On December 31, 2018 Pure Harvest Cannabis Producers, Inc. ("PHC") was acquired by the Company. At the time of the acquisition, the Company had 13,617,314 (post-split) outstanding shares of common stock. The Company issued 17,906,016 (post-split) shares of its common stock, as well as warrants to purchase an additional 17,906,016 (post-split) shares of the Company's common stock to the shareholders of PHC in exchange for all of the outstanding shares of PHC. The warrants issued to the former shareholders of PHC allow the holder to acquire one share of the Company's common stock at a price of $4.00 per share at any time on or before December 31, 2021. PHC is now a wholly owned subsidiary of the Company.

The transaction was accounted for as a reverse acquisition since: (i) the shareholders of PHC owned the majority of the outstanding common stock of the Company after the share exchange; (ii) a majority of the directors of the Company are also directors of PHC; and (iii) the old officers of the Company were replaced with officers designated by PHC. Effective December 31, 2018, the Company's stockholders' equity was retroactively recapitalized as that of PHC. The Company and PHC remain separate legal entities (with the Company as the parent of PHC).

As a result of the acquisition of PHC the Company's new business plan includes the acquisition of licensed medical and recreational marijuana dispensaries, cultivation facilities and production facilities in states which allow publicly traded companies to own and operate dispensaries, cultivation facilities and production facilities. Depending on the markets entered and state regulation, the Company's plan may also include: asset purchases, management/consulting operating agreements, or similar allowable agreements. The Company plans to use a combination of cash, shares of common or preferred stock, notes, or other financing vehicles to complete these acquisitions.





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The Company will continue to collect royalties for licensing the Company's patent and trademarks in connection with the manufacturing and sale of the Pocket Shot branded specialty alcohol beverage pouches.





Results of Operations

During the year ended December 31, 2020 approximately 97% of the Company's revenue was from sales made by the Company's SKM dispensary in Dumont, Colorado. During the year ended December 31, 2020 no sales were generated by Prolific Nutrition, Gratus Living, Love Pharm, EdenFlo or Test Kitchen.





Material changes in the line items in the Company's Statement of Operations for
the year ended December 31, 2020 as compared to the same period last year, are
discussed below:



                    Increase (I) or
      Item           Decrease (D)                          Reason
Revenues                   I          Increase was due to acquisition of Sofa King
                                      Medical Wellness Products in August 2020.
Operating                  I          Increase was primarily due to expenses of
Expenses                              entities acquired during 2020.
Interest Expense           I          Increase in interest bearing debt
Loss on Fair               I          Increase due to issuance of convertible notes
Value of                              for which the fair value of derivative
Derivative                            liabilities was in excess of the proceeds
Securities                            received from the convertible notes.
Other Income               I          Increase is due to increase in principal balance
                                      related to increase in notes receivable.

Capital Resources and Liquidity

The Company's sources and (uses) of cash for the years ended December 31, 2020 and 2019 are shown below:





                                                    2020             2019
        Cash used in operations                 $ (2,074,208 )   $   (917,417 )
        Cash used in investing activities         (2,807,727 )     (2,532,015 )
        Cash provided by financing activities      4,073,532        5,092,178

See Note 6 to the December 31, 2020 financial statements included as part of this report for information concerning our notes payable.

Except as disclosed elsewhere in this report, the Company does not know of any trends, demands, commitments, events or uncertainties that will result in, or that are reasonable likely to result in, the Company's liquidity increasing or decreasing in any material way.

The Company may sell additional shares of common stock and/or other securities to raise capital for its operations. There is no assurance that the Company will be successful in raising any additional capital.

Off Balance Sheet Arrangements

As of December 31, 2020, the Company did not have any off-balance sheet arrangements.

Critical Accounting Policies and Estimates

See Note 2 to the December 31, 2020 financial statements included as part of this report for a description of the Company's significant accounting policies.

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