UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

~~Washington, D.C.~~WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

☒

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

For the quarterly period ended September 30, ~~2021~~2022

orOR

☐

~~TRANSITION REPORT UNDER 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

For the transition period from ________________ to ________________

Commission ~~file number:~~File Number: 000-27039

MARIJUANA COMPANY OF AMERICA, INC.Marijuana Co of America, Inc.

(Exact ~~name~~Name of ~~registrant~~Registrant as ~~specified~~Specified in its ~~charter)~~Charter)

Utah		98-1246221
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

633 ~~West Fifth~~W. 5^th Street, Suite 2826
Los Angeles, CA		90071
(Address of principal executive offices)		(Zip Code)

(888) 777-4362

(Registrant’s telephone number, including area code)

~~Not applicable~~

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

Securities registered pursuant to Section 12(b) of the Act: None

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 (§ 232.405 of this chapter) 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.

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

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 ☒

The number of shares of the issuer’s common stock, ~~$0.001~~no par value per share, outstanding at November ~~16, 2021~~21, 2022 was ~~6,621,939,591~~16,993,152,796.

Table of Contents

		~~PAGE~~Page No.
PART I. FINANCIAL INFORMATION

	~~ITEM 1.~~		~~Financial Statements~~		3

			~~Condensed consolidated balance sheets as of September 30, 2021 (unaudited) and December 31, 2020 (audited)~~		3

			~~Condensed consolidated statements of operations for the three and nine month ended September 30, 2021 and 2020 (unaudited)~~		4

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021 (Audited)	4

	Condensed ~~consolidated statement~~Consolidated Statements of ~~stockholders’ deficit~~Operations for the ~~nine~~Three and Nine months ~~ended~~Ended September 30, 2022 and 2021 ~~and 2020 (unaudited)~~(Unaudited)		5

	Condensed Consolidated Statements of Stockholders’ Deficit for the Three and Nine months Ended September 30, 2022 and 2021 (Unaudited)	6

			Condensed ~~consolidated statements~~Consolidated Statements of ~~cash flows~~Cash Flows for the ~~nine~~Three and Nine months ~~ended~~Ended September 30, 2022 and 2021 ~~and 2020 (unaudited)~~(Unaudited)		7

			Notes to ~~condensed consolidated financial statements (unaudited)~~the Condensed Consolidated Financial Statements (Unaudited)		8

	~~ITEM~~Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		3435

~~ITEM~~Item 3.		Quantitative and Qualitative Disclosures ~~about~~About Market Risk		4543

~~ITEM~~Item 4.		Controls and Procedures	43

PART II. OTHER INFORMATION		44

Item 1.	Legal Proceedings	44

Item 1A.	Risk Factors	45

~~PART II. OTHER INFORMATION~~

	~~ITEM 1.~~		~~Legal Proceedings~~		46
	~~ITEM 1A.~~		~~Risk Factors~~		46
	~~ITEM~~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~~		4745

~~SIGNATURES~~Item 3.	Defaults Upon Senior Securities	4845

Item 4.	Mine Safety Disclosure	45

Item 5.

Other Information


Item 6.	Exhibits	45

Signatures		46

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934 as amended (the “Exchange Act”). Any statements in this Quarterly Report on Form 10-Q about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “believe,” “will,” “expect,” “anticipate,” “estimate,” “intend,” “plan” and “would.” For example, statements concerning financial condition, possible or assumed future results of operations, growth opportunities, industry ranking, plans and objectives of management, ~~and~~ markets for our common ~~stock~~shares and future management and organizational structure are all forward-looking statements. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement.

Any forward-looking statements are qualified in their entirety by reference to the risk factors discussed throughout our most recent Annual Report on Form 10-K ~~and any updates described in our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K~~ as may be amended, supplemented or superseded from time to time by other reports we file with the U.S. Securities and Exchange Commission (the “SEC”). You should read this Quarterly Report on Form 10-Q and the documents that we reference herein and have filed as exhibits to the reports we file with the SEC completely and with the understanding that our actual future results may be materially different from what we expect. You should assume that the information appearing in this Quarterly Report on Form 10-Q is accurate as of the date hereof. Because the risk factors in our SEC reports could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of the information presented in this Quarterly Report on Form 10-Q, and particularly our forward-looking statements, by these cautionary statements.

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

~~PART I – FINANCIAL INFORMATION~~

MARIJUANA COMPANY OF AMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


							Unaudited			Audited
		September 30, 2021			December 31, 2020		September 30, 2022			December 31, 2021
		Unaudited			Audited
ASSETS
Current assets:
Cash	$	107,730		$	74,503		$	831		$	104,024
Short-term Investments		—			239,063
Accounts receivable, net		151,927			8,640			240,351			211,288
Inventory		201,860			103,483			180,580			252,199
Prepaid Insurance		86,250			55,783			—			61,705
Other current assets		187,200			56,121			36,937			2,133,640
Total current assets		734,967			537,593			458,699			2,762,856

Property and equipment, net		122,467			6,542			106,069			121,588

Other assets:
Long-term Investments		2,301,099			1,552,001			285,733			2,327,357
Right- of- use- assets		—			7,858
Goodwill		2,925,884			—			1,633,557			1,633,557
Intangible assets, net								975,000			1,110,000
Security deposit		2,750			2,500			9,239			4,541

Total assets		6,087,167			2,106,494			3,468,297			7,959,899

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable		927,260			480,877			998,027			932,760
Accrued compensation		—			79,214			333,951			42,925
Accrued liabilities		175,901			401,461			577,229			270,689
Notes payable, related parties		20,000			40,000			33,114			20,000
Loans payable PPP Stimulus		—			35,500
Convertible notes payable, net of debt discount of $950,807 and $808,980, respectively		1,059,443			1,426,894
Convertible notes payable, net of debt discount of $756,068 and $1,659,622, respectively								4,830,335			3,769,449
Contingent Liability - Acquisition		1,000,000			—			500,000			953,837
Right-of-use liabilities - current portion		—			7,858
Subscriptions payable		754,961			670,000			752,961			989,594
Derivative liability		432,024			4,426,057			956,795			749,756
Total current liabilities		4,369,589			7,567,861			8,982,412			7,729,010


Total liabilities		4,369,589			7,567,861			8,982,412			7,729,010

Stockholders' equity (deficit):
Stockholders' deficit:
Preferred stock, $0.001 par value, 50,000,000 shares authorized
Class A preferred stock, $0.001 par value, 10,000,000 shares designated, 10,000,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020		10,000			10,000
Class B preferred stock, $0.001 par value, 5,000,000 shares designated, 2,000,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020		2,000			2,000
Common stock, $0.001 par value; 15,000,000,000 shares authorized; 6,373,157,821 and 3,136,774,861 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		6,373,158			3,136,775
Common stock to be issued, 30,226,275 and 11,892,411 shares, respectively		30,226			11,892
Additional paid in capital		88,862,487			77,687,561
Accumulated deficit		(93,560,293	)		(86,309,595	)
Total stockholders' equity (deficit)		1,717,578			(5,461,367	)
Class A preferred stock, $0.001 par value, 10,000,000 shares designated, 10,000,000 shares issued and outstanding as of September 30, 2022 and December 31, 2021								10,000			10,000
Class B preferred stock, $0.001 par value, 5,000,000 shares designated, 2,000,000 shares issued and outstanding as of September 30, 2022 and December 31, 2021								2,000			2,000
Common stock, no par value; 32,000,000,000 shares authorized; 1,518,463,309 and 7,122,806,264 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively								101,114,027			96,730,659
Common stock to be issued, 1,000,000 and 1,000,000 shares, respectively								19,000			1,000
Treasury Stock								(60,000	)		—
Accumulated other Comprehensive (loss)								(31,666	)		(11,725	)
Accumulated (deficit)								(106,567,476	)		(96,501,045	)
Total stockholders' (deficit)								(5,514,115	)		230,889

Total liabilities and stockholders' equity (deficit)	$	6,087,167		$	2,106,494
Total liabilities and stockholders' (deficit)							$	3,468,297		$	7,959,899

See the accompanying notes to these unaudited condensed consolidated financial statements

MARIJUANA COMPANY OF AMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~STATEMENTS OF OPERATIONS~~
COMPREHENSIVE LOSS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, ~~2021~~2022 AND ~~2020~~
2021

UNAUDITED

For the three months ended For the nine months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
REVENUES:
Sales $ 442,178 $ 49,933 $ 493,988 $ 206,407
Related party Sales 0   3,262 0   11,565
Total Revenues 442,178 53,195 493,988 217,972

Cost of sales 378,491 37,170 406,972 110,563

Gross Profit 63,687 16,025 87,016 107,409

OPERATING EXPENSES:
Depreciation 3,697 1,374 6,350 4,702
Selling and marketing 167,664 125,942 430,425 326,608
Payroll and related 142,830 62,000 413,232 258,842
Stock-based compensation 529,393 123,000 688,293 665,767
General and administrative 639,767 294,821 1,777,419 710,094
  Total operating expenses 1,483,352 607,137 3,315,719 1,966,013

Net loss from operations (1,419,664 ) (591,112 ) (3,228,703 ) (1,858,604 )

OTHER INCOME (EXPENSES):
Interest expense, net (549,363 ) (688,090 ) (2,542,108 ) (2,460,185 )
Impairment gain (Loss) on Joint Ventures —   238,296 —   (22,658 )
Income (Loss) on equity investment —   240,198 —   106,305
Loss on share exchange agreement (340,984 ) —   (735,178 ) —
Gain (Loss) on change in fair value of derivative liabilities 1,177,610 (1,454,903 ) (451,679 ) (312,631 )
Unrealized Gain (loss) on trading securities —   —   504,137 (13,945 )
Loss on sale of trading securities (543,200 ) —   (543,200 ) (2,603 )
(Loss) Gain on settlement of debt (88,990 ) 383,440 (253,967 ) 386,930
Total other income (expense) (344,927 ) (1,281,059 ) (4,021,995 ) (2,318,787 )

Net loss before income taxes (1,764,591 ) (1,872,171 ) (7,250,698 ) (4,177,391 )

Income taxes (benefit) —   —   —   —

NET INCOME (LOSS) $ (1,764,591 ) $ (1,872,171 ) $ (7,250,698 ) $ (4,177,391 )

Loss per common share, basic and diluted $ (0.00 ) $ (0.00 ) $ (0.00 ) $ (0.01 )

Weighted average number of common shares outstanding, basic and diluted (after stock-split) 5,266,505,915 1,178,860,134 4,867,533,020 518,261,567


	For the three months ended September 30,						For the nine months ended September 30,
	2022			2021			2022			2021
REVENUES:
Sales	$	142,394		$	442,178		$	962,343		$	493,988
Total Revenues		142,394			442,178			962,343			493,988

Cost of sales		58,200			378,491			607,061			406,972

Gross Profit		84,194			63,687			355,282			87,016

OPERATING EXPENSES:
Depreciation and amortization		51,108			3,697			153,267			6,350
Selling and marketing		43,835			167,664			221,302			430,425
Payroll and related		241,504			142,830			778,628			413,232
Stock-based compensation		9,000			529,393			179,000			688,293
General and administrative		631,514			639,767			1,674,805			1,777,419
Total operating expenses		976,961			1,483,351			3,007,002			3,315,719

Net loss from operations		(892,767	)		(1,419,664	)		(2,651,720	)		(3,228,703	)

OTHER INCOME (EXPENSES):
Interest expense, net		(761,060	)		(549,363	)		(2,859,534	)		(2,542,108	)
Loss on share exchange agreement					(340,984	)					(735,178	)
Impairment Loss on Intangible Asset		—			—			(2,020,982	)		—
(Loss) Gain on change in fair value of derivative liabilities		(126,136	)		1,177,610			(195,203	)		(451,679	)
Loss on equity investment		(2,009,254	)		—			(2,009,254	)		—
Unrealized Gain on trading securities		—						—			504,137
(Loss) Gain on sale of trading securities		—			(543,200	)		6,086			(543,200	)
Loss on settlement of debt		(148,324	)		(88,990	)		(335,824	)		(253,967	)
Total other income (expense)		(3,044,774	)		(344,927	)		(7,414,711	)		(4,021,995	)

Net loss before income taxes		(3,937,541	)		(1,764,591	)		(10,066,431	)		(7,250,698	)

Income taxes (benefit)		—			—			—			—

NET LOSS	$	(3,937,541	)	$	(1,764,591	)	$	(10,066,431	)	$	(7,250,698	)

Foreign currency Translation Adjustment		(17,393	)		—			(19,941	)		—
Comprehensive Loss	$	(3,954,934	)	$	(1,764,591	)	$	(10,086,372	)	$	(7,250,698	)

Loss per common share, basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

Weighted average number of common shares outstanding, basic and diluted (after stock-split)		12,698,727,773			5,266,505,915			10,809,441,907			4,867,533,020

See the accompanying notes to these unaudited condensed consolidated financial statements

MARIJUANA COMPANY OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
UNAUDITED

Class A Preferred Stock Class B Preferred Stock Common Stock Common Stock to be issued Stock Paid In Accumulated
Shares Amount Shares Amount Shares Amount Shares Amount Subscriptions Capital Deficit Total
Balance, December 31, 2019 10,000,000 $ 10,000 —   $ —   77,958,081 $ 77,958 —   $ —   $ —   $ 63,467,054 $ (74,164,213 ) $ (10,609,201 )
Common stock issued to settle amounts previously accrued —   —   —   —   8,333 8 —   —   —   $ 6,692 —   6,700
Common stock issued for services rendered —   —   —   —   156,444,047 156,444 —   —   —   509,323 —   665,767
Common stock issued in settlement of convertible notes payable and accrued interest —   —   —   —   1,469,725,298 1,469,725 —   —   —   1,165,922 —   2,635,647
Conversion of related party notes payable —   —   —   —   21,384,103 21,384 —   —   —   29,229 —   50,613
Common stock issued in exchange for exercise of warrants on a cashless basis —   —   —   —   51,054,214 51,054 1,000,000 1,000 —   375,446 —   427,500
Sale of common stock —   —   —   —   127,012,847 127,013 —   —   —   26,673 —   153,686
Common shares issued in settlement of legal case —   —   —   —   10,293,843 10,294 —   —   —   1,273,338 —   1,283,632
Reclassification of derivative liabilities to additional paid in capital —   —   —   —   —   —   —   —   —   3,886,972 —   3,886,972
Net Loss —   —   —   —   —   —   —   —   —   —   (4,177,391 ) (4,177,391 )
Balance, September 30, 2020 10,000,000 $ 10,000 —   $ —   1,913,880,766 $ 1,913,880 1,000,000 $ 1,000 $ —   $ 70,740,649 $ (78,341,604 ) $ (5,676,075 )

Class A Preferred Stock Class B Preferred Stock Common Stock Common Stock to be issued Stock Paid In Accumulated
Shares Amount Shares Amount Shares Amount Shares Amount Subscriptions Capital Deficit Total
Balance, December 31, 2020 10,000,000 $ 10,000 2,000,000 $ 2,000 3,136,774,841 $ 3,136,775 11,892,411 $ 11,892 $ —   $ 77,687,561 $ (86,309,595 ) $ (5,461,367 )
Common stock issued to settle amounts previously accrued —   —   —   —   —   —   —   —   —   —   —   —
Issuance of Preferred stock to officer —   —   —   $ —   —   —   —   —   —   —   $ —   —
Common stock issued for services rendered —   —   —   —   142,946,860 142,947 —   —   —   518,345 —   661,292
Common stock issued in settlement of convertible notes payable and accrued interest —   —   —   —   905,667,530 905,668 29,226,275 29,226 —   1,054,388 —   1,989,282
Issuance of common stock for settlement of liabilities —   —   —   —   3,027,031 3,027 (10,892,411 ) (10,892 ) —   16,488 —   8,623
Conversion of related party notes payable and accounts payable —   —   —   —   22,500,000 22,500 —   —   —   119,250 —   141,750
Common stock issued in exchange for exercise of warrants on a cashless basis —   —   —   —   462,844,406 462,844 —   —   —   (462,844 ) —   —
Sale of common stock —   —   —   —   742,297,599 742,298 —   —   —   895,828 —   1,638,126
Issuance of common stock for investments —   —   —   —   691,935,484 691,935 691,935 —   ��   608,065 —   1,300,000
Reclassification of derivative liabilities to additional paid in capital —   —   —   —   —   —   —   —   —   6,270,052 —   6,270,052
Debt discount from warrants issued with convertible notes payable —   —   —   —   —   —   —   —   —   716,953 —   716,953
Common stock issued for acquisition of business —   —   —   —   265,164,070 265,164 —   —   —   1,352,337 —   1,617,501
Modification of Notes Payable —   —   —   —   —   —   —   —   —   86,064 —   86,064
Net Loss —   —   —   —   —   —   —   —   —   —   (7,250,698 ) (7,250,698 )
Balance, September 30, 2021 10,000,000 $ 10,000 2,000,000 $ 2,000 6,373,157,821 $ 6,373,158 30,918,210 $ 30,226 $ —   $ 88,862,487 $ (93,560,293 ) $ 1,717,578

MARIJUANA COMPANY OF AMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

UNAUDITED


	Class A Preferred Stock				Class B Preferred Stock				Common Stock					Treasury			Common Stock to be issued						Accumulated			Other Comprehensive
	Shares		Amount		Shares		Amount		Shares			Amount		Stock			Shares			Amount			Deficit			Loss			Total
Balance, December 31, 2020		10,000,000	$	10,000		2,000,000	$	2,000		3,136,774,841		$	80,824,336	$	—			11,892,411		$	11,892		$	(86,309,595	)	$	—		$	(5,461,367	)
Common stock issued for services rendered		—		—						142,946,860			661,292					—			—									661,292
Common stock issued in settlement of convertible notes payable and accrued interest		—		—						905,667,530			1,960,056					29,226,275			29,226			—						1,989,282
Issuance of common stock for setlement of liabilities		—		—						3,027,031			19,515					(10,892,411	)		(10,892	)								8,623
Conversion of related party notes payable and accounts payable		—		—						22,500,000			141,750								—									141,750
Common stock issued in exchange for exercise of warrants on a cashless basis		—		—						462,844,406			—					—			—			—						—
Sale of common stock		—		—						742,297,599			1,638,126					—			—			—						1,638,126
Issuance of common stock for investments										691,935,484			1,300,000					608,065												1,300,000
Reclassification of derivative liabilities to additional paid in capital													6,270,052																	6,270,052
Debt discount from warrants issued with convertible notes payable													716,953																	716,953
Common stock issued for acquisition of business										265,164,070			1,617,501																	1,617,501
Modification of notes payable													86,064																	86,064
Net Loss				—				—					—		—			—			—			(7,250,698	)		—			(7,250,698	)
Balance, September 30, 2021		10,000,000	$	10,000		2,000,000	$	2,000		6,373,157,821		$	95,235,645	$	—			30,834,340		$	30,226		$	(93,560,293	)	$	—		$	1,717,578


		Class A Preferred Stock				Class B Preferred Stock				Common Stock					Treasury			Common Stock to be issued						Accumulated			Other Comprehensive
		Shares		Amount		Shares		Amount		Shares			Amount		Stock			Shares			Amount			Deficit			Loss			Total
Balance, December 31, 2021		10,000,000	$	10,000		2,000,000	$	2,000		7,122,806,264		$	96,730,659	$	—			1,000,000		$	1,000		$	(96,501,045	)	$	(11,725	)		230,889
Common stock issued to settle amounts previously accrued										1,333,508,170			273,403																	273,403
Common stock issued for services rendered		—		—						122,256,410			152,000					—			18,000									170,000
Common stock issued in settlement of convertible notes payable and accrued interest		—		—						2,109,530,915			1,342,674					—			—			—						1,342,674
Issuance of common stock for deferred finance costs		—		—						387,821,466			276,687					—			—									276,687
Sale of common stock		—		—						3,458,888,889			1,218,315					—			—			—						1,218,315
Cancellation of shares upon settlement of SEC legal case										(218,532,087	)		—
Treasury stock purchase															(60,000	)														(60,000	)
Common shares cancelled by officer										(30,000,000	)		—																	—
Reclassification of derivative liabilities to additional paid in capital													233,069																	233,069
Debt discount from warrants issued with convertible notes payable													152,587																	152,587
Common stock issued for contingent consideration										717,866,439			500,000																	500,000
Common stock issued for subscriptions payable										180,486,830			234,633																	234,633
Net Loss		—		—		—		—		—			—		—			—			—			(10,066,431	)		(19,941	)		(10,086,372	)
Balance, September 30, 2022		10,000,000	$	10,000		2,000,000	$	2,000		15,184,633,309		$	101,114,027	$	(60,000	)		1,000,000		$	19,000		$	(106,567,476	)	$	(31,666	)		(5,514,115	)

See the accompanying notes to these unaudited condensed consolidated financial statements

MARIJUANA COMPANY OF AMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, ~~2021~~2022 AND ~~2020~~
2021

UNAUDITED

Nine Months Ended September 30,
2021 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (7,250,698 ) $ (4,177,391 )
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount 1,232,641 1,373,575
Depreciation and amortization 5,753 4,702
Bad debt expense 34,359 —
Impairment loss on equity investment —   22,658
Loss on equity investment 735,178 (106,305 )
Loss (Gain) on change in fair value of derivative liability 451,679 312,631
Interest expense recognized for the excess of fair value of derivative liability over net book value of notes payable at issuance 1,035,115 —
Loss on share inducement and settlement of warrant liability —   427,500
Stock-based compensation 661,292 665,767
Unrealized (Gain) Loss on trading securities 39,063 13,945
Gain on Settlement of joint venture —   (386,930 )
Loss on settlement of liabilities 256,336 —
Changes in operating assets and liabilities:
Accounts receivable (5,496 ) 9,754
Inventories (90,561 ) 3,652
Prepaid expenses and other current assets (161,352 ) (77,605 )
Accounts payable 386,122 205,061
Accrued expenses and other current liabilities (23,063 ) 446,746
Right-of-use assets 7,858 10,459
Right-of-use liabilities (7,858 ) (10,577 )
Net cash provided by (used in) operating activities (2,693,632 ) (1,262,358 )

Cash flows from investing activities:
Purchases of property and equipment (121,603 ) (1,271 )
Payment to establish joint venture (99,098 ) —
Proceeds from sale of investments 190,401 —
Investment in joint venture —   125,000
Acquisition of business (155,550 ) —
Net cash provided by (used in) investing activities (185,850 ) 123,729

Cash flows from financing activities:
Proceeds from issuance of notes payable 2,065,863 876,302
Proceeds from PPP loan payable 0   35,500
Proceeds from sales of trading securities —   10,854
Repayments of notes payable (626,005 ) —
Repayments to related parties (20,000 ) —
Proceeds from sale of common stock 1,492,851 153,685
Net cash provided by (used in) financing activities 2,912,709 1,076,341

Net increase (decrease) in cash 33,227 (62,288 )

Cash at beginning of period 74,503 211,765

Cash at end of period $ 107,730 $ 149,477
—

Supplemental disclosure of cash flow information:
Cash paid for interest —   —
Cash paid for taxes —   —

Non cash financing activities:
Common stock issued in settlement of convertible notes payable $ 1,989,282 $ 2,635,647
Common stock issued in settlement of related party notes payable and accrued compensation —   $ 50,613
Reclassification of derivative liabilities to additional paid-in capital $ 6,270,052 $ 3,886,971
Gains on settlement of JV investment $ —   $ 386,930
Common stock issued for investment $ 1,300,000 $ —
Common stock issued to settle liabilities $ 8,623 $ —
Common stock issued for acquisition of business $ 1,617,501 $ —
Common shares issued in settlement of legal case $ —   $ 1,283,632


	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)	$	(10,066,431	)	$	(7,250,698	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount		2,010,783			1,232,641
Depreciation and amortization		153,267			5,753
Bad debt expense		72,581			34,359
Loss on equity investment		2,009,254			735,178
Loss on VBF acquisition		2,020,982			—
Loss (Gain) on change in fair value of derivative liability		195,203			451,679
Interest expense recognized for the excess of fair value of derivative liability over net book value of notes payable at issuance		194,984			1,035,115
Stock-based compensation		404,633			661,292
Unrealized Gain on trading securities		—			(504,137	)
Loss on sale of trading securities		—			543,200
Loss on settlement of liabilities		335,824			256,336
Changes in operating assets and liabilities:
Accounts receivable		(101,644	)		(5,496	)
Inventories		71,619			(90,561	)
Prepaid expenses and other current assets		132,728			(161,352	)
Accounts payable		735,480			386,122
Accrued expenses and other current liabilities		12,752			(23,063	)
Right-of-use assets		—			7,858
Right-of-use liabilities		—			(7,858	)
Net cash (used in) operating activities		(1,757,153	)		(2,693,632	)

Cash flows from investing activities:
Purchases of property and equipment		(2,748	)		(121,603	)
Payment to establish joint venture		—			(99,098	)
Proceeds from sale of investments					190,401
Acquisition of business		—			(155,550	)
Net cash (used in) investing activities		(2,748	)		(185,850	)

Cash flows from financing activities:
Proceeds from issuance of notes payable		1,649,980			2,065,863
Repayments of notes payable		(1,144,760	)		(626,005	)
Proceeds from related parties		13,114			—
Repayments to related parties		—			(20,000	)
Repurchase of common stock		(60,000	)		—
Proceeds from sale of common stock		1,218,315			1,492,851
Net cash provided by financing activities		1,676,649			2,912,709

Foreign exchange impact on cash		(19,941	)		—

Net (decrease) increase in cash		(103,193	)		33,227

Cash at beginning of period		104,024			74,503

Cash at end of period	$	831		$	107,730

Supplemental disclosure of cash flow information:
Cash paid for interest		—			—
Cash paid for taxes		—			—

Non cash financing activities:
Common stock issued in settlement of convertible notes payable	$	930,174		$	1,989,282
Reclassification of derivative liabilities to additional paid-in capital	$	—		$	6,270,052
Common stock issued for investment	$	234,633		$	1,300,000
Common stock issued to settle liabilities	$	—		$	8,623
Common stock issued for acquisition of business	$	500,000		$	1,617,501
Common stock issued for deferred finance costs	$	276,687		$	—

See the accompanying notes to these unaudited condensed consolidated financial statements

MARIJUANA COMPANY OF AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, ~~2021~~2022

(unaudited)

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Marijuana Company of America, Inc. (the “Company”) was incorporated under the laws of the State of Utah in October 1985 under the name Mormon Mint, Inc. The corporation was originally a startup company organized to manufacture and market commemorative medallions related to the Church of Jesus Christ of Latter Day Saints. On January 5, 1999, Bekam Investments, Ltd. acquired ~~100%~~one hundred percent of the common shares of the Company and spun the Company off changing its name Converge Global, Inc. From August 13, 1999 until November 20, 2002, the Company focused on the development and implementation of Internet web content and e-commerce applications. In October 2009, in a 30 for 1 exchange, the Company merged with Sparrowtech, Inc. for the purpose of exploration and development of commercially viable mining properties. From 2009 to 2014, we operated primarily in the mining exploration business.

In 2015, the Company changed its business model to a marketing and distribution company for medical marijuana. In conjunction with the change, the Company changed its name to Marijuana Company of America, Inc. At the time of the transition in 2015, there were no remaining assets, liabilities or operating activities of the mining business.

On ~~September 21, 2015, the Company formed H Smart, Inc., a Delaware corporation as a wholly owned subsidiary for the purpose of operating the hempSMART™ brand.~~

On February 1, 2016, the Company formed MCOA CA, Inc., a California corporation as a wholly owned subsidiary to facilitate mergers, acquisitions and the offering of investments or loans to the Company.

On May 3, 2017, the Company formed Hempsmart Limited, a United Kingdom corporation as a wholly owned subsidiary for the purpose of future expansion into the European market.

On August 8, 2017, the Company formed H Smart, Inc., a Delaware corporation as a wholly owned subsidiary for the purpose of operating the hempSMART™ brand.

On January 11, 2021, the Company formed Hempsmart Global, Inc., a Nevada corporation, as a wholly owned subsidiary for the purpose of facilitating the Company’s Latin American joint ventures in Uruguay and Brazil.

On June 29, 2021, the Company acquired 100% of the capital stock of cDistro, Inc., a Nevada corporation, which is now a wholly owned subsidiary of the Company for the purpose of engaging in the distribution of hemp and CBD products to retail outlets in the North American market.

On, July 20, 2021, the Company formed Salinas Diversified Ventures, Inc., a California corporation, as a wholly owned subsidiary for the purpose of consummating the asset purchase agreement with VBF Brands, Inc.

On July 19, 2022, the Company formed H Smart, Inc., a California corporation, as a wholly owned subsidiary for the purpose of facilitating the sale and distribution of products in California.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries H Smart, Inc., ~~cDistro,~~ Hempsmart Limited, cDistro, Inc. and MCOA CA, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.

The condensed consolidated balance sheet as of December 31, ~~2020~~2021 has been derived from audited financial statements set forth in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on April ~~14, 2021 and amended on September 27, 2021~~16, 2022 (the “Annual Report”).

Operating results for the three and nine months ended September 30, ~~2021~~2022 are not necessarily indicative of results that may be expected for the year ending December 31, ~~2021.~~2022. These condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, ~~2020.~~2021.

NOTE 2 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS

The accompanying consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements, during the nine months ended September 30, ~~2021,~~2022, the Company incurred net losses from operations of ~~$7,250,699~~$~~7,250,698~~2,651,720 and used cash in operations of $~~2,693,632~~1,757,153~~$2,838,907.~~. These factors among others may indicate that the Company ~~may~~will be unable to continue as a going concern for a reasonable period of time.

The Company's primary source of operating funds for the nine months ended September 30, ~~2021~~2022 was from ~~revenue~~funds generated from the issuance of convertible and non-convertible debt. The Company has experienced net losses from operations since inception, but expects these conditions to improve in ~~2021~~2022 and beyond as it continues to develop its ~~direct sales and marketing programs~~business; however, no assurance can be provided that the Company will not continue to experience losses in the future. The Company has stockholders' deficiencies as of September 30, ~~2021~~2022 and requires additional financing to fund future operations.

The Company’s existence is dependent upon management’s ability to develop profitable operations and to obtain additional funding; however, there can be no assurance that the Company will be successful in developing profitable operations or that it will be able to obtain financing on favorable terms, if at all. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.

NOTE 3 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim Financial Statements

The unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Revenue Recognition

For annual reporting periods after December 15, 2017, the Financial Accounting Standards Board (“FASB”) made effective Accounting Standards Update (“ASU”) 2014-09 “Revenue from Contracts with Customers,” to supersede previous revenue recognition guidance under current GAAP. Revenue is now recognized in accordance with FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue Recognition (“ASC Topic 606”). The objective of the guidance is to establish the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer. The core principle is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Two options were made available for implementation of the standard: the full retrospective approach or modified retrospective approach. The guidance became effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with early adoption permitted. The Company adopted ASC Topic 606 for its reporting period as of the year ended December 31, 2017, which made its implementation of ASC Topic 606 effective in the first quarter of 2018. The Company decided to implement the modified retrospective transition method to implement ASC Topic 606, with no restatement of the comparative periods presented. Using this transition method, the Company applied the new standards to all new contracts initiated on or after the effective date. The Company also decided to apply this method to any incomplete contracts it determined are subject to ASC Topic 606 prospectively. For the quarter ended September 30, ~~2021,~~2022, there were no incomplete contracts. As is more fully discussed below, the Company is of the opinion that none of its contracts for services or products contain significant financing components that require revenue adjustment under ASC Topic 606.

Identification of Our Contracts with Customers

Contracts included in the Company’s application of ASC Topic 606 for the quarter ended September 30, ~~2021~~2022 consisted solely of sales of the Company’s hempSMART™ ~~products, as well as products from its new subsidiary cDistro.~~and cDistro products. With respect to the Company’s financial accounting, bookkeeping and/or real property management consulting services, to date no contracts have been entered into, and thus 0no reportable revenues have resulted for the fiscal years ended December 31, ~~2020~~2021 or ~~2019,~~2020, or for the quarter ended September 30, ~~2021.~~2022.

In accordance with ASC Topic 606, the Company is of the opinion that ~~some~~none of its hempSMART™ or cDistro product sales or offered consulting service, each of which are discussed below, have a significant financing component. The Company’s opinion is based upon the transactional basis for its product sales, with revenue recognized upon customer order, payment ~~and/or shipment.~~and shipment, which occurs concurrently. The Company’s evaluation of the length of time between ~~some of~~ the customer ~~orders,~~order, payment and shipping is not a significant financing component ~~while other shipments~~because shipment occurs the same day as the order is placed and payment made by the customer. The Company’s evaluation of its consulting services is based upon recognizing revenue as the services are performed for a determinable price per hour. The Company only recognizes revenues as incurred and charge billable hours. Because the Company’s hourly fees for services are fixed and determinable and are only earned and recognized as revenue upon actual performance, the Company is of the opinion that such arrangements are not an indicator of a vendor or customer based significant financing that would materially change the amount of revenue the Company recognizes under the contract or would otherwise contain a significant financing component under ASC Topic 606.

Determination of the Price in Our Sales Contracts

The transaction prices in the Company’s sales contract are the amount of consideration the Company expects to be entitled to for transferring promised hempSMART™ and cDistro products. The consideration amount is fixed and not variable. The transaction price is allocated to the identified performance obligations in the contract. These allocated amounts are recognized as revenue when or as the performance obligations are fulfilled, which is concurrently upon receipt of ~~shipment and or/~~payment. There are no future options for a contract when considering and determining the transaction price. The Company excludes amounts third parties will eventually collect, such as sales tax, when determining the transaction price. Since the timing between receiving consideration and transferring goods or services ~~for some of the products are not~~is immediate, the Company’s sales contract do not have a significant financing component, i.e., recognizing revenue at the amount that reflects the ~~invoice and/or~~ cash payment that the customer would have made at the time the goods or services were transferred to them (cash ~~or invoice~~ selling price)., rather than significantly before or after the goods or services are provided.

Allocation of the Transaction Price of Our Sales Contracts

The Company’s sales contracts are not considered multi-element arrangements which require the fulfillment of multiple performance obligations. Rather, the Company’s sales contracts include one performance obligation in each contract. As such, from the outset, the Company allocates the total consideration to each performance obligation based on the fixed and determinable standalone selling price, which the Company believes is an accurate representation of what the price is in each transaction.

Recognition of Revenue when the Performance Obligation is Satisfied

A performance obligation is satisfied when or as control of the good or service is transferred to the customer. ASC 606-10-20 defines control as “the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.” For performance obligations that are fulfilled at a point in time, revenue is recognized at the fulfillment of the performance obligation. As noted above, the Company’s single performance obligation sales contracts are singularly related to its promise to provide the hempSMART™ and cDistro products to the ~~customers~~customer upon ~~delivery and/or~~ receipt of payment, and upon completion, allows the Company to realize revenue under its revenue recognition policy.

With respect to the Company’s offered financial accounting, bookkeeping and/or real property management consulting services, to date no contracts have been entered into, and thus no reportable revenues have resulted for the fiscal years ended December 31, ~~2020~~2021 and ~~2019~~2020 or for the quarter ended September 30, ~~2021.~~2022.

Identifying the Performance Obligations in Our Sales Contracts

In analyzing the Company’s sales contracts, the Company’s policy is to identify the distinct performance obligations in a sales contract arrangement. In determining the Company’s performance obligations under its sales contracts, the Company considers that the terms and conditions of sales are explicitly outlined in its sales contracts and are so distinct and identifiable within the context of each sales contract, and so are not integrated with other goods, or constitute a modification or customization of other goods in the Company’s contracts, or are highly dependent or highly integrated with other goods in the Company’s sales contracts. Thus, the Company’s performance obligations are singularly related to its promise to provide the hempSMART™ and cDistro products upon ~~delivery and/or~~ receipt of payment. The Company offers an assurance warranty on its hempSMART™ and cDistro products that allows a customer to return any hempSMART™ and cDistro products within 30 days if not satisfied for any reason. Assurance warranties are not identifiable performance obligations since they may be elected at the whim of the customer for any reason. However, the Company does account for returns of purchase prices, if made.

~~Income From Lease~~

On May 20, 2021, the Company purchased a new cannabis extraction machine which is to be leased to a cannabis distributor and manufacturer called Lynwood-MCOA joint venture. This joint venture is between Cannabis Global Inc. and the Company and pertains to the licensed cannabis operations of Natural Plant Extract of California Inc. in the city of Lynwood, CA. The Company has retained control of title of the machine. The Equipment was leased to Lynwood- MCOA joint venture for a monthly fee of $7,500, beginning ninety (90) days after the Effective Date of May 20, 2021, for a period of two (2) years. After this two-year period, title to all such equipment shall revert to the joint venture at the agreed upon residual value of the equipment. The Company recorded $12,581 and $0 in equipment lease revenues for the three and nine months ended September 30, 2021 and 2020, respectively pursuant to ASC 842.

Product Sales

Revenue from product sales, including delivery fees, is recognized when (1) an order is placed by the customer; (2) the price is fixed and determinable when the order is placed; (3) the customer is required to and concurrently pays for the product upon order; and (4) the product is shipped. The evaluation of the Company’s recognition of revenue after the adoption of ASC Topic 606 did not include any judgments or changes to judgments that affected the Company’s reporting of revenues since the Company’s product sales, both pre and post adoption of ASC Topic 606 were evaluated using the same standards as noted above, reflecting revenue recognition upon order, payment and shipment, which all occurs concurrently when the order is placed and paid for by the customer, and the product is shipped. Further, given the facts that (1) the Company’s customers exercise discretion in determining the timing of when they place their product order and (2) the price negotiated in the Company’s product sales is fixed and determinable at the time the customer places the order, and there is no delay in shipment, the Company is of the opinion that its product sales do not indicate or involve any significant customer financing that would materially change the amount of revenue recognized under the sales transaction, or would otherwise contain a significant financing component for the Company or the customer under ASC Topic 606.

Consulting Services

The Company also offers professional services for financial accounting, bookkeeping and/or real property management consulting services based on consulting agreements. As of the date of this filing, the Company has not entered into any contracts for any financial accounting, bookkeeping and/or real property management consulting services that have generated reportable revenues as of the years ended December 31, 2021 or 2020 or the quarter ended September 30, 2022. If and when the Company provides these professional services, it would intend and expect the arrangements to be entered into on an hourly fixed fee basis.

For hourly based fixed fee service contracts, the Company intends to utilize and rely upon the proportional performance method, which recognizes revenue as services are performed. Under this method, in order to determine the amount of revenue to be recognized, the Company will calculate the amount of completed work in comparison to the total services to be provided under the arrangement or deliverable. The Company only recognizes revenues as incurred and charges billable hours. Because the Company’s hourly fees for services are fixed and determinable and are only earned and recognized as revenue upon actual performance, the Company is of the opinion that such arrangements are not an indicator of a vendor or customer based significant financing that would materially change the amount of revenue the Company recognizes under the contract or would otherwise contain a significant financing component under ASC Topic 606.

The Company determined that upon adoption of ASC Topic 606 there were no adjustments converting from ASC 605 to ASC Topic 606 because product sales revenue is recognized upon customer order, payment and shipment, which occurs concurrently, and the Company’s consulting services offered are fixed and determinable and are only earned and recognized as revenue upon actual performance.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the fair value of the Company’s stock, stock-based compensation, fair values relating to derivative liabilities, debt discounts and the valuation allowance related to deferred tax assets. Actual results may differ from these estimates.

Cash

The Company considers cash to consist of cash on hand and temporary investments having an original maturity of 90 days or less that are readily convertible into cash.

Concentrations of Credit Risk

The Company’s financial instruments that are exposed to a concentration of credit risk are cash and accounts receivable. Occasionally, the Company’s cash in interest-bearing accounts may exceed FDIC insurance limits. The financial stability of these institutions is periodically reviewed by senior management.

Accounts Receivable

Trade receivables are carried at their estimated collectible amounts. Trade credit is generally extended on a short-term basis. Thus, trade receivables do not bear interest. Trade accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current financial condition.

Allowance for Doubtful Accounts

Any charges to the allowance for doubtful accounts on accounts receivable are charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines the adequacy of the allowance based on historical write-off percentages and the current status of accounts receivable. Accounts receivable are charged off against the allowance when collectability is determined to be permanently impaired. As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, allowance for doubtful accounts was $~~37,632~~36,340 and $03,267, respectively.

Inventories

Inventories are stated at the lower of cost or market with cost being determined on a first-in, first-out (FIFO) basis. The Company writes down its inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. During the periods presented, there were no inventory write-downs.

Cost of Sales

Cost of sales is comprised of cost of product sold, packaging, and shipping costs.

Stock-Based Compensation - Employees

The Company accounts for the stock-based compensation in which the Company obtains employee services in share-based payment transactions under the recognition and measurement principles of the fair value recognition provisions of ASC 718-10-30. Pursuant to ASC 718-10-30-6, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur.

If the Company is a newly formed corporation or shares of the Company are thinly traded, the use of share prices established in the Company’s most recent private placement based on sales to third parties or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.

The fair value of share options and similar instruments is estimated on the date of grant using a Binomial Option Model option-pricing valuation model. The ranges of assumptions for inputs are as follows:

•

Expected term of share options and similar instruments. The expected life of options and similar instruments represents the period of time the options and/or similar instruments are expected to be outstanding. Pursuant to ASC 718-10-50-2(f)(2)(i),. the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and employees’ expected exercise and post-vesting employment termination behavior into the fair value (or calculated value) of the instruments. Pursuant to ASC 718-10-S99-1, it may be appropriate to use the simplified method, i.e., expected term equal the quotient of the vesting term plus the original contractual term divided by two if (i) a company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its equity shares have been publicly traded; (ii) a company significantly changes the terms of its share option grants or the types of employees that receive share option grants such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term; or (iii) a company has or expects to have significant structural changes in its business such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term. The Company uses the simplified method to calculate expected term of share options and similar instruments as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.

•		Expected volatility of the entity’s shares and the method used to estimate it. Pursuant to ASC 718-10-50-2(f)(2)(ii), a ~~thinly traded~~thinly-traded or non-public entity that uses the calculated value method shall disclose the reasons why it is not practicable for it to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses the average historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its expected volatility. If shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.

•		Expected annual rate of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.

•		Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments.

Generally, all forms of share-based payments, including stock options, warrants, restricted stock and stock appreciation rights are measured at their fair value on the grant date of the award based on the estimated number of awards that are ultimately expected to vest.

The expense resulting from share-based payments is recorded in general and administrative expense in the statements of operations.

Stock-Based Compensation – Non Employees

Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services

In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation: Improvement to Nonemployee Share-Based Payment Accounting (“Topic 718”~~).The~~s). The ASU supersedes ASC 505-50, Equity-Based Payment to Non-Employment, and expands the scope of the Topic 718 to include stock-based payments granted to non-employees. Under the new guidance, the measurement date and performance and vesting conditions for stock-based payments to non-employees are aligned with those of employees, most notably aligning the award measurement date with the grant date of an award. The new guidance is required to be adopted using the modified retrospective transition approach. The Company adopted the new guidance effective January 1, 2019, and the adoption did not have a material impact on its financial statements and related disclosures.

The fair value of share options and similar instruments is estimated on the date of grant using a Binomial option-pricing valuation model. The ranges of assumptions for inputs are as follows:

•		Expected term of share options and similar instruments: Pursuant to ASC 718-10-50-2(f)(2)(i), the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and the holder’s expected exercise behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate the holder’s expected exercise behavior. If a company is a newly formed corporation or shares of such company are thinly traded, the contractual term of the share options and similar instruments is used as the expected term of share options and similar instruments as such company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.

•		Expected volatility of the entity’s shares and the method used to estimate it. Pursuant to ASC 718-10-50-2(f)(2)(ii), a thinly-traded or non-public entity that uses the calculated value method shall disclose the reasons why it is not practicable for the company to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses the average historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its expected volatility. If shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.

•		Expected annual rate of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.

•		Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments.

Earnings per Share

Basic earnings per share are calculated by dividing net income (loss) by the weighted average number of shares of the Company’s common stock outstanding during the period. “Diluted earnings per share” reflects the potential dilution that could occur if the Company’s share-based awards and convertible securities were exercised or converted into common stock. The dilutive effect of the Company’s share-based awards is computed using the treasury stock method, which assumes all share-based awards are exercised and the hypothetical proceeds from exercise are used to purchase common stock at the average market price during the period. The incremental shares (difference between shares assumed to be issued versus purchased), to the extent they would have been dilutive, are included in the denominator of the diluted earnings per share calculation. The dilutive effect of the Company’s convertible preferred stock and convertible debentures is computed using the if-converted method, which assumes conversion at the beginning of the year.

Property and Equipment

Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. For financial statement purposes, property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives of 3 to 5 years.

Goodwill and Intangible Assets

Goodwill is carried at cost and is not amortized. The Company tests goodwill for impairment on an annual basis at the end of each fiscal year, relying on a number of factors including operating results, business plans, economic projections, anticipated future cash flows and marketplace data. Company management uses its judgment in assessing whether goodwill has become impaired between annual impairment tests according to specifications set forth in ASC 350.

The Company recognizes an acquired intangible asset apart from goodwill whenever the intangible asset arises from contractual or other legal rights, or when it can be separated or divided from the acquired entity and sold, transferred, licensed, rented or exchanged, either individually or in combination with a related contract, asset or liability. Such intangibles are amortized over their useful lives. Impairment losses are recognized if the carrying amount of an intangible asset subject to amortization is not recoverable from expected future cash flows and its carrying amount exceeds its fair value. The following table summarizes the Company’s intangible assets:

Schedule of intangible assets, net
	September 30, 2022			December 31, 2021
Trademarks (estimated 5-year life)	$	500,000		$	500,000
Licenses (estimated 10-year life)		600,000			600,000
Customer Relationships (estimated 5-year life)		100,000			100,000
Intangible assets, gross		1,200,000			1,200,000
Accumulated amortization		(225,000	)		(90,000	)
Intangible assets, net	$	975,000		$	1,110,000

We evaluate long-lived assets, including intangible assets and goodwill for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to forecasted undiscounted net cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. For long-lived assets held for sale, assets are written down to fair value, less cost to sell. Fair value is determined based on discounted cash flows, appraised values or management's estimates, depending upon the nature of the assets. The Company completed an evaluation of goodwill and intangible assets at September 30, 2022 and determined that no impairment was necessary.

Investments

The Company follows ASC subtopic 321-10, Investments-Equity Securities (“ASC 321-10”) which requires the accounting for an equity security to be measured at fair value with changes in unrealized gains and losses are included in current period operations. Where an equity security is without a readily determinable fair value, the Company may elect to estimate its fair value at cost minus impairment plus or minus changes resulting from observable price changes (See Note 6).

Derivative Financial Instruments

The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) provide the Company with a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement) providing that such contracts are indexed to the Company's own stock. The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the Company’s control) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). The Company assesses classification of its common stock purchase warrants and other free-standing derivatives at each reporting date to determine whether a change in classification between equity and liabilities is required.

The Company’s free-standing derivatives consisted of conversion options embedded within its issued convertible debt and warrants with anti-dilutive (reset) provisions. The Company evaluated these derivatives to assess their proper classification in the balance sheet using the applicable classification criteria enumerated under GAAP. The Company determined that certain conversion and exercise options do not contain fixed settlement provisions. The convertible notes contain a conversion feature and warrants have a reset provision such that the Company could not ensure it would have adequate authorized shares to meet all possible conversion demands. As such, the Company was required to record the conversion feature and the reset provision which does not have fixed settlement provisions as liabilities and mark to market all such derivatives to fair value at the end of each reporting period.

The Company has adopted a sequencing policy that reclassifies contracts (from equity to assets or liabilities) with the most recent inception date first. Thus, any available shares are allocated first to contracts with the most recent inception dates.

Fair Value of Financial Instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash and accounts payable. Fair values were assumed to approximate carrying values for cash, accounts payables and ~~short term~~short-term notes because they are short term in nature.

Advertising

The Company follows the policy of charging the costs of advertising to expense as incurred. The Company charged to operations $~~183,491~~ 105,144and $~~159,428~~183,491 for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, as advertising costs.

Segment Information

ASC subtopic Segment Reporting 280-10 ("ASC 280-10") establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. ASC 280-10 also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. The information disclosed herein materially represents all of the financial information related to the Company's principal operating segments, ~~cDistro~~hempSMART and ~~hempSMART.~~cDistro.

The following table represents the ~~Company's hempSMART'~~Company’s hempSMART business ~~segment as of~~for the nine months ended September 30, ~~2021~~2022 and ~~2020~~:2021:

hempSMART

STATEMENT OF OPERATIONS

THREE AND NINE MONTHS ENDED SEPTEMBER 30, ~~2021~~2022 AND ~~2020~~2021

Segment Information

For the three months ended For the nine months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Revenues $ 22,351 $ 53,195 $ 73,760 $ 217,972
Cost of Goods Sold 19,435 37,170 47,769 110,563
Gross Profit 2,916 16,025 25,991 107,409

Expense
Depreciation Expense 3,100 1,374 5,881 4,702
Selling and Marketing 105,757 117,978 363,796 294,231
Payroll and Related expenses 56,988 26,394 165,800 77,256
Stock Based Compensation 104,685 — 104,685 29,325
General and Admin Expenses 87,517 55,672 284,182 169,707
Total Expense 358,047 201,418 924,344 575,221

Net Loss from Operations $ (355,131 ) $ (185,393 ) $ (898,353 ) $ (467,812 )

Schedule of Operation statement
* The Company has begun the phase-out of this business in the USA during 2022

	For the three months ended						For the nine months ended
	September 30,			September 30,			September 30,			September 30,
	2022			2021			2022			2021
Revenues	$	—		$	22,351		$	15,537		$	73,760
Cost of Sales		482			19,435			5,725			47,769
Gross profit		(482	)		2,916			9,812			25,991

Operating Expenses
Depreciation expense		5,259			3,100			15,808			5,881
Selling and Marketing expenses		66,024			105,757			157,576			363,796
Payroll and related		19,860			56,988			108,665			165,800
Stock-based Compensation		—			104,685			—			104,685
General and administrative expenses		132,612			87,517			306,715			284,182
Total Expenses		233,755			358,047			588,764			924,344

Net Loss from Operations	$	(234,237	)	$	(355,131	)	$	(578,952	)	$	(898,353	)

The following table represents the ~~Company's~~Company’s cDistro business ~~segment as of~~for the nine months ended September 30, ~~2021~~2022 and 2021:

For the three months ended For the nine months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Revenues $ 407,246 $ —   $ 407,589 $ —
Cost of Goods Sold 359,056 —   359,056 —
Gross Profit 48,190 —   48,533 —

Expense
Depreciation Expense 597 —   597 —
Selling and Marketing 3,696 —   3,696 —
Payroll and Related expenses 45,000 —   45,000 —
Stock Based Compensation —   —   —   —
General and Admin Expenses 94,650 —   94,938 —
Total Expense 143,943 —   144,231 —

Net Loss from Operations $ (95,753 ) $ —   $ (95,698 ) $ —

cDistro Inc.

STATEMENT OF OPERATIONS

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021


	For the three months ended						For the nine months ended
	September 30,			September 30,			September 30,			September 30,
	2022			2021			2022			2021
Revenues	$	111,908		$	407,246		$	864,825		$	407,589
Cost of Sales		51,324			359,056			587,834			359,056
Gross profit		60,584			48,190			276,991			48,533

Operating Expenses
Depreciation expense		45,849			597			137,459			597
Selling and Marketing expenses		259			3,696			6,122			3,696
Payroll and related		75,053			45,000			199,053			45,000
General and administrative expenses		0			94,650			138,289			94,938
Total Expenses		121,161			143,943			480,923			144,231

Net Loss from Operations	$	(60,577	)	$	(95,753	)	$	(203,932	)	$	(95,698	)

Income Taxes

Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carry forwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records an estimated valuation allowance on its deferred income tax assets if it is not more likely than not that these deferred income tax assets will be realized.

The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities based on the technical merits of the position. The tax benefits recognized in the condensed consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of September 30, ~~2021~~2022 and ~~2020,~~2021, the Company has ~~not~~0not recorded any unrecognized tax benefits.

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40)” (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative which aims to reduce unnecessary complexity in GAAP. The ASU’s amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company is currently evaluating the impact ASU 2020-06 will have on its financial statements.

~~Recently Issued Accounting Pronouncements Adopted~~

~~Accounting for Income Taxes~~ ~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Simplifying the Accounting for Income Taxes (Topic 740)~~. The amendments in ASU 2019-12 simplify the accounting for income taxes by removing certain exceptions to the general principles in ASC Topic 740, Income Taxes. The amendments also improve consistent application of and simplify U.S. GAAP for other areas of ASC Topic 740 by clarifying and amending existing guidance. ASU 2019-12 became effective for the Company in the first quarter of fiscal year 202~~1. The adoption of this standard did not have any impact on the Company’s condensed consolidated financial statements.~~

~~Equity Securities, Equity-method Investments and Certain Derivatives~~ ~~In January 2020, the FASB issued ASU 2020-01,~~ Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. The guidance provides clarification of the interaction of rules for equity securities, the equity method of accounting and forward contracts and purchase options on certain types of securities. ASU 2020-01 became effective for the Company in the first quarter of 2021. The adoption of this standard did not have any impact on the Company’s condensed consolidated financial statements.

NOTE 4 – OPERATING LEASE

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU requires lessees to recognize a lease liability, on a discounted basis, and a right-of-use asset for substantially all leases, as well as additional disclosures regarding leasing arrangements. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842), which provides an optional transition method of applying the new lease standard. ASU 2018-11, Topic 842can be applied using either a modified retrospective approach at the beginning of the earliest period presented, or as permitted by ASU 2018-11, at the beginning of the period in which it is adopted.

~~The Company~~We adopted this standard using a modified retrospective approach on January 1, 2019. The modified retrospective approach includes a number of optional practical expedients relating to the identification and classification of leases that commenced before the adoption date; initial direct costs for leases that commenced before the adoption date; and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset.

The Company elected the package of practical expedients permitted under ASU 2018-11, Leases, allowing it to account for its existing operating lease that commenced before the adoption date as an operating lease under the new guidance without reassessing (i) whether the contract contains a lease; (ii) the classification of the lease; or, (iii) the accounting for indirect costs as defined in ASC 842.

On May 31, 2021, the Company’s operating lease for its office space located at 1340 West Valley Parkway, Suite 205, Escondido, CA 92029 expired and, at that time, the Company fully amortized its right-of-use asset for such lease. On June 1, 2021, the Company entered into an office accommodation agreement whereby it may access a shared office space located at 633 West Fifth Street, Suite 2826, Los Angeles, CA 90071 on a month-to-month basis over a one-year term1 for a fee of $2,349 per month. In considering its qualitative disclosure obligations under ASC 842-20-50-3, the Company examined its office accommodation agreement for office space that has a fixed monthly fee with no variable payments and no options to extend. The office accommodation agreement creates no tenancy, leasehold, or other real property interest, other than a shared right-of-use. The office accommodation agreement does not provide for terms and conditions granting residual value guarantees by the Company, or any restrictions or covenants imposed for dividends or incurring additional financial obligations by the Company.

The Company determined under ASC 2018-11, Leases (Topic 842), due to the short-term nature of the office accommodation agreement, that such agreement met the criteria of ASC 842-20-25-2 and as such it is not necessary to capitalize the office accommodation agreement and fees will be recognized on a monthly straight-line basis. The adoption of this guidance resulted in no significant impact to the Company’s results of operations or cash flows.

NOTE 5 – PROPERTY, MACHINERY AND EQUIPMENT

Property and equipment as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 is summarized as follows:

Schedule of Property and Equipment

Schedule of property and equipment
	September 30, 2021			December 31, 2020			September 30, 2022			December 31, 2021
Computer equipment	$	25,194		$	20,143		$	31,855		$	30,155
Furniture and fixtures		13,278			5,140			14,327			13,278
Machinery		104,102			—			104,102			104,102
Subtotal		142,574			25,283			150,284			147,535
Less accumulated depreciation		(20,107	)		(18,741	)
Less: accumulated depreciation								(44,214	)		(25,947	)
Property, machinery and equipment, net	$	122,467		$	6,542		$	106,069		$	121,588

Property, machinery and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives of 3 years. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. On May 20, 2021, the Company purchased a new cannabis extraction machine which is to be leased to a cannabis distributor and manufacturer called Lynwood-MCOA joint venture. This joint venture is between Cannabis Global Inc. and the Company and pertains to the licensed cannabis operations of Natural Plant Extract of California Inc. in the city of Lynwood, CA. The ~~Company recorded $12,581~~ ~~and $~~0 ~~in equipment~~ lease ~~revenues for~~payments are scheduled to commence during the ~~three and nine months ended September 30, 2021 and 2020, respectively.~~third quarter of 2021.

Depreciation expense was ~~$5,753~~$~~6,350~~18,267 and $~~4,702~~5,753 for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

NOTE 6 – INVESTMENTS

Bougainville Ventures, Inc. Joint Venture

On March 16, 2017, the Company entered into a joint venture agreement with Bougainville Ventures, Inc. (“Bougainville”), a Canadian corporation, to (i) jointly engage in the development and promotion of products in the legalized cannabis industry in Washington State; (ii) utilize Bougainville's high quality cannabis grow operations in the State of Washington, where it claimed to have an ownership interest in real property for use within the legalized cannabis industry; (iii) leverage Bougainville’s agreement with a I-502 Tier 3 license holder to grow cannabis on the site; provide technical and management services and resources including, but not limited to, sales and marketing, agricultural procedures, operations, security and monitoring, processing and delivery, branding, capital resources and financial management; and (iv) optimize collaborative business opportunities. The Company and Bougainville agreed to operate through BV-MCOA Management, LLC, a limited liability company organized in the State of Washington on May 17, 2017.

Pursuant to the joint venture agreement, the Company committed to raise not less than $1,000,000 to fund joint venture operations, based upon a funding schedule. The Company also committed to providing branding and systems for the representation of cannabis related products and derivatives comprised of management, marketing and various proprietary methodologies directly tailored to the cannabis industry.

The joint venture agreement provided that funding provided by the Company would contribute towards the joint venture’s ultimate purchase of the land consisting of a one-acre parcel located in Okanogan County, Washington, for joint venture operations.

As disclosed in the Company’s Current Report on Form 8-K filed with the SEC on December 11, 2017, the Company did not comply with the funding schedule for the joint venture. On November 6, 2017, the Company and Bougainville amended the joint venture agreement to reduce the amount of the Company's commitment from $1,000,000 to $800,000, and also required the Company to issue Bougainville 15 million shares of the Company's restricted common stock. The Company completed its payments pursuant to the amended agreement on November 7, 2017, and on November 9, 2017, issued to Bougainville 15 million shares of restricted common stock. The amended agreement provided that Bougainville would deed the real property to the joint venture within thirty days of its receipt of payment.

Thereafter, the Company determined that Bougainville had no ownership interest in the property in Washington State, but rather was a party to a purchase agreement for real property that was in breach of contract for non-payment. Bougainville also did not possess an agreement with a Tier 3 I-502 license holder to grow marijuana on the property. Nonetheless, as a result of funding arranged for by the Company, Bougainville and an unrelated third party, Green Ventures Capital Corp., purchased the land, but did not deed the real property to the joint venture. Bougainville failed to pay delinquent property taxes to Okanogan County, and as a result, as further discussed below, to date, the property has not been deeded to the joint venture.

To clarify the respective contributions and roles of the parties, the Company offered to enter into good faith negotiations to revise and restate the joint venture agreement with Bougainville. The Company diligently attempted to communicate with Bougainville to enter into an amended and restated joint venture agreement, and efforts towards satisfying the conditions to complete the subdivision of the land by the Okanogan County Assessor. However, Bougainville failed to cooperate or communicate with the Company in good faith, and failed to pay the delinquent taxes on the real property that would allow for sub-division and the deeding of the real property to the joint venture.

On August 10, 2018, the Company advised its independent auditor that Bougainville did not cooperate or communicate with the Company regarding its requests for information concerning the audit of Bougainville’s receipt and expenditures of $800,000 contributed by the Company to the joint venture. Bougainville had a material obligation to do so under the joint venture agreement. The Company believes that some of the funds it paid to Bougainville were misappropriated and that there was self-dealing with respect to those funds. Additionally, the Company believes that Bougainville misrepresented material facts in the joint venture agreement, as amended, including, but not limited to, Bougainville’s representations that: (i) it had an ownership interest in real property that was to be deeded to the joint venture; (ii) it had an agreement with a Tier 3 I-502 cannabis license holder to grow cannabis on the real property; and (iii) that clear title to the real property associated with the Tier 3 I-502 license would be deeded to the joint venture thirty days after the Company made its final funding contribution. As a result, on September 20, 2018, the Company filed a lawsuit against Bougainville, BV-MCOA Management, LLC, Andy Jagpal, Richard Cindric, et al. in Okanogan County Washington Superior Court, case number 18-2-0045324. The Company seeks legal and equitable relief for breach of contract, fraud, breach of fiduciary duty, conversion, recession of the joint venture agreement, an accounting, quiet title to real property in the name of the Company, the appointment of a receiver, the return to treasury of 15 million shares of restricted common stock issued by the Company to Bougainville and treble damages pursuant to the Consumer Protection Act. The Company has filed a lis pendens on the real property. The case is currently in litigation.

In connection with the joint venture agreement, the Company recorded a cash investment of $1,188,500 to the joint venture during 2017. This was comprised of a 49.5% ownership of BV-MCOA Management, LLC, and was accounted for using the equity method of accounting. The Company recorded an annual impairment in 2017 of $792,500, reflecting the Company’s percentage of ownership of the net book value of the investment. During 2018, the Company recorded equity losses of $37,673 and $11,043 for the quarters ended March 31, 2018 and June 30, 2018, respectively, and recorded an annual impairment of $285,986 for the year ended December 31, 2018, at which time the Company determined the investment to be fully impaired due to Bougainville’s breach of contract and resulting litigation, as discussed above.

Natural Plant Extract

Natural Plant Extract of California & Subsidiaries Joint Venture; On April 15, 2019, the Company entered into a joint venture agreement with Natural Plant ~~Extract~~Extracts of California, Inc. and ~~itssubsidiaries (collectively, “NPE”),~~subsidiaries. The purpose of the joint venture was to utilize Natural Plant Extracts’ California and City cannabis licenses to jointly operate a business named “Viva Buds” to operate a licensed ~~psychoactive~~ cannabis distribution service in California. ~~California legalized THC psychoactive cannabis~~In exchange for ~~medicinal~~acquiring 20% of Natural Plant Extracts’ common stock, the Company agree to pay two million dollars and ~~recreational use on January 1, 2018. On~~issue Natural Plant Extract one million dollars’ worth of the Company’s restricted common stock. As of February 3, 2020, the ~~parties terminated~~Company was in arrears in its payment obligations under the joint venture agreement, and the parties entered into a settlement and release ~~agreement (the “Settlement Agreement”). In exchange for a complete release~~ of all claims terminating the ~~Company and NPE (1)~~joint venture. The parties agreed ~~that~~to reduce the ~~Company would reduce its interest~~Company’s equity ownership in ~~NPE~~Natural Plant Extracts from 20% to 5%~~; (2) the~~. The Company also agreed to pay ~~NPE a total of~~Natural Plant Extracts $85,000 ~~as follows: $35,000~~ ~~concurrent with the execution of the Settlement Agreement,~~ and $~~25,000~~ ~~no later than the fifth calendar day for each of the two months following execution of Settlement Agreement; and, (3) to retire~~ the balance of ~~the Company’s original valuation obligation from the material definitive agreement, representing a shortfall of~~ $56,085,.15 paid in a convertible promissory note issued with terms allowing ~~NPE~~Natural Plant Extracts to convert the note into ~~shares of the Company’s~~ common stock of at a 50%50% discount to the closing price of ~~the Company’s~~MCOA’s common stock as of the maturity date. ~~The note was satisfied in full during the year ended December 31, 2020.~~

As of the date of this filing, the Company ~~does not owe any amount and is in compliance with~~satisfied its payment obligations under the ~~terms of~~settlement agreement.

During the ~~Settlement Agreement. On February 3, 2020,~~nine months ended September 30, 2022, the Company ~~issued NPE a convertible promissory note~~recorded an impairment on the investment in the ~~principal~~ amount of $$142,567.

~~56,085. Additionally, as a result of the Settlement Agreement, the Company became liable to pay NPE its 5% portionequal to $25,902~~ ~~of the regulatory charges to the City of Lynwood and the State of California to transfer the cannabis licenses back to NPE.~~

~~Of the total amount due and payable by the Company with regards to the NPE joint venture agreement as of the date of this filing, the Company owes $75,000~~ ~~and is in breach of the Settlement and Release of All Claims Agreement with NPE. On February 3, 2020, the Company issued a convertible promissory note in the principal amount of $56,085~~.15 to NPE. Additionally, as a result of the Company’s settlement agreement with NPE, the Company became liable to pay NPE its 5% portion equal to $25,902 of the regulatory charges to the City of Lynwood and the State of California to transfer the cannabis licenses back to NPE. To date, the Company has not paid this amount and it is due and owing.

Brazilian Joint Ventures

On September 30, 2020, the Company entered into two joint venture agreements (the “Joint Venture Agreements”) with Marco Guerrero, a director of the Company (“Guerrero”) and related party, to form joint ventures in Brazil and in Uruguay to produce, manufacture, market and sell the Company’s hempSMART™ products in Latin America and to develop and sell hempSMART™ products globally. The Joint Venture Agreements contain equal terms for the formation of the joint venture entities in Uruguay and Brazil. The Brazilian joint venture, HempSmart Produtos Naturais Ltda. (“HempSmart Brazil”), will be headquartered in São Paulo, Brazil. The Uruguayan joint venture, Hempsmart Uruguay S.A.S. (“HempSmart Uruguay”), will be headquartered in Montevideo, Uruguay.

Pursuant to the Joint Venture Agreements, the Company acquired a 70% equity interest in both HempSmart Brazil and HempSmart Uruguay, with a minority 30% equity interest in both HempSmart Brazil and HempSmart Uruguay being held by newly formed entities controlled by Guerrero. Pursuant to the Joint Venture Agreements, the Company agreed to provide capital in the amount of $50,000 to both HempSmart Brazil and HempSmart Uruguay, for a total capital outlay obligation of $100,000. It is expected that the proceeds of the initial capital contribution will be used for contracting with third-party manufacturing facilities in Brazil and Uruguay and related infrastructure and employment of key personnel. As of September 30, ~~2021,~~2022, the Company has not initiated the capital ~~contribution; however, it intends to make the payment during the first quarter of 2022.~~contribution.

The boards of directors of HempSmart Brazil and HempSmart Uruguay will consist of three directors, elected by the joint venture partners. Pursuant to the Joint Venture Agreements, the Company agreed to license, on a royalty-free basis, certain of its intellectual property regarding its existing products to HempSmart Brazil and HempSmart Uruguay to enable the joint ventures to manufacture and sell its products in Brazil, Uruguay, and for export to other Latin American countries, the United States, and globally in accordance with the terms of the Joint Venture Agreements.

In addition, as majority partner, in the event a joint venture is frustrated in its intent or purpose, the Company may trigger a compulsory buy-sell procedure pursuant to which the Company could pursue a sale of all or substantially all of the joint venture. Subject to certain exceptions, the joint venture partners may not transfer their interests in HempSmart Brazil and HempSmart Uruguay.

CannabisGlobal, Inc.

Joint Venture

On May 12, 2021, the Company entered into a joint venture agreement with Cannabis Global, Inc. (“Cannabis Global”) pursuant to which the Company will invest up to $250,000 into a newly formed entity (“MCOA Lynwood”) and Cannabis Global, through Natural Plant Extracts of California, Inc. (“Natural Plant”), an entity in which Cannabis Global owns a majority interest, will operate a regulated and licensed laboratory to manufacture various cannabis products in the State of California. As of September 30, ~~2021,~~2022, the Company has invested $115,000.

Share Exchange

On September 30, 2020, the Company entered into a securities exchange agreement with Cannabis Global pursuant to which the Company issued 650,000,000 shares of its common stock to Cannabis Global in exchange for 7,222,222 shares of Cannabis Global common ~~stock, subject to true-up provisions.~~stock. In addition, the Company and Cannabis Global entered into a lock-up leak-out agreement which contains certain restrictions with respect to the sales of such securities.

During the ~~three~~nine months ended September 30, ~~2021,~~2022, the Company ~~issued~~recorded an impairment on the ~~650,000,000~~ ~~shares~~investment in the amount of ~~stock to Cannabis Global pursuant to the true-up provision.~~$852,597.

Eco Innovation Group Inc. –

Share Exchange

On February 26, 2021, the Company entered into a Share Exchange Agreement with Eco Innovation Group, Inc., a Nevada corporation quoted on OTC Markets Pink (“ECOX”) dated February 26, 2021, to acquire the number of shares of ECOX’s common stock, par value $0.001, equal in value to $650,000 based on the per-share price of $0.06, in exchange for the number of shares of Company common stock, par value $0.001, equal in value to $650,000 based on the closing price for the trading day immediately preceding the effective date (the “Share Exchange Agreement”). For both parties, the Share Exchange Agreement contains a “true-up” provision requiring the issuance of additional common stock in the event that a decline in the market value of either parties’ common stock should cause the aggregate value of the stock acquired pursuant to the Share Exchange Agreement to fall below $650,000. As of September 30, ~~2021,~~2022, the Company owed ECOX an additional 64,621,893 ~~shares of common stock~~ with an estimated value of $~~754,961~~394,194 related to the ECOX Share Exchange Agreement. The investment balance is $~~650,000~~,$650,000, with a liability of $~~754,961~~394,194 included in subscriptions payable related to the value of the additional shares to be issued. The Company recognized a loss of $~~394,194~~$394,194 related to the shares to be issued.

Complementary to the Share Exchange Agreement, the Company and ECOX entered into a Lock-Up Agreement dated February 26, 2021 (the “Lock-Up Agreement”), providing that the shares of common stock acquired pursuant to the Share Exchange Agreement shall be subject to a lock-up period preventing its sale for a period of 12 months following issuance and limiting the subsequent sale to aggregate maximum sale value of $20,000 per week, or $80,000 per month. On October 1, 2021, the Company entered into a First Amendment to Lock-Up Agreement between the Company and ECOX, dated and effective October 1, 2021 (the “Amended Lock-Up Agreement”), which amends the Lock-Up Agreement by amending the initial lock-up period from 12 months following its effective date to 6 months following its effective date. All other terms and conditions of the Lock-Up Agreement remain unaffected.

For a period of two years following the Effective Date, at the closing of each fiscal quarter, should the per-share closing price of the common shares of the same class as the Shares or the Exchange Shares,as quoted by the OTC Markets for the last day of the relevant fiscal quarter, decrease below original issuance value with the effect that the aggregate value of the Shares or the Exchange Shares at the fiscal quarter close would be lower than $650,000, then either ~~the Company,~~MCOA, in the case of the Shares, or ECOX, in the case of the Exchange Shares, shall issue the other party the number of shares of common stock necessary to cause the aggregate value of the Shares or the Exchange Shares, as applicable, be $650,000 as of the end of the relevant fiscal quarter. The parties shall irrevocably instruct their respective transfer agents to reserve and maintain authorized and unissued common stock in a reserve account designated for the purpose of issuing such shares pursuant to this share exchange adjustment provision. Such share reserve accounts shall be maintained with a number of authorized and unissued common stock not less than three (3) times the number of Shares or Exchange Shares, as the case may be, that are issued pursuant to the Share Exchange Closing.

On ~~February 24, 2021,~~September 30, 2022, the closing price of the Company’s common stock was $0.0155, so that the number of shares of Company common stock issuable to ECOX under the Share Exchange Agreement was 41,935,484. As a result of the transactions pursuant to the Share Exchange Agreement, the Company ~~had~~will have 4,179,073,945 shares of common stock outstanding, with the shares issued to ECOX pursuant to the Share Exchange Agreement representing 1.00% of the Company’s outstanding shares.

For the quarter ended September 30, ~~2021,~~2022, the Company recorded a ~~loss~~Loss on ~~equity investment~~Equity Investment and corresponding increase in ~~subscriptions payable~~Subscriptions Payable of $~~735,178~~394,194 to address the decline in the Company's stock price from the original issuance price of ~~$0.0155.~~$.0155.

Asset Purchase Agreement with VBF Brands, Inc.

On October 6, 2021, the Company, through its wholly owned subsidiary Salinas Diversified Ventures, Inc., a California corporation, entered into an Asset Purchase Agreement, Management Services Agreement, Cooperation Agreement and Employment Agreement with VBF Brands, Inc., a California corporation (“VBF”), a wholly owned subsidiary of Sunset Island Group, Inc., a Colorado corporation (“SIGO”). VBF and SIGO agreed to transfer to the Company all of VBF’s outstanding stock to the Company and appointed our CEO and CFO Jesus Quintero as President of VBF.

BF owns various fixed assets including machinery and equipment, a lease for a 10,000 square foot facility located at 20420 Spence Road, Salinas, California, 93908, leasehold improvements, good-will, inventory, tradenames including “VBF Brands,” trade secrets, intellectual property, and other tangible and intangible properties, including licenses issued by the City of Salinas, County of Monterey, and the State of California to operate a licensed cannabis nursery, cultivation facility, and operations for the manufacturing and distribution of cannabis and cannabis products.

VBF and SIGO agreed to sell and transfer to the Company all of VBF’s outstanding stock, and, by virtue of the Management Services Agreement, appoint Mr. Jesus Quintero as President of VBF, vesting management and control of VBF’s licensed cannabis operations in the Company. Concurrently, VBF and Livacich entered into a Cooperation Agreement, whereby VBF and Livacich agreed to cooperate to facilitate the transfer of ownership of VBF, which includes licenses issued by the City of Salinas, County of Monterey, and the State of California, to operate a cannabis nursery, cultivation facility and manufacturing and distribution operations to the Company. The Company also agreed to retain Livacich as Chief Executive Officer for a term of two years and agreed to compensate her with a salary including a signing cash bonus of $250,000, and a $250,000 performance cash bonus payable after six months after the Effective Date. The bonus is conditioned upon Livacich meeting an agreed to “Net Revenue” target of one million dollars ($1,000,000) from VBF’s operations during the six-month period after closing of the Asset Purchase Agreement, and her compliance with the terms and conditions of this Asset Purchase Agreement, the Management Services Agreement and the Cooperation Agreement.

As consideration for the transaction, the Company agreed to assume two secured convertible promissory notes issued by SIGO to St. George Investments, LLC, a Utah limited liability company (“St. George”) (the “SIGO Notes”). The first note was issued December 8, 2017, in the original face amount of $170,000.00, and the second was issued February 13, 2018, in the original face amount of $4,245,000.00. SIGO also issued warrants to St. George to purchase common shares in SIGO, and fifty (50) shares of SIGO’s preferred stock. St. George agreed to cancel the warrants and preferred shares upon the Company’s assumption of the SIGO Notes.

Under the Asset Purchase Agreement, the closing is conditioned upon certain conditions precedent, specifically (i) VBF and SIGO’s full corporate authorization, consent and execution of this Agreement; (ii) VBF’s sale to MCOA of 100% of the issued and outstanding shares of VBF; (iii) full corporate authorization, consent compliance with and execution of the Management Services Agreement and Cooperation Agreement; (iv) SIGO’s disclosure of the Agreement on Form 8-K with the Securities and Exchange Commission; (v) full cooperation in MCOA’s financial auditing of VBF in accordance with ASC 805, including providing unrestricted access to all VBF corporate and financial records and providing all necessary cooperation with VBF financial personnel; (vi) full cooperation in aiding and assisting Buyer with its change of ownership applications with the relevant licensing authorities; (vii) the warranty of truthful representations and execution of and compliance with the terms and conditions of the Executive Employment Agreement, Management Services Agreement and the Cooperation Agreement.

As of the date of this filing, the conditions precedent to the closing of the Asset Purchase Agreement remain in the process of implementation, so that the Asset Purchase Agreement closing has not yet occurred pursuant to its terms. Legal counsel for MCOA is currently in the process of working with VBF, Salinas Diversified Ventures, and the relevant state and local governments to effect the change of control and license transfers necessary to close the Asset Purchase Agreement. During the nine months ended September 30, 2022, based on the remote likelihood of the Company closing this acquisition, the Company recognized a loss of $2,020,982 related to the preliminary fair value of the business that was recognized as an other current asset during the year ended December 31, 2021 when the Company assumed the convertible promissory notes from SIGO with St. George.

MARIJUANA COMPANY OF AMERICA, INC.

INVESTMENT ROLL-FORWARD

AS OF SEPTEMBER 30, 2022

Schedule of investment roll forward
INVESTMENTS AS OF SEPTEMBER 30, 2022

	TOTAL			Consolidated			Cannabis Global								Hempsmart		Lynwood		Natural Plant			Salinas Ventures		VBF
	INVESTMENTS			Eliminations			Inc.			ECOX			C'Distro		Brazil		JV		Extract			Holding		BRANDS		Vivabuds

Investment, Beginning balance	0			0			0			0			0		0		0		0			0		0		0
Investments made during quarter ended 03-31-19	0
Quarter 03-31-19 equity method Loss	0
Unrealized gains on trading securities - quarter ended 03-31-19	-			-			-			-			-		-		-		-			-		-		-
Balance @03-31-19	0		$	0		$	0		$	0		$	0	$	0	$	0	$	0		$	0	$	0	$	0

Investments made during quarter ended 06-30-19	3,073,588																	$	3,000,000						$	73,588
Quarter 06-30-19 equity method Income (Loss)	(29,414	)																$	(6,291	)					$	(23,123	)
Unrealized gains on trading securities - quarter ended 06-30-19	0			-			-			-			-		-		-		-			-		-		-
Balance @06-30-19	3,044,174		$	0		$	0		$	0		$	0	$	0	$	0	$	2,993,709		$	0	$	0	$	50,465

Investments made during quarter ended 09-30-19	186,263																								$	186,263
Quarter 09-30-19 equity method Income (Loss)	(139,926	)																$	(94,987	)					$	(44,939	)
Sale of trading securities during quarter ended 09-30-19
Unrealized gains on trading securities - quarter ended 09-30-19	0			-			-			-			-		-		-		-			-		-		-
Balance @09-30-19	3,090,511		$	0		$	0		$	0		$	0	$	0	$	0	$	2,898,722		$	0	$	0	$	191,789

Investments made during quarter ended 12-31-19	129,812																								$	129,812
Quarter 12-31-19 equity method Income (Loss)	(102,944	)																$	(23,865	)					$	(79,079	)
Reversal of Equity method Loss for 2019	272,285																	$	125,143						$	147,142
Impairment of investment in 2019	(2,306,085	)																$	(2,306,085	)					$	0
Loss on disposition of investment	(389,664	)																							$	(389,664	)
Sale of trading securities during quarter ended 12-31-19	0
Unrealized gains on trading securities - quarter ended 12-31-19	0			-			-			-			-		-		-		-			-		-		-
Balance @12-31-19	693,915		$	0		$	0		$	0		$	0	$	0	$	0	$	693,915		$	0	$	0	$	0

Equity Loss for Quarter ended 03-31-20	0
Recognize Joint venture liabilities per JV agreement @03-31-20	0
Impairment of Equity Loss for Quarter ended 03-31-20	0
Unrealized gains on trading securities - quarter ended 03-31-19	-			-			-			-			-		-		-		-			-		-		-
Balance @03-31-20	693,915		$	0		$	0		$	0		$	0	$	0	$	0	$	693,915		$	0	$	0	$	0

Equity Loss for Quarter ended 06-30-20	0
Impairment of Equity Loss for Quarter ended 06-30-20	0
Sales of of trading securities - quarter ended 06-30-20	-			-			-			-			-		-		-		-			-		-		-
Balance @06-30-20	693,915		$	0		$	0		$	0		$	0	$	0	$	0	$	693,915		$	0	$	0	$	0

Global Hemp Group trading securities issued	650,000					$	650,000
Investment in Cannabis Global	0			-			-			-			-		-		-		-			-		-		-
Balance @09-30-20	1,343,915		$	0		$	650,000		$	0		$	0	$	0	$	0	$	693,915		$	0	$	0	$	0

Unrealized gain on Global Hemp Group securities - 4th Quarter 2020	-			-			-			-			-		-		-		-			-		-		-
Unrealized gains on Cannabis Global Inc securities - 4th Quarter 2020	208,086					$	208,086
Balance @12-31-20	1,552,001		$	0		$	858,086		$	0		$	0	$	0	$	0	$	693,915		$	0	$	0	$	0

Investment in ECOX	650,000			-			-		$	650,000			-		-		-		-			-		-		-
Balance @03-31-21	2,202,001		$	0		$	858,086		$	650,000		$	0	$	0	$	0	$	693,915		$	0	$	0	$	0

Investments made during quarter ended 06-30-21	30,898															$	30,898
Unrealized gain on Global Hemp Group securities - 2nd quarter 2021	-			-			-			-			-		-		-		-			-		-		-
Balance @06-30-21	2,232,899		$	0		$	858,086		$	650,000		$	0	$	0	$	30,898	$	693,915		$	0	$	0	$	0

Investments made during quarter ended 09-30-21	68,200					$	68,000														$	200
Sale of short-term investments in quarter ended 09-30-21	0			-			-			-			-		-		-		-			-		-		-
Balance @09-30-21	2,301,099		$	0		$	926,086		$	650,000		$	0	$	0	$	30,898	$	693,915		$	200	$	0	$	0

Investments made during quarter ended 12-31-21	5,087,079											$	2,975,174	$	90,923								$	2,020,982
Consolidated Eliminations @12/31/21	(5,060,821	)		(5,060,821	)		-			-			-		-		-		-			-		-		-
Balance @12-31-21	2,327,357		$	(5,060,821	)	$	926,086		$	650,000		$	2,975,174	$	90,923	$	30,898	$	693,915		$	200	$	2,020,982	$	0

Investments made during quarter ended 03-31-22	(26,458	)		(26,458	)		-			-			-		-		-		-			-		-		-
Balance @03-31-22	2,300,899		$	(5,087,279	)	$	926,086		$	650,000		$	2,975,174	$	90,923	$	30,898	$	693,915		$	200	$	2,020,982	$	0

Investments made during quarter ended 06-30-22	20,976			-			-			-			-	$	20,976		-		-			-		-		-
Balance @06-30-22	2,321,875		$	(5,087,279	)	$	926,086		$	650,000		$	2,975,174	$	111,899	$	30,898	$	693,915		$	200	$	2,020,982	$	0

Investments made during quarter ended 06-30-22	(26,888	)		(26,888	)		-			-			-		-		-		-			-		-		-
Investment write off during quarter ended 09-30-22	(2,009,254	)					(852,597	)		(605,309	)								(551,348	)
Balance @09-30-22	285,733		$	(5,114,167	)	$	73,489		$	44,691		$	2,975,174	$	111,899	$	30,898	$	142,567		$	200	$	2,020,982	$	0

NOTE 7 – NOTES PAYABLE, RELATED PARTY

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company’s officers and directors have provided advances and incurred expenses on behalf of the Company as such have been evidenced by the issuance of notes to such officers and directors. The notes are unsecured, due on demand and accrue interest at a rate of 5% per annum. The balance due to ~~notes payable related party~~Notes Payable Related Party as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 was $20,000 and $~~40,000~~20,000, respectively. These notes are payable to the estate of Charles Larsen.

NOTE 8 – CONVERTIBLE NOTES PAYABLE

During the nine months ended September 30, ~~2021,~~2022, the Company issued an aggregate of ~~905,667,530~~2,109,530,915 shares of its common stock in settlement of issued convertible notes payable and accrued interest.

For the nine months ended September 30, ~~2021~~2022 and September 30, ~~2020,~~2021, the Company recorded amortization of debt discounts of $~~1,232,641~~2,010,783 and $~~1,373,575~~1,232,641, respectively, as a charge to interest expense.

Convertible notes payable are comprised of the following:

Schedule of Convertible Notes Payable

Schedule of convertible notes payable
	September 30,			December 31,			September 30,			December 31,
	2021			2020			2022			2021
Lender	(Unaudited)			(Audited)			(Unaudited)			(Audited)
Convertible note payable - Power Up Lending Group	$	—		$	35,000
Convertible note payable – Labrys							$	—		$	99,975
Convertible note payable – FF Global Opportunities fund								—			243,750
Convertible note payable - Crown Bridge Partners	$	35,000		$	172,500			—			35,000
Convertible note payable – Labrys	$	537,500		$	—
Convertible note payable – Beach Labs								416,668			583,333
Convertible note payable - GS Capital Partners LLC	$	82,000		$	143,500			153,185			82,000
Convertible note payable – Pinnacle Consulting Services, Inc.								79,500			30,000
Convertible note payable – Geneva Roth	$	153,750		$	33,500			—			97,939
Convertible note payable - Robert L. Hymers III	$	110,000		$	70,000
Convertible note payable – Dutchess Capital	$	135,000		$	10,000			96,556			60,709
Convertible note payable – Redstart Holdings	$	—		$	109,000
Convertible note payable – Coventry								37,144			100,000
Convertible note payable - GW Holdings	$	120,750		$	98,175			—			120,750
Convertible note payable – FF Global Opportunities funds		268,750
Convertible note payable - St. George/Bucktown	$	567,500		$	1,160,726
Convertible note payable – Sixth Street Lending								—			60,737
Convertible note payable – Fourth Man LLC								—			—
Convertible note payable – 1800 Diagonal Lending LLC								194,795			—
Convertible note payable – Mast Hill Fund								550,000			—
Convertible note payable – Powerup Lending								13,054			—
Convertible note payable – Vista Point Services LLC								29,980			—
Convertible note payable – EBF Holdings, LLC								7,464			—
Convertible note payable – Fundamental Capital, LLC								5,055			—
Convertible note payable – Kingdom Kapital, LLC								5,608			—
Convertible note payable – Speedy Funding, LLC								2,516			—
Convertible note payable - St. George								3,994,878			3,914,878
Total	$	2,010,250		$	1,832,401			5,586,403			5,429,071
Less debt discounts	$	(950,807	)	$	(405,507	)		(756,068	)		(1,659,622	)
Net	$	1,059,443		$	1,426,894			4,830,335			3,769,449
Less current portion	$	(1,059,443	)	$	(1,426,894	)		(4,830,335	)		(3,769,449	)
Long term portion	$	—		$	—		$	—		$	—

Convertible Note ~~Payable-Firstfire~~Payable-Mast Hill Fund

In ~~July 2021,~~May 2022, the Company issued a convertible promissory note in the aggregate principal amount of $~~268,750~~550,000 to ~~Firstfire Global Opportunities~~Mast Hill Fund, ~~LLC~~L.P (“~~Firstfire”~~Mast Hill”). The promissory note accrues interest at 12% per annum, is due one year from the issuance date and includes an original issuance discount ~~and financing fees~~ in the aggregate amount of $~~44,888~~55,000. The Company also paid $39,700 in deferred financing fees and received $~~200,963~~455,300 of net proceeds. ~~The~~In the event of default, as defined in the agreement, the note is convertible ~~at any time~~ at a conversion price of ~~$0.005~~$0.0004 per share. The Company also issued a five-year warrants to purchase up to ~~38,174,715~~200,000,000 shares of its common stock to ~~Firstfire,~~Mast Hill, at an exercise price of $~~0.00704~~$0.0004 per share. The aggregate debt discount of $~~245,851~~391,835 is being amortized to interest expense over the respective terms of the note.

The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the investor, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note. The Company is prohibited from effecting an exercise of the warrant to the extent that, as a result of such exercise, the investor, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon exercise of the note. ~~Accrued interest on the note was $6,538~~ as

As of September 30, ~~2021.~~2022 the Company owed an aggregate of $550,000 of principal. As of September 30, 2022, the Company owed $21,542 in accrued interest.

Convertible Note Payable-Labrys

In June 2021, the Company issued a convertible promissory note in the aggregate principal amount of $537,500 to Labrys Funds, LP (“Labrys”). The promissory note accrues interest at 12% per annum, is due one year from the issuance date and includes an original issuance discount in the aggregate amount of $53,750. The Company also paid $33,750 in deferred financing fees and received $450,000 of net proceeds. The note is convertible at any time at a conversion price of $0.005 per share. The Company also issued a five-year warrants to purchase up to 76,349,431 shares of its common stock to Labrys, at an exercise price of $~~0.00704~~$0.00704 per share. In addition, the Company issued five-year warrants to purchase up to 76,349,431 shares of its common stock to an investment banker for services, which warrants have an exercise price of $0.008448 per share. The aggregate debt discount of $533,526 is being amortized to interest expense over the respective terms of the note.

~~Convertible Notes Payable-Power Up Lending~~

~~On June 25, 2020, the Company entered into a convertible promissory note with Power Up Lending Group Ltd. (“Power Up”). The promissory notes accrue interest at a rate of~~ 10% per annum, were due one year from the respective issuance date The note was convertible at a conversion price equal to 61% of the market price of the Company’s common stock, defined as the lowest trading price during the 15-trading-day period prior to the date of conversion. During the nine months ended September 30, 2021, the principal and accrued interest of $~~1,750~~ ~~were converted into~~ ~~15,978,261~~ ~~shares of common stock resulting in the settlement of $48,107~~ ~~of derivative liabilities.~~

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company owed an aggregate of $0 and $~~35,000~~99,975 of principal ~~respectively, on~~after the ~~notes.~~note was converted into common stock in full. As of September 30, ~~2021 and December 31, 2020,~~2022, the Company owed $0 ~~and $1,167, respectively, of~~in accrued ~~interest on the notes.~~interest.

~~Convertible Notes Payable-Redstart Holdings~~

~~During the year ended December 31, 2020, the Company entered into various convertible promissory notes with Redstart Holdings (“Redstart Holdings”) totaling a principal amount of $109,000. The promissory notes accrue interest at a rate of~~ 10% per annum, were due one year from the respective issuance date. The notes were convertible at a conversion price equal to 61% of the market price of the Company’s common stock, defined as the lowest trading price during the 15-trading-day period prior to the date of conversion. Upon the issuance of these convertible notes, the Company determined that the features associated with the embedded conversion option embedded in the notes should be accounted for at fair value, as a derivative liability, as the Company cannot determine if a sufficient number of shares of common stock would be available to settle all potential future conversion transactions. As of the funding date of each note, the Company determined the fair value of the embedded derivative associated with the convertibility of each note. The fair value of the embedded derivative has been added to the debt discount (total debt discount is limited to the face value of the debt) with any excess of the derivative liability recognized as interest expense.

The Company has the right to prepay the notes for an amount ranging from 125% to 140% multiplied by the outstanding balance (all principal and accrued interest) depending on the prepayment period (ranging from 1 to 180 days following the issuance date). The Company is prohibited from effecting a conversion of any note to the extent that, as a result of such conversion, the investor, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note. During the three months ended March 31, 2021, the Company repaid $~~109,000~~ ~~of principal and $43,204~~ ~~of total interest and penalties.~~

~~During the nine months ended September 30, 2021, the Company entered into an additional three convertible promissory notes with principal value of $226,250~~, which accrued interest at 8% per annum and were convertible at 65% of the average of the two lowest trading prices during the previous 15 day trading period. These notes along with accrued interest and early repayment penalties of $~~40,857~~ ~~were paid in full prior to September 30, 2021. As of September 30, 2021, the Company owes~~ 0 ~~amount to Redstart Holdings.~~

Convertible Notes Payable-Crown Bridge Partners

From October 1 through December 31, 2019, the Company issued convertible promissory notes in the aggregate principal amount of $225,000 to Crown Bridge Partners LLC (“Crown Bridge”). The promissory notes accrue interest at a rate of 10% per annum, were due one year from the respective issuance date and include an original issuance discount in aggregate amount of $22,500. Interest accrues from the issuance date, but interest shall not become payable until the notes becomes payable. The notes are convertible at any time at a conversion price equal to 60% of the market price of the Company’s common stock, defined as the lowest trading price during the 15-trading-day period prior to the conversion date. Upon the issuance of these convertible notes, the Company determined that the features associated with the embedded conversion option embedded in the debentures should be accounted for at fair value, as a derivative liability, as the Company cannot determine if a sufficient number of shares of common stock would be available to settle all potential future conversion transactions. As of the funding date of each note, the Company determined the fair value of the embedded derivative associated with the convertibility of each note. The fair value of the embedded derivative has been added to the debt discount (total debt discount is limited to the face value of the debt) with any excess of the derivative liability recognized as interest expense. The aggregate debt discount of $88,674 was being amortized to interest expense over the respective terms of the notes. The Company also issued a warrants to purchase up to 519,230 shares of the Company’s common stock with an initial exercise price of $0.26, with reset provisions based on issuances of common stock subsequent to the issuance date. Due to the reset provision, the exercise option of these warrants is also accounted for as a derivative liability. See Note 10.

During the nine months ended September 30, 2022, the Company repaid Crown Bridge $50,000 in full settlement of the outstanding note. As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company owed an aggregate of $~~35,000~~0 and $~~172,500~~35,000 of principal, respectively, on the notes. As of September 30, ~~2021 and December 31, 2020,~~2022, the Company owed ~~accrued interest of~~ $0 ~~and $6,500~~ ~~on the notes, respectively.~~in accrued interest.

Convertible Notes Payable-GS Capital Partners LLC

~~On December 19, 2019,~~In August 2021, the Company issued convertible promissory notes in the aggregate principal amount of $~~173,000~~82,000 to GS ~~Capital Partners LLC (“GS Capital”).~~Capital. The promissory notes ~~accrue~~bear interest at ~~a rate of~~ 10% per annum ~~were~~and is due one year from the respective issuance date and include an original issuance discount in an aggregate ~~amount~~ of $~~15,000~~7,000. ~~Pursuant~~In connection with the Note, the Company issued 5,000,000 warrants to purchase common stock with a fair value of $18,086, which was recorded as a debt discount. During the ~~notes, GS Capital~~nine months ended September 30, 2022, the Company issued 216,820,755 shares of common stock for the full settlement of the note along with the accrued interest on the note.

The Holder of this Note is entitled, at its option, at any time after cash payment, to convert all or any amount of the principal face amount of ~~the notes~~this Note then outstanding into shares of the Company's common stock (the "Common Stock") at a ~~conversion~~ price ("Conversion Price") for each share of Common Stock equal to 62% of the lowest trading price of the ~~Company's common stock~~Common Stock as reported on the National Quotations Bureau OTC ~~Markets or such other~~Marketplace exchange on which the Company’s shares are ~~then~~ traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the 20twenty prior trading days ~~prior~~including the day upon which a Notice of Conversion is received by the Company or its transfer. To the extent the Conversion Price of the Company’s Common Stock closes below the par value per share, the Company will take all steps necessary to solicit the consent of the stockholders to reduce the par value to the ~~date of conversion. During~~lowest value possible under law. The Company agrees to honor all conversions submitted pending this increase. In the ~~nine months ended September 30, 2021,~~event the Company ~~repaid $96,130~~experiences a DTC “Chill” on its shares, the Conversion Price shall be decreased to 52% instead of ~~principal and $4,622~~ ~~of accrued interest, and an additional $47,370~~ ~~of principal and $2,628~~ ~~of accrued interest were converted into~~ ~~11,357,987~~62% while that “Chill” is in effect. In no event shall the Holder be allowed to effect a conversion if such conversion, along with all other shares of ~~common stock, resulting in~~Company Common Stock beneficially owned by the ~~settlement~~Holder and its affiliates would exceed 4.99% of $~~129,285~~the outstanding shares of ~~derivative liabilities.~~the Common Stock of the Company (which may be increased up to 9.9% upon 60 days’ prior written notice by the Investor).

As of the funding date of each note, the Company determined the fair value of the embedded derivative associated with the convertibility of each note. The fair value of the embedded derivative has been added to the debt discount (total debt discount is limited to the face value of the debt) with any excess of the derivative liability recognized as interest expense. The aggregate debt discount of $~~166,193~~25,086 ~~was~~is being amortized to interest expense over the respective terms of the notes. ~~As of September 30, 2021 and December 31, 2020, the Company owed $~~0 ~~and $143,500~~ ~~of principal, respectively, on the notes. As of September 30, 2021 and December 31, 2020, the Company owed $~~0 ~~and $2,789~~ ~~in accrued interest on the notes, respectively.~~

~~Convertible Notes Payable-St. George Investments~~

~~On November 1, 2017, the Company issued a secured convertible promissory note in the principal amount of $601,420~~ ~~to St. George Investments LLC (“St. George”). The promissory note accrues interest at a rate of~~ 10~~% per annum compounded daily, was due upon maturity on September 10, 2018 and includes an original issue discount of $59,220. The promissory note was funded on November 11, 2017 for $542,200, net of the original issue discount and transaction costs. During the nine months ended September 30, 2021, $420,726~~ ~~of principal and $125,090~~ ~~of accrued interest, along with $1,297,664~~ ~~of derivative liabilities valued as of the respective conversion date were converted into an aggregate of~~ ~~181,938,599~~ ~~shares of the Company’s common stock. As of September 30, 2021, the Company owed~~ 0 ~~principal or accrued interest on this convertible promissory note.~~

~~On March 25, 2019, the Company issued a secured convertible promissory note in the principal amount of $580,000~~ ~~to St. George. The promissory note accrues interest at a rate of~~ 10~~% per annum compounded daily, was due upon maturity on~~In January ~~24, 2020 and includes an original issue discount of $75,000. In addition, the Company agreed to pay $5,000~~ ~~for legal, accounting and other transaction costs of the lender. During the nine months ended September 30, 2019, the promissory note was funded in the amount of $580,000~~ ~~resulting in net proceeds of $500,000. During the three months ended March 31, 2021, the principal balance of $580,000~~ ~~and accrued interest of $93,755~~ ~~were converted into~~ ~~288,888,889~~ ~~shares of common stock and resulted in the settlement of $1,207,773~~ ~~of derivative liabilities. As of September 30, 2021, the Company owed~~ 0 ~~principal or accrued interest on this convertible promissory note.~~

The Company entered into five convertible note agreements with Bucktown Capital, LLC, an affiliated entity of St. George in fiscal year 2020 and during the nine months ended September 30, 2021. The notes have total principal due of $~~727,500~~ ~~and bear interest at 8% per annum. The notes mature between December 2021 and March 2022. The notes are convertible at fixed prices, with $225,000~~ ~~of principal convertible at $0.002~~ ~~per share, $80,000~~ ~~convertible at $0.003~~ ~~per share, and $422,500~~ ~~convertible at $0.005~~ ~~per share.~~

~~As of September 30, 2021 and December 31, 2020, the Company owed $727,500~~ ~~of principal on these notes. As of September 30, 2021 and December 31, 2020, the Company owed $27,031~~ ~~of accrued interest on the above notes, respectively.~~

~~Convertible Notes Payable - Robert L. Hymers III~~

~~On September 8, 2020,~~2022, the Company issued convertible promissory notes in the aggregate principal amount of $105,000 to GS Capital. The promissory notes bear interest at 10% per annum and is due one year from the respective issuance date and includes an original issuance discount in aggregate of $10,000.

The Holder of this Note is entitled, at its option, at any time after cash payment, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the "Common Stock") at a price ("Conversion Price") for each share of Common Stock equal to $0.001. To the extent the Company’s Common Stock closes below $0.001 for three consecutive days, the conversion price will be reset to $0.005.

In February 2022, the Company issued a convertible promissory note in the aggregate principal amount of $70,000to GS Capital. The promissory notes bear interest at 8% per annum and is due one year from the respective issuance date and includes an original issuance discount in aggregate of $20,000.

As of September 30, 2022 and December 31, 2021, the Company owed an aggregate of $153,185 and $82,000 of principal, respectively. As of September 30, 2022, the Company owed accrued interest of $2,520 on these convertible promissory notes. During the nine months ended September 30, 2022, the lender converted $82,000 of principal and $5,013 of accrued interest into common stock, and the Company repaid $175,000 of principal with cash.

Convertible Notes Payable-St. George Investments

In January and March 2021, the Company entered into three convertible promissory notes in the aggregate amount of $567,500 of principal with Bucktown Capital LLC, entity controlled by the owners of St. George. The Company received net proceeds of $535,000. The notes mature in January and March 2022 and bear interest at 8% or 22% in the event of default. The notes are convertible at the lender’s option at any time at a fixed price of $0.002 per common share, subject to normal adjustment for common stock splits. As a result of default, the company recorded and additional $135,000 of principal on the note as interest expense during the nine months ended September 30, 2022.

Effective October 6, 2021, the Company issued a secured convertible promissory note in the amount of $3,492,378 with Chicago Ventures. The Company received cash proceeds of $1,100,000 and included an original issue discount of $574,916 and paid legal fees of $10,000. This note agreement was assumed by the Company as part of the VBF Acquisition discussed in Note 13 and includes $1,770,982 which reflects the initial consideration towards the future closing of the VBF Acquisition. The note bears interest at 8% and is due upon maturity on October 6, 2023. The note is convertible at a fixed price of $0.002 per share. In the event of default as defined in the agreement, the lender has the right to convertible principal and accrued interest at 70% of the lowest closing trading price over the 10 days preceding the conversion notice.

In March 2022, the Company issued a convertible promissory note in the amount of $266,500 of principal with Bucktown, Capital LLC. The Company received net proceeds of $240,000 after and original issue discount of $24,000 and fees of $2,500. The note matures in March 2023 and bear interest at 8% or 22% in the event of default. The note is convertible at the lender’s option at any time at a fixed price of $0.001 per common share, subject to normal adjustment for common stock splits.

In May 2022, the Company issued a convertible promissory note in the amount of $57,500 of principal with Bucktown, Capital LLC. The Company received net proceeds of $50,000 after and original issue discount and fees of $7,500. The note matures in February 2023 and bear interest at 8% or 22% in the event of default. The note is convertible at the lender’s option at any time at a fixed price of $0.001 per common share, subject to normal adjustment for common stock splits.

As of September 30, 2022 and December 31, 2021, the Company owed $3,994,878 and $3,914,878 of principal, respectively. As of September 30, 2022, the Company owed accrued interest of $311,118 on these convertible promissory notes. During the nine months ended September 30, 2022, the lender converted $325,000 of principal into common stock.

Convertible Notes Payable - Robert L. Hymers III

On December 27, 2021, the Company issued convertible promissory notes in the aggregate principal amount of $30,000 to Pinnacle Consulting Services, Inc. (“~~Hymers”~~Pinnacle”). The promissory note ~~accrues~~bears interest at ~~a rate of 10%~~12.5% per annum, and ~~matured~~is due one year from the respective issuance date of the note along with accrued and unpaid interest and includes an original issue discount (“OID”) of $5,000. Principal and interest to be payable as provided below on ~~September 8, 2021.Hymers has~~that date which is one year from the date of issuance (the “Maturity Date”).

For so long as there remains any amount due hereunder, the Holder shall have the option to convert all or any portion of the unpaid principal amount of ~~the notes,~~this Note, plus accrued interest (together with the unpaid principal amount, the “Converted Amount”), into shares of the Company’s common ~~stock at a~~stock. The conversion price (the “Conversion Price”) shall be equal to a ~~50% discount~~$0.006. The Conversion price, and any other economic terms will be adjusted on a ratchet basis if the Company offers a more favorable conversion or stock issuance price, prepayment rate, interest rate, additional securities, look back period or more favorable terms to ~~the lowest closing bid price of the Company’s common stock during the 15 day trading period prior to the date of conversion.~~ another party for any financings while this note is in effect.

The aggregate debt discount of $~~70,000~~5,000 is being amortized to interest expense over the respective ~~terms~~term of the ~~notes.~~note.

On ~~February 4, 2021, $70,000~~ ~~of principal and $4,286~~ ~~of accrued interest, along with $385,688~~ ~~of derivative liabilities valued as of the respective conversion date were converted into an aggregate of~~ ~~30,952,626~~ ~~shares of the Company’s common stock.~~

~~On February 4, 2021,~~August 6, 2022, the Company issued convertible promissory notes in the aggregate principal amount of $~~75,000~~79,500 to ~~Hymers.~~Pinnacle Consulting Services, Inc. (“Pinnacle”). The promissory ~~notes accrue~~note has a one time interest ~~at a rate~~charge of ~~10% per annum~~$7,950, and ~~mature on February 4, 2022. Hymers has~~is due April 1, 2023 (the “Maturity Date”) and includes an original issue discount (“OID”) of $16,250.

As of September 30, 2022, and December 31, 2021, the Company owed an aggregate of $79,500 and $30,000 respectively. As of September 30, 2022, the Company owed accrued interest of $7,950 on this convertible promissory note. During the nine months ended September 30, 2022, the lender converted $30,000 of principal and $1,870 of accrued interest into common stock.

Convertible Note Payable – GW Holdings Group

On January 6, 2020, the Company entered into a convertible promissory note in the principal amount of $57,750 with GW Holdings Group, LLC, a New York limited liability company (“GW”). GW has the option, beginning on the six month anniversary of the issuance date of, to convert all or any amount of the principal amountof the note then outstanding together with any accrued interest thereon into shares of the Company's common stock at a conversion price equal to a 40% discount of the lowest trading price for fifteen trading days prior to the date of conversion. The note bears interest at a rate of 10% per annum and include a $5,250 such that the price of the note was $57,750. During the nine months ended September 30, 2022, $75,750 of principal and $4,449 of accrued interest on the notes was converted into 100,248,801 shares of common stock.

As of September 30, 2022 and December 31, 2021, the Company owed principal of $~~0.07~~0. and $120,750, respectively. As of September 30, 2022, the Company owed $0 in accrued interest. During the nine months ended September 30, 2022, the lender converted $75,750 of principal and $4,449 of accrued interest into common stock, and the Company repaid $45,000 of principal and $27,068 of accrued interest with cash.

Convertible Note Payable- Beach Labs

On November 24, 2021, the Company issued a convertible promissory note in the aggregate principal amount of $625,000 to Beach Labs in connection with the modification of the cDistro acquisition agreement discussion in Note 13. The promissory note accrues interest at 10% per annum and is due four years from the issuance date.

The holder of this Note is entitled, at its option, at any time after cash payment, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the "Common Stock") at a price ("Conversion Price") for each share of Common Stock equal to 70% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer.

The Company determined the fair value of the embedded derivative associated with the convertibility of each note. The fair value of the embedded derivative has been added to the debt discount (total debt discount is limited to the face value of the debt) with any excess of the derivative liability recognized as interest expense. The aggregate debt discount of $~~75,000~~625,000 is being amortized to interest expense over the respective terms of the notes.

~~On August 11,~~

As of September 30, 2022, and December 31, 2021, the Company owed principal of $416,668and ~~Hymers modified~~$583,333, respectively. As of September 30, 2022, the ~~February 4,~~Company owed $55,215 in accrued interest. During the nine months ended September 30, 2022, the Company repaid $166,665 of this convertible note payable in cash.

Convertible Note Payable- Sixth Street Lending

On November 16, 2021, the Company issued a promissory note ~~so that~~in the aggregate principal amount of $60,737 to Sixth Street Lending (“SSL”). The promissory note has a one-time interest charge of 7,896 and is due one year from the issuance date. The Company paid $10,738 in deferred financing fees and received $50,000 of net proceeds. Upon default, the note is convertible at a price ("Conversion Price") for each share of Common Stock equal to 73% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the five prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer.

On January 10, 2022, the Company issued a promissory note in the aggregate principal amount of $43,750 to SSL. The promissory note bears interest at a rate of 8% and is due one year from the issuance date. The Company paid $3,750 in deferred financing fees and received $40,000 of net proceeds. The note is convertible at a price ("Conversion Price") for each share of Common Stock equal to $.0055 for the first 180 days and then at 65% of the average of the two lowest trading prices of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the fifteen prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer.

As of September 30, 2022, and December 31, 2021, the Company owed principal of $0 and $60,737, respectively. As of September 30, 2022, the Company owed $9,420 in accrued interest. During the nine months ended September 30, 2022, the Company repaid $60,737 of principal with cash.

Convertible Note Payable- Coventry

On December 29, 2021, the Company issued a promissory note in the aggregate principal amount of $100,000 to Coventry (“Coventry”). The promissory note has a one-time interest charge of 10,000 and is due one year from the issuance date. The Company paid $20,000 in deferred financing fees and received $80,000 of net proceeds. The note is convertible at a price ("Conversion Price") for each share of Common Stock equal to 90% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the five prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer. In January 2022, the Company issued 10,000,000 shares of common stock for deferred financing fees with a value of $13,000 which was recorded as a debt discount to be amortized over the remaining term of the note.

As of September 30, 2022 and December 31, 2021, the Company owed an aggregate of $37,144 and $100,000 of principal. As of September 30, 2022, the Company owed $10,000 in accrued interest. During the nine months ended September 30, 2022, the Company repaid $62,856 of principal with cash.

Convertible Note Payable-Firstfire

In July 2021, the Company issued a convertible promissory note in the aggregate principal amount of $268,750 to Firstfire Global Opportunities Fund LLC (“Firstfire”). The promissory note accrues interest at 12% per annum, is due one year from the issuance date and includes an original issuance discount and financing fees in the aggregate amount of $44,888 and received $200,963 of net proceeds. The note is convertible at any time at a conversion price ~~was equal~~of $0.005 per share. The Company also issued a five-year warrants to purchase up to 38,174,715 shares of its common stock to Firstfire, at an exercise price of $0.00704 per share. The aggregate debt discount of $~~0.002~~245,851~~. As~~ is being amortized to interest expense over the respective terms of the note.

The Company is prohibited from effecting a conversion of the note to the extent that, as a result of such conversion, the ~~modification, the Company recorded a loss on the extinguishment~~investor, together with its affiliates, would beneficially own more than 4.99% of the ~~old debt~~number of $~~123,564. Also on August 11, 2021, $75,000~~ ~~of principal and $3,884~~ ~~of accrued interest, along with $102,324~~ ~~of derivative liabilities valued as of the respective conversion date were converted into an aggregate of~~ ~~39,441,780~~ shares of the Company’s common ~~stock.~~stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note. The Company is prohibited from effecting an exercise of the warrant to the extent that, as a result of such exercise, the investor, together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon exercise of the note.

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company owed an aggregate of $0 and $~~70,000~~243,750 of ~~principal, respectively, to Hymers.~~principal. As of September 30, ~~2021 and December 31, 2020,~~2022, the Company owed $0 in accrued interest. During the nine months ended September 30, 2022, the lender converted $183,750 of principal and $~~1,005~~34,000 inof accrued interest oninto common stock, and the ~~notes, respectively.~~Company repaid $60,000 of principal with cash.

Convertible Note ~~Payable – GW Holdings Group~~Payable- Dutchess Capital Growth Fund LP

~~As of December 31, 2020,~~On May 25, 2021, the Company ~~owed~~issued a convertible promissory note in the aggregate principal amount of $~~98,175~~135,000 to Dutchess Capital Growth Fund LP (“Dutchess”). The promissory note accrues interest at 8% per annum, is due one year from the issuance date. The Company paid $13,750 in deferred financing fees and received $121,250 of ~~principal on convertible promissory notes issued to GW Holdings Group, LLC (“GW”). GW has the option, beginning on the~~net proceeds.

Beginning six ~~month anniversary of the~~months after date of ~~issuance,~~issue, the holder of this Note is entitled, at its option, at any time after cash payment, to convert all or any amount of the principal face amount of ~~the notes~~this Note then outstanding into shares of the Company's common stock (the "Common Stock") at a ~~conversion~~ price ("Conversion Price") for each share of Common Stock equal to ~~40% discount~~55% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the 15fifteen prior trading days ~~prior~~including the day upon which a Notice of Conversion is received by the Company or its transfer.

The Company determined the fair value of the embedded derivative associated with the convertibility of each note. The fair value of the embedded derivative has been added to the ~~date~~debt discount (total debt discount is limited to the face value of the ~~conversion. The notes accrue interest at a rate of 10% per annum. During the nine months ended September 30, 2021, GW converted all principal and $5,045~~ ~~of accrued interest into~~ ~~35,840,446~~ ~~shares~~debt) with any excess of the ~~Company’s common stock, resulting in the settlement~~derivative liability recognized as interest expense. The aggregate debt discount of $~~170,358~~135,000 is being amortized to interest expense over the respective terms of ~~derivative liabilities.~~the notes.

On ~~June 3, 2021,~~May 5, 2022, the Company ~~entered~~ issued a convertible promissory note in the aggregate amount of $~~120,750~~110,000 ~~to.~~to Dutchess. The promissory note accrues interest at 10% per annum, is due one year from the issuance date. The Company paid $10,000 in deferred financing fees and received $100,000 of net proceeds. The Company also issued 87,500,00 shares of common stock to the lender as a deferred finance cost, with a fair value of $61,250. The shares and deferred financing fees are being amortized through the maturity date of the note.

In the event of default on the note by the Company, the holder ~~has the~~of this Note is entitled, at its option, at any time after cash payment, to convert all or any amount of the principal face amount of ~~the note~~this Note then outstanding into shares of the Company's common stock (the "Common Stock") at a ~~conversion~~ price ("Conversion Price") for each share of Common Stock equal to $~~0.005~~80% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the ~~first 90~~25 prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer.

As of September 30, 2022 and December 31, 2021, the Company owed an aggregate of $96,556 and $~~0.002~~60,709 ~~thereafter.~~of principal. As of September 30, 2022, the Company owed $11,000 in accrued interest. During the nine months ended September 30, 2022, the lender converted $14,302 of principal and $815 of accrued interest into common stock, and the Company repaid $59,851 of principal and $14,302 of accrued interest with cash.

Convertible Note Payable- Geneva Roth Holdings

On July 28, 2021, the Company issued a promissory note in the aggregate principal amount of $169,125 to Geneva Roth Holdings (“Geneva”). The promissory note accrues interest at ~~a rate of~~ 10% per annum, ~~and included~~is due one year from the issuance date. The Company paid $~~15,750~~13,750 ofin deferred financing fees and ~~original issue~~received $153,750 of net proceeds. The Company also issued five-year warrants to purchase up to 10,147,500 shares of its common stock to Geneva, at an exercise price of $0.001 per share. The aggregate debt discount ~~which~~of $67,253 is being amortized to interest expense over the ~~term~~respective terms of the note. ~~This note was repaid~~

As of September 30, 2022 and December 31, 2021, the Company owed an aggregate of $0 and $97,939 of principal. As of September 30, 2022, the Company owed $0 in ~~full during~~accrued interest. During the nine months ended September 30, ~~2021.~~

~~On August 24, 2021,~~2022, the Company ~~entered~~repaid $97,938 of principal and $40,898 in interest in cash.

Convertible Note Payable - Fourth Man LLC

In January 2022, the Company issued a convertible promissory note in the aggregate principal amount of $~~120,750~~60,000 to ~~GW. GW has~~Fourth Man, LLC (“Fourth Man”). The promissory note accrues interest at 12% per annum, is due one year from the ~~option to convert all or any~~issuance date and includes an original issuance discount in the aggregate amount of ~~the principal face amount~~$6,000. The Company also paid $6,240 in deferred financing fees and received $47,760 of ~~the~~net proceeds. The note ~~then outstanding into shares of the Company's common stock~~is convertible at any time at a conversion price ~~equal to~~of $0.0006 per share. The Company also issued 25,000,000 shares of its common stock for deferred financing fee. The aggregate debt discount of $~~0.0025~~42,240 ~~for the first 90 days and $0.001~~ ~~thereafter. The note accrues interest at a rate of~~ 10~~% per annum and includes a $15,750~~ ~~original issue discount which~~ is being amortized to interest expense over the ~~term~~respective terms of the ~~note~~note.

As of September 30, ~~2021 and December 31, 2020,~~2022, the Company owed an aggregate of $0 of principal. As of September 30, 2022, the Company owed $~~120,750~~0 in accrued interest. During the nine months ended September 30, 2022, the lender added $15,000 of principal as a result of default and converted $75,000 of principal and $14,250 of accrued interest into common stock

Convertible Note Payable- 1800 Diagonal Lending LLC

On May 18, 2022, the Company issued a promissory note in the aggregate principal amount of $137,037 to 1800 Diagonal Lending LLC (“DLL”). The promissory note has a one-time interest charge of $16,444 and is due one year from the issuance date, and had an original issue discount of $18,433. The Company paid $3,750 in deferred financing fees and received $100,000 of net proceeds. Upon default, the note is convertible at a price ("Conversion Price") for each share of Common Stock equal to 73% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the five prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer.

On July 29, 2022, the Company issued a promissory note in the aggregate principal amount of $57,758 to 1800 Diagonal Lending LLC (“DLL”). The promissory note has a one-time interest charge of $7,509 and is due one year from the issuance date, and had an original issue discount of $9,645. The Company paid $4,250 in deferred financing fees and received $46,863 of net proceeds. Upon default, the note is convertible at a price ("Conversion Price") for each share of Common Stock equal to 73% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the five prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer.

As of September 30, 2022, and December 31, 2021, the Company owed principal of $194,795 and $~~98,175~~0, respectively. As of September 30, 2022, the Company owed $23,953 in accrued interest.

Revenue share agreement – Money Well Group

In March 2022, the Company entered into a revenue share in the aggregate principal amount of $89,940 to Money Well Group (“Money Well”). The agreement requires daily payments in the amount of $1,285 and includes an original issuance discount in the aggregate amount of $35,940 and received $54,000 of net proceeds. The aggregate debt discount of $35,940 is being amortized to interest expense over the respective terms of the note. The note was fully repaid in cash by September 30, 2022.

Revenue share agreement – Vista Point Services LLC

On August 5, 2022, the Company entered into a revenue share in the aggregate principal ~~respectively, on~~amount of $37,475 to Vista Point Services LLC. The agreement requires daily payments in the amount of $341 and includes an original issuance discount in the aggregate amount of $14,975 and received $22,500 of net proceeds. The aggregate debt discount of $14,975 is being amortized to interest expense over the respective terms of the note. As of September 30, ~~2021 and December 31, 2020, the Company owed $959~~ ~~and $818~~ ~~in accrued interest on~~2022, the note ~~respectively.~~balance was as $29,980.

Revenue share agreement – Everest Business Funding LLC

~~Convertible Debt~~ On August 9 2022, the Company entered into a revenue share in the aggregate principal amount of $35,000 to EBF Holdings LLC. The agreement requires daily payments in the amount of $280 and includes an original issuance discount in the aggregate amount of $10,725 and received $24,275 of net proceeds. The aggregate debt discount of $10,725 is being amortized to interest expense over the respective terms of the note. As of September 30, 2022, the note balance was as $7,464.

Revenue share agreement – Fundamental Capital, LLC

On September 13, 2022, the Company entered into a revenue share in the aggregate principal amount of $91,994 to Fundamental Capital LLC. The agreement requires weekly payment in the amount of $920 and includes an original issuance discount in the aggregate amount of $26,284 and received $65,710 of net proceeds. The aggregate debt discount of $26,284 is being amortized to interest expense over the respective terms of the note. As of September 30, 2022, the note balance was as $5,055.

Revenue share agreement – Kingdom Kapital LLC

On July 7, 2022, the Company entered into a revenue share in the aggregate principal amount of $44,970 to Kingdom Kapital LLC. The agreement requires daily payments in the amount of $600 and includes an original issuance discount in the aggregate amount of $14,970 and received $30,000 of net proceeds. The aggregate debt discount of $14,970 is being amortized to interest expense over the respective terms of the note. As of September 30, 2022, the note balance was as $5,608.

Revenue share agreement – Speedy Funding LLC

On August 29, 2022, the Company entered into a revenue share in the aggregate principal amount of $55,965 to Speedy Funding LLC. The agreement requires daily payments in the amount of $499 and includes an original issuance discount in the aggregate amount of $20,965 and received $35,000 of net proceeds. The aggregate debt discount of $20,965 is being amortized to interest expense over the respective terms of the note. As of September 30, 2022, the note balance was as $2,516.

Summary:

The Company has identified the embedded derivatives related to the ~~above-described~~above described notes and warrants. These embedded derivatives included certain conversion and reset features. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of the note and to fair value as of each subsequent reporting date.

~~At September 30, 2021, the Company determined the aggregate fair value of embedded derivatives to be $432,024. The fair values were determined using the Binomial Option Pricing Model based on the following assumptions: (1) dividend yield of~~ 0~~%; (2) expected volatility of~~ ~~95.1% to~~ ~~198.2%, (3) weighted average risk-free interest rate of~~ ~~0.05% to~~ ~~0.28%, (4) expected life of~~ ~~0.05~~ to ~~4.7~~ ~~years, (5) conversion prices of $0.0004~~ ~~to $0.007~~ ~~and (6) the Company's common stock price of $0.0029~~ ~~per share as of September 30, 2021.~~

~~For the nine months ended September 30, 2021, the Company recorded a loss on the change in fair value of derivative liabilities of $1,101,640~~ ~~and a loss of $1,035,115~~ related to the excess of the fair value of derivatives at issuance above convertible note principal as a charge to interest expense. For the nine months ended September 30, 2020, the Company recorded a gain on change in fair value of derivative liabilities of $~~1,142,272, a loss of $395,607~~ ~~related to the excess of the fair value of derivatives at issuance above convertible note principal as a charge to interest expense, and amortization of debt discounts of $1,028,931~~ ~~as a charge to interest expense.~~

~~NOTE 9.~~ ~~OTHER DEBT~~

~~Paycheck Protection Program Loan~~

~~During the quarter ended June 30, 2020, the Company's wholly-owned subsidiary, H Smart Inc., received a $35,500~~ ~~loan as part of the Paycheck Protection Program (“PPP”) offered by the Small Business Administration.~~

~~The Company has elected to account for the PPP loan pursuant to FASB ASC 470,~~ ~~Debt~~~~, or as a government grant by analogy to International Accounting Standard 20,~~ ~~Accounting for Government Grants and Disclosure of Government Assistance~~.

Following the guidance in ASC 470, the Company has recognized the entire loan amount as a liability on the balance sheet, with interest accrued and expensed over the term of the loan. The Company will not impute additional interest at a market rate because transactions where interest rates are prescribed by governmental agencies are excluded from the scope of ASC 835-30.

~~For purposes of derecognizing the liability, ASC 470 refers to the extinguishment guidance in ASC 405,~~ ~~Liabilities~~.

~~Based on that guidance, the loan would remain recorded as a liability until either of the following criteria are met:~~

~~The Company has been legally released from being the primary obligor under the liability.~~

~~The Company pays the lender and is relieved of its obligation for the liability.~~

Because the Company will not be legally released from being the primary obligor of the PPP loan until forgiveness is actually granted, income from the extinguishment of the loan would only be recognized once the Company's application for forgiveness is approved. If the forgiveness application is approved, any resulting amount forgiven would be recognized and separately disclosed in the income statement as a gain on extinguishment. As of September 30, 2021 the balance of the PPP loan was $0 ~~as the loan was formally forgiven by the Small Business Administration.~~

~~NOTE~~ See Note 10.~~SUBSCRIPTIONS PAYABLE~~

Subscriptions Payable

On September 30, 2020, the Company entered into a shareexchange agreement (“~~Cannabis Global~~Share Exchange Agreement”) with Cannabis Global, Inc. (“CBGL”) dated September 30, 2020, to acquire the number of shares of ~~Cannabis Global’s~~CBGL’s common stock equal in value to $650,000 based on the closing price for the trading day immediately preceding the effective date of the Cannabis Global Exchange Agreement, in exchange for the number of shares of Company common stock equal in value to $650,000 based on the closing price for the trading day immediately preceding the effective date of the Cannabis Global Exchange Agreement. For both parties, the Cannabis Exchange Agreement contains a “true-up” provision requiring the issuance of additional common stock in the event that a decline in the market value of either parties’ common stock should cause the aggregate value of the stock acquired pursuant to the Cannabis Global Exchange Agreement to fall below $650,000.

~~On February 26, 2021, the Company entered into the~~ Share Exchange Agreement, ~~with ECOX dated February 26, 2021, to acquire the number of shares of ECOX’s common stock, equal in value to $650,000~~ ~~based on the per-share price of $0.06~~, in exchange for the number of shares of Company common stock equal in value to $650,000 based on the closing price for the trading day immediately preceding the effective date of the Share Exchange Agreement. For both parties, the Share Exchange Agreement contains a “true-up” provision requiring the issuance of additional common stock in the event that a decline in the market value of either parties’ common stock should cause the aggregate value of the stock acquired pursuant to the Share Exchange Agreement to fall below $650,000.

On February 26, 2021, the Company entered into a share exchange agreement (“ECOX Share Exchange Agreement”) with Eco Innovation Group, Inc. (“ECOX”) dated February 26, 2021, to acquire the number of shares of ECOX’s common stock, equal in value to $650,000 based on the per-share price of $0.06, in exchange for the number of shares of Company common stock equal in value to $650,000 based on the closing price for the trading day immediately preceding the effective date of the ECOX Share Exchange Agreement. For both parties, the ECOX Share Exchange Agreement contains a “true-up” provision requiring the issuance of additional common stock in the event that a decline in the market value of either parties’ common stock should cause the aggregate value of the stock acquired pursuant to the ECOX Share Exchange Agreement to fall below $650,000. Based on the value of ECOX shares in the market as of September 30, 2021, the Company recorded a value for additional shares owed to ECOX pursuant to the ECOX Share Exchange Agreement of $~~754,961~~329,572 as a subscription agreement along with a loss from equity investment of $~~735,178~~391,194. As of September 30, ~~2021,~~2022 41,935,484 shares of the Company’s common stock have been issued. As a result, the balance of subscriptions payable as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 was $~~754,961~~752,961 and $~~670,000~~989,594, respectively.

NOTE 119 – ~~STOCKHOLDERS~~STOCKHOLDERS’ DEFICIT

Preferred Stock

The Company is authorized to issue 50,000,000 shares of $0.001 par value preferred stock (“Series A Preferred Stock”) as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 of which 10,000,000 shares are outstanding as of September 30, ~~2021.~~2022. As of September 30, 2022 and December 31, 2021, the Company is authorized to issue 5,000,000 shares of Class B Preferred Stock of which 2,000,000 shares are issued and outstanding as of September 30, 2022.

Each share of Class A Preferred Stock is entitled to 100 votes on all matters submitted to a vote to the stockholders of the Company and does not have conversion, dividend or distribution upon liquidation rights.

~~As of September 30, 2021 and December 31, 2020, the Company is authorized to issue~~ ~~5,000,000~~ ~~shares of Class B Preferred Stock of which~~ ~~2,000,000~~ ~~shares are issued and outstanding as of September 30, 2021.~~ Each share of Class B Preferred Stock is entitled to 1,000 votes on all matters submitted to a vote to the stockholders of the Company and does not have conversion, dividend or distribution upon liquidation rights.

Common stock

The Company is authorized to issue As32,000,000,000 shares of no par value common stock as of September 30, 2022. As of December 31, 2021, the Company was authorized to issue ~~15,000,000,000~~10,000,000,000 shares of $0.001 par value common stock. ~~On October 21, 2021, the Company increased its authorized common shares to 22,000,000,000.~~ As of September 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, the Company had ~~6,373,157,821~~1,518,463,309 and ~~3,136,774,861~~7,122,806,264 shares of common stock issued and outstanding, respectively. As of November ~~15, 2021,~~14, 2022, there were ~~6,621,939,591~~xx,xxx,xxx, shares of the Company’s common stock issued and outstanding.

During the nine months ended September 30, ~~2021,~~2022, the Company issued an aggregate of ~~142,946,860~~122,256,410 shares of its common stock for services with an estimated fair value of $~~661,292~~170,000.

During the nine months ended September 30, ~~2021,~~2022, the Company issued an aggregate of ~~905,667,530~~2,109,530,915 shares of its common stock, including ~~153,227,150~~shares related to warrants accounted for as liabilities, in settlement of $1,214,277 of principal on convertible notes payable, accrued interest of $~~343,011~~128,397, and reclassified derivative liabilities of $~~6,270,052~~233,069 to ~~additional paid in capital~~common stock in connection with the conversions.

During the nine months ended September 30, ~~2021, the Company issued a net amount of~~ ~~3,027,031~~ ~~shares of its common stock in settlement of liabilities with an estimated fair value of $8,623, which included 10,892,411 related to shares to be issued as of December 31, 2020, the cancellation of~~ ~~8,755,714~~ ~~shares for previous settlements, and 890,334 new shares issued for settlement of accounts payable.~~

~~During the nine months ended September 30, 2021, the Company issued~~ ~~22,500,000~~ ~~of its common stock upon the settlement of related party notes payable and accounts payable with an estimated fair value of $141,750~~.

~~During the nine months ended September 30, 2021, the Company issued~~ ~~462,844,406~~ ~~of its common stock upon the exercise of warrants on a cash basis, including warrant liabilities with an estimated value of $63,500~~.

~~During the nine months ended September 30, 2021,~~2022, the Company sold ~~742,297,599~~3,458,888,889 of its common stock for an aggregate value of $~~1,638,126~~1,218,315.

During the nine months ended September 30, ~~2021,~~2022, the Company issued ~~41,935,484~~387,821,466 of its common stock ~~with a~~for an aggregate value of $~~650,000~~276,687 ~~and will issue an additional~~ ~~117,580,554~~ ~~shares~~ for ~~investments with an estimated value of $735,178 related to the Share Exchange Agreement. The investment balance is $650,000, with a liability of $754,961 included in subscriptions payable related to the value of the additional shares to be issued. The Company recognized a loss of $735,178~~ ~~related to these additional shares during the nine months ended September 30, 2021.~~

deferred finance costs.

During the nine months ended September 30, ~~2021,~~2022, the Company ~~issued~~ ~~650,000,000~~ ~~shares of~~reacquired its common stock ~~with a value~~ of $~~650,000~~60,000 ~~for investments with an estimated value of $650,000~~ ~~related to the Cannabis Global Exchange Agreement.~~

~~The Company was authorized to issue~~ ~~15,000,000,000~~ ~~shares of $0.001~~ ~~par value common stock~~returned as ~~of September 30, 2021, and as of October 21, 2021, is authorized to issue~~ ~~22,000,000,000~~ ~~shares of common~~Treasury stock. ~~As of December 31, 2020, the Company was authorized to issue~~ ~~5,000,000,000~~ ~~shares of $0.001~~ ~~par value common stock. As of September 30, 2020 and December 31, 2019, the Company had~~ ~~469,288,934~~ ~~and~~ ~~77,958,081~~ ~~shares of common stock issued and outstanding, respectively.~~

~~During the nine months ended September 30, 2020, the Company issued an aggregate of~~ ~~8,333~~ ~~shares of its common stock to settle amounts previously accrued with an estimated fair value of $6,700~~.

During the nine months ended September 30, ~~2020,~~2022, the ~~Company issued an aggregate of~~Company’s officer cancelled ~~156,444,047~~30,000,000 ~~shares of its common stock for services with an estimated fair value of $665,767~~.

in commons stock.

During the nine months ended September 30, ~~2020,~~2022, the Company had Debt discount from warrants issued ~~an aggregate of~~ ~~1,469,725,298~~ ~~shares of its common stock in settlement of~~with convertible notes payable ~~accrued interest and embedded derivative liabilities of~~with an aggregate value of $~~6,522,619~~152,587.

During the nine months ended September 30, ~~2020,~~2022, the Company issued ~~21,384,103~~717,866,439 of its ~~common~~Common stock ~~upon the conversion of related party notes payable with~~for contingent consideration for an ~~estimated fair~~aggregate value of $~~50,613~~500,000.

During the nine months ended September 30, ~~2020,~~2022, the Company issued ~~51,054,214~~180,486,830 ~~shares~~ of its common stock ~~upon the exercise~~for subscriptions payable for an aggregate value of ~~warrants on a cashless basis.~~$234,633.

During the nine months ended September 30, ~~2020,~~2022, the Company issued ~~10,293,843~~1,333,508,170 ~~shares~~ of its common stock infor the settlement of accounts payable for an aggregate value of $273,403.

During the nine months ended September 30, 2022, the Company had 218,532,087 of its common stock cancelled and returned to treasury as a result of the settlement of a legal case ~~with an estimated fair value~~between the Securities and Exchange Commission and the holder of $~~1,283,632~~.

~~On January 17, 2020,~~ the ~~Company entered into an amendment of an existing convertible promissory note issued~~shares, whereby the holder was required to ~~Paladin. The Company authorized the issuance of a warrant to purchase up to~~ ~~5,750,000~~forfeit and cancel all outstanding shares its held of the Company’s ~~common stock, which warrant could be exercised on a cashless basis. This warrant was exercised during the three months ended June 30, 2020.~~Common Stock

Options

As of September 30, ~~2021,~~2022, the Company has no outstanding stock options.

Warrants

The following table summarizes the stock warrant activity for the nine months ended September 30, ~~2021:~~2022:

Summarizes the Stock Warrant Activity

Shares
Weighted-Average
Exercise Price

Weighted Average
Remaining
Contractual Term

Aggregate
Intrinsic Value
Outstanding at December 31, 2020 293,054,702 $ 0.0011 2.22 $ 1,023,306
Granted 133,107,371 0.0084 5.00 —
Increase due to reset provision (9,722,222 ) 0.0004 2.41 —
Exercised (271,137,466 ) 0.01 2.53 1,427,826
Outstanding at September 30, 2021 145,302,385 $ 0.0033 3.05 $ 220,650
Exercisable at September 30, 2021 145,302,385 $ 0.0033 3.05 $ 220,650

Schedule of stock warrant activity
	Shares			Weighted-Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2021		145,302,385		$	0.0033		2.80	$	70,200
Granted		200,000,000			0.0004		5.00		—
Cancelled/Expired		(87,544,445	)		0.0011		—		—
Increase due to reset provision		—			—		—		—
Exercised		—			—		—		—
Outstanding at September 30, 2022		257,757,940		$	0.002		4.43	$	—
Exercisable at September 30, 2022		2,577,577,940		$	0.002		4.43	$	—

Certain warrants issued to debt holders have reset provisions whereby upon subsequent issuances of common stock at a price below the current exercise price, the number of warrants increase and the exercise price is reduced to the new price. The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s stock price of $~~0.0029~~0.0003 as of September 30, ~~2021,~~2022, which would have been received by the option holders had those option holders exercised their options as of that date.

NOTE 1210 — FAIR VALUE MEASUREMENT

ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

All items required to be recorded or measured on a recurring basis are based upon level 3 inputs.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

Upon adoption of ASC 825-10, there was no cumulative effect adjustment to beginning retained earnings and no impact on the financial statements.

The carrying value of the Company’s cash and cash equivalents, accounts receivable, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company did ~~not~~not have any items that would be classified as level 1 or 2 disclosures.

The Company recognizes its derivative liabilities as level 3 and values its derivatives using the methods discussed in Note 3. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed in Note 3 are that of volatility and market price of the underlying common stock of the Company.

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company did not 0have any derivative instruments that were designated as hedges.

The derivative liability as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, in the amount of $~~432,024~~956,795 and $~~4,426,057~~749,756, respectively, have a level 3 classification.

The fair values were determined using the Binomial Option Pricing Model based on the following assumptions: (1) dividend yield of 0%; (2) expected volatility of 171.74% to 312.54%, (3) weighted average risk-free interest rate of 2.51% to 4.25%, (4) expected life of 0.5 to 4.0 years, (5) conversion prices of $0.00013 to $0.006 and (6) the Company's common stock price of $0.0004 per share as of September 30, 2022.

For the nine-month period ended September 30, 2022, the Company recorded a loss on the change in fair value of derivative liabilities of $440108, which included a loss of $244,905 related to convertible notes payable, a gain of $165,175 related to the settlement of the fair value of derivatives as a result of repayments on the convertible notes, and also recognized a loss of $360,378 related to the excess of the fair value of derivatives at issuance above convertible note principle as a charge to interest expense. During the nine months ended September 30, 2022, derivative liabilities of $233,069 were reclassified to common stock as a result of conversions of the underlying notes payable into common stock.

The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities for the nine months ended September 30, ~~2021:~~2022:

Summary of Changes in Fair Value of Derivative Liabilities

Debt Derivative
Balance, January 1, 2021 $ 4,426,057
Increase resulting from initial issuance of additional convertible notes payable 1,824,340
Decreases resulting from conversion of convertible notes payable (6,270,052 )
Decreases resulting from payoff of convertible notes payable (649,961 )
Loss from change in fair value included in earnings 1,101,640
Balance, September 30, 2021 $ 432,024

Schedule of summary of changes in fair value of derivative liabilities
	Debt Derivative
Balance, January 1, 2022	$	749,756
Increase resulting from initial issuance of additional convertible notes payable recorded as debt discount		184,921
Increase resulting from initial issuances of additional convertible notes payable recorded as day one loss		59,984
Decreases resulting from conversion or payoff of convertible notes payable		(233,069	)
Decreases resulting from payoff of convertible notes payable		(165,175	)
Loss due to change in fair value included in earnings		360,378
Balance, September 30, 2022	$	956,795

~~The total impact to net loss during the nine months ended September 30, 2021 was a loss of $451,679~~ ~~from the net impact of the change in fair value and decreases from payoffs of convertible notes payable.~~ Fluctuations in the Company’s stock price are a primary driver for the changes in the derivative valuations during each reporting period. During the period ended September 30, ~~2021,~~2022, the Company’s stock price decreased significantly from initial valuations. As the stock price decreases for each of the related derivative instruments, the value to the holder of the instrument generally decreases. Stock price is one of the significant unobservable inputs used in the fair value measurement of each of the Company’s derivative instruments.

NOTE 1311 — RELATED PARTY TRANSACTIONS

The Company’s current officers and stockholders advanced funds to the Company for travel related to business meetings and due diligence with respect to acquisition targets and working capital purposes. As of September 30, ~~2021~~2022 and December 31, ~~2020, respectively, there were~~ 0 ~~balances~~2021, the balance due to officers for travel and working capital ~~purposes.~~purposes was $13,114 and $0, respectively.

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, accrued compensation due to officers and executives included as accrued compensation was $0333,951 and $~~79,214~~42,925, respectively.

Related party sales contributed $0 and $~~3,262~~0 to revenues for the ~~three~~nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, while related party sales contributed $0 and $~~11,565~~0 to revenues for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Related party sales ~~are~~were comprised of sales of the Company’s hempSMART products to the Company’s directors, officers, employees, and sales team members. No related party sales were for services. All sales were made at listed retail prices and were for cash consideration.

~~NOTE 14 –~~ ~~ACQUISITION~~

On June 29, 2021, the Company, cDistro Merger Sub, Inc., a Nevada corporation and a wholly-owned subsidiary of the Company (“Merger Sub”), and cDistro, Inc., a privately-held Nevada corporation engaged in the hemp and CBD product distribution business (“cDistro”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which, among other things, Merger Sub merged with and into cDistro on September 30, 2021, with cDistro becoming a wholly-owned subsidiary of the Company and the surviving corporation in the merger (the “Merger”). The Merger is intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended.

~~Contingent Consideration - Earnout Agreement~~

In connection to the Merger, the Company and the securityholder of cDistro (the “cDistro Stockholder”) entered into an earnout agreement dated June 29, 2021 (the “Earnout Agreement”), whereby the Company agreed to issue additional shares of its common stock to the cDistro Stockholder as compensation for the Merger conditioned upon the achievement of certain gross revenue milestones. If cDistro meets revenue targets of $~~600,000~~ ~~per quarter, up to a total of $2,400,000~~ ~~of revenue, the Company will issue shares worth $250,000~~ ~~upon the achievement each quarterly revenue target, with the number of shares to be issued at each payout date calculated based on the lessor of~~ ~~220,970,059~~ ~~shares of common stock or a~~ 30% discount to the average close price of the Company’s common stock for the 20-day period immediately preceding the payout date of the earnout. In accordance with ASC 805, the Company accounts for this earnout agreement as contingent consideration based on the number of shares calculated as owed as of each quarter end, with changes in value to be recorded in earnings each reporting period.

~~Leak-Out Agreement~~

On June 29, 2021, in connection with the Merger and the Earnout Agreement, the cDistro Stockholder entered into a Lock-Up and Leak-Out Agreement with the Company pursuant to which, among other thing, such stockholder agreed to certain restrictions regarding the resale of the common stock issued pursuant to the Merger for a period of six months from the date of the Merger.

~~Employment Agreement~~

On June 29, 2021, in connection with the Merger, the Company and the Chief Executive Officer of cDistro entered into an employment agreement, pursuant to which that employee will serve as cDistro’s Chief Executive Officer for a three-year term.

The acquisition of cDistro is being accounted for as a business combination under ASC 805. The Company is continuing to gather evidence to evaluate what identifiable intangible assets were acquired, such as a customer list, and the fair value of each, and expects to finalize the fair value of the acquired assets within one year of the acquisition date.

~~The aggregate preliminary fair value of consideration for the cDistro acquisition was as follows:~~

Schedule of aggregate preliminary fair value
Amount
Cash, net of cash acquired of $94,450 $ 155,550
Contingent Consideration - Earnout Agreement 1,000,000
265,164,070 shares of common stock 1,617,501
Total preliminary consideration transferred $ 2,773,051

~~During the nine months ended September 30, 2021, the Company has paid $250,000~~ ~~of the cash consideration.~~

~~The following information summarizes the preliminary allocation of the fair values assigned to the assets acquired and liabilities assumed at the acquisition date:~~

Schedule summarizes the preliminary allocation of the fair values

Accounts Receivable $ 26,875
Inventory 7,816
Other Assets 518
Goodwill 2,925,884
Accounts payable (181,042 )
Other accrued liabilities (7,000 )
Net assets acquired $ 2,773,051

~~Unaudited Pro Forma Financial Information~~

The following table sets forth the pro-forma consolidated results of operations for the three and nine months ended September 30, 2021 and 2020 as if the cDistro acquisition occurred on January 1, 2020. The pro forma results of operations are presented for informational purposes only and are not indicative of the results of operations that would have been achieved if the acquisitions had taken place on the dates noted above, or of results that may occur in the future.

Schedule of pro-forma consolidated results of operations

Three months ended
September 30,

Nine months ended
September 30,
2021 2020 2021 2020
Revenue $ 442,178 $ 62,816 $ 886,417 $ 297,037
Operating loss (1,419,665 ) (580,152 ) (3,275,525 ) (1,928,929 )
Net loss (1,764,592 ) (1,861,211 ) (7,297,520 ) (4,247,716 )
Net loss per common share $ (0.00 ) $ (0.00 ) $ (0.00 ) $ (0.01 )
Weighted Average common shares outstanding 5,266,505,915 1,444,024,204 5,057,632,261 783,425,637

NOTE 1512 – SUBSEQUENT EVENTS

~~Amendment to Lock-Up Agreement.~~

~~On October 1, 2021,~~The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company ~~entered into a First Amendment to Lock-Up Agreement between~~did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the ~~Company and ECOX, dated and effective October 1, 2021which amends that certain Lock-Up Agreement entered into between the Company and ECOX on February 26, 2021.~~financial statements, except as disclosed.

~~The Lock-Up Agreement was ancillary to the share exchange agreement dated February 26, 2021 between the Company and ECOX, whereby the parties exchanged common stock equal in value to $650,000~~, subject to the restrictions of the Lock-Up Agreement. The Lock-Up Agreement provided for an initial lock-up period of 12 months following its effective date, and a subsequent sell volume limitation of the quantity of shares equaling an aggregate maximum sale value of $~~20,000~~ ~~per week, or $80,000~~ ~~per month until all shares are sold.~~

The Amended Lock-Up Agreement amends the Lock-Up Agreement by amending the initial lock-up period from 12 months following its effective date to 6 months following its effective date. All other terms and conditions of the Lock-Up Agreement remain unaffected.

~~Salinas Diversified Ventures~~

On October 6, 2021, the Company, through its wholly owned subsidiary Salinas Diversified Ventures, Inc., a California corporation, entered into an Asset Purchase Agreement, Management Services Agreement, Cooperation Agreement and Employment Agreement with VBF Brands, Inc., a California corporation (“VBF”), a wholly owned subsidiary of Sunset Island Group, Inc., a Colorado corporation (“SIGO”), and Ms. Lori Livacich, individually, and as an affiliate of both VBF and SIGO (“Livacich”). No material relationship exists between the parties, other than with respect to the material definitive agreements.

VBF and SIGO agreed to sell and transfer to the Company all of VBF’s outstanding stock, and, by virtue of the Management Services Agreement, appoint Mr. Jesus Quintero as President of VBF, vesting management and control of VBF’s licensed cannabis operations in the Company. Concurrently, VBF and Livacich entered into a Cooperation Agreement, whereby VBF and Livacich agreed to cooperate to facilitate the transfer of ownership of VBF, which includes licenses issued by the City of Salinas, County of Monterey, and the State of California, to operate a cannabis nursery, cultivation facility and manufacturing and distribution operations to the Company. The Company also agreed to retain Livacich as Chief Executive Officer for a term of two years and agreed to compensate her with a salary including a signing cash bonus of $~~250,000, and a $250,000~~ ~~performance cash bonus payable after six months after the Effective Date.The bonus is conditioned upon Livacich meeting an agreed to “Net Revenue” target of $1,000,000~~ from VBF’s operations during the six month period after closing of the Asset Purchase Agreement, and her compliance with the terms and conditions of this Asset Purchase Agreement, the Management Services Agreement and the Cooperation Agreement.

As consideration for the transaction, the Company agreed to assume two secured convertible promissory notes issued by SIGO with St. George. The first note was issued December 8, 2017, in the original principal amount of $~~170,000~~ ~~(“Note 1”); and the second note was issued February 13, 2018, in the original principal amount of $4,245,000~~ ~~(“Note 2”). As part of Note 2, SIGO also issued warrants to St. George to purchase shares in SIGO, and~~ 50 shares of Series A Preferred Stock in SIGO. St. George agreed to cancel the warrants and preferred shares upon the Company’s assumption of Notes 1 and 2 (collectively, the “SIGO Notes”). On October 6, 2021, the Company issued and sold a convertible promissory note to St. George in the principal amount of $~~3,455,178. As partial consideration for the purchase of the securities, St. George assigned and transferred to the Company, who agreed to receive and accept, the SIGO Notes, valued at $1,770,982. The Company agreed to pay an original issue discount of $574,196~~ ~~and $10,000~~ ~~in legal fees. St. George paid a cash purchase price of $1,100,000~~ ~~to the Company.~~

~~Increase in Authorized Common Stock~~

~~On October 21, 2021, the Company filed an amendment to its articles of incorporation to increase the Company’s authorized common stock from~~ ~~15,000,000,000~~ to ~~22,000,000,000~~ ~~shares.~~

~~Regulation A Offering~~

~~On October 1, 2021, the Company filed an Offering Statement on Form 1-A (File No. 024-11668) (the “Regulation A Offering”) with the Securities and Exchange Commission with respect to~~ ~~5,000,000,000~~ ~~shares of common stock that was qualified by the SEC on October 20, 2021.~~

~~Common Stock Issued for Cash~~

~~In October 2021, the Company sold a total of~~ ~~130,000,000~~ ~~shares of its common stock for a total of $260,000, or $0.002~~ ~~per share, under its Regulation A Offering.~~

~~On October 6, 2021 the Company issued~~ ~~29,226,275~~ ~~shares of common stock upon the full conversion of $58,453~~ ~~of principal and interest on the December 2020 convertible note payable to Bucktown Capital, LLC.~~

~~On October 22, 2021 the Company issued~~ ~~34,555,495~~ ~~shares of common stock upon the conversion of $69,111~~ ~~of principle and accrued interest on the January 2021 convertible note payable to Bucktown Capital, LLC.~~

~~In October 2021, the Company sold a total of~~ ~~185,000,000~~ ~~shares of common stock for cash proceeds of $370,000~~.

~~Subsequent to September 30, 2021, the Company repaid approximately $435,000~~ ~~on the convertible note payable with Labrys.~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion and analysis of our financial condition and results of operations together with and our consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~ 2021, as may be amended, supplemented or superseded from time to time by other reports we file with the SEC. All amounts in this report are in U.S. dollars, unless otherwise noted.

~~Overview~~

Background

History and Development of the Company

We were incorporated in the State of Utah on October 4, 1985, under the name of Mormon Mint, Inc., and our business focused on the manufacture and marketing of commemorative medallions related to the Church of Jesus Christ of Latter-Day Saints. On January 5, 1999, the Company changed its name to Converge Global, Inc., and subsequently focused on the development and implementation of Internet web content and e-commerce applications. In the period from 2009 to 2014, we operated primarily in the mining exploration business, and in 2015, we left the mining business and began an internet-based marketing business focused on online marketing of service items to the hospitality and food service industry, selling retail product directly to consumers from food distributors via credit card and commercial accounts.

On September 4, 2015, Donald Steinberg and Charles Larsen acquired control of the Company through the purchase of 400,000,000 shares of restricted common stock and 10,000,000 shares of Preferred Class A stock for $105,000.00, in equal amounts. On September 9, 2015, Donald Steinberg was appointed Chairman of the Board, Chief Executive Officer and Secretary of the Company. Mr. Larsen was appointed to the Board of Directors. The new management changed the Company’s business plans and operations to focus on emerging opportunities in the cannabis and hemp industries. On December 1, 2015, the Company changed its name to Marijuana Company of America, Inc. and its stock trading symbol to MCOA. On December 6, 2019, a change of control occurred, where Donald Steinberg and Charles Larsen transferred their control shares to directors Robert Coale, Edward Manolos and Jesus Quintero. Also on December 6, 2019, Jesus Quintero, who was appointed as Chief Financial Officer in 2018, was appointed as our Chief Executive Officer. Mr. Quintero is currently our Chief Executive Officer and Chief Financial Officer, and a member of the Board of Directors.

Marijuana Company of America is a Utah corporation quoted on OTC Markets Pink Tier under the symbol “MCOA”. We are based in Los Angeles, California.

We are an owner and operator of licensed cannabis cultivation, processing and dispensary facilities and a developer, producer and distributor of innovative branded cannabis and cannabidiol (“CBD”) products in the United States. We are committed to creating a national distributorship and retail brand portfolio of branded cannabis and CBD products, although as of the date of this filing, marijuana (defined as cannabis containing delta-9 tetrahydrocannabinol concentration of more than 0.3 percent on a dry weight basis) currently remains illegal under U.S. federal law.

Through hempSMART™, our retail CBD product division, we develop and sell consumer products that include industrial hemp derived, non-psychoactive CBD as an ingredient, under the brand name “hempSMART™” through our wholly-owned subsidiary ~~H Smart,~~cDistro, Inc. In addition, we provide consulting services to licensed cannabis and/or hemp operators with respect to financial accounting and bookkeeping and real property management. Our business also includes making selected investments and entering into joint ventures with start-up businesses in the legalized cannabis and hemp industries.

~~Through cDistro,~~, a Nevada corporation, our wholly-owned CBD product distribution business, we distribute hemp and CBD products throughout the United States. Through cDistro, we distribute high quality hemp-derived cannabinoid products, as detailed on our cDistro website, ~~www.cdistro.com~~.www.cdistro.com. cDistro offers CBD brands along with smoke and vape shop related products to wholesalers, c-stores, specialty retailers, and consumers in North America. Through cDistro, we work exclusively with select manufacturers to deliver retail service and products at wholesale prices

~~Our Products~~

~~hempSMART™~~

~~Our consumer products containing hemp and CBD are sold through~~Through our ~~wholly-owned~~wholly owned subsidiary H Smart, Inc., a Delaware corporation, we develop and sell CBD products under the brand name hempSMART™. Our ~~current hempSMART™ products offerings include~~business also includes making selected investments and entering into joint ventures with start-up businesses in the ~~following:~~

~~hempSMART Brain™~~ ~~a proprietary patented~~legalized cannabis and ~~formulated personal care consumer product encapsulated with enriched non-psychoactive industrial~~ hemp ~~derived CBD. This encapsulation is combined with other high quality, proprietary natural ingredients to compliment CBD to support the brain.~~

~~hempSMART Pain™~~ capsules formulated with 10mg of full spectrum, non-psychoactive CBD per serving, derived from industrial hemp, which along with a proprietary blend of other natural ingredients, are intended to deliver an all-natural formulation for the temporary relief of minor discomfort associated with physical activity.

~~hempSMART Pain Cream™~~ each container is formulated with 300mg of full spectrum non-psychoactive CBD derived from industrial hemp. This product contains a synergistic combination of natural botanicals and full spectrum hemp extract featuring CBD, cannabigerol, also known as CBG, and a broad range of terpenes. Our proprietary blend of Ayurvedic herbs along with menthol, cayenne pepper extract, rosemary oil, aloe gel, white willow bark, arnica, wintergreen extract and tea tree oil, is intended to provide an immediate cooling and soothing sensation. This topical product is formulated to help reduce minor discomfort and promote muscle relaxation on the areas to which it is applied.

~~hempSMART Drops™~~ full spectrum hemp CBD oil tincture drops available in 250mg and 500mg bottles, enriched with non-psychoactive industrial hemp derived CBD, and available in four different flavors (lemon, mint, orange and strawberry). These drops are free of the THC isolate.

~~hempSMART Pet Drops™~~ for cats and dogs, formulated with 250mg of full spectrum non-psychoactive CBD derived from industrial hemp. This product contains naturally occurring CBD derived from hemp seed oil, full spectrum hemp extract, fractionated coconut oil, and a rich bacon flavor.

~~hempSMART Face™~~ a nourishing facial moisturizer combines full spectrum CBD from hemp with a unique blend of Ayurvedic herbs and botanicals. This facial moisturizer is designed to refresh, replenish and restore skin, providing long lasting hydration and balance.

~~hempSMART Drink Mix~~,~~an industrial hemp based powderized premium CBD drink made with organic CBD infused with honey to be mixed with any beverage of preference.~~

~~Our Consulting Services~~industries.

~~In addition~~Readers are directed to ~~selling~~review our ~~hempSMART™ products, we also provide certain services to licensed cannabis and/or hemp operators. Our services include the following:~~detailed disclosures in Item 1, Business; Principal Products and their Markets; Joint Ventures and Investments above. A summary of our investment and joint venture activity follows:

~~Financial Accounting and Bookkeeping~~Joint Ventures

Bougainville Ventures, Inc. Our joint venture with Bougainville Ventures, Inc. is currently in litigation (See Legal Proceedings, Item 3). We ~~provide financial accounting, bookkeeping~~recorded an annual impairment in 2017 of $792,500, reflecting the Company’s percentage of ownership of the net book value of the investment. During 2018, the Company recorded equity losses of $37,673 and ~~reporting protocols in order~~$11,043 for the first and second quarters respectively, and recorded an annual impairment of $285,986 for the year ended December 31, 2018, at which time we determined the investment to ~~allow licensed cannabis and/or hemp operators in those states where cannabis has been legalized for medicinal and/or recreational use,~~be fully impaired due to ~~report, collect, verify~~Bougainville’s breach of contract and ~~state effective financial records and disclosure. We provide a comprehensive accounting strategy based on best accounting practices.~~resulting litigation.

~~Real Property Management Consulting~~Global Hemp Group Scio Oregon Joint Venture.

~~Our property management consulting services consist~~ On May 8, 2018, we entered into a joint venture with Global Hemp Group, Inc., develop a project to commercialize the cultivation of ~~providing planning, budgeting, acquisition, accounting and management services to licensed cannabis and/or~~industrial hemp ~~operators in those states where cannabis and/or hemp has been legalized for medicinal and/or recreational use and who are searching for~~on a 109-acre parcel of real property owned by the Company and Global Hemp Group in Scio, Oregon, and operating under the Oregon corporation Covered Bridges, Ltd. The joint venture agreement commits the Company to ~~conduct operations.~~

~~We have not yet entered~~a cash contribution of $600,000 payable on the following funding schedule: $200,000 upon execution of the joint venture agreement; $238,780 by July 31, 2018; $126,445 by October 31, 2018; and, $34,775 by January 31, 2019. The Company has complied with its payments. The 2018 crop of hemp grown on the joint venture’s real property consisted of 33 acres of high yielding CBD hemp grown in an orchard style cultivation on the property. The 2018 harvest consisted of approximately 37,000 high yielding CBD hemp plants producing 24 tons of biomass that produced 48,000 pounds of dried biomass. However, there were delays with Global Hemp Group’s management and maintenance of the business and the biomass that caused degradation to the harvested crop affecting marketability. Additional issues and disputes arose between the Company and Global Hemp Group. These disputes led to the parties entering into ~~any engagements~~a settlement agreement on September 28, 2020, whereby Global Hemp Group agreed to pay the Company $200,000 and issue common stock to the Company equal in value to $185,000 as of September 28, 2020, subject to a non-dilutive protection provision. Additionally, Global Hemp Group agreed to pay the Company $10,000 to cover the Company’s legal fees relating to the Agreement. In exchange for ~~such services and have not generated any revenue related~~the settlement consideration, the Company agreed to ~~such services.~~

~~cDistro~~

~~On June 29, 2021, we acquired cDistro, Inc. which is engaged~~relinquish its ownership interest in the ~~hemp and CBD product distribution business. Specifically, cDistro distributes high quality hemp-derived cannabinoid products on its website,~~ ~~www.cdistro.com~~. cDistro offers CBD brands along with smoke and vape shop related products to wholesalers, c-stores, specialty retailers, and consumers in North America. Through cDistro, we work exclusively with select manufacturers to deliver retail products at wholesale prices.

~~Current Joint Ventures and Investments~~joint venture.

Natural Plant Extract of California & Subsidiaries Joint Venture; On April 15, 2019, the Company entered into a joint venture agreement with Natural Plant Extracts of California, Inc. and subsidiaries (“NPE”). The purpose of the joint venture was to utilize NPE’s California and City cannabis licenses to jointly operate a business named “Viva Buds” to operate a licensed cannabis distribution service in California. In exchange for acquiring 20% of NPE’s common stock, the Company agree to pay two million dollars and issue NPE one million dollars’ worth of the Company’s restricted common stock. As of February 3, 2020, the Company was in arrears in its payment obligations under the joint venture agreement, and the parties entered into a settlement and release of all claims terminating the joint venture. The parties agreed to reduce the Company’s equity ownership in NPE from 20% to 5%. The Company also agreed to pay NPE $85,000 and the balance of $56,085.15 paid in a convertible promissory note issued with terms allowing NPE to convert the note into common stock at a 50% discount to the closing price of MCOA’s common stock as of the maturity date. As of the date of this filing, the Company satisfied its payment obligations under the settlement agreement. Our continuing 5% equity ownership in NPE involves related parties, since Edward Manolos, our director, is also a director and shareholder of Cannabis Global, Inc., which is the controlling shareholder holding 55% of Natural Plant Extract of California Inc. Joint Ventures in Brazil and Uruguay

; On ~~September 30,~~October 1, 2020, we entered into two ~~joint venture agreements~~Joint Venture Agreements with Marco Guerrero, ~~our~~a director of the Company, dated September 30, 2020, to form joint venture operations in Brazil and in Uruguay to produce, manufacture, market and sell ~~our~~the Company’s hempSMART™ products in Latin America, and will also work to develop and sell hempSMART™ products globally.

The Joint Venture Agreements contain equal terms for the formation of joint venture entities in Uruguay and Brazil. The Brazilian joint venture will be headquartered in São Paulo, Brazil, and will be named HempSmart Produtos Naturais Ltda. (“HempSmart Brazil”). The Uruguayan joint venture will be headquartered in Montevideo, Uruguay and will be named Hempsmart Uruguay S.A.S. (“HempSmart Uruguay”). Both are in the development stage.

~~Cannabis~~Investments

Share Exchange with Cannabis Global, Inc.

~~Joint Venture~~

On May 12, 2021, we entered into a joint venture agreement with Cannabis Global, Inc. (“Cannabis Global”) pursuant to which we will invest up to $250,000 into a newly formed entity (“MCOA Lynwood”) and Cannabis Global, through Natural Plant Extracts of California, Inc., an entity in which Cannabis Global owns a majority interest, will operate a regulated and licensed laboratory to manufacture various cannabis products in the State of California. As of September 30, 2021, we have invested $158,000.

~~Share Exchange~~

On September 30, 2020, wethe Company entered into a securities exchange agreement with Cannabis Global, ~~pursuant to which we~~Inc. (OTC: CBGL), a Nevada corporation. By virtue of the agreement, the Company issued 650,000,000 shares of ~~our~~its unregistered common stock to Cannabis Global in exchange for 7,222,222 shares of Cannabis Global unregistered common stock. ~~In addition, we~~The Company and Cannabis Global also entered into a ~~lock-up leak-out~~lock up leak out agreement, which ~~contains certain restrictions with respect to the~~prevents either party from sales of ~~such securities. During~~ the ~~three months ended September 30, 2021,~~exchanged shares for a period of 12 months. Thereafter the ~~Company issued~~parties may sell not more than the ~~650,000,000~~quantity of shares equaling an aggregate maximum sale value of ~~stock to~~$20,000 per week, or $80,000 per month until all Shares and Exchange Shares are sold. Our transaction with Cannabis Global, ~~pursuant to the true-up value provision~~Inc. is material and involves related parties, since Edward Manolos, our director and holder of ~~the securities exchange agreement.~~Preferred Class A stock, is also a director and officer of Cannabis Global, Inc.

~~Joint Venture Subject to Ongoing Dispute~~

Share Exchange with Eco Innovation Group, Inc.On ~~March 16, 2017,~~February 26, 2021, we entered into a ~~joint venture agreement~~Share Exchange Agreement with ~~Bougainville Ventures,~~Eco Innovation Group, Inc., a Nevada corporation quoted on OTC Markets Pink (“~~Bougainville”~~ECOX”) to ~~among other things, engage~~acquire the number of shares of ECOX’s common stock, equal in value to $650,000 based on the per-share price of $0.06, in exchange for the number of shares of MCOA common stock equal in value to $650,000 based on the closing price for the trading day immediately preceding the effective date (the “Share Exchange Agreement”). For both parties, the Share Exchange Agreement contains a “true-up” provision requiring the issuance of additional common stock in the ~~development and promotion of products~~event that a decline in the ~~legalized cannabis industry in Washington State. We believe that some~~market value of either parties’ common stock should cause the aggregate value of the ~~funds~~stock acquired pursuant to the Share Exchange Agreement to fall below $650,000. Complementary to the Share Exchange Agreement, the Company and ECOX entered into a Lock-Up Agreement dated February 26, 2021 (the “Lock-Up Agreement”), providing that the shares of common stock acquired pursuant to the Share Exchange Agreement shall be subject to a lock-up period preventing its sale for a period of 12 months following issuance and limiting the subsequent sale to aggregate maximum sale value of $20,000 per week, or $80,000 per month. On October 1, 2021, we ~~paid~~entered into a First Amendment to ~~Bougainville were misappropriated~~Lock-Up Agreement between the Company and Eco Innovation Group, Inc., dated and effective October 1, 2021 (the “Amended Lock-Up Agreement”), which amends that ~~there was self-dealing with~~certain Lock-Up Agreement entered into between the Company and Eco Innovation Group, Inc. on February 26, 2021 (the “Original Lock-Up Agreement”). The Amended Lock-Up Agreement amends the Original Lock-Up Agreement in one respect, by amending the initial lock-up period from 12 months following its effective date to ~~those funds~~6 months following its effective date. All other terms and ~~that Bougainville misrepresented certain material facts in the joint venture agreement. As a result~~conditions of the ~~foregoing, on September 20, 2018, we filed suit against Bougainville, Andy Jagpal, Richard Cindric, et al. in Okanogan County Washington Superior Court. See Part II, Item 1 - Legal Proceedings.~~ Original Lock-Up Agreement remain unaffected.

~~Recent Developments~~

~~Salinas Diversified Ventures~~Asset Purchase Agreement with VBF Brands, Inc.

On October 6, 2021, the Company, through its wholly owned subsidiary Salinas Diversified Ventures, Inc., a California corporation, entered into an Asset Purchase Agreement, Management Services Agreement, Cooperation Agreement and Employment Agreement with VBF Brands, Inc., a California corporation (“VBF”), a wholly owned subsidiary of Sunset Island Group, Inc., a Colorado corporation (“SIGO”)~~, and Ms. Lori Livacich, individually, and as an affiliate of both~~. VBF and SIGO ~~(“Livacich”). No material relationship exists between the parties, other than with respect~~agreed to transfer to the ~~material definitive agreements.~~Company all of VBF’s outstanding stock to the Company, and appointed our CEO and CFO Jesus Quintero as President of VBF.

VBF owns various fixed assets including machinery and equipment, a lease for a 10,000 square foot facility located at 20420 Spence Road, Salinas, California, 93908, leasehold improvements, good-will, inventory, tradenames including “VBF Brands,” trade secrets, intellectual property, and other tangible and intangible properties, including licenses issued by the City of Salinas, County of Monterey, and the State of California to operate a licensed cannabis nursery, cultivation facility, and operations for the manufacturing and distribution of cannabis and cannabis products.

VBF and SIGO agreed to sell and transfer to the Company all of VBF’s outstanding stock, and, by virtue of the Management Services Agreement, appoint Mr. Jesus Quintero as President of VBF, vesting management and control of VBF’s licensed cannabis operations in the Company. Concurrently, VBF and Livacich entered into a Cooperation Agreement, whereby VBF and Livacich agreed to cooperate to facilitate the transfer of ownership of VBF, which includes licenses issued by the City of Salinas, County of Monterey, and the State of California, to operate a cannabis nursery, cultivation facility and manufacturing and distribution operations to the Company. The Company also agreed to retain Livacich as Chief Executive Officer for a term of two years and agreed to compensate her with a salary including a signing cash bonus of $250,000, and a $250,000 performance cash bonus payable after six months after the Effective Date.The bonus is conditioned upon Livacich meeting an agreed to “Net Revenue” target of ~~$1,000,000~~one million dollars ($1,000,000) from VBF’s operations during the ~~six month~~six-month period after closing of the Asset Purchase Agreement, and her compliance with the terms and conditions of this Asset Purchase Agreement, the Management Services Agreement and the Cooperation Agreement.

As consideration for the transaction, the Company agreed to assume two secured convertible promissory notes issued by SIGO ~~with~~to St. ~~George.~~George Investments, LLC, a Utah limited liability company (“St. George”) (the “SIGO Notes”). The first note was issued December 8, 2017, in the original ~~principal~~face amount of ~~$170,000 (“Note 1”);~~$170,000.00, and the second ~~note~~ was issued February 13, 2018, in the original ~~principal~~face amount of ~~$4,245,000 (“Note 2”). As part of Note 2,~~$4,245,000.00. SIGO also issued warrants to St. George to purchase common shares in SIGO, and 50fifty (50) shares of ~~Series A Preferred Stock in SIGO.~~SIGO’s preferred stock. St. George agreed to cancel the warrants and preferred shares upon the Company’s assumption of ~~Notes 1~~the SIGO Notes.

Under the Asset Purchase Agreement, the closing is conditioned upon certain conditions precedent, specifically (i) VBF and ~~2 (collectively,~~SIGO’s full corporate authorization, consent and execution of this Agreement; (ii) VBF’s sale to MCOA of 100% of the ~~“SIGO Notes”). On October 6, 2021, the Company~~ issued and ~~sold a convertible promissory note~~outstanding shares of VBF; (iii) full corporate authorization, consent compliance with and execution of the Management Services Agreement and Cooperation Agreement; (iv) SIGO’s disclosure of the Agreement on Form 8-K with the Securities and Exchange Commission; (v) full cooperation in MCOA’s financial auditing of VBF in accordance with ASC 805, including providing unrestricted access to ~~St. George~~all VBF corporate and financial records and providing all necessary cooperation with VBF financial personnel; (vi) full cooperation in aiding and assisting Buyer with its change of ownership applications with the relevant licensing authorities; (vii) the warranty of truthful representations and execution of and compliance with the terms and conditions of the Executive Employment Agreement, Management Services Agreement and the Cooperation Agreement.

As of the date of this filing, the conditions precedent to the closing of the Asset Purchase Agreement remain in the ~~principal amount~~process of ~~$3,455,178. As partial consideration~~implementation, so that the Asset Purchase Agreement closing has not yet occurred pursuant to its terms. Legal counsel for MCOA is currently in the ~~purchase~~process of working with VBF, Salinas Diversified Ventures, and the ~~securities, St. George assigned~~relevant state and ~~transferred~~local governments to effect the ~~Company, who agreed~~change of control and license transfers necessary to ~~receive and accept,~~close the ~~SIGO Notes, valued at $1,770,982. The Company agreed to pay an original issue discount of $574,196 and $10,000 in legal fees. St. George paid a cash purchase price of $1,100,000 to the Company.~~Asset Purchase Agreement.

Results of Operations

~~Three Months~~

Comparison of the three months Ended September 30, 2022 and 2021 ~~Compared to Three Months Ended~~

For the three months ended September 30, ~~2020~~2022 and 2021, we had net losses from continuing operations of $722,115 and $1,419,664, respectively, an decrease of $697,549. This decrease is due primarily to the effects of a company-wide effort for overall reduction of General and Administrative expenses, as well as a decrease in gross revenues.

Revenues

~~Revenues~~

~~Total~~The Company generated revenues of $142,394 and $442,178 for the three months ended September 30, 2022 and 2021, respectively. The decrease of $299,784 and ~~2020, were $442,178 and $53,195, respectively, an increase~~is primarily attributed to the Company’s phase-out of ~~$388,983. This increase is mainly attributable to $407,246 of product sales from our new acquisition of cDistro, which was began full~~its hempsmart operations during the quarter ~~ended September 30, 2021. In addition, we also recorded $12,581~~and due to effects of Hurricane Ian which affected CDistro sales in South Florida.

The following table identifies products and equipment lease revenues ~~to a~~ cannabis distributor and manufacturer, the Lynwood-MCOA joint venture. This joint venture is between us and Cannabis Global Inc. and pertains to the licensed cannabis operations of Natural Plant Extract of California Inc. in the city of Lynwood, CA. We also sold $22,351 of hempSMART products during the three months ended September 30, 2022 and 2021, ~~due to our new sales platform as well as changes to our sales strategy including the rebranding of hempSMART products.~~respectively:

~~The following table identifies sales of products and services during the three months ended September 30, 2021 and 2020:~~

Products September 30, 2021 September 30, 2020
Body Lotion - hempSMART $ 184 $ 679
Brain - hempSMART 1,153 4,610
Drink Mix - hempSMART —   563
Drops - hempSMART 11,533 25,541
Face Moisturizer - hempSMART —   1,606
Pain Capsules - hempSMART —   2,714
Pain Cream - hempSMART 8,379 14,911
Pet Drops - hempSMART 2,939 2,571
Accessories and hardware - cDistro products 21,844 —
CBD Products – cDistro product 485 —
E-Liquids - cDistro 75,531 —
Kratom - cDistro 306,256 —
Nutraceutical products - cDistro 441 —
Other products – cDistro 852 —
Leased equipment revenues – Marijuana Company of America 12,581 —

Totals $ 442,178 $ 82,958
September 30, 2022 September 30, 2021

Body Lotion $ —   $ 184
Brain $ 470 $ 1,153
Drink Mix $ —   $ —
Drops $ 4,250 $ 11,533
Face Moisturizer $ —   $ —
Pain Cream $ 3,266 $ 8,379
Pet Drops $ —   $ 2,939
Bottles – Nic $ —   $ 75,531
Bottles – Salt Nic $ —   $ —
CBD Hempettes $ 1,911 485
Disposables–Tobacco – Free Nicotine $ —   $ —
Kratom $ 14,304 $ 306,256
Other cDistro products $ 6,731 $ 23,137

Vape products $ 31,670 $ —
Marketing fees $ 57,292 —
MCOA Equipment Lease rental $ 22,500 $ 12,581
$ 142,394 $ 442,178

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~~Related Party Sales~~ Cost of sales
Related party sales contributed $0 and $3,262 to revenues for the three months ended September 30, 2021 and 2020, respectively. Related party sales are comprised of sales of our hempSMART products to our directors, officers, ~~employees, and sales team members. No related party sales were for services. All sales were made at listed retail prices and were for cash consideration.~~
~~Costs of Sales~~
Costs of sales primarily consist of inventory cost and overhead, manufacturing, packaging, warehousing, shipping, and direct labor costs directly attributable to all of our products. For the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, our total costs of sales were ~~$378,491~~$58,200 and ~~$37,170,~~$378,491, respectively, an ~~increase~~decrease of ~~$341,321. The increase~~$320,291.The decrease in costs of sales is attributed to ~~volume~~low volumes from our ~~acquisition~~hempsmart business as we began to phase-out product sales during the quarter and also due to low purchases from our CDistro business which was impacted by Hurricane Ian. .
Gross profit
For the three months ended September 30, 2022 and 2021, gross profit was $84,194 and $63,687, respectively. This increase of $20,507 was primarily attributed to the cDistro business which ~~began full operations with us~~sold CBD and hemp products throughout the USA during the period. We anticipate an increase in sales from our cDistro company as the company ramping up business after Hurricane Ian.. As a percentage of total revenues, gross profit was 59.1% and 14.4% for the three months ended September 30, 2022 and 2021, respectively.
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Selling and marketing expenses
For the three months ended September 30, 2022 and 2021, selling and marketing expenses were $43,835 and $167,664, respectively. This decrease of $123,829 is due to the phase-out of the Company’s hempsmart business in the USA as well as a decrease from our CDistro business due to the impact of Hurricane Ian. .
Payroll and related expenses
For the three months ended September 30, 2022 and 2021, payroll and related expenses were $241,504 and $142,830, respectively. This increase of $98,674, is mainly attributable to an increase in wages for operation staff and the Company CEO compensation and benefits as well as the Company’s new employee health insurance. during the three months ended eptember 30, 2022 as compared to the three months ended September 30, 2021.

~~Gross Profit~~Stock-based compensation
We measure the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. We record stock-based compensation expense in the same expense classifications in the statements of operations, as if such amounts were paid in cash. For the three months ended September 30, 2022 and 2021, stock-based compensation was $9,000 and ~~2020, gross profit was $63,687~~$529,393, respectively. This decrease of $520,393is due primarily to less issuance of equity to consultants and ~~$16,025, respectively, an increase of $47,662. This increase is mainly attributed to gross profits from our acquisition of cDistro which began full operations with us~~employees during the three months ended September 30, 2021. In addition, our hempSMART business improved gross profits due to new pricing and promotions associated with our sales restructuring and new sales strategies, along with the effects of the COVID-19 pandemic during the three months ended September 30, 2022 as compared to September 30, 2021. ~~As a result, the combined gross margin was 14.4%~~
General and ~~30.1%~~administrative expenses
Other general and administrative expenses decreased to $631,514 for the three months ended September 30, ~~2021 and 2020, respectively.~~
~~Selling and Marketing Expenses~~
For the three months ended September 30, 2021 and 2020, selling and marketing expenses were $167,664 and $125,942, respectively, an increase of $41,722. The increase is due primarily to the selling and marketing expenses from our acquisition of cDistro which began operations with us during the three months ended September 30, 2021. These expenses included expenses for advertisement, promotions and digital media during the period. In addition, hempSMART added marketing staff for promotional opportunities along with new market analyst to assist market trends.
~~Payroll and Related Expenses~~
For the three months ended September 30, 2021 and 2020, payroll and related expenses were $142,830 and $62,000, respectively, an increase of $80,830. Of this increase, $45,000 is attributed to payroll with regards to our acquisition of cDistro which began operations with us during the period. and in addition, an increases in our Chief Executive Officer’s compensation and an increase in our staff during the three months ended September 30, 2021 as2022 compared ~~to September 30, 2020.~~
~~Stock-based Compensation~~
For the three months ended September 30, 2021 and 2020, stock-based compensation was $529,393 and $123,000 respectively, an increase of $406,393. This increase was due to the issuance of equity pursuant to a stock incentive plan to officers, employees, and vendors during the three months ended September 30, 2021 as compared to September 30, 2020.
~~General and Administrative Expenses~~
~~General and administrative expenses increased~~ to $639,767 for the three months ended September 30, ~~2021 as compared to $294,821 for the three months ended September 30, 2020.~~2021. General and administrative expenses include research and development, building rent, utilities, legal fees, office supplies, subscriptions, and office equipment. The ~~increase~~decrease of ~~$344,946~~$8,253 is attributed consistent cost cutting measures implemented during the quarter as compared to the three months ended September 30, 2021 ~~is primarily attributed to an increase~~
Loss on change in ~~the following expenses - legal fees~~fair value of approximately $88,000 related to acquisition costs and SEC filings, approximately $67,000 in travel related expenses, $67,000 for investor relations as we expanded our investor/stockholder communications, $34,000 in bad debt expenses and the remaining expenses were attributed to operating expenses from our acquisition of cDistro which began operations with us duringderivative liabilities
For the three months ended September 30, ~~2021.~~
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~~Gain on Change in Fair Value of Derivative Liabilities~~
~~During the three months ended September 30,~~2022 and 2021, ~~and 2020,~~ we issued convertible promissory notes and warrants with an embedded derivative, all requiring us to ~~adjust~~calculate the fair value of the derivatives each reporting period, and mark to ~~reflect~~market as a non-cash adjustment to our current period operations. This resulted in a loss in changes in fair value of derivative liabilities of $126,136 and a gain of 1,177,610 for the three months ended September 30, 2022 and 2021, respectively.
Loss on equity investments
During the three months ended September 30, 2022 and 2021, we realized a loss on equity investments of $2,009,254 and $0, respectively. The loss was related primarily to the writeoff of the Company’s investments in Cannabis Global Inc. and ECO Innovation Group Inc. during the three months ended September 30, 2022.
Gain (loss) on settlement of debt
During the three months ended September 30, 2022 and 2021, we realized a loss on settlement of debt of $148,324 and $88,990, respectively. The loss was related primarily to the settlement in shares to lenders during the three months ended September 30, 2022 and September 30, 2021.
Interest expense
Interest expense during the three months ended September 30, 2022 was $761,060 as compared to $549,363 for the three months ended September 30, 2021 an increase of $211,697. Interest expense primarily consists of interest incurred on our convertible debt and other debt. The debt discounts amortization and non-cash interest incurred during the three months ended September 30, 2022 and 2021 was $640,417 and $487,858, respectively. ..
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Results of Operations
Comparison of the nine months Ended September 30, 2022 and 2021
For the nine months ended September 30, 2022 and 2021, we had net losses from continuing operations of $2,481,068 and $3,228,703, respectively, a decrease of $747,635. This decrease is primarily attributed to the Company’s phase-out of its hempsmart operations during the quarter and due to effects of Hurricane Ian which affected CDistro sales in South Florida.
Revenues
The Company generated revenues of $962,343 and $493,988 for the nine months ended September 30, 2022 and 2021, respectively. The increase of $468,355 and is primarily attributed to the Company’s cDistro business which distributes CBD and hemp products throughout the USA.
The following table identifies products and equipment lease revenues during the nine months ended September 30, 2022 and 2021, respectively
September 30, 2022 September 30, 2021

Body Lotion $ —   $ 1,251
Brain $ 2,594 $ 1,514
Drink Mix $ —   $ 167
Drops $ 16,180 $ 41,249
Face Moisturizer $ —   $ 2,793
Pain Cream $ 8,836 $ 24,802
Pet Drops $ 2,408 $ 3,879
Bottles – Nic $ 246 $ 75,531
Bottles – Salt Nic $ 288 $ —
CBD Hempettes $ 52,293 $ —
Disposables–Tobacco – Free Nicotine $ 303,936 $ —
Kratom $ 250,006 $ 306,256
Other cDistro products $ 45,639 $ 23,965
Vape products $ 155,125 $ —
Marketing fees $ 57,292 —
MCOA Equipment Lease rental $ 67,500 $ 12,581
$ 962,343 $ 493,988
Cost of sales
Costs of sales primarily consist of inventory cost and overhead, manufacturing, packaging, warehousing, shipping and direct labor costs attributable to our hempSMART products. For the nine months ended September 30, 2022 and 2021, our total costs of sales were $607,061 and $406,972, respectively. The increase of $200,089 was primarily attributed to our distributor cDistro purchases products from various CBD and hemp manufactures for resale during the nine month period ended September 30, 2022 as compared to the nine months ended September 30, 2021..
Gross profit
For the nine months ended September 30, 2022 and 2021, gross profit was $355,282 and $87,016, respectively. This increase of $268,266 was primarily attributed to the Company’s cDistro distribution business which sells CBD and hemp products throughout the USA. We anticipate an increase in sales from our cDistro company as we continue the deployment our new distribution strategies during the rest of 2022; however, no assurance can be provided that sales will increase. As a percentage of total revenues, gross profit was 37.0% and 18.0% for the nine months ended September 30, 2022 and 2021, respectively.
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Selling and marketing expenses
For the nine months ended September 30, 2022 and 2021, selling and marketing expenses were $221,302 and $430,425, respectively. This decrease of $209,123 is due to the phase-out of the Company’s hempsmart business in the USA as well as a decrease from our CDistro business due to the impact of Hurricane Ian.
Payroll and related expenses
For the nine months ended September 30, 2022 and 2021, payroll and related expenses were $778,682 and $413,232, respectively. This increase of $365,396, is mainly attributable to wages for operation staff, the Company CEO compensation and benefits, compensation from the Company’s cDistro business, $80,000 attributed to our new subsidiary Salinas Diversified Ventures, as well as the Company’s new employee health insurance, which was implemented during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.
Stock-based compensation
We measure the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. We record stock-based compensation expense in the same expense classifications in the statements of operations, as if such amounts were paid in cash. For the nine months ended September 30, 2022 and 2021, stock-based compensation was $179,000 and $688,293, respectively. This decrease of $509,293 is primarily to less issuance of equity to consultants and employees during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.
General and administrative expenses
Other general and administrative expenses decreased to $1,674,805 for the nine months ended September 30, 2022 compared to $1,777,419for the nine months ended September 30, 2021. General and administrative expenses include research and development, building rent, utilities, legal fees, office supplies, subscriptions, and office equipment. The decrease of $102,614 is principally attributed to a $298,460 decrease in lawsuits engaged by the Company which was offset by an increase in overall accounting fees over $45,000,an increase in consulting and audit fees of over $125,000 and a $35,000 reduction in meals and entertainment. for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.
Loss on change in fair value of derivative liabilities
For the nine months ended September 30, 2022 and 2021, we issued convertible promissory notes and warrants with an embedded derivative, all requiring us to calculate the fair value of the derivatives each reporting period, and mark to market as a non-cash adjustment to our current period operations. This resulted in a gain on changes in fair value of derivative liabilities of $1,177,610 and a loss of ~~$1,454,903 change in fair value of derivative liabilities~~$451,679 for ~~the three months ended September 30, 2021 and 2020, respectively.~~
~~Loss/Income on Equity Investment and Loss on Share Exchange Agreement~~
During the three months ended September 30, 2021 and 2020, we adjusted the carrying value of our investment for our pro rata share of equity investment loss of $0 and an equity investment income of $240,198, respectively. The Company also recognized a loss on its share exchange agreement with Eco Innovation Group of $340,984 during the nine months ended September 30, ~~2021.~~2022 and 2021, respectively.
~~Loss/Gain~~Loss on ~~Settlement of Debt~~equity investments
During the ~~three~~nine months ended September 30, 2022 and 2021, we realized a loss on equity investments of $2,009,254 and ~~2020,~~$0, respectively. The loss was related primarily to the writeoff of the Company’s investments in Cannabis Global Inc. and ECO Innovation Group Inc. during the nine months ended September 30, 2022.
Gain (loss) on settlement of debt
During the nine months ended September 30, 2022 and 2021, we realized a loss on settlement of debt of ~~$88,990~~$335,824 and ~~a gain of $383,440,~~$253,967, respectively. The loss was related primarily to the settlement in shares to lenders during the nine months ended September 30, 2022 and 2021.

~~Loss on Sale of Trading Securities~~Interest expense
~~During~~
Interest expense during the ~~three~~nine months ended September 30, 2022 was $2,859,534 as compared to $2,542,108 for the nine months ended September 30, 2021 ~~and 2020, we realized a loss on sale~~an increase of ~~trading securities of $543,200 and $0, respectively.~~
~~Interest Expense~~
~~Interest expense during the three months ended September 30, 2021 was $549,363 compared to $688,090 for the three months ended September 30, 2020.~~$317,426. Interest expense primarily consists of interest incurred on our convertible debt and ~~non-convertible~~other debt. The debt discounts amortization and non-cash interest incurred during the ~~three~~nine months ended September 30, 2022 and 2021 was $1,370,366 and ~~2020 was $525,358~~$744,783, respectively. In addition, as of September 30, 2022 and ~~$344,644, respectively.~~2021, we incurred a non-cash interest of $2,010,783 and $1,232,641, respectively, in connection with convertible notes.

~~Net Loss~~Impairment (Loss) on Intangible Asset
~~Our net loss for~~
During the ~~three~~nine months ended September 30, ~~2021 and 2020 was $1,764,591 and $1,872,171, respectively,~~2022, the Company incurred a ~~decrease~~$2,020,982 impairment loss on an intangible asset associated with the acquisition of $107,580. The net loss of $1,764,591 for the three months ended September 30, 2021 represents 399.1% of total revenues for the period. The net loss of $1,872,171 for the three months ended September 30, 2020 represents 3,519.4% of total revenues for the period.VBF Brands Inc. which is currently under litigation.

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41

~~Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020~~
~~Revenues~~
Total revenues for the nine months ended September 30, 2021 and 2020, were $493,988 and $217,972, respectively, an increase of $276,016. This increase is mainly attributable to $407,589 of product sales from our acquisition of cDistro, which was effective on June 30, 2021 and accordingly, began to contribute revenue during the period ended September 30, 2021. ~~In addition, we also recorded $12,581 in equipment lease revenues to a~~ cannabis distributor and manufacturer, under the Lynwood joint venture. This joint venture is between us and Cannabis Global Inc. and pertains to the licensed cannabis operations of Natural Plant Extract of California Inc. in the city of Lynwood, CA. We also sold $73,818 of hempSMART products during the nine months ended September 30, 2021, due to our new sales platform as well as c~~hanges to our sales strategy, including the rebranding of our hempSMART product line.~~
~~The following table identifies sales of products and services during the nine months ended September 30, 2021 and 2020:~~

Products September 30, 2021 September 30, 2020
Body Lotion - hempSMART $ 1,251 $ 3,131
Brain - hempSMART 1,514 24,284
Drink Mix - hempSMART 167 2,615
Drops - hempSMART 41,249 111,673
Face Moisturizer - hempSMART 2,793 8,915
Pain Capsules - hempSMART —   6,360
Pain Cream - hempSMART 24,802 46,817
Pet Drops - hempSMART 3,879 14,177
Accessories and hardware - cDistro products 22,187 —
CBD Products – cDistro product 485 —
E-Liquids - cDistro 75,531 —
Kratom - cDistro 306,256 —
Nutraceutical products - cDistro 441 —
Other products – cDistro 852 —
Leased equipment revenues – Marijuana Company of America 12,581 —

Totals $ 493,988 $ 217,972
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~~Related Party Sales~~
Related party sales contributed $0 and 11,565 to revenues for the nine months ended September 30, 2021 and 2020, respectively. Related party sales are comprised of sales of our hempSMART products to our directors, officers, ~~employees, and sales team members. No related party sales were for services. All sales were made at listed retail prices and were for cash consideration.~~
~~Costs of Sales~~
Costs of sales primarily consist of inventory cost and overhead, manufacturing, packaging, warehousing, shipping, and direct labor costs directly attributable to all of our products. For the nine months ended September 2021 and 2020, our total costs of sales were $406,972 and $110,563, respectively, an increase of $296,409. The increase in costs of sales is mainly attributed to the cost of goods sold from our acquisition of cDistro which we acquired on June 30, 2021 and began operating as a wholly-owned subsidiary of the Company at the beginning of the three months ended September 30, 2021.
~~Gross Profit~~
For the nine months ended September 30, 2021 and 2020, gross profit was $87,016 and $107,409, respectively, a decrease of $20,393. This decrease is mainly attributed to gross profits from our new acquisition cDistro which began full operations with the Company during the three months ended September 30, 2021 as their margins reflect wholesale margins as compared to hempSMART retail margins. In addition, gross profits from hempSMART products decreased due to continued new pricing and promotions associated with our sales restructuring and new sales strategies, along with the continued effects of the COVID-19 pandemic during the nine months ended September 30, 2021. As a result, the combined gross margin was 17.6% and 49.3% for the nine months ended September 30, 2021 and 2020, respectively.
~~Selling and Marketing Expenses~~
For the nine months ended September 30, 2021 and 2020, selling and marketing expenses were $430,425 and $326,608, respectively, an increase of $103,817. This increase was attributed to our investment in product marketing and social media advertising in support of our new e-commerce program promoting our rebranded hempSMART products and the marketing expenses from our acquisition of cDistro which began operations ~~with us after~~ ~~June 30, 2021.~~
~~Payroll and Related Expenses~~
For the nine months ended September 30, 2021 and 2020, payroll and related expenses were $413,232 and $258,842, respectively, an increase of $154,390. The increase is primarily due to an increase in our Chief Executive Officer’s compensation and the payroll expenses from our acquisition of cDistro, which began operations ~~with us~~ ~~during the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020.~~
~~Stock-based Compensation~~
For the nine months ended September 30, 2021 and 2020, stock-based compensation was $688,293 and $665,767 respectively, an increase of $22,526. This 3.4% increase during the nine months ended September 30, 2021 is considered reasonable as compared to the nine months ended September 30, 2020 as these expenses are related to issuances of equity pursuant to our stock incentive plan to officers, employees and vendors.
~~General and Administrative Expenses~~
General and administrative expenses increased to $1,777,419 for the nine months ended September 30, 2021 as compared to $710,094 for the nine months ended September 30, 2020. General and administrative expenses include research and development, building rent, utilities, legal fees, office supplies, subscriptions, and office equipment. The increase of $1,067,326 during the nine months ended September 30, 2021 is primarily attributed to an increase in the following expenses - legal fees of approximately $360,000 related to acquisition costs, lawsuits, public offerings and SEC filings, approximately $48,000 increase in insurance premiums in director and officer’s liability insurance due to cannabis industry risk assessments, $135,000 in travel expenses related to acquisition visits, various business and company events as well as trade show participations, $215,000 for investor relations as we expanded our investor/stockholder communications, $34,000 in bad debt expenses, $95,000 in operational expenses related to our acquisition of cDistro which began operations at the end of June 30, 2021, $72,000 in operating expenses of our new hempSMART Brazil subsidiary which began operations during the nine month period ended September 30, 2021, $38,000 in fees to the our medical advisory board, $30,000 in board of director fees based on new agreements established during 2021, $17,000 in truck rental fees incurred as part of a discontinued operation, $63,000 in consulting fees related to services related to the establishment of a new subsidiary in the country of Uruguay for the purpose of selling hempSMART products and $56,000 in other operational and administrative expenses incurred during the nine period ended September 30, 2021 as compared to September 30, 2020.
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~~Gain on Change in Fair Value of Derivative Liabilities~~
During the nine months ended September 30, 2021 and 2020, we issued convertible promissory notes and warrants with an embedded derivative, all requiring us to adjust to reflect the fair value of the derivatives each reporting period, and mark to market as a non-cash adjustment to our current period operations. This resulted in a loss of $451,679 and $312,631 change in fair value of derivative liabilities for the nine months ended September 30, 2021 and 2020, respectively.
~~Loss / Income on Equity Investment and Loss on Share Exchange Agreement~~
During the nine months ended September 30, 2021 and 2020, we adjusted the carrying value of our investment for our pro rata share of equity investment loss of $0 and an equity investment income of $106,305, respectively. The Company also recognized a loss on its share exchange agreement with Eco Innovation Group of $735,178 during the nine months ended September 30, 2021.
~~Loss /Gain on Settlement of Debt~~
~~During the nine months ended September 30, 2021 and 2020, we realized a loss on settlement of debt of $253,967 and a gain of $386,930, respectively.~~
~~Unrealized Gain/Loss on Sale of Trading Securities~~
During the nine months ended September 30, 2021, we recorded an unrealized gain on trading securities of $504,137, while recording an unrealized loss on trading securities of $13,945 for the nine months ended September 30, 2020.
~~Loss on Sale of Trading Securities~~
~~During the nine months ended September 30, 2021 and 2020, we realized a loss on sale of trading securities of $543,200 and $2,603, respectively.~~
~~Interest Expense~~
Interest expense during the nine months ended September 30, 2021 was $2,542,108 compared to $2,460,185 for the nine months ended September 30, 2020. Interest expense primarily consists of interest incurred on our convertible and non-convertible debt. The debt discounts amortization incurred during the nine months ended September 30, 2021 and 2020 was $1,232,641 and $1,373,575, respectively.
~~Net Loss~~
Our net loss for the nine months ended September 30, 2021 and 2020 was $7,250,698 and $4,177,391, respectively, an increase of $3,073,307. The net loss of $7,250,698 for the nine months ended September 30, 2021 represents 1,468% of total revenues for the period. The net loss of $4,177,391 for the nine months ended September 30, 2020, represents 1,917% of total revenues for the period.
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Liquidity and Capital Resources
We have generated a net loss from continuing operations for the nine months ended September 30, ~~2021~~2022 of ~~$7,250,699~~$2,651,720 and used ~~$2,693,632~~$1,757,153 of cash for ~~operations and we had a working capital deficit of $3,634,622.~~operations. As of September 30, ~~2021,~~2022, we had total assets of ~~$6,087,167,~~$3,468,297, which ~~includes accounts~~included cash of $831. Accounts receivable trade of ~~$151,927,~~$240,351, inventory of ~~$201,860, prepaid insurance of $86,250~~$180,580 and other current assets of ~~$187,200. The other~~$36,937. On October 6, 2021, the Company entered into an Asset Purchase Agreement, Management Services Agreement, Cooperation Agreement and Employment Agreement with VBF Brands, Inc. As consideration for the transaction, the Company agreed to assume two secured convertible promissory notes issued by SIGO to St. George Investments, LLC with a net balance of $4,091,378. Since the conditions of the acquisition of VBF haven’t been consummated, this assumed debt was recorded as an Other Current Asset. Based on the current ~~assets consisted~~conditions and at the suggestion of ~~$157,775~~legal counsel, the company has determined a risk in ~~non-trade receivable due from a brokerage~~the collectability of this asset and ~~investment firm and advance payments~~accordingly, has calculated an impairment loss of $2,020,982 as the acquisition continues to ~~vendors.~~not be consummated as of September 30, 2022.
During the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, we met our capital requirements through a combination the sale of ~~loans, sales of equity~~securities and convertible debt ~~instruments; however, we~~instruments. We will need to secure additional external funding in order to continue our operations. ~~Our~~For the nine months ended September 30, 2022, our primary internal sources of liquidity were provided by an increase in proceeds from the issuance of note payables of $1,649,980 and proceeds from the sale of common stock of $1218,315, as compared to proceeds from issuance of notes payable of $2,065,863 ~~and sale of our common stock for gross proceeds of $1,638,126~~ for the nine months ended September 30, 2021 ~~as compared to an increase in~~and proceeds from ~~the issuance of note payables of $876,302,~~ sale of ~~our~~ common stock ~~for gross proceeds~~ of ~~$153,685, a government loan due to COVID-19 of $35,500 and gross proceeds for the sales of trading securities of $10,854~~$1,492,851 for the nine months ended September 30, 2020. Our ability to rely upon external financing arrangements to fund operations is not certain, and this may limit our ability to secure future funding from external sources without changes in terms requested by counterparties, changes in the valuation of collateral, and associated risk, each of which is reasonably likely to result in our liquidity decreasing in a material way. We intend to utilize cash on hand, loans and other forms of financing such as the sale of additional equity and debt securities and other credit facilities to conduct our ongoing business, and to also conduct strategic business development and implementation of our business plans generally. However, we may be unable to raise additional funds when needed on favorable terms, or at all, which may have a negative impact on our financial condition and could force us to curtail or cease our operations.2021.
Cash Flows from Operating Activities
For the nine months ended September 30, 2022 and 2021, we used cash in operating activities of ~~$2,693,632. For~~$1,757,153 and $2,693,632, respectively. This decrease of $936,479 is due primarily to an increase in net loss for the nine months ended September 30, ~~2020, we used cash in operating activities~~2022 of ~~$1,262,358. This decrease of $1,431,274 is due primarily~~$10,066,431 as compared to ~~loss~~$7,250,698 for the ~~period, which~~nine months ended September 30, 2021. This was offset by the increase in cashflows from the impairment loss ~~on equity investment, interest expense recognized~~of the VBF acquisition asset of $2,020,982 and a increase in accounts payable $735,480 and a decrease in accounts receivable of $101,644 for the excess of fair value of derivative liability over net book value of notes payable at issuance and continued implementation of our business plans, operations, management, personnel and professional services.nine months for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.
Cash Flows from Investing Activities
During the nine months ended September 30, 2022 and 2021, we used ~~$185,850~~cash of $2,748 and 185,850, respectively, in investing activities related to purchase of equipment and property of $121,603, $99,098 to establish a joint venture and $155,550 in the acquisition of a new business, and these amounts were offset by proceeds from the sale of investments of $190,401. During the nine months ended September 30, 2020, cash provided by investing activities was $123,729 which was primarily from proceeds attributed to an investment in a joint venture of $125,000, which was offset by $1,271 related to our purchase of property and ~~equipment.~~equipment for the nine months ended September 30, 2022. In addition, we invested in joint ventures and acquisition of new business during the nine months ended September 30, 2021.
Cash Flows from Financing Activities
During the nine months ended September 30, 2022, net cash provided by financing activities was $1,676,649 which was primarily attributable to $1,649,980 from the issuance of notes and $1,218,315 from the sale of our common stock, this was offset by $1,144,760 of repayments of notes payable and a $60,000 repurchase of the company’s common stock. During the nine months ended September 30, 2021, net cash provided by financing activities was $2,912,709 ~~as a result of our receipts of funds~~which was attributable to $2,065,863 from the issuance of notes ~~payable of $2,065,863~~ and $1,492,851 which was from the sale of our common stock of $1,492,851, along with repayments of notes payable of $626,005 and repayments of related party notes of $20,000. During the nine months ended September 30, 2020, cash provided by financing activities was $1,076,341 as a result of our receipt of funds from the issuance of notes payable of $876,302, sale of our common stock with gross proceeds of $153,685, a government loan due to COVID-19 of $35,500 and proceeds from the sales of trading securities of $10,854.stock.
Our business plans have not generated significant revenues and as of the date of this filing are not sufficient to generate adequate amounts of cash to meet our needs for cash. Our primary source of operating funds in ~~2021~~2022 and ~~2020~~2021 has been proceeds from the sale of our common stock and the issuance of convertible debt and ~~non-convertible~~other debt. We have experienced net losses from operations since inception, but expect these conditions to improve in ~~2021~~the second half of 2022 and beyond as we develop direct sales and marketing programs. We had stockholders' deficiencies at ~~September~~June 30, ~~2021~~2022 and require additional financing to fund future operations. As of the date of this filing, and due to the early stages of operations, we have insufficient sales data to evaluate the amounts and certainties of cash flows, as well as whether there has been material variability in historical cash flows.
We currently do not have sufficient cash and liquidity to meet our anticipated working capital for the next twelve months. Historically, we have financed our operations primarily through private sales of our common stock and ~~debt. If~~if our sales goals for our ~~hempSMART™ products~~cDistroproducts do not materialize as planned, and we are not able to achieve profitable operations at some point in the future, we may have insufficient working capital to maintain our operations as we presently intend to conduct them or to fund our expansion, marketing, and product development plans. There can be no assurance that we will be able to obtain such financing on acceptable terms, or at all.

43
42

~~Off Balance~~Off-Balance Sheet Arrangements; Commitments and Contractual Obligations
As of September 30, ~~2021,~~2022, we did not have any off-balance sheet arrangements ~~that have or are reasonably likely to have a current or future effect on our financial condition,~~ ~~revenues, expenses, results of operations, liquidity, capital expenditures or capital resources nor~~and did wenot have any commitments or contractual obligations.
~~Critical Accounting Policies~~
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 1 to the condensed consolidated financial statements describes the significant accounting policies and methods used in the preparation of the condensed consolidated financial statements. Estimates are used for, among other things, contingencies and taxes. Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the condensed consolidated financial statements.
~~Stock-Based Compensation~~

We account for employee and non-employee compensation in accordance with Accounting Standards Codification 718-10-30 of the Financial Accounting Standards Board. See Note 3 - “Summary of Significant Accounting Policies” set forth in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
~~Recent Accounting Pronouncements~~
~~A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is set forth in~~ ~~Note 3 to the condensed consolidated financial statements~~ ~~included elsewhere in this Quarterly Report.~~
JOBS Act

On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have chosen to opt out of the extended transition periods available to emerging growth companies under the JOBS Act for complying with new or revised accounting standards. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition periods for complying with new or revised accounting standards is irrevocable.

Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certain exemptions, including, without limitation, (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, and (ii) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of our initial public offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
~~COVID-19:~~
The COVID-19 global pandemic has been unprecedented and unpredictable and is likely to continue to result in significant national and global economic disruption, which may adversely affect our business. Based on the Company’s current assessment, however, the Company does not expect any material impact on its long-term strategic plans, its operations, or its liquidity due to the worldwide spread of COVID-19. However, the Company is actively monitoring this situation and the possible effects on its financial condition, liquidity, operations, suppliers, and industry.
44
~~ITEM 3.~~
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act.
~~ITEM 4.~~ ~~CONTROLS AND PROCEDURES.~~
ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We are required to maintain “disclosure controls and procedures,” as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to its management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer ~~has~~have concluded that as of September 30, ~~2021,~~2022, our disclosure controls and procedures were not effective due to material ~~weaknesses described below.~~weaknesses. Management has identified the following material weaknesses: our ability to prepare our financial statements in a timely manner and inadequate segregation of duties consistent with control objectives. In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we plan to create a new controller position and hire a controller in order to segregate duties within the accounting department consistent with control objectives. In addition, we also intend to increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us and we are able to find a qualified person to fill such ~~roll.   This includes hiring a competent director of corporate reporting to help ensure that the Company meets its filing deadlines in a more timely manner.~~role.

Changes in Internal Control

There have been no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II -— OTHER INFORMATION
~~ITEM 1.~~ ~~LEGAL PROCEEDINGS.~~
ITEM 1. LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings. Litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. Except as set forth herein, we are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

On September 20, 2018, we filed suit against Bougainville Ventures, Inc. (“Bougainville”), BV-MCOA Management, LLC, Andy Jagpal, Richard Cindric, et al. in Okanogan County Washington Superior Court. We previously entered into a joint venture agreement with Bougainville on March 16, 2017, as amended on November 6, 2017.

We and Bougainville originally agreed to a joint venture with the goal of participating in the legalized cannabis business in Washington State. We intended to organize and operate a cannabis growth and cultivation business on land owned by Bougainville in Oroville, Washington. Furthermore, we agreed to finance the joint venture with a cash payment of $800,000 and issued Bougainville 15 million shares of our common stock. Bougainville represented that it would provide the real property for the joint venture, computer-controlled greenhouses and agricultural facilities and, as landlord, oversight of the operations of a cannabis licensee holding a I-502 cannabis license. Bougainville represented that the property was I-502 compliant, and that it had a lease payment arrangement with an I-502 license holder to operate on the land. Bougainville agreed to vend clear title to the real property associated with the I-502 licensee to the joint venture within 30 days of the final payment by us. Despite our compliance, in full with our financial obligations, Bougainville did not and has not transferred the real property to the joint venture. We determined that Bougainville did not own the real property, misappropriated funds paid into the joint venture for its own purposes and did not have an agreement with a licensed I-502 operator.

Pursuant to our complaint, we are seeking legal and equitable relief for breach of contract, fraud, breach of fiduciary duty, conversion, recession of the joint venture agreement, an accounting, quiet title to real property in the name of the registrant, for the appointment of a receiver, the return to treasury of the 15 million shares of common stock issued to Bougainville, and, for treble damages pursuant to the Consumer Protection Act in Washington State. We have filed a lis pendens on the real property.

We recently served process on the defendants and the case is currently in litigation. ~~The case is currently set for trial on January 22, 2022.~~
~~ITEM 1A.~~ ~~RISK FACTORS.~~
ITEM 1A. RISK FACTORS.

Risk factors that affect our business and financial results are discussed in Part I, Item 1A “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 (“Annual Report”). There have been no material changes in our risk factors from those previously disclosed in our Annual Report. You should carefully consider the risks described in our Annual Report, which could materially affect our business, financial condition or future results. The risks described in our Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected.
~~ITEM 2.~~ ~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.~~

~~During the three months ended September 30,~~
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Subsequent to December 31, 2021, the Company ~~issued the following securities~~:
~~The Company issued 54,700,000~~has sold a total of 90,000,000 shares ~~on September 14, 2021~~of common stock at ~~$0.0025~~a fixed price of $0.001 per share for a total of $90,000 in cash ~~proceeds~~to accredited investors under the Company’s active Regulation A offering.
Subsequent to December 31, 2021, the Company has sold a total of ~~$134,084.~~706,250,000 shares of common stock at a fixed price of $0.0008 per share for a total of $565,000 in cash to accredited investors under the Company’s active Regulation A offering.
Subsequent to December 31, 2021, the Company has sold a total of 2,020,000,000 shares of common stock at a fixed price of $0.0002 per share for a total of $404,000 in cash to accredited investors under the Company’s active Regulation A offering.

The ~~Company issued 55,000,000 shares on September 28, 2021 at $0.0026 per share for total proceeds~~foregoing issuances were exempt from registration under Section 4(a)(2) of ~~$145,275. The Company reflected a receivable for~~ the ~~total purchase price as of September 30, 2021, and the cash proceeds were received on October 7, 2021.~~Securities Act.
~~ITEM 3.~~ ~~DEFAULTS UPON SENIOR SECURITIES.~~
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.
~~ITEM 4.~~ ~~MINE SAFETY DISCLOSURES.~~
ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.
~~ITEM 5.~~ ~~OTHER INFORMATION.~~
ITEM 5. OTHER INFORMATION.

None.
46
~~ITEM 6.~~ ~~EXHIBITS.~~
ITEM 6. EXHIBITS.

Exhibit
No. Description
~~2.1~~ Agreement and Plan of Merger, dated June 29, 2021, by and among Marijuana Company of America, Inc., cDistro Merger Sub, Inc. and cDistro, Inc. (Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 1, 2021)
3.1* ~~Amendment to Articles of Incorporation, dated October 21, 2021~~
~~10.1+~~ First Amendment to Executive Employment Agreement, dated April 27, 2021, by and between the Company and Jesus Quintero (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 27, 2021)
~~10.2~~ ~~Joint Venture Agreement (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 18, 2021)~~
~~10.3~~
~~Form of Earnout Agreement (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 1, 2021)~~
~~10.4~~ ~~Form of Lock-Up and Leak-Out Agreement (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on July 1, 2021)~~
~~10.5~~ ~~Form of Stock Purchase Agreement (Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on July 1, 2021)~~
~~10.6+~~ ~~Form of Employment Agreement (Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the SEC on July 1, 2021)~~
~~10.7†~~
Asset Purchase Agreement dated October 6, 2021, by and between the Company and Salinas Diversified Ventures, Inc., VBF Brands, Inc., Sunset Island Group, Inc., Lori Livacich and St. George Investments, LLC (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 13, 2021)
~~10.8~~ Cooperation Agreement dated October 6, 2021, by and between Salinas Diversified Ventures, Inc., VBF Brands, Inc., Sunset Island Group, Inc., and Lori Livacich (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on October 13, 2021)
~~10.9~~ Employment Agreement dated  October 6, 2021, by an between Salinas Diversified Ventures, Inc. and Lori Livacich (Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on October 13, 2021)
~~10.10~~ Management Services Agreement dated October 6, 2021, by and between the Company and Salinas Diversified Ventures, Inc., VBF Brands, Inc., and Sunset Island Group, Inc. (Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on October 13, 2021)
~~10.11~~ Securities Purchase Agreement dated October 6, 2021 by and between the Company and St. George Investments, LLC (Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the SEC on October 13, 2021)
~~10.12~~ Convertible Promissory Note dated October 6, 2021, by and between the Company and St. George Investments, LLC (Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the SEC on October 13, 2021)
~~10.13~~ Assignment of Promissory Note dated October 6, 2021, by and between the Company and St. George Investments, LLC (Incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed with the SEC on October 13, 2021)
~~10.14~~ Lock-Up Agreement dated February 26, 2021, between Marijuana Company of America, Inc. and Eco Innovation Group, Inc. (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on March 2, 2021)
~~10.15~~ First Amendment to Lock-Up Agreement dated October 1, 2021, between Marijuana Company of America, Inc. and Eco Innovation Group, Inc. (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on October 7, 2021)

31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1* Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2* Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS* Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH* Inline XBRL Taxonomy Extension Schema Document

101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document

104* ~~Cover Page Interactive Data File -~~Inline XBRL for the cover page ~~from the Registrant’s~~of this Quarterly Report on Form 10-Q, ~~for~~included in the ~~quarter ended September 30, 2021 is formatted in~~Exhibit 101 Inline XBRL Document Set.

* Filed herewith.

+ ~~Indicates a management contract or any compensatory plan, contract or arrangement.~~
† The schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC.

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45

SIGNATURES
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 thereunto duly authorized.

MARIJUANA COMPANY OF AMERICA, INC.

Date:  November ~~16, 2021~~21, 2022 By: /s/ Jesus Quintero
Jesus Quintero,
Chief Executive Officer and Chief Financial Officer
(Principal Executive Officer and Principal Financial and Accounting Officer)

48


	For the three months ended						For the nine months ended
	September 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
REVENUES:
Sales	$	442,178		$	49,933		$	493,988		$	206,407
Related party Sales		0			3,262			0			11,565
Total Revenues		442,178			53,195			493,988			217,972

Cost of sales		378,491			37,170			406,972			110,563

Gross Profit		63,687			16,025			87,016			107,409

OPERATING EXPENSES:
Depreciation		3,697			1,374			6,350			4,702
Selling and marketing		167,664			125,942			430,425			326,608
Payroll and related		142,830			62,000			413,232			258,842
Stock-based compensation		529,393			123,000			688,293			665,767
General and administrative		639,767			294,821			1,777,419			710,094
Total operating expenses		1,483,352			607,137			3,315,719			1,966,013

Net loss from operations		(1,419,664	)		(591,112	)		(3,228,703	)		(1,858,604	)

OTHER INCOME (EXPENSES):
Interest expense, net		(549,363	)		(688,090	)		(2,542,108	)		(2,460,185	)
Impairment gain (Loss) on Joint Ventures		—			238,296			—			(22,658	)
Income (Loss) on equity investment		—			240,198			—			106,305
Loss on share exchange agreement		(340,984	)		—			(735,178	)		—
Gain (Loss) on change in fair value of derivative liabilities		1,177,610			(1,454,903	)		(451,679	)		(312,631	)
Unrealized Gain (loss) on trading securities		—			—			504,137			(13,945	)
Loss on sale of trading securities		(543,200	)		—			(543,200	)		(2,603	)
(Loss) Gain on settlement of debt		(88,990	)		383,440			(253,967	)		386,930
Total other income (expense)		(344,927	)		(1,281,059	)		(4,021,995	)		(2,318,787	)

Net loss before income taxes		(1,764,591	)		(1,872,171	)		(7,250,698	)		(4,177,391	)

Income taxes (benefit)		—			—			—			—

NET INCOME (LOSS)	$	(1,764,591	)	$	(1,872,171	)	$	(7,250,698	)	$	(4,177,391	)

Loss per common share, basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)

Weighted average number of common shares outstanding, basic and diluted (after stock-split)		5,266,505,915			1,178,860,134			4,867,533,020			518,261,567


	Nine Months Ended September 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)	$	(7,250,698	)	$	(4,177,391	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount		1,232,641			1,373,575
Depreciation and amortization		5,753			4,702
Bad debt expense		34,359			—
Impairment loss on equity investment		—			22,658
Loss on equity investment		735,178			(106,305	)
Loss (Gain) on change in fair value of derivative liability		451,679			312,631
Interest expense recognized for the excess of fair value of derivative liability over net book value of notes payable at issuance		1,035,115			—
Loss on share inducement and settlement of warrant liability		—			427,500
Stock-based compensation		661,292			665,767
Unrealized (Gain) Loss on trading securities		39,063			13,945
Gain on Settlement of joint venture		—			(386,930	)
Loss on settlement of liabilities		256,336			—
Changes in operating assets and liabilities:
Accounts receivable		(5,496	)		9,754
Inventories		(90,561	)		3,652
Prepaid expenses and other current assets		(161,352	)		(77,605	)
Accounts payable		386,122			205,061
Accrued expenses and other current liabilities		(23,063	)		446,746
Right-of-use assets		7,858			10,459
Right-of-use liabilities		(7,858	)		(10,577	)
Net cash provided by (used in) operating activities		(2,693,632	)		(1,262,358	)


Cash flows from investing activities:
Purchases of property and equipment		(121,603	)		(1,271	)
Payment to establish joint venture		(99,098	)		—
Proceeds from sale of investments		190,401			—
Investment in joint venture		—			125,000
Acquisition of business		(155,550	)		—
Net cash provided by (used in) investing activities		(185,850	)		123,729

Cash flows from financing activities:
Proceeds from issuance of notes payable		2,065,863			876,302
Proceeds from PPP loan payable		0			35,500
Proceeds from sales of trading securities		—			10,854
Repayments of notes payable		(626,005	)		—
Repayments to related parties		(20,000	)		—
Proceeds from sale of common stock		1,492,851			153,685
Net cash provided by (used in) financing activities		2,912,709			1,076,341

Net increase (decrease) in cash		33,227			(62,288	)

Cash at beginning of period		74,503			211,765

Cash at end of period	$	107,730		$	149,477
		—

Supplemental disclosure of cash flow information:
Cash paid for interest		—			—
Cash paid for taxes		—			—

Non cash financing activities:
Common stock issued in settlement of convertible notes payable	$	1,989,282		$	2,635,647
Common stock issued in settlement of related party notes payable and accrued compensation		—		$	50,613
Reclassification of derivative liabilities to additional paid-in capital	$	6,270,052		$	3,886,971
Gains on settlement of JV investment	$	—		$	386,930
Common stock issued for investment	$	1,300,000		$	—
Common stock issued to settle liabilities	$	8,623		$	—
Common stock issued for acquisition of business	$	1,617,501		$	—
Common shares issued in settlement of legal case	$	—		$	1,283,632

Summarizes the Stock Warrant Activity

	Shares			Weighted-Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2020		293,054,702		$	0.0011		2.22	$	1,023,306
Granted		133,107,371			0.0084		5.00		—
Increase due to reset provision		(9,722,222	)		0.0004		2.41		—
Exercised		(271,137,466	)		0.01		2.53		1,427,826
Outstanding at September 30, 2021		145,302,385		$	0.0033		3.05	$	220,650
Exercisable at September 30, 2021		145,302,385		$	0.0033		3.05	$	220,650

Summary of Changes in Fair Value of Derivative Liabilities

		Debt Derivative
Balance, January 1, 2021	$	4,426,057
Increase resulting from initial issuance of additional convertible notes payable		1,824,340
Decreases resulting from conversion of convertible notes payable		(6,270,052	)
Decreases resulting from payoff of convertible notes payable		(649,961	)
Loss from change in fair value included in earnings		1,101,640
Balance, September 30, 2021	$	432,024

Schedule of aggregate preliminary fair value
	Amount
Cash, net of cash acquired of $94,450	$	155,550
Contingent Consideration - Earnout Agreement		1,000,000
265,164,070 shares of common stock		1,617,501
Total preliminary consideration transferred	$	2,773,051

Schedule summarizes the preliminary allocation of the fair values

Accounts Receivable	$	26,875
Inventory		7,816
Other Assets		518
Goodwill		2,925,884
Accounts payable		(181,042	)
Other accrued liabilities		(7,000	)
Net assets acquired	$	2,773,051

Schedule of pro-forma consolidated results of operations
	Three months ended September 30,						Nine months ended September 30,
	2021			2020			2021			2020
Revenue	$	442,178		$	62,816		$	886,417		$	297,037
Operating loss		(1,419,665	)		(580,152	)		(3,275,525	)		(1,928,929	)
Net loss		(1,764,592	)		(1,861,211	)		(7,297,520	)		(4,247,716	)
Net loss per common share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)
Weighted Average common shares outstanding		5,266,505,915			1,444,024,204			5,057,632,261			783,425,637


Products	September 30, 2021		September 30, 2020
Body Lotion - hempSMART	$	184	$	679
Brain - hempSMART		1,153		4,610
Drink Mix - hempSMART		—		563
Drops - hempSMART		11,533		25,541
Face Moisturizer - hempSMART		—		1,606
Pain Capsules - hempSMART		—		2,714
Pain Cream - hempSMART		8,379		14,911
Pet Drops - hempSMART		2,939		2,571
Accessories and hardware - cDistro products		21,844		—
CBD Products – cDistro product		485		—
E-Liquids - cDistro		75,531		—
Kratom - cDistro		306,256		—
Nutraceutical products - cDistro		441		—
Other products – cDistro		852		—
Leased equipment revenues – Marijuana Company of America		12,581		—

Totals	$	442,178	$	82,958

	September 30, 2022		September 30, 2021

Body Lotion	$	—	$	184
Brain	$	470	$	1,153
Drink Mix	$	—	$	—
Drops	$	4,250	$	11,533
Face Moisturizer	$	—	$	—
Pain Cream	$	3,266	$	8,379
Pet Drops	$	—	$	2,939
Bottles – Nic	$	—	$	75,531
Bottles – Salt Nic	$	—	$	—
CBD Hempettes	$	1,911		485
Disposables–Tobacco – Free Nicotine	$	—	$	—
Kratom	$	14,304	$	306,256
Other cDistro products	$	6,731	$	23,137

Vape products	$	31,670	$	—
Marketing fees	$	57,292		—
MCOA Equipment Lease rental	$	22,500	$	12,581
	$	142,394	$	442,178

Exhibit No.		Description

~~2.1~~		Agreement and Plan of Merger, dated June 29, 2021, by and among Marijuana Company of America, Inc., cDistro Merger Sub, Inc. and cDistro, Inc. (Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 1, 2021)

3.1*		~~Amendment to Articles of Incorporation, dated October 21, 2021~~

~~10.1+~~		First Amendment to Executive Employment Agreement, dated April 27, 2021, by and between the Company and Jesus Quintero (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 27, 2021)

~~10.2~~		~~Joint Venture Agreement (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 18, 2021)~~

~~10.3~~		~~Form of Earnout Agreement (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 1, 2021)~~

~~10.4~~		~~Form of Lock-Up and Leak-Out Agreement (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on July 1, 2021)~~

~~10.5~~		~~Form of Stock Purchase Agreement (Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on July 1, 2021)~~

~~10.6+~~		~~Form of Employment Agreement (Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the SEC on July 1, 2021)~~

~~10.7†~~		Asset Purchase Agreement dated October 6, 2021, by and between the Company and Salinas Diversified Ventures, Inc., VBF Brands, Inc., Sunset Island Group, Inc., Lori Livacich and St. George Investments, LLC (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 13, 2021)

~~10.8~~		Cooperation Agreement dated October 6, 2021, by and between Salinas Diversified Ventures, Inc., VBF Brands, Inc., Sunset Island Group, Inc., and Lori Livacich (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on October 13, 2021)

~~10.9~~		Employment Agreement dated October 6, 2021, by an between Salinas Diversified Ventures, Inc. and Lori Livacich (Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on October 13, 2021)

~~10.10~~		Management Services Agreement dated October 6, 2021, by and between the Company and Salinas Diversified Ventures, Inc., VBF Brands, Inc., and Sunset Island Group, Inc. (Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on October 13, 2021)

~~10.11~~		Securities Purchase Agreement dated October 6, 2021 by and between the Company and St. George Investments, LLC (Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the SEC on October 13, 2021)

~~10.12~~		Convertible Promissory Note dated October 6, 2021, by and between the Company and St. George Investments, LLC (Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the SEC on October 13, 2021)

~~10.13~~		Assignment of Promissory Note dated October 6, 2021, by and between the Company and St. George Investments, LLC (Incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed with the SEC on October 13, 2021)

~~10.14~~		Lock-Up Agreement dated February 26, 2021, between Marijuana Company of America, Inc. and Eco Innovation Group, Inc. (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on March 2, 2021)

~~10.15~~		First Amendment to Lock-Up Agreement dated October 1, 2021, between Marijuana Company of America, Inc. and Eco Innovation Group, Inc. (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on October 7, 2021)

31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*		~~Cover Page Interactive Data File -~~Inline XBRL for the cover page ~~from the Registrant’s~~of this Quarterly Report on Form 10-Q, ~~for~~included in the ~~quarter ended September 30, 2021 is formatted in~~Exhibit 101 Inline XBRL Document Set.

+	~~Indicates a management contract or any compensatory plan, contract or arrangement.~~

†	The schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC.

	MARIJUANA COMPANY OF AMERICA, INC.

Date: November ~~16, 2021~~21, 2022	By:	/s/ Jesus Quintero
		Jesus Quintero, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer)