Note 22 – Subsequent Events

Canaccord Debenture Amendments 

On September 15, 2022, the holders of the Canaccord Debentures voted to amend the terms of the Canaccord Debentures to, among other things, (i) permit the mandatory conversion, in the Company’s discretion, of $7,931,490 in principal amount of the Canaccord Debentures plus $132,192 in accrued interest on the Canaccord Debentures into units at the reduced conversion price of $0.29 per unit; (ii) decrease the conversion price of the remaining Canaccord Debentures (following the mandatory conversion) to $0.40 per unit; (iii) reduce the mandatory conversion VWAP provision in the Canaccord Debentures from $2.40 to $0.80; (iv) provide for a reduced conversion price to holders of the Canaccord Debentures who elect to covert more than the mandatory conversion amount of Canaccord Debentures on or prior to the date of the meeting of debenture holders; (v) change the maturity date of the Canaccord Debentures so that half of the remaining Canaccord Debentures mature on December 31, 2023 and the remaining Canaccord Debentures mature on December 31, 2024; (vi) provide for the payment of interest accruing between July 1, 2022 and December 31, 2024 so that one-third of the total scheduled interest is paid on December 31, 2023 and the balance of the accrued interest is paid on December 31, 2024; and (vii) subject to the receipt of regulatory approvals, grant a security interest in certain of the Company’s assets (such as licenses, inventory (including work in process), equipment (excluding equipment subject to purchase money financing) and contract rights (excluding investments in entities other than wholly owned subsidiaries)) to the holders of the December Debentures and to other holders of the Company’s debt, now or in the future, as the Company may elect. Following the meeting, the Company elected to effect the mandatory conversion provided for in the amendments to the Canaccord Debentures and received an additional voluntary conversion of $33,787 in principal and $563 in accrued interest of the Canaccord Debentures. On September 15, 2022, the Company issued 28,414,148 shares for the conversion of $8,012,157 of convertible debt and accrued interest.

Reverse Stock Split

On September 15, 2022, the Company announced that, subject to the receipt of regulatory approvals, it planned to effect a 1-for-4 reverse stock split (the “Reverse Split”) effective at the opening of business on September 21, 2022. As a result of the reverse stock split, every 4 shares of issued and outstanding common stock will were exchanged for 1 shares of common stock, with any fractional shares being rounded up to the next higher whole share. Immediately after the reverse stock split becomes effective, the Company will have approximately 72,517,570 shares of common stock issued and outstanding. The authorized common stock and preferred stock (none of which is outstanding) will also be reduced as a result of the reverse stock split from 750,000,000 shares to 187,500,000 shares of common stock and from 20,000,000 to 5,000,000 shares of preferred stock. As a result of the reverse split, an additional 528 shares were issued for rounding.

U.S. Convertible Debenture Amendments

Effective September 15, 2022, the Company entered into agreements with the holders of U.S. Convertible Debenture 1 and U.S. Convertible Debenture 2 to make the following changes to these debentures and related subscription agreements: (i) to permit the mandatory conversion, in the Company’s discretion, of an aggregate of $3,378,342 in principal amount of U.S. Convertible Debenture 1 and 2 plus $56,307 in accrued interest on U.S. Convertible Debenture 1 and 2 into units at the reduced conversion price of $0.29 per unit; (ii) to decrease the conversion price of the remaining U.S. Convertible Debenture 1 and 2 (following the mandatory conversion) to $0.40 per unit; (iii) to reduce the mandatory conversion VWAP provision in the U.S. Convertible Debenture 1 and 2 from $2.40 to $0.80; (iv) to provide for a reduced conversion price to holders of U.S. Convertible Debenture 1 and 2 who elect to covert more than the mandatory conversion amount of U.S. Convertible Debenture 1 and 2 on or prior to September 15, 2022; (v) to change the maturity date of U.S. Convertible Debenture 1 and 2 so that half of the remaining amounts due under U.S. Convertible Debenture 1 and 2 mature on December 31, 2023 and the remaining amounts due under U.S. Convertible Debenture 1 and 2 mature on December 31, 2024; (vi) to provide for the payment of interest accruing between July 1, 2022 and December 31, 2024 so that one-third of the total scheduled interest is paid on December 31, 2023 and the balance of the accrued interest is paid on December 31, 2024; and (vii) subject to the receipt of regulatory approvals, to grant a security interest in certain of the Company’s assets (such as licenses, inventory (including work in process), equipment (excluding equipment subject to purchase money financing) and contract rights (excluding investments in entities other than wholly owned subsidiaries)) to the holders of U.S. Convertible Debenture 1 and 2 and to other holders of the Company’s debt, now or in the future, as the Company may elect. Following execution of the amendments to U.S. Convertible Debenture 1 and 2 and the related subscription documents, the Company elected to effect the mandatory conversion provided for in the amended documents. On September 15, 2022, the Company issued 12,051,401 shares for the conversion of $3,434,648 of convertible debt and accrued interest.

2022 Financing Agreement

Effective September 30, 2022, we entered into a Business Loan and Security Agreement with CBR Capital LLC to borrow $900,000.  The loan is repayable in 48 weekly installments in the amount of $13,312.50 for weeks 1-8 and $29,287.50 for weeks 9-48. CBR Capital LLC has stated that it is aware of the Canaccord Debentures and the U.S. Convertible Debentures and will agree to subordinate the CBR security interest to these debenture holders. Certain terms of the loan remain subject to regulatory approval. 

Initial Cannabis Harvest by Quinn River Joint Venture

In August 2022, the Company completed the initial harvest of cannabis produced by the Quinn River Joint Venture resulting in approximately 3,000 pounds of cannabis. In September 2022 this harvest was dried, cured, and inspected, and our first sales occurred in the amount of approximately 100 pounds at a price of $1,400 per pound. In October 2022, the second harvest was completed for an additional 3,000 pounds of cannabis; it is expected that this product will be available for sale in November.

The Company has evaluated events through the date of the financial statements and has determined that there were no additional material subsequent events.