Note 22 – Subsequent Events

On March 3, 2020, the Company filed a claim for declaratory relief, among other things, requesting the court declare that CLS Massachusetts had validly exercised the IGH Option and instruct IGH to comply with its diligence requests and ultimately execute a merger agreement with CLS and CLS Massachusetts. The dispute regarding whether CLS Massachusetts properly exercised the IGH Option arose after CLS Massachusetts delivered a notice of exercise to IGH and IGH subsequently asserted that CLS Massachusetts’ exercise was invalid. CLS and CLS Massachusetts intend to pursue this suit vigorously and believe that their claims are meritorious, however, there can be no assurance as to the ultimate outcome of this matter.

In December 2019, a novel strain of coronavirus (“COVID-19") emerged in Wuhan, China. Since then, it has spread to the United States and infections have been reported around the world. On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. In response to the outbreak, federal and state authorities in the United States have introduced various recommendations and measures to try to limit the pandemic, including travel restrictions, border closures, nonessential business closures, quarantines, self-isolations, shelters-in-place and social distancing. The COVID-19 outbreak and the response of governmental authorities to try to limit it are having a significant impact on the private sector and individuals, including unprecedented business, employment and economic disruptions. On March 20, 2020, Nevada Governor Sisolak ordered all cannabis dispensaries to close their retail operations but permitted them to shift to a delivery-only model to serve their communities. As a result, the Company closed its retail operations for two days as it changed its business model, onboarded new staff, trained them on new software and communicated with its customer base. Within six days, the Company was achieving 50% of February 2020 sales despite having reduced its operating hours from 24 hours a day to a 14 hour a day delivery model. The Company’s wholesale business has also been adversely affected. Additional State mandates that impact the Company’s business could occur. The continued spread of COVID-19 could have a continuing adverse impact on the Company’s business, operations and financial results, including through disruptions in processing activities, sales channels, payments by wholesale customers and retail dispensary operations, as well as a deterioration of general economic conditions including a possible national or global recession. Due to the speed with which the COVID-19 pandemic is developing and the uncertainty of its magnitude, outcome and duration, it is not possible to estimate its impact on the Company’s business, operations or financial results; however, the impact could be material.