ~~shares of common stock at an exercise price of $4.50~~ ~~per share. The fair value of these warrants at issuance approximated $601,000, with approximately $294,000~~ ~~of this amount amortized to interest expense during the period and the remainder amortized by the maturity date of the $10M Note.~~

~~The Company also issued stand-alone warrants to purchase up to~~ ~~25,000~~ ~~and~~ ~~125,000~~ ~~shares of common stock during the nine months ended September 30, 2020 and 2019, respectively. The fair value of these warrants at issuance approximated $2,000~~ ~~in 2020 and $139,000~~ ~~in 2019, and were charged to compensation expense during the periods.~~

~~During the nine months ended September 30, 2019, warrants to purchase up to~~ ~~686,104~~50,000 shares of common stock were exercised at an exercise price of $0.15 per share. NaN warrants were exercised during the same period in 2020.

During the three months ended March 31, 2021, warrants to purchase 225,000 shares of common stock with exercise prices ~~ranging from~~of $~~0.12~~0.90 toand $1.75 per share ~~resulting in aggregate proceeds to the Company of approximately $~~were forfeited. ~~612,000~~NaN~~. No~~ warrants were ~~exercised~~forfeited during the ~~nine months ended September 30,~~same period in 2020.

At ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ warrants to purchase up to ~~17,735,107~~32,282,708 and ~~11,270,107~~11,960,107 shares of common stock, respectively, were outstanding ~~with~~at exercise prices ranging from $~~0.15~~0.25 to $5.50 per share inacross both periods.

~~The~~For the three months ended March 31, 2021 and 2020, the Company’s revenues were comprised of the following major categories:

	Nine Months Ended September 30,
	2020		2019		2021		2020
Product sales		21,992,298		60,839	$	20,949,092	$	4,232,828
Product sales from related party		-		29,029,249
Real estate	$	5,065,538	$	5,250,084		1,808,799		1,973,098
Management		1,081,562		1,963,205		895,703		429,632
Supply procurement		1,218,334		2,830,555		519,504		430,134
Licensing		1,179,113		1,230,366		469,466		400,327
Other		984		47,893
Total revenues	$	30,537,829	$	40,412,191	$	24,642,564	$	7,466,019

~~The amount under~~ ~~Product Sales From Related Party~~ ~~shown in~~For the ~~table above represents the total revenues from the seed transactions with GenCanna, which is further disclosed in Note 17 –~~ ~~Related Party Transactions~~~~. Excluding these revenues, for the nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, revenue~~revenues from two clients represented ~~24%~~14% and ~~82%~~39%, respectively, of total revenues.

At ~~September~~ ~~30, 2020~~The Company maintains two types of reserves to address uncertain collections of amounts due—an allowance against trade accounts receivable (the “AR Allowance”), and ~~2019,~~a reserve against cash advanced by the Company ~~maintained reserves against bad debts of approximately $44.3~~ ~~million and $250,000, respectively.~~to its cannabis-licensed clients for working capital purposes (the WC Reserve”).

During the three months ended March 31, 2021, the Company increased the AR Allowance by $850,000, and the WC Reserve by approximately $175,000. The ~~September~~ ~~30, 2020 reserves were primarily comprised~~aggregate of ~~(i) an allowance against the accounts receivable balance due from~~ ~~GenCanna~~these two amounts of approximately $~~29.0million, following the commencement of GenCanna’s Chapter 11 proceedings as previously discussed in Note 4 –~~ ~~Investments~~~~, (ii) an allowance against the accounts receivable balance of approximately $11.1~~1,025,000 ~~million, and reserve against the working capital balance of approximately $1.5~~ ~~million, due from Kind, in light of the current litigation between the Company and Kind as further discussed in Note 18 –~~was charged to ~~Commitments and Contingencies~~Bad Debts~~, and (iii) an allowance against the accounts receivable balance of approximately $314,000, and~~ ~~a reserve against the working capital balance of approximately $2.3~~ ~~million due from Harvest, based~~ on the ~~Company’s expectation~~statement of operations for the ~~negative impact of~~three months ended March 31, 2021. No changes to the ~~COVID-19 pandemic on Harvest’s local economy.~~AR Allowance and WC Reserve were made during the three months ended March 31, 2020.

During 2019, the Company, through its MariMed Hemp subsidiary, entered into several hemp seed sale transactions with GenCanna whereby the Company acquired large quantities of top-grade feminized hemp seeds with proven genetics at volume discounts that it sold to GenCanna at market rates. The seeds met the U.S. government’s definition of federally legal industrial hemp, which was descheduled as a controlled substance and classified as an agricultural commodity upon the signing of the 2018 U.S. Farm Bill.

~~The Company purchased $20.75~~ ~~million of hemp seed inventory which it sold and delivered to GenCanna for $33.2~~ million. The Company provided GenCanna with extended payment terms through December 2019, to coincide with the completion of the seeds’ harvest, although the payment by GenCanna was not contingent upon the success of such harvest or its yield. To partially fund the seed purchases, the Company raised $~~17.0~~ ~~million in debt financings which is reflected in~~ ~~Notes Payable~~ ~~on the balance sheet and previously discussed in Note 9~~ ~~– Debt~~.

By the end of 2019, GenCanna had not paid the amount it owed the Company for its seed purchases due to several challenges it faced late in the year, including defaults under its senior credit facility, a fire at its main processing and lab facility, the domestic decline of CBD selling prices, and the contraction of the cannabis capital markets. In ~~February~~ 2020, ~~as previously discussed in Note 4 –~~ ~~Investments~~, under pressure from certain of its creditors, the GenCanna Debtors agreed to convert a previously-filed involuntary bankruptcy proceeding into a voluntary Chapter 11 proceeding, and filed voluntary petitions under Chapter 11 in the Bankruptcy Court.

~~As required by the relevant accounting guidance, the Company initially recorded the $33.2~~ ~~million due from GenCanna as a related party receivable, with approximately $29.0~~ ~~million recognized as related party revenue, and approximately $4.2~~ ~~million classified as unearned revenue (such amount representing the Company’s~~ ~~33.5%~~ ownership portion of the profit on these transactions, which was to have been recognized as revenue upon payment by GenCanna). As a result of GenCanna’s Chapter 11 proceedings, the Company fully reserved the receivable balance of approximately $~~29.0~~ ~~million and wrote off the entire unearned revenue balance of approximately $4.2~~ ~~million.~~

~~In 2019, the Company granted~~ ~~five-year optionsto purchase up to~~ ~~100,000~~ ~~shares of common stock to each of the Company’s three independent board members at an exercise price of $0.99~~ ~~per share. The aggregate fair value of these options of approximately $191,000~~ ~~was fully amortized at March 31, 2020. No options were granted to related parties during the nine months ended September 30, 2020.~~

~~In 2019,~~ options to purchase an aggregate of ~~200,000~~550,000 ~~and~~ ~~132,499~~shares of common stock were exercised by the Company’s CEO, CFO, and an independent board member ~~respectively,~~ at ~~weighted average~~ exercise prices of $~~0.11~~0.13 and $~~0.08~~0.14 per ~~share, respectively. The independent board member’s options were exercised on a cashless basis with the exercise prices paid via the surrender of 3,108 shares of common stock.~~share. No options were exercised by ~~related parties~~these individuals during the ~~nine~~first three months ~~ended September 30, 2020.~~

~~In 2019, options to purchase~~ ~~117,501~~ ~~shares~~ of ~~common stock were forfeited by board members. No options were forfeited by related parties during the nine months ended September 30, 2020.~~2021.

The Company’s ~~current~~ corporate offices are leased from ~~a company owned by a related party under a~~ ~~10-year~~an entity in which the Company’s CFO has an investment interest. This lease ~~that commenced August 2018~~ expires in October 2028 and contains a five-year extension option. ~~During~~In each of the ~~nine months~~three-month periods ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ expenses incurred under this lease approximated $~~117,000~~39,000.

The Company procures nutrients, lab equipment, cultivation supplies, furniture, and tools from an entity owned by the family of the Company’s COO. The aggregate purchases from this entity in the three months ended March 31, 2021 and 2020 approximated $825,000 and $490,000, respectively.

The Company pays royalties on the revenue generated from its Betty’s Eddies® product line to an entity owned by the Company’s COO and its SVP of Sales under a royalty agreement. This agreement was amended effective January 1, 2021 whereby, among other modifications, the royalty percentage changed from 2.5% on all sales of Betty’s Eddies® products to (i) 3.0% and 10.0% of wholesale sales of existing products within the product line if sold directly by the Company, or licensed by the Company for sale by third-parties, respectively, and (ii) 0.5% and 1.0% of wholesale sales of future developed products within the product line if sold directly by the Company, or licensed by the Company for sale by third-parties, respectively. The aggregate royalties due to this entity in the three months ended March 31, 2021 and 2020 approximated $83,000 and $64,000, respectively.

In the three months ended March 31, 2021 and 2020, one of the Company’s majority owned subsidiaries paid aggregate distributions of approximately $9,000 and $12,000, respectively, to the Company’s CEO and CFO, who own minority equity interests in such subsidiary.

In the three months ended March 31, 2021, the Company purchased fixed assets and consulting services of approximately $265,000 in ~~both periods.~~the aggregate from two entities owned by two of the Company’s general managers. No payments were made to these two entities in the same period in 2020.

In the three months ended March 31, 2021, the Company purchased fixed assets of approximately $310,000 from an entity owned by an employee. No payments were made to this related entity in the same period in 2020.

The balance of Due To Related Parties at ~~September 30, 2020 and~~ December 31, ~~2019~~2020 of approximately $~~1,233,000~~1.2 ~~and $1,455,000, respectively, were~~million was comprised of amounts owed of approximately (i) $~~515~~460,000 ~~,000 and~~to the Company’s CEO, (ii) $~~420~~653,000 ~~,000, respectively,~~ to entities owned by the Company’s CEO and CFO, ~~(ii) $673,000~~ ~~and $990,000, respectively, to companies partially owned by these officers,~~ and (iii) $4545,000 ~~,000 in both periods~~ to a stockholder of the Company. ~~Such~~All amounts owed ~~are not subject to repayment schedules.~~were repaid in March 2021.

~~Both of the~~The Company’s mortgages with Bank of New England ~~discussed in Note 9~~ ~~– Debt,~~ ~~as well as the mortgage with Commonwealth Real Estate Ventures LLC disclosed in Note 19 –~~ ~~Subsequent Events,~~ are personally guaranteed by the Company’s CEO and CFO.

The Company is the lessee under ~~five~~six operating leases and four finance leases. These leases contain rent holidays and customary escalations of lease payments for the type of facilities being leased. The Company recognizes rent expense on a straight-line basis over the expected lease term, including cancelable option periods which the Company fully expects to exercise. Certain leases require the payment of property taxes, insurance and/or maintenance costs in addition to the rent payments.

The Company leases machinery and office equipment under finance leases that expire in February 2022 through June 2024 with such terms being a major part of the economic useful life of the leased property.

The components of lease expense for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 were as follows:

				2021
Operating lease cost	$	737,993	$	266,580

Finance lease cost:
Amortization of right-of-use assets	$	24,512	$	8,171
Interest on lease liabilities		5,834		1,504
Total finance lease cost	$	30,346	$	9,675

The weighted average remaining lease term for operating leases is ~~8.7~~8.0 years, and for the finance lease is ~~3.0~~2.6 years. The weighted average discount rate used to determine the right-of-use assets and lease liabilities was between 7.5%to 12% for all leases.

Future minimum lease payments as of ~~September 30, 2020~~March 31, 2021 under all non-cancelable leases having an initial or remaining term of more than one year were:

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER ALL NON-CANCELABLE OPERATING LEASES

An employment agreement which commenced in 2012 with Thomas Kidrin, the former CEO of the Company, ~~that~~which provided Mr. Kidrin with salary, car allowances, stock options, life insurance, and other employee benefits, was terminated by the Company in 2017.At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company maintained an accrual of approximately $1,043,000 for any amounts that may be owed under this agreement, although the Company contends that such agreement is not valid and ~~that~~ no amount is due.

In July 2019, Mr. Kidrin, also a former director of the Company, filed a complaint in the Massachusetts Superior Court, ~~that~~which alleges the Company failed to pay all wages owed to him and breached the employment agreement, and requests multiple damages, attorney fees, costs, and interest. The Company has moved to dismiss certain counts of the complaint and has asserted counterclaims against Mr. Kidrin alleging breach of contract, breach of fiduciary duty, money had and received, and unjust enrichment. The Company believes that the allegations in the complaint are without merit and intends to vigorously defend this matter and prosecute its counterclaims.

While the Company’s motion to dismiss was pending, the parties reached a settlement in principle and the court has issued a nisi order of dismissal. The parties have not yet competed the settlement agreement. If the parties are for any reason unable to do so, then the Company will continue vigorously to defend this matter and prosecute its counterclaims.

As previously disclosed in Note 3 – Acquisitions, Kind has sought to renege on the ~~sellers~~parties’ original agreement to a partnership/joint venture made in the fall of Kind have attempted to renegotiate the terms of the MOU, alleging that the MOU is not an enforceable agreement, despite the MOU containing all the definitive material terms with respect to the acquisition transaction2016 and ~~confirming the management and lease agreements.~~subsequent MOU. The Company engaged with the ~~sellers~~members of Kind in a good faith in an attempt to reach updated terms acceptable to both parties, ~~but~~however the ~~non-reciprocation~~members of ~~the sellers resulted~~Kind failed to reciprocate in good faith, resulting in an impasse. Incrementally, both parties through counsel further sought to resolve the impasse, ~~and~~however such initiative resulted in both parties commencing legal proceedings.

OnIn November ~~13,~~ 2019, Kind ~~Therapeutics USA Inc. (“Kind”)~~ commenced an action by filing a complaint against the Company in the Circuit Court for Washington County, MD captioned Kind Therapeutics USA, Inc. vs. MariMed, Inc., et al. (Case No. C-21-CV-19-000670) ~~asserting claims against the Company, including~~(the “Complaint”). The Complaint, as amended, alleges breach of contract, breach of fiduciary duty, ~~accounting, and~~ unjust enrichment, intentional misrepresentation, rescission, civil conspiracy, and seeking an accounting and declaratory judgment and damages in excess of $75,000. On November 15, 2019, the Company filed counterclaims against Kind and a third-party complaint against the ~~Members~~members of Kind (Jennifer DiPietro, Susan Zimmerman, and Sophia Leonard-Burns) and William Tham (the ~~“Counterclaim”~~“Counterclaims”). The ~~Counterclaim alleged~~Counterclaims, as amended, allege breach of contract with respect to each of the partnership/joint venture agreement, the MOU, the MSA, the Lease, and the ~~Management~~Licensing and Manufacturing Agreement ~~(the “MSA”~~(“LMA”), unjust enrichment, promissory estoppel/detrimental reliance, ~~and~~ fraud in the inducement, breach of fiduciary duty, and ~~seeking~~seeks reformation of the MSA, a declaratory ~~judgement that~~judgment regarding enforceability of the partnership/joint venture arrangement and/or the MOU, ~~is an enforceable contract,~~ specific performance of ~~such contact,~~the parties’ various contracts, and the establishment of a constructive trust for the Company’s benefit. The ~~Counterclaim~~Counterclaims also ~~seeks~~seek damages.

~~Both~~At the time the Complaint and Counterclaims were filed, both parties, MariMed (including MariMed Holdings MD, LLC and MariMed Advisors Inc.) and Kind, brought motions for a temporary restraining order and a preliminary injunction. By Opinion and Order entered on November 21, 2019, the Court denied both parties motions for a temporary restraining order. In its opinion, the Court specifically noted that, contrary to Kind’s allegations, the MSA and the ~~20-year lease agreementfor Kind’s utilization of the Company’s cultivation and production facility (the “Lease”)~~Lease “appear to be independent, valid and enforceable contracts.”

~~On or about April 3,~~A hearing on the parties’ cross-motions for preliminary injunction was held in September 2020 and November 2020. Also in November 2020, the Court granted the Company’s motion for summary judgment as to the Lease, determining that the Lease is valid and enforceable. Based on this ruling, the Company ~~filed its First Amended Counterclaim~~is seeking judgment at trial in the amount of approximately $5.4 million for past due rent and ~~Third Party Complaint in which additional claims were added and clarified, including breach of Lease and breach~~expenses owed by Kind under the Lease.

In December 2020, the Court entered a Preliminary Injunction Order, accompanied by a Memorandum Opinion, denying Kind’s motion for a preliminary injunction (which Kind had withdrawn at the conclusion of the ~~Licensing~~hearing) and ~~Manufacturing Agreement (the “LMA”) against Kind, along with other alternative claims and seeking damages. On August 11, 2020,~~granting the Company’s request for preliminary injunction. The Court determined that the Company ~~filed~~is likely to succeed with respect to the validity and enforceability of the MSA and the LMA, that the Company would suffer substantial and irreparable harm without the preliminary injunction, and that the balance of convenience and public interest both warranted the issuance of a preliminary injunction in the Company’s favor. The Court ordered, inter alia, that the MSA and LMA are in effect pending judgment after trial on the merits, and that Kind and its ~~Second Amended Counterclaim~~members, and ~~Third Party Complaint~~their attorneys, agents, employees, and representatives, are prohibited from (a) interfering with the Company’s duties and responsibilities under the MSA and (b) withdrawing funds, making any distribution, paying any loans, returning any capital, or making any payment towards a debt from any Kind bank or other financial account(s) without written consent of the Company or Order of the Court, thereby preserving the Company’s management of Kind’s operations and finances at least through the jury trial currently scheduled to begin on March 28, 2022. Further, the Court ordered Kind to pay management and licensing fees to the Company beginning January 1, 2021. Kind has noted an appeal of the Order to the Maryland Court of Special Appeals, which is pending; however, the preliminary injunction order remains in ~~which additional clarifications were made~~effect.

In addition to the favorable rulings on the Lease, MSA, and ~~claims added for breach of fiduciary duty and breach of partnership. The~~LMA, the Company believes that its claims ~~for breach of contract~~ with respect to the ~~MOU, the MSA, the Lease, and the LMA, as well as all other claims~~70%/30% partnership/joint venture agreement are meritorious. Further, the Company believes that Kind’s claims against the Company are without merit. On March 18, 2021, the Court issued an opinion and order on Kind’s motion for summary judgment finding that the MOU was not enforceable by the Company against Kind as a final binding agreement. The Company is evaluating an appeal of this ruling which under Maryland rules can only be pursued upon final judgment.

In March 2021, the Kind parties filed motions to modify the preliminary injunction order or, alternatively, for direction from the Court based on Kind’s claim to have terminated the MSA. The Company has opposed both motions and has filed a petition for civil contempt against the Kind parties for interfering with the Company’s management of Kind. The motions and petition are pending, and the preliminary injunction remains in effect.

The Company intends to aggressively prosecute and defend the action. Trial has been scheduled from March 28, 2022 to April 11, 2022.

In ~~light~~August 2020, Jennifer DiPietro, directly and derivatively on behalf of Mari Holdings MD LLC (“Mari-MD”) and Mia Development LLC (“Mia”), commenced a suit against the Company’s CEO, CFO, and wholly-owned subsidiary MariMed Advisors Inc. (“MMA”), in Suffolk Superior Court, Massachusetts.

In this action, DiPietro, a party to prior ongoing litigation in Maryland involving the Company and Kind as discussed above, brings claims for breach of fiduciary duty, breach of contract, fraud in the inducement, aiding and abetting the alleged breach of fiduciary duty, and also seeks access to books and records and an accounting related to her investments in Mari-MD and Mia. DiPietro seeks unspecified money damages and rescission of her interest in Mari-MD, but not of her investment in Mia, which has ~~not~~provided substantial returns to her as a member.

The Company has answered the complaint and MMA has moved for leave to file counterclaims against DiPietro on its own behalf and derivatively on behalf of Mari-MD for breach of her fiduciary duties to each of those entities, for tortious interference with Mari-MD’s lease and MMA’s management services agreement with Kind, and for breach of Mari-MD’s operating agreement.

The Company believes that the allegations of the complaint are without merit and intends to defend the case vigorously. The Company’s counterclaim seeks monetary damages from DiPietro, including the Company’s legal fees in the Kind action.

During 2019, the Company’s MMH subsidiary sold and delivered hemp seed inventory to GenCanna Global Inc., a Kentucky-based cultivator, producer, and distributor of hemp (“GenCanna”). At the time of sale, the Company owned a 33.5% ownership interest in GenCanna. The Company recorded ~~management fees charged to Kind~~a related party receivable of approximately $~~1.1~~ 29.0million ~~for~~from the ~~nine months ended September 30, 2020. A hearing~~sale, which was fully reserved on December 31, 2019.

In February 2020, GenCanna USA, GenCanna’s wholly-owned operating subsidiary, under pressure from certain of its creditors including MGG Investment Group LP, GenCanna’s senior lender (“MGG”), agreed to convert a previously-filed involuntary bankruptcy proceeding with the ~~parties’ cross-motions for preliminary injunction was held on September 14~~U.S. Bankruptcy Court in the Eastern District of Kentucky (the “Bankruptcy Court”) into a voluntary Chapter 11 proceeding. In addition, GenCanna and GenCanna USA’s subsidiary, Hemp Kentucky LLC (collectively with GenCanna and GenCanna USA, the “GenCanna Debtors”), filed voluntary petitions under Chapter 11 in the Bankruptcy Court.

In May 2020, after an abbreviated solicitation/bid/sale process, the Bankruptcy Court, over numerous objections by creditors and shareholders of the GenCanna Debtors which included the Company, entered an order authorizing the sale of all or substantially all of the assets of the GenCanna Debtors to ~~17, 2020~~MGG. After the consummation of the sale of all or substantially all of their assets and ~~November 2~~business, the GenCanna Debtors n/k/a OGGUSA, Inc. and ~~4, 2020,~~OGG, Inc. (the “OGGUSA Debtors”) filed their liquidating plan of reorganization (the “Liquidating Plan”) to collect various prepetition payments and commercial claims against third parties, liquidate the remaining assets of the ODDUSA Debtors, and make payments to creditors. The Company and the ~~Court’s ruling on~~unsecured creditors committee filed objections to such Liquidating Plan, including opposition to the ~~motions~~release of litigation against the OGGUSA Debtors’ senior lender, MGG, for lender liability, equitable subordination, and return of preference. As a part of such plan confirmation process, the OGGUSA Debtors filed various objections to proofs of claims filed by various creditors, including the proof of claim in the amount of approximately $33.6 million filed by the Company. Through intense and lengthy negotiations with the OGGUSA Debtors and the unsecured creditors committee regarding the objections to the Liquidating Plan, the Company reached an agreement with the OGGUSA Debtors to withdraw the objections to the Company’s claim and to have it approved by the Bankruptcy Court as a general unsecured claim in the amount of $31.0 million.

Since the approval of the Liquidating Plan, the OGGUSA Debtors have been in the process of liquidating the remaining assets, negotiating and prosecuting objections to other creditors’ claims, and pursuing the collection of accounts receivable and Chapter 5 bankruptcy avoidance claims. As of the date of this filing, there is ~~pending. The trial is currently scheduled~~insufficient information as to ~~start on June 7, 2021.~~what portion, if any, of the Company’s allowed claim will be paid upon the completion of the liquidation of the remaining assets of the OGGUSA Debtors.

~~In October 2020, the holder of the $21M Debentures converted an aggregate of approximately $1,259,000~~ ~~of principal and accrued interest into~~ ~~10,653,600~~ ~~shares of common stock at conversion prices of $0.11~~ ~~and $0.12~~ ~~per share.~~

~~In October 2020, as previously discussed in~~Amended Note ~~9 –~~ ~~Debt~~~~, the Company and the Holding Party entered into the Second Extension Agreement whereby the~~ ~~Company (i) paid, in October 2020, $~~1 ~~million of principal and all outstanding accrued interest of approximately $333,000~~ ~~on the $6.8M Note, (ii) issued the $5.8M Note, which replaced the $6.8M Note, and the New $3M Note, both with maturity dates in~~ ~~September 2022~~.

In ~~October 2020,~~April 2021, the Company entered into a $~~1.3~~ ~~million mortgage~~third amendment agreement with ~~Commonwealth Real Estate Ventures LLC.~~ the Noteholder referred to in Note 10 – Debt whereby the Company and MMH issued a third amended and restated promissory note in the principal amount of approximately $3.2 million (the “$3.2M Note”), comprised of the remaining principal balance on the $8.8M Note.

The ~~mortgage is secured by the Company’s properties in Illinois, and requires interest-only monthly payments~~$3.2M Note bears interest at a rate of ~~15%~~ 0.12%per annum ~~through its maturity date~~and matures in ~~October 2021~~.April 2023. The ~~mortgage contained an origination charge of~~ 1% Noteholder has the option to convert, subject to certain conversion limitations, all or a portion of the ~~principal balance. Repayment~~$3.2M Note into shares of the ~~mortgage is personally guaranteed~~Company’s common stock at a conversion price of $0.35 per share, subject to adjustment from certain transactions by the ~~Company’s CEO and CFO.~~Company.

On or after the one-year anniversary of the $3.2M Note, upon twenty days prior written notice to the Noteholder, the Company can prepay all of the outstanding principal and unpaid interest of the $3.2M Note, along with a prepayment premium equal to 10% of the principal amount being prepaid. The Noteholder shall remain entitled to convert the $3.2M Note during such notice period. On or after the one-year anniversary of the $3.2M Note, the Noteholder has the right to require the redemption in cash of up to $125,000 of principal and unpaid interest thereon per calendar month.

In ~~October 2020,~~April 2021, the Company issued ~~33,319~~6,877 shares of common stock previously subscribed in connection with the stock grant to ~~a current~~an employee previously disclosed in Note 1214 – Stockholders’ ~~Equity.~~Equity. Also during this period, (i) the Company granted five-year options to purchase up to 590,000 shares of common stock to employees at an exercise price of $0.74 per share, (ii) options to purchase 25,000 shares of common stock were exercised at an exercise price of $0.30 per share, (iii) options to purchase 125,000 shares of common stock were exercised on a cashless basis, with the exercise price of $0.45 per share paid by the surrender of 72,115 shares of common stock, (iv) warrants to purchase 200,000 shares of common stock were exercised on a cashless basis, with the exercise price of $0.45 per share paid by the surrender of 88,235 shares of common stock, and (v) the Company issued 28,834 shares of common stock to satisfy a $21,000 obligation.

Item 2. Management’s Discussions and Analysis of Financial Condition and Results of Operations

When used in this form 10-Q and in future filings by the Company with the Commission, the words or phrases such as “anticipate,” “believe,” “could,” “should,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on any such forward looking statements, each of which speak only as of the date made. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company has no obligation to publicly release the result of any revisions which may be made to any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different. These factors include, but are not limited to, changes that may occur to general economic and business conditions; changes in current pricing levels that we can charge for our services or which we pay to our suppliers and business partners; changes in political, social and economic conditions in the jurisdictions in which we operate; changes to laws and regulations that pertain to our products and operations; and increased competition.

The following discussion should be read in conjunction with the unaudited financial statements and related notes which are included under Item 1 of this report.

We do not undertake to update our forward-looking statements or risk factors to reflect future events or circumstances.

MariMed Inc. (the “Company”) is a multi-state operator in the United States cannabis industry. The Company develops, operates, manages, and optimizes over 300,000 square feet of state-of-the-art, regulatory-compliant facilities for the cultivation, production and dispensing of medicinal and recreational cannabis. The Company also licenses its proprietary brands of cannabis and hemp-infused products, along with other top brands, in several domestic markets and overseas.

A goal in completing this transition from a consulting business to a direct owner of cannabis licenses and operator of seed-to-sale operations is to present a simpler, more transparent financial picture of the full breadth of the Company’s efforts, with a clearer representation of the revenues, earnings, and other financial metrics the Company has generated for its clients. The Company has played a key role in the successes of these entities, from the securing of their cannabis licenses, to the development of facilities that are models of excellence, to providing operational and corporate guidance. Accordingly, the Company believes it is well suited to own these facilities and manage the continuing growth of their operations.

To date, acquisitions of the licensed businesses in Massachusetts and Illinois have been state-approved and completed and establishes the Company as a fully integrated seed-to-sale multi-state operator, The acquisitions of the remaining entities located in Maryland, Nevada, and Delaware are at various stages of completion and subject to each state’s laws governing the ownership and transfer of cannabis licenses, which in the case of Delaware requires a modification of current cannabis ownership laws to permit for-profit ownership. Meanwhile, the Company continues to develop additional revenue and business in these states and plans to leverage its success to expand into other markets where cannabis is and becomes legal.

The Company also has exclusive sublicensing rights in certain states to distribute the Binske® line of cannabis products crafted from premium artisan ingredients, the Healer™ line of medical full-spectrum cannabis tinctures, and the clinically tested medicinal cannabis strains developed in Israel by global medical cannabis research pioneer Tikun Olam™. ~~The Company’s hemp division distributes hemp-derived CBD products, including its Florance™ brand, in the US and abroad.~~ The Company intends to continue licensing and distributing its brands as well as other top brands in the Company’s current markets and in additional legal markets worldwide.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. The spread of the virus in the United States and the measures implemented to contain it—including business shutdowns, indoor capacity restrictions, social distancing, and diminished travel—have negatively impacted the economy and have created significant volatility and disruption in financial markets. Consequently, the Company’s ~~expansion efforts and~~ implementation of its ~~strategic plan have~~aforementioned Consolidation Plan has been delayed. Additionally, while the cannabis industry has been deemed an essential business, and is not expected to suffer severe declines in revenue, the Company’s business, operations, financial condition, and liquidity have been ~~adversely affected,~~impacted, as further discussed in ~~the notes accompanying the financial statements and within~~ this ~~Management’s Discussions and Analysis of Financial Condition and Results of Operations~~.report.

~~Continued disruption to~~¹Awards won by the ~~global economy may materially and adversely affect the future carrying values of certain~~Company’s Betty’s Eddies® brand include LeafLink 2020 Industry Innovator, Explore Maryland Cannabis 2020 Edible of the ~~Company’s assets, including inventories, accounts receivables,~~Year, and intangibles, as well as negatively impact the Company’s ability to raise working capital to support its operations. The full extent to which COVID-19 and the measures to contain it will impact the Company’s business, operations financial condition, and liquidity will depend on the continued severity and duration of the COVID-19 outbreak and other future developments in response to the virus, all of which are highly uncertain at this time. As a result, the Company cannot predict the ultimate impact of COVID-19 on its operational and financial performance.LeafLink 2019 Best Selling Medical Product.

The Company’s revenues are ~~currently~~primarily comprised of the following ~~primary~~ categories:

~~At September 30, 2020,~~The Company produced significant improvements to its liquidity in the Company had cash and cash equivalents of approximately $2.3 million and negative working capital of approximately $9.1 million, compared to cash and cash equivalents of approximately $739,000 and negative working capital of approximately $29.3 million at December 31, 2019.reported periods:

~~The Company produced the following improvements to key liquidity metrics during the reported period:~~

The large negative working capital balance at December 31, 2019 was primarily caused by GenCanna’s bankruptcy proceeding under Chapter 11 initiated in early 2020, the details of which are disclosed in the footnotes accompanying the Company financial statements included in this report. Prior to the commencement of these bankruptcy proceedings, during the period March 2019 to June 2019, the Company raised $17.0 million via the issuance of promissory notes to three unaffiliated third parties (the “Seed Funding Notes”). The proceeds from the Seed Funding Notes were used to fund the purchase of large quantities of top-grade hemp seeds at volume discounts which were then sold to GenCanna at market rates (the “Seed Transactions”). The Seed Funding Notes were committed to be repaid by the end of calendar 2019 utilizing a portion of the approximate $29.0 million of revenue to be generated from the Seed Transactions. Upon the commencement of the GenCanna bankruptcy proceedings, the Company recorded a bad debt reserve at December 31, 2019 against the entire $29.0 million receivable balance from GenCanna.

~~Also contributing~~The aforementioned improvements to were primarily the ~~large negative working capital balance at December 31, 2019 were the additional bad debt reserves recorded by the Company on such date~~result of ~~$11.2 million against the working capital and receivable balances due from Kind,~~(i) increases in light of the pending litigation between the Company and Kind, and $2.2 million against the working capital and receivable balances due from Harvest, based on the impact of the COVID-19 pandemic on Harvest’s operations.

During 2020, the Company (i) successfully extended the maturity dates of all of the Seed Funding Notes, (i) converted $802,000 of accrued interest on the Seed Funding Notes into shares of the Company’s common stock, and (iii) paid down $4,450,000 of principal and accrued interest of the Seed Funding Notes with proceeds from newly-issued long-term debt and cash generated from operations. These actions, coupled with the continuing growthrevenues and profitability ofgenerated by the Company’s cannabis operations in the states of Illinois and Maryland, and offset by the continued reserves on amounts due from GenCanna, Kind, and Harvest, resulted in a negative working capital balance of $9.1 million at September 30, 2020, an improvement from December 31, 2019 of approximately $20.2 million.

The approximate $1.5 million increase in cash and cash equivalents from December 31, 2019 to September 30, 2020 was primarily attributable to the proceeds from the Refinanced Mortgage, the $4.4M Notes, the Third Party Notes, and the $1M NoteMassachusetts, acquired as ~~discussed in Note 9 –~~ ~~Debt~~part of the Company’s ~~financial statements, coupled with the continuing growth in profitability~~Consolidation Plan to transition from a consulting business to a direct owner of ~~the Company’s~~ cannabis licenses and operator of see-to-sale operations, ~~in Illinois~~ and ~~Massachusetts as explained below, offset primarily by the buildup of inventory balances and the purchase of property and equipment.~~

With respect to the Company’s consolidation plan, the operations of the acquired entities in Illinois and Massachusetts have started to generate considerable liquidity and working capital for the Company. Since their acquisition in October 2019, the KPGs in Illinois have generated in excess of $4.6(ii) $23.0 million of pretax income for the Company, which continues to exceed forecasts, in part due to the legalization of adult-use cannabis in this state in January 2020. Additionally, the KPGs added a third dispensary in Mt. Vernon which commenced operations in September 2020. In Massachusetts, the cultivation and production facility acquiredgross proceeds raised by the Company under a financing facility of up to $46.0 million pursuant to a securities purchase agreement with Hadron Healthcare Master Fund (“Hadron”) in ~~December 2018 has ramped up its grow capabilities to full capacity.~~ exchange for newly-designated Series C convertible preferred stock and warrants.

Additionally, the Company received final approval for adult-use cannabis production and sales from the Massachusetts Cannabis Control Commission, and commenced business in this state’s robust adult-use market in September 2020.

~~In connection with the preparation of its~~section below entitled Non-GAAP Measurement discusses an additional financial ~~statements for the nine months ended September 30, 2020,~~measure not defined by GAAP which the Company’s management ~~evaluated the Company’s ability~~uses to ~~continue as a going concern in accordance with ASU 2014-15,~~ ~~Presentation of Financial Statements–Going Concern (Subtopic 205-40)~~, which requires an assessment of relevant conditions or events, considered in the aggregate, that are known or reasonably knowable by management on the issuance dates of the financial statements which indicate the probable likelihood that the Company will be unable to meet its obligations as they become due within one year after the issuance date of the financial statements.evaluate liquidity.

Net cash provided by operating activities ~~for~~in the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 approximated ~~$1.6~~$6.8 million, compared to net cash used in operating activities of approximately ~~$24.2 million for~~$407,000 in the same period in ~~2019.~~2020. The year-over-year improvement was primarily attributable to ~~(i)~~ the increase in cannabis-derived profits ~~in 2020~~ generated by the ~~acquisition of the KPGs~~acquired operations in Illinois and ARL in Massachusetts, (ii) the intentional slowing of payments of trade accounts payable and other liabilities in 2020, and (iii) the large purchase of hemp seeds in 2019 as part of the Seed Transactions, offset by higher cannabis inventory in 2020.Massachusetts.

Net cash used in investing activities ~~for~~in the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 approximated ~~$3.9~~$2.9 million, compared to approximately ~~$9.3~~$1.4 million ~~for~~in the same period in ~~2019.~~2020. The ~~year-over-year decrease in the use of cash~~increase was due to ~~the investments in Atalo, Healer, MHWC,~~additional purchases of fixed assets and ~~MediTaurus made in 2019. No similar investments were made in 2020. The year-over-year decrease is also due~~amounts paid to ~~reduced property and equipment purchases in 2020.~~renew cannabis licenses.

Net cash provided by financing activities ~~for~~in the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 approximated ~~$3.8~~$5.4 million, compared to approximately ~~$29.5~~$2.9 million ~~for~~in the same period in ~~2019. In 2020,~~2020. The increase is primarily due to the ~~Company raised approximately $20.1~~$23.0 million ~~from debt financings, offset by approximately $15.9 million~~ of ~~promissory note and mortgage repayments, compared to debt and equity financings in 2019 of $29.2 million in the aggregate with no repayments of debt.~~

~~The~~ proceeds from the aforementioned ~~financings were used to execute on~~Hadron transaction, offset by the paydown of debt and obligations of approximately $17.1 million. The remaining proceeds from the Hadron transaction will fund construction and upgrades of certain of the Company’s ~~strategy~~owned and managed facilities. The balance of the committed facility of up to ~~become a fully integrated multistate operator~~an additional $23.0 million is intended to fund the Company’s specific targeted acquisitions provided such acquisitions are contracted in 2021 and consummated, including obtaining the necessary regulatory approvals, no later than the end of ~~seed-to-sale cannabis operations, to continue the development of its regulated facilities, to grow its hemp operations, to expand its branded licensing business, and for working capital purposes.~~2022.

Three months ended ~~September 30, 2020~~March 31, 2021 compared to three months ended ~~September 30, 2019~~March 31, 2020

~~Total revenues for~~Revenues in the three months ended ~~September 30, 2020~~March 31, 2021 approximated ~~$13.5~~$24.6 million compared to approximately ~~$11.2~~$7.5 million ~~for~~in the same period in ~~2019,~~2020, an increase of approximately ~~$2.2~~$17.2 million or 19.9%. Excluding the Seed Transactions, core revenues for the three months ended September 30, 2020 grew to approximately $13.5 million from approximately $4.2 million for the same period in 2019, an increase of approximately $9.3 million or 219.8%230.1%. The year-over-year increase was primarily due to ~~aggregate~~the four-fold growth of cannabis sales ~~during~~to approximately $20.9 million in the ~~quarter ended September 30, 2020 of~~current period, compared to approximately ~~$10.8~~$4.2 million from the same period a year ago. This growth was attributable to approximately (i) $5.4 million generated in the current period by the ~~KPGs~~Company’s cultivation and production facility in ~~Illinois, acquired by~~New Bedford, MA; this location had completed in first harvest at the ~~Company in October 2019,~~end of the prior period and ~~ARL in Massachusetts, acquired by the Company in late 2018 and whose~~commenced full scale selling operations ~~commenced~~after the end of such quarter, (ii) $3.8 million generated in ~~December 2019. The cannabis sales were offset by decreases in procurement revenue and management fees charged to Kind,~~the current period from the Company’s ~~cannabis-licensed client~~dispensary in ~~Maryland,~~Mt. Vernon, IL in the current period, which was not yet operational in the previous period, (iii) a $3.9 million increase in revenue generated in the current period from the Company’s dispensaries in Anna, IL and Harrisburg, IL due to 55% and 70% increases, respectively, in recreational customer visits year-over-year, and (iv) a $3.5 million increase in revenue generated from the Company’s Middleboro, MA dispensary which commenced recreational sales in the third quarter of 2020 and also saw a six-fold increase in medical customers. The year-over-year increase in revenues was also the result of continued improvement across all revenue categories, primarily from increased business with ~~whom~~ the ~~Company is currently engaged~~Company’s clients in ~~litigation.~~Delaware and Maryland.

Cost of revenues ~~for~~in the three months ended ~~September 30, 2020~~March 31, 2021 approximated ~~$4.8~~$11.5 million compared to approximately ~~$6.5~~$2.6 million ~~for~~in the same period in ~~2019, a decrease~~2020, an increase of approximately ~~$1.7 million or 26.7%.~~$8.9 million. The year-over-year variance was primarily attributable to the ~~cost~~higher level of ~~seeds incurred by the Company during the quarter ended September 30, 2019 of approximately $5.0 million as part of the Seed Transactions. Excluding the Seed Transactions, cost~~revenues. As a percentage of revenues, ~~for~~these costs increased to 46.5% in the three months ended ~~September 30, 2020 increased to approximately $4.0 million~~March 31, 2021 from ~~approximately $1.5 million for~~34.8% in the same period in ~~2019. As a percentage~~2020, primarily due to the change in the relative mix of revenue ~~these~~categories in each period. Specifically, in the three months ended March 31, 2021, (a) 85.0% of revenues were comprised of product sales, which historically have had corresponding costs ~~remained relatively steady at 35.9%~~of revenue of approximately 50.0%, and (b) 7.3% of revenues were comprised of real estate revenue, which have no corresponding cost of revenue. This compares to revenues in the same period in 2020 that were comprised of (x) 56.7% of product sales and ~~35.9%~~(y) 26.4% of real estate revenues. While the cost rate is higher for product sales, the level of product sales able to be generated by the Company is several multiples higher than the level of real estate revenue able to be generated, resulting in ~~2019, demonstrating~~significantly higher margin dollars and profitability to be generated by the ~~Company’s leveraging of its infrastructure to produce higher levels of revenue with minimal increases on cost of revenues.~~Company.

As a result of the foregoing, gross profit approximated ~~$8.7~~$13.2 million, or ~~64.5%~~53.5% of ~~total~~ revenues ~~for~~in the three months ended ~~September 30, 2020,~~March 31, 2021, from approximately ~~$4.7~~$4.9 million, or ~~41.9%~~62.5% of ~~total~~ revenues ~~for~~in the same period a year ago. Excluding the Seed Transactions, gross profit increased to approximately $8.7 million for the three months ended September 30, 2020 from approximately $2.7 million for the same period a year ago, an increase of approximately $6.0 million or 221.5%.in 2020.

Personnel expenses increased to approximately ~~$1.4~~$1.7 million ~~for~~in the three months ended ~~September 30, 2020~~March 31, 2021 from approximately ~~$1.2~~$1.5 million ~~for~~in the same period ~~a year ago.~~in 2020. The increase was primarily due to the hiring of additional staff to support (i) higher levels of revenue, and (ii) the Company’s expansion into a direct owner and operator of seed-to-sale cannabis businesses. As a percentage of revenues ~~excluding the Seed Transactions,~~ personnel expenses dropped significantly to ~~10.1%~~7.0% in ~~2020~~the three months ended March 31, 2021 from ~~to 29.5%~~20.3% in ~~2019.~~the same period in 2020.

Marketing and promotion costs increased ~~slightly~~ to approximately ~~$103,000 for~~$224,000 in the three months ended ~~September 30, 2020~~March 31, 2021 from approximately ~~$92,000 for~~$112,000 in the same period ~~a year ago.~~in 2020, primarily from increased spending on public relations and related expenses. As a percentage of revenues, ~~excluding the Seed Transactions,~~ these costs fell to ~~0.8%~~0.9% in ~~2020~~the three months ended March 31, 2021 from ~~2.2%~~1.5% in ~~2019.~~the same period in 2020.

General and administrative costs increased to approximately ~~$2.9~~$3.2 million ~~for~~in the three months ended ~~September 30, 2020~~March 31, 2021 from approximately ~~$2.4~~$2.2 million ~~for~~in the same period ~~a year ago.~~in 2020. This increase is primarily due to ~~taxes paid on~~increased legal costs associated with the Company’s ~~cannabis operation, and increases~~legal proceedings, coupled with higher facility costs on additional properties in ~~corporate insurance.~~service in 2021. As a percentage of revenues, ~~excluding the Seed Transactions,~~ these costs fell significantly to ~~21.8%~~12.9% in ~~2020~~the three months ended March 31, 2021 from ~~56.9%~~29.9% in ~~2019~~the same period in 2020.

~~During~~Bad debt expense approximated $1.0 million in the three months ended ~~September 30, 2020, the Company recorded additional~~March 31, 2021 compared to zero bad debt ~~reserves~~expense in the same period in 2020. The current period amount reflects a reserve of approximately ~~$892,000 to cover potential losses that would be incurred by the Company from the impact of COVID-19 and the measures enacted by local governments to reduce its spread.~~$1.0 million recorded against aging receivable balances.

As a result of the foregoing, the Company generated operating income of approximately ~~$3.4~~$7.0 million ~~for~~in the three months ended ~~September 30, 2020~~March 31, 2021 compared to approximately $973,000 for the same period a year ago. Excluding the Seed Transactions, the Company generated operating income of approximately $3.4 million for the three months ended September 30, 2020 compared to an operating loss of approximately $1.0 million ~~for~~in the same period in ~~2019, a positive swing of approximately $4.4 million.~~2020.

Net non-operating expenses decreased to ~~$1.7~~approximately $1.5 million ~~for~~in the three months ended ~~September 30, 2020~~March 31, 2021 from approximately ~~$7.4~~$3.3 million ~~for~~in the same period in ~~2019.~~2020. The decrease is primarily due to ~~(i) a charge~~an approximate $1.2 million reduction of interest expense from lower levels of outstanding debt, and an approximate $640,000 smaller decline in the ~~third quarter~~fair value of 2019 of approximately $2.9 million from the Company’s equity in GenCanna’s net loss (GenCanna was accounted for as an equity investment at such time), and (ii) a decrease in interest expense of approximately $2.6 million attributable to a lower amount of remaining beneficial conversion feature on the $21M Debentures that was amortized in 2020 compared to 2019.investments.

As a result of the foregoing, the Company generated ~~net~~ income before income taxes of approximately ~~$1.7~~$5.5 million ~~for~~in the three months ended ~~September 30, 2020. For~~March 31, 2021, compared to a loss before income taxes of approximately $2.3 million in the same period ~~a year ago, after~~in 2020. After a tax provision of approximately ~~$901,000,~~$1.2 million in the ~~Company incurred~~three months ended March 31, 2021 and approximately $13,000 in the same period in 2020, net income approximated $4.3 million in the current period, compared to a net loss of approximately ~~$7.3~~$2.3 million ~~and excluding~~in the ~~Seed Transactions, incurred~~prior period, a ~~net loss~~positive swing of approximately ~~$8.4~~$6.6 million.

~~Nine months ended September 30, 2020 compared to nine months ended September 30, 2019~~Non-GAAP Measurement

~~Total revenues for~~In addition to the ~~nine months ended September 30, 2020 approximated $30.5 million compared to $40.4 million for the same period~~financial information reflected this report, which is prepared in 2019. The year-over-year variance was primarily attributable to revenues of approximately $22.0 million generated from the Seed Transactions. Excluding the Seed Transactions, core revenues for the nine months ended September 30, 2020 grew to approximately $30.5 million from approximately $11.4 million for the same period in 2019, an increase of approximately $19.2 million or 168.3%. The year-over-year increase was due to aggregate cannabis sales in 2020 of approximately $22.0 million generated by the KPGs in Illinois, acquired by the Company in October 2019, and ARL in Massachusetts, acquired by the Company in late 2018 and whose selling operations commenced in December 2019. The cannabis sales were offset by decreases in procurement revenue and management fees charged to Kind, the Company’s cannabis-licensed client in Maryland, andaccordance with ~~whom~~GAAP, the Company is ~~currently engaged in litigation.~~providing an additional financial measure not defined by GAAP – EBITDA (defined below). The Company is providing this non-GAAP financial measurement as a supplement to the preceding discussion of the Company’s financial results.

~~Cost~~Management defines EBITDA as net income (loss) before interest, income taxes, depreciation, and amortization. Management believes EBITDA is a useful measure to assess the performance and liquidity of ~~revenues~~the Company as it provides meaningful operating results by excluding the effects of expenses that are not reflective of its operating business performance. In addition, the Company’s management uses EBITDA to understand and compare operating results across accounting periods, and for financial and operational decision making. The presentation of EBITDA is not intended to be considered in isolation or as a substitute for the ~~nine months ended September 30, 2020 approximated $10.8 million compared~~financial information prepared in accordance with GAAP.

Management believes that investors and analysts benefit from considering EBITDA in assessing the Company’s financial results and its ongoing business as it allows for meaningful comparisons and analysis of trends in the business. EBITDA is used by many investors and analysts themselves, along with other metrics, to ~~approximately $24.5 million for the same period in 2019. The year-over-year variance was primarily attributable~~compare financial results across accounting periods and to ~~the cost~~those of seeds incurred by the Company of approximately $20.8 million as part of the Seed Transactions. Excluding the Seed Transactions, cost of revenues for the nine months ended September 30, 2020 increased to approximately $10.8 million from approximately $3.8 million for the same period in 2019. As a percentage of total revenues, these costs increased to 35.5% in 2020 from 33.2% in 2019, which is the result of Company’s transition from a cannabis advisory company to a multi-state operator of cannabis businesses, whereby the Company will generate less revenues from a rental income and management fees, which have minimal associated costs, to a vastly higher level of revenue from product sales, which have a relatively higher level of associated costs.peer companies.

As ~~a result~~there are no standardized methods of calculating non-GAAP measurements, the ~~foregoing, gross profit approximated $19.7 million, or 64.5% of total revenues, for the nine months ended September 30, 2020~~Company’s calculations may differ from ~~approximately $15.9 million, or 39.3% of total revenues, for the same period a year ago. Excluding the Seed Transactions, gross profit increased~~those used by others, and accordingly, and therefore may not be directly comparable to ~~approximately $19.7 million for the nine months ended September 30, 2020 from approximately $7.6 million for the same period a year ago, an increase of approximately $12.1 million or 159.0%.~~similarly titled measures used by others.

~~Personnel expenses increased~~Reconciliation of Net Income (Loss) to approximately $4.1 million for the nine months ended September 30, 2020 from approximately $2.7 million for the same period a year ago. The increase was primarily due to the hiring of additional staff to support (i) higher levels of revenue, and (ii) the Company’s expansion into a direct owner and operator of seed-to-sale cannabis businesses. As a percentage of revenues excluding the Seed Transactions, personnel expenses dropped to 13.3% in 2020 from 24.1% in 2019.EBITDA (a Non-GAAP Measurement)

~~Marketing and promotion costs decreased slightly~~The table below reconciles Net Income (Loss) to ~~approximately $281,000 for the nine~~EBITDA three months ended ~~September 30, 2020 from approximately $287,000 for the same period a year ago. As a percentage of revenues excluding the Seed Transactions, these costs fell to 0.9% in 2020 from 2.5% in 2019.~~

~~General~~March 31, 2021 and administrative costs increased to approximately $7.5 million for the nine months ended September 30, 2020 from approximately $6.8 million for the same period a year ago. The increase is primarily due to higher facility costs on additional properties owned and in service in 2020, higher depreciation expense on such properties, taxes paid on the Company’s cannabis operation, and increases in corporate insurance. As a percentage of revenue excluding the Seed Sales, general and administrative costs decreased significantly to 24.6% in 2020 from 59.3% in 2019, reflecting a more efficient use of the Company’s fixed overhead costs.

During the nine months ended September 30, 2020, the Company recorded an additional bad debt reserve of approximately $1.3 million to cover potential losses that would be incurred by the Company from the impact of COVID-19 and the measures enacted by local governments to reduce its spread.

As a result of the foregoing, the Company generated operating income of approximately $6.5 million for the nine months ended September 30, 2020 compared to approximately $6.1 million for the same period in 2019. Excluding the Seed Transactions, the Company generated operating income of approximately $6.5 million for the nine months ended September 30, 2020 compared to an operating loss of approximately $2.2 million for the same period in 2019, a positive swing of approximately $8.7 million.2020:

Net non-operating expenses were approximately $8.3 million for the nine months ended September 30, 2020 compared to approximately $6.7 million for the same period in 2019. The increase is primarily due to the approximate $2.9 million received by the Company in 2019 from the settlement of the AgriMed matter discussed in Note 3 – ~~Acquisitions~~ ~~of the Company’s financial statements, and declines in value of the Company’s investments in Terrace, Chooze and MRSVP in 2020, offset by a decrease interest expense.~~2021 Plans

As a result of the foregoing, the Company incurred a net loss of approximately $1.8 million for the nine months ended September 30, 2020. For the same period a year ago, after a tax provision of approximately $1.9 million, the Company incurred a net loss of approximately $2.5 million, and excluding the Seed Transactions, incurred a net loss of approximately $8.9 million.

For the balance of ~~2020,~~2021, the Company’s focus will ~~continue~~ to be on the following key areas:

No assurances can be given that any of these plans will come to fruition or that if implemented will necessarily yield positive results.

~~No assurances can be given that any of these plans will come to fruition or that if implemented will necessarily yield positive results~~

Please refer to Note 1920 – Subsequent Events of the Company’s financial statements included in this report for a discussion of material events that occurred after the balance sheet date.

The issuance of the shares of common stock described in Note 1920 – Subsequent Events of the Company’s financial statements were deemed to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon Sections 4(a)(2) and/or 4(a)(5) of the Securities Act. A legend restricting the sale, transfer, or other disposition of these securities other than in compliance with the Securities Act was placed on the securities issued in the foregoing transactions.

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

In the opinion of management, inflation has not had a material effect on the Company’s financial condition or results of its operations.

In the opinion of management, the Company’s financial condition and results of its operations are not materially impacted by seasonal sales.

The Company is a “smaller reporting company” as defined by Regulation S-K and, as such, is not required to provide the information contained in this item pursuant to Regulation S-K.

Our management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~September 30, 2020~~March 31, 2021 (the “Evaluation Date”). Based upon that evaluation, the chief executive officer and the chief financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) are accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

During the ~~nine months ended September 30, 2020 and~~ past fiscal ~~year,~~years, we implemented significant measures to remediate the previously disclosed ineffectiveness of our internal control over financial reporting, which included an insufficient degree of segregation of duties amongst our accounting and financial reporting personnel, and the lack of a formalized and complete set of policy and procedure documentation evidencing our system of internal controls over financial reporting. The remediation measures consisted of the engagement of accounting consultants as needed to provide expertise on specific areas of the accounting guidance, the continued hiring of individuals with appropriate experience in internal controls over financial reporting, and the modification of our accounting processes and enhancement to our financial controls, including the testing of such controls.

Other than as described above, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) identified in connection with the evaluation required by Rules 13a-15(d) or 15d-15(d) that occurred during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

In July 2019, Thomas Kidrin, the former chief executive officer and a former director of the Company, filed a complaint in the Massachusetts Superior Court, Suffolk County, captioned Thomas Kidrin v. MariMed Inc., et. al., Civil Action No. 19-2173D. In the complaint, Mr. Kidrin alleges that the Company failed to pay all wages owed to him and breached his employment agreement, dated August 30, 2012, and requests multiple damages, attorney fees, costs, and interest.

The Company has moved to dismiss certain counts of the complaint and has asserted counterclaims against Mr. Kidrin alleging breach of contract, breach of fiduciary duty, money had and received, and unjust enrichment. The Company believes that the allegations in the complaint are without merit and intends to vigorously defend this matter and prosecute its counterclaims.

OnWhile the Company’s motion to dismiss was pending, the parties reached a settlement in principle and the court has issued a nisi order of dismissal. The parties have not yet competed the settlement agreement. If the parties are for any reason unable to do so, then the Company will continue vigorously to defend this matter and prosecute its counterclaims.

In November ~~13,~~ 2019, Kind ~~Therapeutics USA Inc. (“Kind”)~~ commenced an action by filing a complaint against the Company in the Circuit Court for Washington County, MD captioned Kind Therapeutics USA, Inc. vs. MariMed, Inc., et al. (Case No. C-21-CV-19-000670) ~~asserting claims against the Company, including~~(the “Complaint”). The Complaint, as amended, alleges breach of contract, breach of fiduciary duty, ~~accounting, and~~ unjust enrichment, intentional misrepresentation, rescission, civil conspiracy, and seeking an accounting and declaratory judgment and damages in excess of $75,000. On November 15, 2019, the Company filed counterclaims against Kind and a third-party complaint against the ~~Members~~members of Kind (Jennifer DiPietro, Susan Zimmerman, and Sophia Leonard-Burns) and William Tham (the ~~“Counterclaim”~~“Counterclaims”). The ~~Counterclaim alleges~~Counterclaims, as amended, allege breach of contract with respect to each of the ~~Memorandum of Understanding (the “MOU”)~~partnership/joint venture agreement, the MOU, the MSA, the Lease, and the ~~Management Services~~Licensing and Manufacturing Agreement ~~(the “MSA”~~(“LMA”), unjust enrichment, promissory estoppel/detrimental reliance, ~~and~~ fraud in the inducement, breach of fiduciary duty, and ~~seeking~~seeks reformation of the MSA, a declaratory ~~judgement that~~judgment regarding enforceability of the partnership/joint venture arrangement and/or the MOU, ~~is an enforceable contract,~~ specific performance of ~~such contact,~~the parties’ various contracts, and the establishment of a constructive trust for the Company’s benefit. The ~~Counterclaim~~Counterclaims also ~~seeks~~seek damages. ~~Both~~

At the time the Complaint and Counterclaims were filed, both parties, MariMed (including MariMed Holdings MD, LLC and MariMed Advisors Inc.) and Kind, brought motions for a temporary restraining order and a preliminary injunction. By Opinion and Order entered on November 21, 2019, the Court denied both parties motions for a temporary restraining order. In its opinion, the Court specifically noted that, contrary to Kind’s allegations, the MSA and the ~~20-year lease agreement for Kind’s utilization of the Company’s cultivation and production facility (the “Lease”)~~Lease “appear to be independent, valid and enforceable contracts.” ~~On or about April 3,~~

A hearing on the parties’ cross-motions for preliminary injunction was held in September 2020 and November 2020. Also in November 2020, the Court granted the Company’s motion for summary judgment as to the Lease, determining that the Lease is valid and enforceable. Based on this ruling, the Company ~~filed its First Amended Counterclaim~~is seeking judgment at trial in the amount of approximately $5.4 million for past due rent and ~~Third Party Complaint in which additional claims were added and clarified, including breach of Lease and breach~~expenses owed by Kind under the Lease.

In addition to the favorable rulings on the Lease, MSA, and ~~claims added for breach of fiduciary duty and breach of partnership. The~~LMA, the Company believes that its claims ~~for breach of contract~~ with respect to the ~~MOU, the MSA, the Lease, and the LMA, as well as all other claims~~partnership/joint venture agreement are meritorious. Further, the Company believes that Kind’s claims against the Company are without merit. On March 18, 2021, the Court issued an opinion and order on Kind’s motion for summary judgment finding that the MOU was not enforceable by the Company against Kind as a final binding agreement. The Company is evaluating an appeal of this ruling which under Maryland rules can only be pursued upon final judgment.

The Company intends to aggressively prosecute and defend the action. ~~A hearing~~Trial has been scheduled from March 28, 2022 to April 11, 2022.

In August 2020, Jennifer DiPietro, directly and derivatively on behalf of Mari Holdings MD LLC (“Mari-MD”) and Mia Development LLC (“Mia”), commenced an action against the ~~parties’ cross-motions~~Company’s CEO, CFO, and wholly-owned subsidiary MariMed Advisors Inc. (“MMA”), in Suffolk Superior Court, Massachusetts (C.A. No. 20-1865).

In this action, DiPietro, a party to prior ongoing litigation in Maryland involving the Company and Kind as discussed above, asserts claims for ~~preliminary injunction was held~~breach of fiduciary duty, breach of contract, fraud in the inducement, aiding and abetting the alleged breach of fiduciary duty, seeks access to books and records, and an accounting related to her investments in Mari-MD and Mia. DiPietro seeks unspecified monetary damages and rescission of her interest in Mari-MD, but not of her investment in Mia, which has provided substantial returns to her as a member.

The Company has answered the complaint and MMA has moved for leave to file counterclaims against DiPietro on ~~September 14~~its own behalf and derivatively on behalf of Mari-MD for DiPietro’s breach of her fiduciary duties to ~~17, 2020~~each of those entities, for tortious interference with Mari-MD’s lease and ~~November 2~~MMA’s management services agreement with Kind, and ~~4, 2020,~~for breach of Mari-MD’s operating agreement.

The Company believes that the allegations of the complaint are without merit and intends to defend the ~~Court’s ruling on~~case vigorously. The Company’s counterclaim seeks monetary damages from DiPietro, including the ~~motions is pending. The trial is currently scheduled to start on June 7, 2021.~~Company’s legal fees in the Kind action.

As a smaller reporting company, the Company is not required to provide the information contained in this item pursuant to Regulation S-K. However, information regarding the Company’s risk factors appears in Part I, Item 1A. of its Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. These risk factors describe some of the assumptions, risks, uncertainties, and other factors that could adversely affect the Company’s business or that could otherwise result in changes that differ materially from management’s expectations. There have been no material changes to the risk factors contained in the Annual ~~Report except for the following additional risk related to COVID-19:~~Report.

~~Our business, operations, financial condition, and liquidity have been and may continue to be materially and adversely affected by the outbreak of COVID-19.~~

In March 2020, the World Health Organization declared COVID-19 a global pandemic, and governmental authorities around the world implemented measures to reduce the spread of the virus. The spread of COVID-19 in the United States and the measures to contain it have negatively impacted the economy and created significant volatility and disruption in financial markets. Business shutdowns in certain states in response to stay-at-home orders and related measures have temporarily eliminated certain customers’, principally non-medical use customers’, access to our managed dispensaries, adversely impacting sales during this restricted period. In addition, these restrictions and other disruptions caused by the pandemic have impacted our expansion, consolidation, and administrative functions. Further, the volatility in the financial markets and investor uncertainty has delayed and adversely impacted our ability to consummate debt and equity financings to raise working capital to support our operations and expansion plans. As a result, our business, operations, financial condition, and liquidity have been and may continue to be materially and adversely affected. Further, the disruption to the global economy and to our business, along with the decline in our stock price, may also negatively impact the future carrying values of certain assets, including inventories, accounts receivables, intangibles, and goodwill. The full extent to which COVID-19 and the measures to contain it will impact our business, operations financial condition, and liquidity will depend on the severity and duration of the COVID-19 outbreak and other future developments related to the response to the virus, all of which are highly uncertain. As a result, we cannot predict the ultimate impact of COVID-19 on the Company and its operational and financial performance.

During the ~~quarter~~three months ended ~~September 30, 2020,~~March 31, 2021, the Company issued ~~18,256,436~~(i) 4,610,645 shares of common stock ~~from~~upon the conversion of debentures, (ii) 3,365,972 shares of common stock upon the conversion of promissory notes, (iii) 50,000 shares of common stock upon the exercise of a warrant, (iv) 42,857 shares of common stock to satisfy an obligation, and ~~34,171~~(v) 11,413 shares of common stock related to an employee stock grant. In addition, the Company sold 6,216,216 shares of Series C convertible preferred stock.

The issuance of the shares of common stock described above were deemed to be exempt from registration under the Securities Act in reliance upon Sections 4(a)(2) and/or 4(a)(5) of the Securities Act. A legend restricting the sale, transfer, or other disposition of these securities other than in compliance with the Securities Act was placed on the securities issued in the foregoing transactions.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized.

Delaware		27-4672745
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

Title of each class		Ticker symbol(s)		Name of each exchange on which registered
Not Applicable.		Not Applicable.		Not Applicable.

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

		Page
	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of ~~September 30, 2020~~March 31, 2021 (Unaudited) and December 31, ~~2019~~2020	3

	Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (Unaudited)	4

	Condensed Consolidated Statements of Stockholders’ Equity for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (Unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (Unaudited)	6

	Notes to Condensed Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3537

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	44

Item 4.	Controls and Procedures	44

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	45

Item 1A.	Risk Factors	4546

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46

Item 3.	Defaults Upon Senior Securities	46

Item 4.	Mine Safety Disclosures	46

Item 5.	Other Information	46

Item 6.	Exhibits	47

Signatures		4950

	Shares		Par Value		Shares			Amount			Capital			Deficit			Interests			Equity
	Common Stock				Common Stock Subscribed But Not Issued						Additional Paid-In			Accumulated			Non-Controlling			Total Stockholders’
	Shares		Par Value		Shares			Amount			Capital			Deficit			Interests			Equity
Balances at December 31, 2018		211,013,043	$	211,013		97,136		$	169,123		$	87,180,165		$	(25,575,808	)	$	(220,032	)	$	61,764,461
Sales of common stock		799,995		800		-			-			2,599,200			-			-			2,600,000
Issuance of subscribed shares		97,136		97		(97,136	)		(169,123	)		169,026			-			-			-
MediTaurus acquisition		-		-		752,260			2,080,000			-			-			1,200,000			3,280,000
Terrace investment		500,000		500		-			-			1,589,500			-			-			1,590,000
Harvest payment		1,000,000		1,000		-			-			(1,000	)		-			-			-
Exercise of options		417,352		417		2,644,456			413,894			11,189			-			-			425,500
Exercise of warrants		686,104		686		-			-			611,756			-			-			612,442
Stock grants		-				-
Stock forfeiture		-				-
Amortization of stock grants		108,820		109		-			-			193,601			-			-			193,710
Amortization of option grants		-		-		-			-			1,219,958			-			-			1,219,958
Issuance of stand-alone warrants
Amortization of stand-alone warrant issuances		-		-		-			-			139,015			-			-			139,015
Issuance of warrants attached to debt
Warrant discount on promissory notes		-		-		-			-			600,621			-			-			600,621
Warrant discount on debentures payable		-		-		-			-			1,148,056			-			-			1,148,056
Discount on debentures payable
Extinguishment of promissory note		-
Common stock issued to settle obligations		-
Beneficial conversion feature on debentures		-		-		-			-			4,235,469			-			-			4,235,469
Conversion of debentures payable		3,591,523		3,592		3,206,816			2,464,438			5,391,253			-			-			7,859,283
Conversion of common stock to preferred stock		-
Conversion of promissory note		-
Distributions		-		-		-			-			-			-			(376,993	)		(376,993	)
Net income (loss)		-		-		-			-			-			(2,744,808	)		246,367			(2,498,441	)
Balances at September 30, 2019		218,213,973	$	218,214		6,603,532		$	4,958,332		$	105,087,809		$	(28,320,616	)	$	849,342		$	82,793,081

Subsidiary:	Percentage Owned
MariMed Advisors Inc.		100.0%
Mia Development LLC		89.5%
Mari Holdings IL LLC		100.0%
Mari Holdings MD LLC		97.4%
Mari Holdings NV LLC		100.0%
Mari Holdings Metropolis LLC		100.0%
Mari Holdings Mt. Vernon LLC		100.0%
Hartwell Realty Holdings LLC		100.0%
iRollie LLC		100.0%
ARL Healthcare Inc.		100.0%
KPG of Anna LLC		100.0%
KPG of Harrisburg LLC		100.0%
MariMed Hemp Inc.		100.0%
MediTaurus LLC		70.0%

	●	Identify the contract(s) with a customer;

	●	Identify the performance obligations in the contract(s);

	●	Determine the transaction price;

	●	Allocate the transaction price to the performance obligations in the contract(s); and

	●	Recognize revenue as the performance obligation is satisfied.

	●	Product Sales – direct sales of cannabis and cannabis-infused products by the Company’s dispensary and wholesale operations in Massachusetts and Illinois, and ~~direct~~ sales of hemp and hemp-infused ~~products by the Company’s hemp division. In 2019, this division participated~~products. An increase in ~~one-time sales of acquired hemp seed inventory, as further explained in Note 17 –~~ ~~Related Party Transactions~~~~. Future~~ product sales ~~are~~is expected ~~to include~~from the Company’s planned cannabis-licensee acquisitions in Maryland, Nevada, and Delaware (upon this state’s amendment to permit for-profit ownership of cannabis entities). This revenue is recognized when products are delivered or at retail ~~point-of-sale.~~ points-of-sale.

	●	Real Estate – rental income and additional rental fees generated from leasing of the Company’s state-of-the-art, regulatory-compliant cannabis facilities to its cannabis-licensed clients. Rental income is generally a fixed amount per month that escalates over the respective lease ~~term,~~terms, while additional rental fees are based on a percentage of tenant revenues that exceed specified amounts.

	●	Management – fees for providing the Company’s cannabis clients with comprehensive oversight of their cannabis cultivation, production, and dispensary operations. ~~Along with this oversight, the Company provides human resources, regulatory, marketing, and other corporate services.~~ These fees are based on a percentage of such clients’ revenue and are recognized after services have been performed.

	●	Supply Procurement – the Company maintains volume discounts with top national vendors of cultivation and production resources, supplies, and equipment, which the Company acquires and resells to its clients or third parties within the cannabis industry. The Company recognizes this revenue after the delivery and acceptance of goods by the purchaser.

	●	Licensing – ~~revenue~~royalties from the ~~sale~~licensed distribution of ~~precision-dosed, cannabis-infused products—such as~~the Company’s branded products including Kalm ~~Fusion™, Nature’s Heritage™~~Fusion® and Betty’s Eddies®, and ~~Betty’s Eddies™—~~from sublicensing of contracted brands including Healer and Tikun Olam, to regulated dispensaries throughout the United States and Puerto Rico. The recognition of this revenue occurs when the products are delivered.

Level 1	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3	Pricing inputs that are generally observable inputs and not corroborated by market data.

Cash and cash equivalents	$	443,980
Inventory		113,825
Intangibles		2,067,727
Minority interests		138,356
Accounts payable		(642,033	)
Accrued expenses		(186,005	)
Due to third parties		(1,020,850	)
Total fair value of consideration	$	915,000

Cash and cash equivalents	$	64,196
Accounts receivable		5,362
Inventory		519,750
Goodwill		2,662,669
Accounts payable		(777	)
Total value of MediTaurus		3,251,200
Noncontrolling interests in MediTaurus		(975,360	)
Total fair value of consideration	$	2,275,840

	September 30, 2020		December 31, 2019
Current investments:
Terrace Inc.	$	1,002,659	$	1,449,144
Total current investments		1,002,659		1,449,144

Non-current investments:
MembersRSVP LLC		1,085,528		1,066,975
Chooze Corp.		-		257,686
GenCanna Global Inc.		-		-
Iconic Ventures Inc.		-		-
Total non-current investments		1,085,528		1,324,661
Total investments	$	2,088,187	$	2,773,805

	●	Delaware – a 45,000 square foot facility purchased in September 2016 and developed into a cannabis cultivation, processing, and dispensary facility which is leased to a cannabis-licensed client ~~occupying~~ ~~100% of the space~~ under a triple net lease that commenced in 2017 and expires in 2035.

	●	Maryland – a 180,000square foot former manufacturing facility purchased in January 2017 and developed by the Company into a cultivation and processing facility which is leased to a licensed cannabis client under a triple net lease that commenced in 2018and expires in 2037.

	●	Massachusetts – a 138,000 square foot industrial property of which approximately half of the available square footage is leased to a non-cannabis manufacturing company under a lease that commenced in 2017 and expires in ~~2022.~~

	●	~~Illinois – two~~ ~~3,400~~ ~~square foot free-standing retail dispensaries in the cities of Anna and Harrisburg and leased to the KPGs, each under a~~ 20~~-year lease that~~ ~~commenced in 2018~~2022. ~~With the acquisition of the KPGs as disclosed in Note 3 –~~ ~~Acquisitions~~, this lease was eliminated upon the consolidation of the KPGs in October 2019. Accordingly, the rental receipts on such leases have been removed from the table of future minimum rental receipts below.

	●	Delaware – 4,000square feet of retail space in a multi-use building space which the Company developed into a cannabis dispensary and is subleased to its cannabis-licensed client under a under a triple net lease expiring in December 2021 with a five-year option to ~~extend.~~extend.

	●	Delaware – a 100,000 square foot warehouse which the Company is developing into a cultivation and processing facility to be subleased to its cannabis-licensed client. The lease expires in March 2030, with an option to extend the term for three additional five-year periods.

	●	Delaware – a 12,000 square foot premises which the Company developed into a cannabis production facility with offices, and is subleased to its cannabis-licensed client. The lease expires in January 2026 and contains an option to negotiate an extension at the end of the lease term.

	March 31, 2021		December 31, 2020
Plants	$	3,713,877	$	3,352,425
Ingredients and other raw materials		234,826		176,338
Work-in-process		424,435		468,377
Finished goods		3,081,190		2,833,431
Total inventory	$	7,454,328	$	6,830,571

2020	$	2,808,883
2021		11,024,306
2022		12,268,122
2023		544,571
2024		577,281
Thereafter		13,110,191
Total		40,333,354
Less discounts		(994,591	)
	$	39,338,763

2021	$	1,270,010
2022		516,481
2023		3,761,529
2024		582,894
2025		623,170
Thereafter		12,497,810
Total		19,251,894
Less discounts		(12,268	)
	$	19,239,626

Exercise Price		Shares Under Option				Remaining
per Share		Outstanding		Exercisable		Life in Years
$	0.130		200,000		200,000		0.01
$	0.140		550,000		550,000		0.25
$	0.149		500,000		500,000		5.25
$	0.300		554,500		-		4.50
$	0.330		50,000		50,000		0.44
$	0.417		900,000		400,000		4.24
$	0.450		125,000		125,000		1.01
$	0.590		15,000		15,000		4.19
$	0.630		300,000		300,000		1.25
$	0.770		200,000		200,000		2.25
$	0.900		50,000		50,000		2.62
$	0.910		50,000		50,000		2.06
$	0.950		50,000		30,000		2.25
$	0.992		300,000		300,000		3.99
$	1.000		125,000		75,000		4.09
$	1.350		100,000		50,000		2.83
$	1.950		375,000		250,000		2.75
$	2.320		100,000		100,000		2.95
$	2.450		2,000,000		2,000,000		2.23
$	2.500		100,000		100,000		2.91
$	2.650		200,000		200,000		2.98
$	2.850		56,250		43,750		2.20
$	2.850		100,000		75,000		3.20
$	3.000		25,000		25,000		3.21
$	3.725		100,000		100,000		3.19
			7,125,750		5,788,750

		Shares Under Option
Exercise Price per Share		Outstanding		Exercisable		Remaining Life in Years
	$0.140		160,000		40,000	4.28
	$0.149		500,000		500,000	4.76
	$0.169		200,000		200,000	4.62
	$0.210		70,000		50,000	4.65
	$0.225		2,000,000		875,000	4.61
	$0.250		20,000		15,000	4.17
	$0.250		50,000		-	4.57
	$0.250		800,000		200,000	4.62
	$0.250		80,000		40,000	4.65
	$0.250		50,000		50,000	3.92
	$0.300		554,500		277,250	4.00
	$0.417		900,000		900,000	3.74
	$0.450		125,000		125,000	0.51
	$0.505		100,000		-	4.76
	$0.505		800,000		-	4.78
	$0.590		15,000		15,000	3.69
	$0.630		300,000		300,000	0.75
	$0.770		200,000		200,000	1.75
	$0.830		287,000		71,750	4.98
	$0.890		10,000		-	4.81
	$0.892		40,000		-	4.81
	$0.895		25,000		-	4.82
	$0.900		50,000		50,000	2.11
	$0.910		50,000		50,000	1.56
	$0.950		50,000		50,000	1.75
	$0.992		300,000		300,000	3.49
	$1.000		125,000		125,000	3.59
	$1.350		100,000		75,000	2.33
	$1.950		375,000		375,000	2.25
	$2.320		100,000		100,000	2.45
	$2.450		2,000,000		2,000,000	1.73
	$2.500		100,000		100,000	2.41
	$2.650		200,000		200,000	2.48
	$2.850		56,250		56,250	1.70
	$2.850		100,000		100,000	2.70
	$3.000		25,000		25,000	2.71
	$3.725		100,000		100,000	2.69
			11,017,750		7,565,250

	●	Delaware – 4,000square feet of retail space in a multi-use building under a five-year lease that ~~commenced~~expires in ~~October 2016 and contains~~December 2021 with a five-year option to extend ~~the term.~~. The Company developed the space into a cannabis dispensary which is subleased to its cannabis-licensed client.

	●	Delaware – a 100,000 square foot warehouse leased in March 2019 that the Company is developing into a cultivation and processing facility to be subleased to the same Delaware client. The lease term is 10 years,, with an option to extend the term for three additional five-year periods.

	●	Delaware –a 12,000 square foot premises which the Company developed into a cannabis production facility with offices, and is subleases to its cannabis-licensed client. The lease expires in January 2026 and contains an option to negotiate an extension at the end of the lease term.

	●	Nevada – 10,000 square feet of an industrial building that the Company has built-out into a cannabis cultivation facility and plans to rent to its cannabis-licensed client under a sub-lease which will be coterminous with this lease expiring in 2024.

	●	Massachusetts – 10,000 square feet of office space which the Company utilizes as its corporate offices under a ~~10-year~~10-year lease with a related party expiring in 2028, with an option to extend the term for an additional five-year period.

	●	Maryland – a 2,700square foot 2-unit apartment under a lease that expires in July 2022 ~~with an option to renew for a two-year term.~~.

	Operating Leases			Finance Lease
2020	$	246,937		$	9,603
2021		1,008,227			38,412
2022		949,535			27,123
2023		910,166			23,201
2024		835,411			3,229
Thereafter		4,267,635			-
Total lease payments		8,217,911			101,568
Less: imputed interest		(2,248,157	)		(10,718	)
	$	5,969,754		$	90,850

	Operating Leases			Finance Leases
2021	$	845,987		$	28,809
2022		1,071,079			27,123
2023		1,035,017			23,201
2024		963,589			3,229
2025		936,947			-
Thereafter		3,468,041			-
Total lease payments		8,320,660		$	82,362
Less: imputed interest		(2,177,632	)		(7,560	)
	$	6,143,028		$	74,802

	●	~~cost~~Cost of ~~revenues, which includes~~Revenues – the direct costs associated with the generation of the Company’s ~~revenues;~~revenues.

	●	~~operating expenses, which include~~Operating Expenses – comprised of the sub-categories of personnel, marketing and promotion, general and administrative, and bad ~~debts; and~~debts.

	●	~~non-operating income~~Non-operating Income and ~~expenses, which include~~Expenses – comprised of the sub-categories of interest expense, interest income, ~~equity in earnings of equity method investments, loss~~losses on ~~obligations settled with equity,~~debt settlements, and changes in the fair value of non-consolidated investments.

	●	~~During the nine months ended September 30, 2020, the Company’s operating activities provided positive~~Cash and cash ~~flow~~equivalents increased four-fold to approximately $12.3 million at March 31, 2021, from approximately $3.0 million at December 31, 2020.

	●	Working capital increased to approximately $17.1 million at March 31, 2021 from a working capital deficit of approximately ~~$1.6~~$2.2 million ~~compared to approximately $24.2 million of negative cash flow used by such activities during the same period of 2019,~~at December 31, 2020, a positive swing of approximately ~~$25.8~~$19.3 million.

	●	~~At September 30, 2020,~~In the three months ended March 31, 2021, the Company’s ~~negative working capital was~~operating activities provided positive cash flow of approximately ~~$9.1~~$6.8 million, ~~a continued improvement from approximately $21.5 million at June 30, 2020 and approximately $29.3 million at December 31, 2019.~~

	●	~~The Company successfully restructured the terms of its short term promissory notes payable~~compared to approximately ~~$8.5 million at September 30,~~$407,000 of negative cash flow used in such activities in the same period in 2020, ~~from~~an increase of approximately ~~$17.2 million at June 30, 2020 and $23.1 million at December 31, 2019.~~$7.2 million.

	Three Months Ended March 31,
	2021		2020
	(Unaudited)
Net income (loss)	$	4,310,026	$	(2,337,716	)

Interest expense, net		1,477,994		2,645,114
Income taxes		1,203,797		12,926
Depreciation and amortization		639,725		563,170
EBITDA		7,631,542		883,494

	1)	~~In Massachusetts, increase production and wholesale revenue at~~Subject to the applicable state approvals, continue the execution of its ~~cultivation and production facility in New Bedford, and drive revenues at the recently approved for adult-use dispensary in Middleboro.~~Consolidation Plan.

	2)	~~In Illinois, increase sales~~Identify and ~~profits of~~open two new dispensary locations in Massachusetts that can service both the ~~dispensaries in Anna, Harrisburg~~medical and ~~recently-opened Mt. Vernon.~~ adult-use marketplaces.

	3)	~~Continue to expand the Company’s Nature’s Heritage™ branded flower~~Increase sales and ~~popular infused-product brands, such as Betty’s Eddies™~~profits in Delaware by expanding cultivation and ~~Kalm Fusion™, into the robust Massachusetts medical and adult-use marketplace.~~processing facilities.

	4)	~~Continue~~Complete the acquisition of Maryland, subject to ~~execute its aforementioned~~resolution of the outstanding litigation, and proceed with a plan to expand the cultivation and processing facilities as well as adding a dispensary location.

	5)	Drive licensing fees through the expansion of the Company’s Nature’s Heritage™ branded flower and popular infused-product brands Betty’s Eddies® and Kalm Fusion® into the Company’s owned and managed facilities, and with strategic ~~plan.~~partners into additional markets. Expand the exclusively licensed Tropizen® and Binske® brands.

	6)	Identify acquisition opportunities in other states.

Exhibit No.		Description

3.1		Certificate of Incorporation of the Company (a)

3.1.1		Amended Certificate of Incorporation of the Company (b)

3.1.2		Series B Convertible Preferred Stock Certificate of Designation as filed with the Secretary of State of Delaware on February 27, ~~2020.~~2020 (h)

3.1.3		Certificate Eliminating the Series A Preferred Stock as filed with the Secretary of State of Delaware on February 27, ~~2020.~~2020 (h)

3.1.4		Series C Convertible Preferred Stock Certificate of Designation as filed with the Secretary of State of Delaware on March 1, 2021 (p)

3.2		By-Laws -– Restated as Amended (a)

4.1		Amended and Restated Promissory Note, dated February 10, 2020, in the principal amount of $11,500,000, issued by MariMed Hemp Inc. and MariMed Inc. (f)

4.1.1		Promissory Note, dated February 27, 2020, in the principal amount of $3,742,500, issued by MariMed Inc. to Navy Capital Green Fund, ~~LP.~~LP (h)

4.1.2		Promissory Note, dated February 27, 2020, in the principal amount of $675,000, issued by MariMed Inc. to Navy Capital Green Co-Invest Fund, ~~LLC.~~LLC (h)

4.1.3		12% Convertible Promissory Note, dated April 23, 2020, in the principal amount of $900,000, issued by MariMed Inc. to Best Buds Funding ~~LLC.~~LLC (i)

4.2		Second Amended and Restated Promissory Note, dated June 24, 2020, in the principal amount of $8,811,653.84, issued by MariMed Hemp Inc. and MariMed Inc. to SYYM ~~LLC.~~LLC (j)

4.3		Common Stock Purchase Warrant, dated June 24, 2020, issued by MariMed Inc.to SYYM ~~LLC.~~LLC (k)

4.4		Amended and Restated Senior Secured Commercial Promissory Note, dated October 19, 2020, in the principal amount of $5,845,000, issued by MariMed Advisors, Inc. to Best Buds Funding ~~LLC.~~LLC (m)

4.5		Amended and Restated Senior Secured Commercial Promissory Note, dated October 19, 2020, in the principal amount of $3,000,000, issued by MariMed Advisors, Inc. to Best Buds Funding ~~LLC.~~LLC (m)

4.6		Common Stock Purchase Warrant, dated September 30, 2020, issued by MariMed Inc.to Best Buds Funding, LLC. and/or its ~~designees.~~designees (m)

4.7		Amended and Restated Common Stock Purchase Warrant, dated March 18, 2021, issued by MariMed Inc. to Hadron Healthcare Master Fund (q)

4.8		Third Amended and Restated Promissory Note, dated April 1, 2021, in the principal amount of $3,211,653.84, issued by MariMed Hemp Inc. and MariMed Inc. to SYYM LLC (r)

10.1		Employment Agreement dated as of August 30, 2012 between Worlds Online Inc. and Thomas Kidrin (o)

10.2		2011 Stock Option and Restricted Stock Award Plan (a)

10.3		Form of Convertible Debenture issued by the Company (c)

10.4		Form of Secured Convertible Debenture of GenCanna Global, Inc. (c)

10.5		Form of Securities Purchase Agreement between the Company and YA II PN, LTD. (c)

10.6		Amended and Restated Registration Rights Agreement dated as of November 5, 2018 between the Company and YA II PN, LTD. (c)

10.7		Amended and Restated 2018 Stock Award and Incentive ~~Plan.~~Plan (d)

10.8		Form of Stock Option Agreement, dated September 27, 2019, with each of David R. Allen, Eva Selhub, M.D., and Edward J. ~~Gildea.~~Gildea (e)

10.9		Amendment Agreement, dated as of February 10, 2020, between SYYM LLC, as noteholder and collateral agent, and MariMed Inc. and MariMed Hemp Inc., as ~~co-borrowers.~~co-borrowers (g)

10.10		Exchange Agreement, dated as of February 27, 2020, among MariMed Inc., Navy Capital Green Management, LLC, a Delaware limited liability company, as discretionary investment manager of Navy Capital Green Fund, LP, and Navy Capital Green Co-Invest Fund, LLC. (h)

10.11		Amendment Agreement dated June 24, 2020, between SYYM LLC, as noteholder and collateral agent, and MariMed Inc. and MariMed Hemp Inc., as ~~co-borrowers.~~co-borrowers (l)

10.12		Note Extension Agreement, effective as of September 30, 2020, among Best Buds Funding LLC, as lender, and each of MariMed Inc., Mari Holdings MD LLC, and MariMed Advisors Inc., as the borrower ~~parties.~~parties (n)

10.13		Securities Purchase Agreement, dated March 1, 2021, between MariMed Inc. and Hadron Healthcare Master Fund (p)

10.14		First Amendment to Securities Purchase Agreement, dated March 18, 2021, between MariMed Inc. and Hadron Healthcare Master Fund (q)

10.15		Amendment Agreement dated April 1, 2021, between SYYM LLC, as noteholder and collateral agent, and MariMed, Inc. and MariMed Hemp, Inc., as co-borrowers (r)

31.1.		Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive ~~Officer.~~Officer *

31.2.		Rule 13a-14(a)/15d-14(a) Certifications of Chief Financial ~~Officer.~~Officer *

32.1.		Section 1350 Certifications of Chief Executive ~~Officer.~~Officer **

32.2.		Section 1350 Certifications of Chief Financial ~~Officer.~~Officer **

101.INS XBRL		Instance Document *

101.SCH XBRL		Taxonomy Extension Schema *

101.CAL XBRL		Taxonomy Extension Calculation Linkbase *

101.DEF XBRL		Taxonomy Extension Definition Linkbase *

101.LAB XBRL		Taxonomy Extension Label Linkbase *

101.PRE XBRL		Taxonomy Extension Presentation Linkbase *

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) *

(a)	Incorporated by reference to the same numbered ~~Exhibit filed with~~exhibit of the Registration Statement on Form 10-12G (File No. 000-54433) filed on June 9, 2011.

(b)	Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2016, filed on April 17, 2017.

(c)	Incorporated by reference to the Current Report on Form 8-K filed on November 9, 2018.

(d)	Incorporated herein by reference to Appendix A of the Company’s Definitive Proxy Statement on Schedule 14A filed on August 26, 2019.

(e)	Incorporated by reference to Exhibit 10.2 ~~filed with~~of the Quarterly Report on Form 10-Q for the period ended September 30, 2019, filed on November 29, 2019.

(f)	Incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed on February 12, 2020.

(g)	Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on February 12, 2020.

(h)	Incorporated by reference to the Current Report on Form 8-K filed on February 27, 2020.

(i)	Incorporated by reference to the Quarterly Report on Form 10-Q for the period ended March 31, 2020, filed on May 28, 2020.

(j)	Incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed on June 30, 2020.

(k)	Incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K filed on June 30, 2020.

(l)	Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on June 30, 2020.

(m)	Incorporated by reference to the same numbered exhibit of the Current Report on Form 8-K filed on October 26, 2020.

(n)	Incorporated by reference to Exhibit 10.13 of the Current Report on Form 8-K filed on October 26, 2020.

(o)	Incorporated by reference to the same numbered ~~Exhibit filed with~~exhibit of the Annual Report on Form 10-K for the year ended December 31, 2012, filed on March 29, 2013.

(p)	Incorporated by reference to the same numbered exhibit of the Current Report on Form 8-K filed on March 2, 2021.

(q)	Incorporated by reference to the same numbered exhibit of the Annual Report on Form 10-K for the year ended December 31, 2020, filed on March 23, 2021.

(r)	Incorporated by reference to the exhibit of the Current Report on Form 8-K filed on March 23, 2021.

MARIMED INC.

By:	/s/ Robert Fireman
	Robert Fireman
	President and Chief Executive Officer (Principal Executive Officer)

By:	/s/ Jon R. Levine
	Jon R. Levine
	Chief Financial Officer (Principal Financial Officer)