Notes to the Condensed Financial Statements

(Unaudited)

NOTE 1 – DESCRIPTION OF THE BUSINESS OF ACQUIRED SALES CORP.

NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation – The accompanying financial statements include the accounts and operations of Acquired Salesthe Company for all periods presented.

Condensed Financial Statements – The accompanying financial statements are condensed and do not include all disclosures normally required by generally accepted accounting principles. These statements should be read in conjunction with the annual financial statements included in Form 10-K filed with the U.S. Securities and Exchange CommissionSEC on March 28, 2016.13, 2019. In particular, the basis of presentation and significant accounting principles were presented in Note 1 to the annual financial statements. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying unaudited condensed financial statements and consist of only normal recurring adjustments, except as disclosed herein. The results of operations for the three and nine months ended September 30, 20162019 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016.

Basic and Diluted Earnings (Loss) Per Common Share – Basic earnings (loss) per common share is determined by dividing earnings (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per common share is calculated by dividing earnings (loss) by the weighted-average number of common shares and dilutive common share equivalents outstanding during the period. When dilutive, the incremental potential common shares issuable upon exercise of stock options and warrants are determined by the treasury stock method. The following table summarizes the calculations of basic and diluted earnings (loss) per common share for the three and nine months ended September 30, 20162019 and 2015.

At January 1, 2016 through May 17, 2016,September 30, 2019, there were 4,848,7744,211,019 stock options and 478,000warrants, and 31,250 financing warrants outstanding that were excluded from the computation of diluted earnings loss per share because their effects would have been anti-dilutive. On May 18, 2016, 100,000 of these stock options were exercised. As a result,In comparison, at September 30, 2016,2018, there were 4,748,7744,181,415 stock options and 478,000warrants, and 17,500 financing warrants outstanding that were excluded from the computation of diluted earnings loss per share because their effects would have been anti-dilutive.

The Company hasSeries A Preferred Stockoutstanding convertible into 6,615,000 shares of common stock. In comparison, there were 4,848,774 employeeaddition, to date, the Company has accepted subscriptions from three accredited investors to purchase 90,000 shares of Series B Preferred Stock for an aggregate purchase price of $450,000 in cash, convertible at the option of the holder into 90,000 shares of newly issued common stock options and 938,000 warrants outstanding duringof the three and nine months ended September 30, 2015 that were excluded from the computation of diluted earnings (loss)Company, or $5.00 per share because their effects would have been anti-dilutive. 

Recent Accounting Pronouncements – In JuneMay 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which superseded previous revenue recognition guidance. ASU No. 2014-09 and its amendments were included in ASC 606, “Revenue from Contracts with Customers”. ASC 606 requires that a company recognizes revenue at an amount that reflects the consideration to which the company expects to be entitled in exchange for transferring goods or services to a customer. The Company recently adopted and implemented ASC 606; however, it had no direct impact on the Company’s operations.

In February 2016, the Financial Accounting Standards Board ("FASB"(“FASB”) issued Accounting Standards Update ("ASU") No. 2014-12, Compensation-Stock Compensation (Topic 718)-Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force). ASU No. 2014-122016-02, “Leases” (Topic 842) (“ASU 2016-02”).  The amended guidance, which is effective for the Company on January 1, 2019, requires that a performance target that affects vestingthe recognition of lease assets and couldlease liabilities on the balance sheet for those leases with terms in excess of 12 months and currently classified as operating leases. Disclosure of key information about leasing arrangements will also be achieved after the requisite service period shall be treated as a performance condition. The effective date is the first quarter of fiscal year 2016.required. The Company recently adopted ASU No. 2014-12; the adoption of this hasand implemented ASC 842; however, it had no effectdirect impact on the financial statements.

Going Concern– The Company has a history of recurring losses which have resulted in an accumulated deficit of $13,665,544$15,190,639 as of September 30, 2016.2019. During the three and nine months ended September 30, 2016,2019, the Company recognized net lossesa loss from operations of $52,861$146,466 and $142,236,$1,087,721, respectively.

Also, the Company has Series A Preferred Stock and Series B Preferred Stock outstanding that is currently accruing dividends at the rate of 3% per year. The Company used net cashhas no income to pay these dividends. The Company does not have any business or any sources of $56,453 inrevenue to pay these dividends or its other operating activities during the nine months ended September 30, 2016. As discussed in Note 4, on September 1, 2015, the Company determined that the note and related interest receivable due from the William Noyes Webster Foundation, Inc. (the "Foundation") would not be collectible. As such, the Company wrote off the note totaling $737,850 and interest receivable totaling $97,427 as bad debt expense on September 1, 2015.

will be able to continue as a going concern. Bankruptcy of the Company at some point in the future is a possibility. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded

asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company currently has no revenue-generating subsidiaries. Management plans to sustain the Company as a going concern by taking the following actions: (1) acquiring and/or developing profitable businesses that will create positive income from operations; and/or (2) completing private placements of the Company'sCompany’s common stock and/or preferred stock. Management believes that by taking these actions, the Company will be provided with sufficient future operations and cash flow to continue as a going concern. However, there can be no assurances or guarantees whatsoever that the Company will be successful in consummating such actions on acceptable terms, if at all. Moreover, any such actions can be expected to result in substantial dilution to the existing shareholders of the Company.

NOTE 45 – NOTES RECEIVABLE

The William Noyes Webster Foundation, Inc.

The Foundation, a non-profit Massachusetts corporation, has received a provisional registration from the Commonwealth of Massachusetts to own and operate a medical marijuana cultivation facility in Plymouth, Massachusetts, and a medical marijuana dispensary in Dennis, Massachusetts. Jane W. Heatley ("Heatley"(“Heatley”) is the founder and a member of the board of directors of the Foundation.

Between April and July 2015, the Company loaned an additional $135,350 to the Foundation, evidenced by the Note and secured by the Security Agreement. Following such additional loans, the principal of the loan from the Company to the Foundation, evidenced by the Note and secured by the Security Agreement, is now $737,850.

than one year after the Foundation commences operations. The principal of the Note would be payable in eight consecutive equal quarterly installments, commencing on the last day of the calendar quarter in which the Foundation commences operations. Principal on the Note and related accrued interest would be considered past due if the aforementioned payments were not received by their due dates.

Uncollectable Note and Interest Receivable– The Company assessed the collectability of the Note based on the adequacy of the Foundation'sFoundation’s collateral and the Foundation'sFoundation’s capability of repaying the Note according to its terms. Based on this assessment, on September 1, 2015, the Company concluded that Note and interest receivable would not be collectible. As such, the Company wrote off the Note totaling $737,850 and interest receivable totaling $97,427 as bad debt expense on September 1, 2015.

On June 21, 2016, a company affiliated with Gerard M. Jacobs, CEO of Acquired Sales,GJacobs made a non-interest bearing loan of $4,000 to the Company, which iswas payable upon demand. This loan was outstanding at September 30, 2018, but was not outstanding as of September 30, 2019.

At September 30, 2019, there were no expense reimbursements owed to GJacobs. In comparison, at September 30, 2018, there were expense reimbursements owed GJacobs totaling $18,746.

As of December 31, 2018, a total of $30,791 had been borrowed by the Company on such terms, and warrants to purchase 25,000 shares of common stock of the Company had been issued to director Joshua A. Bloom and warrants to purchase 12,500 shares of common stock of the Company had been issued to the Company's CEO GJacobs. As of December 31, 2018, there was also a total of $1,381 in interest payable to Joshua A. Bloom and GJacobs, related to these borrowings.

Between January 7, 2019 and February 6, 2019, an additional $14,772 was lent by GJacobs to the Company on such terms, and warrants to purchase 18,750 shares of common stock of the Company were issued to GJacobs.

On March 13, 2019, all of these borrowings and the related interest payable to Joshua A. Bloom and GJacobs was repaid. In total, $21,540 was paid to Joshua A. Bloom, and $26,628 was paid to GJacobs.

Amounts Owed to Third Parties

At September 30, 2019, there were accounts payable of $6,985 owed to third parties for professional fees. In comparison, at September 30, 2018, there were accounts payable of $110,315 owed to third parties for professional fees.

On March 15, 2019, the Company settled and paid its debt of $61,500 to its previous independent registered public accounting firm, Eide Bailly LLP, and the Company recognized a gain on the settlement of $29,196.

Issuance of Series A Preferred Stock – The Company has authorized 400,000 shares of its Series A Preferred Stock. Each share ofSeries APreferred Stock may be converted into 100 shares of common stock. TheSeries APreferred Stock pays dividends at the rate of 3% annually. TheSeries APreferred Stock dividends are cumulative if the Company does not have the necessary cash to pay the dividend when due. TheSeries APreferred Stock dividends shall cease to accrue at such time as the Company’s Common Stock has closed at $3.00 per share or higher for 20 consecutive trading days after the first date that the Series A Registration Statement is effective, and there have been, on average, at least 25,000 shares traded on each of those 20 consecutive trading days. TheSeries APreferred Stock have no voting rights. The holders of theSeries APreferred Stock shall have voluntary conversion rights. Shares ofSeries APreferred Stock are subject to mandatory conversion (in the discretion of the Company) at such time as the Company’s common stock has closed at $5.00 per share or higher for 20 consecutive trading days after the first date that the Series A Registration Statement is effective, and there have been, on average, at least 50,000 shares traded on each of those 20 consecutive trading days.   

Between February 27, 2019 and May 13, 2019, the Company accepted subscriptions from accredited investors to purchase 66,150 shares of newly issuedSeries APreferred Stock for an aggregate purchase price of $6,615,000 in cash. These 66,150 shares of

Series APreferred Stock are convertible at the option of the holders into 6,615,000 shares of newly issued common stock of the Company, or $1.00 per share of common stock of the Company. On August 2, 2019, the Company filed a Form S-1 Series A Registration Statement covering the shares of newly issued common stock of the Company into which theSeries APreferred Stock can be converted. The Series A Registration Statement has not yet been approved by the SEC. TheSeries APreferred Stock will receive an annual dividend, and will be subject to mandatory conversion, under terms and conditions set forth in the Certificate of Designation of theSeries APreferred Stock. As of September 30, 2019, the Company has accrued a liability of $94,997 as dividends payable to holders of the Series A Preferred Stock. Although no dividends have been declared by the Board of Directors, the Company fully intends on paying the annual dividends to the holders of the Series A Preferred Stock, and as such, the Company has accrued the liability.

Issuance of Series B Preferred Stock – The Company has authorized 5,000,000 shares of its Series B Preferred Stock. Each share ofSeries BPreferred Stock may be converted into one share of common stock. TheSeries BPreferred Stock pays dividends at the rate of 3% annually. TheSeries BPreferred Stock dividends are cumulative if the Company does not have the necessary cash to pay the

For the past many years, our stated objective has been to acquire all or a portion of one or more operating businesses. In the past year, we have been exploring potential acquisitions of all or a portion of one or more operating businesses involving the manufacture and sale of cannabidiol (CBD)-infused products such as beverages, muscle/joint rubs, oils, tinctures, bath bombs, isolate, relief balms, elixirs, body washes, med sticks, lotions, vape pens, vape cartridges, shatter, gummies, pet food, soap and edibles (a “CBD-Infused Products Company”). In order to consummate or to enhance a particular acquisition of a CBD-Infused Products Company, we are open-minded to the concept of also acquiring all or a portion of one or more operating businesses and/or assets that are related to such CBD-Infused Products Company or that enhance such CBD-Infused Products Company, for example operating businesses and/or assets involving distilled spirits, beer, wine, hemp growing, hemp processing/extraction, paraphernalia, cannabis, tetrahydrocannabinol (THC)-infused products, marijuana growing, marijuana dispensaries, and real estate. We have entered into agreements with a number of operating business to acquire some or all of the businesses.

The Stock Sale and Purchase Agreement also sets out terms for an additional equity purchase of Ablis HC such that the Company may purchase up to an additional 15% of Ablis HC for $1,200,000 so that the Company would then own 19.99% of the ownership equity of Ablis HC. However, the option to purchase the additional equity in the company expired on July 31, 2019. As a result, we do not have a contractual right to purchase any more of Ablis HC than 4.99%.

The terms of the Stock Sale and Purchase Agreement entitle Gerard M. Jacobs (“GJacobs”), CEO of the Company, to be a member of the board of directors of Ablis HC and entitles William C. Jacobs (“WJacobs), President and CFO of the Company, to be provided with access to financial information and grants WJacobs financial oversight functions over Ablis HC. It further allows WJacobs the right to provide consulting/advisory services. WJacobs’ reasonable expenses will be covered by Ablis HC. The Stock Sale and Purchase Agreement also requires that GJacobs and WJacobs be introduced to the owners of Ablis’ CBD isolate suppliers, and any other companies in the hemp, CBD and cannabis industries with whom Ablis HC and/or Bendis have relationships, and whom may potentially be interested in entering into a stock sale or merger with us.

The Stock Sale and Purchase Agreement requires that Ablis HC evaluate and seriously consider a sale of Ablis HC or taking Ablis HC public within 60 months from April 30, 2019 and that it use commercially reasonable best efforts, to close a mutually acceptable alternative exit opportunity for the Company within 72 months from April 30, 2019.

Stock Purchase Agreement Bendistillery Inc. and Bend Spirits

On April 30, 2019, we, GJacobs, and WJacobs entered into a Stock Purchase Agreement with Bendistillery Inc., an Oregon corporation (“Bendistillery”), Bend Spirits, Inc., an Oregon corporation (“Bend Spirits”), Bendis Homes Pinehurst, LLC, an Oregon limited liability company (“Landowner”), Bendis, and Alan T. Dietrich (“Dietrich”) wherein we paid $1,347,300 for a post transaction 4.99% ownership of Bendistillery’s equity and $149,700 for a post transaction 4.99% ownership of Bend Spirits’ equity. Bendistillery and Bend Spirits are in the business of manufacturing and sale of alcoholic beverages, CBD-infused beverages, and CBD-infused products. The Stock Purchase Agreement requires that Bendistillery and Bend Spirits use a portion of the purchase proceeds to pay off at least $835,000 of their collective liabilities.

The Stock Purchase Agreement also sets out terms for an additional equity purchase of Bendistillery such that we may purchase up to an additional 15% of Bendistillery for $4,050,000 so that we would then own 19.99% of the ownership equity of Bendistillery. Per the terms of the Agreement, we may also purchase up to an additional 15% of Bend Spirits for $450,000 such that we would then own 19.99% of the ownership equity of Bend Spirits. However, the option to purchase the additional equity in the company expired on July 31, 2019. As a result, we do not have a contractual right to purchase any more of Bendistillery or Bend Spirits than 4.99%. In addition, any purchase of by the Company of more than 4.99% of Bendistillery or Bend Spirits would require approval by the Oregon Liquor Control Commission.

Landowner (as landlord) and Bendistillery (as tenant) have entered into a long-term recorded lease (the “Lease”) of the 23 acres in Tumalo outside Bend, Oregon, where Bendistillery and Bend Spirits conduct their businesses (the “Real Estate”) The initial term of the Lease is 20 years at a rent of $17,500 per month; Tenant has the right, in its sole discretion, to exercise a series of options to extend the term of the Lease up to a maximum of 99 years; and Tenant has a 60-day right of first refusal if Landowner ever decides to sell all or any portion of the Real Estate. Bendis is the owner of Landowner.

The terms of the Stock Purchase Agreement entitle GJacobs to be a member of the board of directors of Bendistillery and Bend Spirits and entitles WJacobs to be provided with access to financial information. The Stock Purchase Agreement also grants WJacobs financial oversight functions over Bendistillery and Bend Spirits and allows WJacobs the right to provide consulting/advisory services. WJacobs’ reasonable expenses will be covered by Bendistillery and Bend Spirits as well as an advisory fee of not less than $5,000 per quarter. The Stock Purchase Agreement also requires that GJacobs and WJacobs be introduced to the owners of Deschutes Brewery, Silver Moon Brewing, LBD Beverage, and any other companies in the distilled spirits, beer, wine, hemp, CBD and cannabis industries with whom Bendistillery, Bend Spirits, Bendis and/or Dietrich have relationships, and whom may potentially be interested in entering into a stock sale or merger with us.

Prohibition, banning or regulation of vaping products, or lawsuits related to the use of Lifted Liquids’ vaping products, could have a material adverse effect on Lifted Liquids, and could have a material adverse effect on the trading price of our common stock

Federal, state and local authorities are investigating deaths and illnesses apparently related to vaping. We can provide no guarantees or assurances that vaping will not be prohibited, banned and/or heavily regulated in response to these deaths and illnesses, nor that Lifted Liquids will not be sued by customers who use Lifted Liquids vaping products. Prohibition, banning or regulation of vaping products, or lawsuits related to the use of Lifted Liquids’ vaping products, could have a material adverse effect on Lifted Liquids, and could have a material adverse effect on the trading price of our common stock.

Any unfavorable verdict or settlement of the lawsuit between Lifted Liquids and Mile High Labs could have a material adverse effect upon Lifted Liquids, and upon the trading price of AQSP’s common stock

Lifted Liquids has been sued by CBD isolate supplier Mile High Labs in connection with alleged contractual commitments between the two companies that are in dispute. AQSP can provide no guarantees or assurances that Lifted Liquids will be able to win or settle this lawsuit on favorable terms, if at all. Any unfavorable verdict or settlement of this lawsuit could have a material adverse effect upon Lifted Liquids, and upon the trading price of AQSP’s common stock. 

The target companies may rely on contract manufacturers to manufacturer their products. If the target companies are unable to maintain good relationships with their existing contract manufacturers and/or secure such contract manufacturers, their businesses could suffer

Many of the target companies’ contract manufacturers are affiliated with and manufacture other CBD-infused product brand products. In many cases, such products compete directly with the target companies’ products. If the target companies are unable to maintain good relationships with their existing contract manufacturers and/or secure such contract manufacturers, their businesses, financial conditions and results of operations could be adversely affected. This could have a material adverse effect on our Company and the trading price of our common stock.

The US FDA considers the sale of most CBD-infused products to be illegal

The US Food and Drug Administration (the “FDA”) appears to believe that CBDs are drugs, and that the sale of most CBD-infused products without FDA approval is illegal. In deference to the FDA’s position, various states and municipalities have similarly declared that the sale of certain CBD-infused products are illegal. There can be no guarantee or assurance whatsoever that this regulatory hostility to CBDs will be resolved favorably to the CBD products industry. Aggressive law enforcement against the CBD industry by federal, state or local authorities and agencies could have a material adverse effect upon our Company and the trading price of our common stock.

CBD-infused products may be shown to have negative health and/or safety impacts upon consumers

The health and safety impacts of CBDs have not yet been established via traditional scientific and/or clinical studies. If scientific and/or clinical studies ultimately demonstrate negative health and/or safety impacts upon consumers, the CBD industry and AQSP, and the price of AQSP’s stock, could be materially adversely affected.

Hemp and CBD-infused products are illegal if they exceed 0.3% THC

Hemp and CBD-infused products which exceed a THC concentration of 0.3% are illegal. Any failure to keep the THC concentration in hemp or CBD-infused products below 0.3% could subject us to action by regulatory authorities and/or to lawsuits by consumers, which could have a material adverse effect upon our Company's business and the trading price of our common stock.

In addition, the approval of medical and recreational marijuana by many states has created a situation in which it may be difficult or impossible for regulators and courts to determine whether the THC levels reflected in consumers’ blood tests are the result of CBD-infused products or THC-infused products. This may result in regulatory actions or lawsuits that could have a material adverse effect upon our Company's business and the trading price of our common stock.

Also, certain hemp products may, over time, gradually increase their THC concentration, and this may ultimately cause such products to exceed the 0.3% THC concentration level, making such products illegal in certain jurisdictions. If this happens, we could be subject to regulatory action that could have a material adverse effect upon our Company and the trading price of our common stock.

The price of CBD raw materials could spike as demand for CBD-infused products increases dramatically

Although considerable additional hemp acreage is being developed around the country which is expected to increase the supply of CBD isolate, distillate and water-soluble CBD, the demand for these raw materials is also growing dramatically, and any spike in the price of these raw materials could materially adversely affect our Company and the trading price of our common stock.

Target companies may not be of the same caliber company as previous acquisitions, or target companies' management may not fit well into our corporate culture

If we acquire a company that is not of the same caliber company as previous acquisitions, or if we acquire a company that does not have management that is as high energy as our management, or for whatever reason the management of the acquired company does not fit in well with the rest of our team, we may become less attractive for potential investors, future acquisition targets may be uninterested in merging into our company, and the overall camaraderie among the players in the company may disappear, which could materially adversely affect our company and the price of our stock.

Large competitors are expected to enter the CBD-infused product industry

We expect that over the next few years several major beverage and other consumer products companies with tremendous financial resources will emerge to compete against our Company in the CBD-infused products industry. We may not have the personnel, products, marketing and distribution capabilities, and/or financial resources to compete effectively against such larger companies, which could materially adversely affect our Company and the trading price of our common stock.

Alcoholic beverage sales are subject to slowdowns and are seasonal

Bendistillery Inc. and Bend Spirits, Inc. are involved in the sale of a variety of distilled alcoholic beverages including vodka, whiskey and gin, and their sales of such beverages are subject to occasional slowdowns and are seasonal. Also, some health-conscious consumers are reducing or eliminating their alcohol consumption entirely. These factors could adversely affect the value of our ownership interest in those companies, which could materially adversely affect our Company and the trading price of our common stock.

Alcoholic beverage distributors are powerful and control much of the marketplace

Bendistillery Inc. and Bend Spirits, Inc. distribute their distilled alcoholic beverages through a limited number of powerful distributors that control much of the marketplace for alcoholic beverages. The loss of such distributors, or disruptions to the operations of such distributors, could adversely affect the value of our ownership interest in those companies, which could materially adversely affect our Company and the trading price of our common stock.

Increases in labor costs could harm the target companies' businesses

The U.S. in general, and Bend, Oregon in particular, are experiencing very low unemployment, which generally results in rising labor costs. Such rising labor costs are adversely affecting the expenses of Bendistillery Inc. and Bend Spirits, Inc., and may adversely affect the expenses of other target companies' businesses, which could materially adversely affect our Company and the trading price of our common stock.

Unregistered sales of equity securities during the period were disclosed in Item 3.02 of the current report on Form 8-K filed on May 10, 2019.

The material circumstances surrounding the termination of the Merger Agreement are set out in the letter dated November 14, 2019 from the Company’s legal counsel to Lion. The letter is attached as Exhibit 99.1 to the current report filed on Form 8-K on November 15, 2019.

Due to termination of the Merger Agreement, and per Section 5.15 of the Merger Agreement, commencing on December 1, 2019, the Company’s $300,000 loan made to Lion on August 8, 2019 is now required to be repaid. The repayment is required by agreement to be made in six equal monthly installments of principal and interest due and payable on the first day of each calendar month. Interest on the principal balance is calculated at an annual rate of 6% commencing as of August 8, 2019.

There are no material early termination penalties incurred by the Company as a result of the termination of the Merger Agreement. Due to the termination, the Company no longer intends to change its name to CBD Lion Corp. The termination of the Merger Agreement is not currently anticipated to have a negative impact on the previously disclosed, proposed acquisition of Warrender Enterprise Inc. d/b/a Lifted Liquids.

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