See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

On March 13, 2015, Diego Pellicer Worldwide, Inc. (the Company) (f/k/a Type 1 Media, Inc.) closed on a merger and share exchange agreement by and among (i) the Company, and (ii) Diego Pellicer World-wide 1, Inc., a Delaware corporation, (“Diego”), and (iii) Jonathan White, the majority shareholder of the Company. Diego was merged with and into the Company with the Company to continue as the surviving corporation in the merger.

The Company leases real estate to licensed marijuana operators, providing complete turnkey growing space, processing space, recreational and medical retail sales space and related facilities to licensed marijuana growers, processors, dispensary and recreational store operators. Additionally, the Company plans to explore ancillary opportunities in the regulated marijuana industry, as well as offering for wholesale distribution branded non-marijuana clothing and accessories.

~~Until Federal law allows,~~The properties generating rents in 2021 and 2020 are as follows:

The Company’s three properties in Denver, CO (one terminated in October 2020) are leased to Royal Asset Management, LLC (“RAM”). RAM opened the Diego Denver branded flagship store in February 2017. This store is known as “Diego Colorado”. The retail facilities have shown steady growth in sales since opening. For the other two properties subleased (one terminated in October 2020), RAM uses these properties for its cultivation facilities in Denver, CO. Production at these facilities began in late 2016. The Company ~~will not grow, harvest, process, distribute or sell marijuana or any other substances that violate~~is currently exploring the ~~laws~~acquisition of this entity, and the ~~United States of America or any other country.~~parties are in negotiations (see Note 4).

In October 2020, the master lease and sublease associated with the 18,600 sq. cultivation warehouse in Denver were terminated (see Note 4).

The management of the Company is responsible for the selection and use of appropriate accounting policies and for the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results of operations and that require management’s most difficult, subjective, or complex judgments, often because of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below, as required by generally accepted accounting principles.

The accompanying consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and presented in accordance with accounting principles generally accepted in the United States of America (US GAAP).

The accompanying consolidated balance sheet at December 31, 2020, has been derived from audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying unaudited condensed consolidated financial statements as of ~~Diego Pellicer Worldwide, Inc. were~~March 31, 2021 and for the three months ended March 31, 2021 and 2020 have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and ~~therefore,~~Article 8 of Regulation S-X. Accordingly, they do not include all ~~disclosures~~of the information and footnotes required by U.S. GAAP for complete financial statements, ~~prepared~~and should be read in ~~conformity~~conjunction with ~~U.S. GAAP.~~

~~This Form 10-Q relates~~the audited consolidated financial statements and related notes to the ~~three months and nine months ended September 30, 2017 (the “Current Quarter”) and~~financial statements included in the ~~three months and nine months ended September 30, 2016 (the “Prior Quarter”). The~~ Company’s ~~annual report~~Annual Report on Form 10-K for the year ended December 31, ~~2016~~2020 as filed with the U.S. Securities and Exchange Commission (“~~2016 Form 10-K”~~SEC”) ~~includes certain definitions and a summary of significant accounting policies and should be read in conjunction with this Form 10-Q. All material adjustments which, in~~on the opinion of management, ~~are~~all material adjustments (consisting of normal recurring adjustments) considered necessary for a fair ~~statement~~presentation have been made to the condensed consolidated financial statements. The condensed consolidated financial statements include all material adjustments (consisting of normal recurring accruals) necessary to make the condensed consolidated financial statements not misleading as required by Regulation S-X Rule 10-01. Operating results for the ~~interim periods have been reflected. The results for the current quarter~~three months ended March 31, 2021 are not necessarily indicative of the results tothat may be expected for the ~~full year.~~year ending December 31, 2021 or any future periods.

The financial statements include the accounts of Diego Pellicer Worldwide, Inc., and its wholly-owned subsidiary Diego Pellicer World-wide 1, Inc. Intercompany balances and transactions have been eliminated in consolidation.

In February 2016, the FASB issued guidance that requires a lessee to recognize assets and liabilities arising from leases on the balance sheet. Previous GAAP did not require lease assets and liabilities to be recognized for most leases. Additionally, companies are permitted to make an accounting policy election not to recognize lease assets and liabilities for leases with a term of 12 months or less. For both finance leases and operating leases, the lease liability should be initially measured at the present value of the remaining contractual lease payments. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee will not significantly change under this new guidance. This new guidance is effective for the company as of the first quarter of fiscal year 2020. The Company is evaluating the effect that this ASU will have on its financial statements and related disclosures.

In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 clarifies the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. This ASU is effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. The Company is currently assessing the potential impact of ASU 2016-15 on its financial statements and related disclosures.

In April 2016 the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606). The core principle of Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services This ASU is effective for public business entities for fiscal years, and interim periods within those years, beginning after January 1. 2018. The Company is currently assessing the potential impact of ASU 2016-10 on its financial statements and related disclosures.

~~The Company believes that otherrecently~~issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented.

Certain prior year amounts were reclassified to conform to the manner of presentation in the current period. These reclassifications had no effect on the Company’s balance sheet, net loss or stockholders’ equity.

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. These estimates and assumptions include valuing equity securities and derivative financial instruments issued in financing transactions and share based payment arrangements, ~~determining the fair value of the warrants received for the licensing agreement,~~ the collectability of accounts receivable and other receivables (See Note 4), valuation of right of use assets and lease liabilities and deferred taxes and related valuation allowances.

Certain estimates, including evaluating the collectability of accounts receivable, could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could influence our estimates ~~that~~and could cause actual results to differ from our estimates. The Company intends to re-evaluate all its accounting estimates at least quarterly based on these conditions and record adjustments when necessary.

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the ~~condensed~~ consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016.~~2020. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

The following table reflects assets and liabilities that are measured at fair value on a recurring basis (in thousands):

The Company maintains cash balances at various financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation, and the National Credit Union Share Insurance Fund, up to $250,000. The Company’s accounts at these institutions may, at times, exceed the federal insured limits. The Company has not experienced any losses in such accounts. There were no uninsured balances at March 31, 2021. Uninsured balances were approximately $73,000 at December 31, 2020.

In accordance with ASC 842, ~~Property and Equipment, and Depreciation Policy~~Leases,

~~Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided for~~ the Company recognizes rent income on a straight-line basis over the ~~useful lives of~~lease term to the ~~assets. Leasehold improvements are amortized over~~extent that collection is considered probable. As a result the ~~term of the lease. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed~~Company been recognizing rents as ~~incurred.~~they become payable.

~~The Company intends to take depreciation or amortization on a straight-line basis for all properties, beginning when they are put into service, using the following life expectancy:~~

~~Leasehold Improvements – 10 years, or the term of the lease, whichever is shorter~~

The company conforms to the FASB issued Accounting Standards Update (“ASU”) No. 2015-11, Inventory, which requires an entity to measure inventory within the scope at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company’s inventory is stated at the lower of cost or estimated realizable value, with cost primarily determined on a cost basis on the first-in, first-out (“FIFO”) method.

Accounts receivable are presented at their face amount, less an allowance for doubtful accounts, on the balance sheets. Accounts receivable consist of revenue earned and currently due from sub lessee. We evaluate the collectability of accounts receivable based on a combination of factors. We recognize reserves for bad debts based on estimates developed using standard quantitative measures that incorporate historical write-offs and current economic conditions. As of September 30, 2017, the outstanding balance allowance for doubtful accounts is $9,908.

The policy for determining past due status is based on the contractual payment terms of each customer. Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables is made.

~~The Company recognizes revenue from rent, tenant reimbursements, and other revenue sources once all the following criteria are met in accordance with SEC Staff Accounting Bulletin 104,~~~~Revenue Recognition~~: (a) the agreement has been fully executed and delivered; (b) services have been rendered; (c) the amount is fixed or determinable; and (d) the collectability of the amount is reasonably assured. Thus, duringDuring the initial term of the lease, management has a policy of partial rent forbearance when the tenant first opens the facility to assure that the tenant has the opportunity for success.

~~When the collectability is reasonably assured,~~ Management may be required to exercise considerable judgment in ~~accordance with ASC Topic 840 “Leases” as amended and interpreted, minimum annual rental~~estimating revenue ~~is recognized for rental revenues on a straight-line basis over the term of the related lease.~~to be recognized.

When management concludes that the Company is the owner of tenant improvements, ~~management~~the Company records the cost to construct the tenant improvements as a capital asset. In addition, ~~management~~the Company records the cost of certain tenant improvements paid for or reimbursed by tenants as capital assets when management concludes that the Company is the owner of such tenant improvements. For these tenant improvements, ~~management~~the Company records the amount funded or reimbursed by tenants as deferred revenue, which is amortized as additional rental income over the term of the related lease. When management concludes that the tenant is the owner of tenant improvements for accounting purposes, ~~management records~~we record the Company’s contribution towards those improvements as a lease incentive, which is amortized as a reduction to rental revenue on a straight-line basis over the term of the lease.

The Company analyzes its contracts to assess that they are within the scope and in accordance with ASC 606. In ~~January 2014,~~determining the appropriate amount of revenue to be recognized as the Company ~~entered into an agreement to license certain intellectual property to an unrelated company. In consideration,~~fulfills its obligations under each of its agreements, whether for goods and services or licensing, the Company ~~received warrants to purchase shares~~performs the following steps: (i) identification of the ~~licensee’s common stock,~~promised goods or services in the ~~value~~contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the ~~warrants was recorded as an investment and the deferred revenue is being amortized over the ten year term~~contract; (iii) measurement of the ~~licensing agreement.~~transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

~~The Company currently leases properties to licensed cannabis operators for locations that meet~~During the ~~regulatory criteria applicable by the respective regulatory jurisdiction for the sale, production,~~three months ended March 31, 2021 and development of cannabis products. The Company evaluates the lease to determine its appropriate classification as an operating or capital lease for financial reporting purposes. The Company leases are currently all classified as operating leases.2020, advertising expense was $9,881 and $6,804, respectively.

Minimum base rent is recorded on a straight-line basis over the lease term after an initial period during which the tenant is establishing the business and during which the Company may forbear some or all of the rent. The Company is more likely than not to forbear some or all of the rental income which it considers uncollectable during the tenant’s initial ramp-up period (see~~Revenue Recognitionabove). The tenant is still liable for the full rent, although the collectability may be unlikely and the Company may not expect to collect it.~~

The Company recognizes rent expense on a straight-line basis over the non-cancelable lease term and certain option renewal periods where failure to exercise such options would result in an economic penalty in such amount that renewal appears, at the inception of the lease, to be reasonably assured. Deferred rent is presented on current liabilities section on the consolidated balance sheets.

Income taxes are provided for using the liability method of accounting in accordance with the Income Taxes Topic of the FASB ASC. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized and when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The computation of limitations relating to the amount of such tax assets, and the determination of appropriate valuation allowances relating to the realizing of such assets, are inherently complex and require the exercise of judgment. As additional information becomes available, the Company continually assesses the carrying value of their net deferred tax assets.

The Company applies the guidance enumerated in ASC Topic 480 “Distinguishing Liabilities from Equity” when determining the classification and measurement of preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. The Company classifies conditionally redeemable preferred shares which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control, as temporary equity. At all other times, it classifies its preferred shares in stockholders’ equity. Preferred shares do not feature any redemption rights within the holders’ control or conditional redemption features not within our control. Accordingly, all issuances of preferred stock are presented as a component of consolidated stockholders’ equity.

The Company classifies as equity any contracts that require physical settlement or net-share settlement or provide us a choice of net cash settlement or settlement in our own shares (physical settlement or net-share settlement) provided that such contracts are indexed to our own stock as defined in ASC Topic 815-40 “Contracts in Entity’s Own Equity.” The Company classifies as assets or liabilities any contracts that require net-cash settlement including a requirement to net cash settle the contract if an event occurs and if that event is outside our control or give the counterparty a choice of net-cash settlement or settlement in shares. 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 assets and liabilities is required.

The Company recognizes compensation expense for stock-based compensation in accordance with ASC Topic 718. The Company calculates the fair value of the award on the date of grant using the Black-Scholes method for stock options and the quoted price of our common stock for ~~unrestricted~~common shares; the expense is recognized over the service period for awards expected to vest. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. The Company considers many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience.

~~Earnings (loss)~~The Company utilizes ASC 260, “Earnings per ~~share is provided in~~Share” for calculating the basic and diluted loss per share. In accordance with ASC ~~Subtopic 260-10. The Company presents~~260, the basic and diluted loss per share ~~(“EPS”) and diluted EPS on the face of statements of operations. Basic EPS~~ is computed by dividing ~~reported earnings (loss)~~net loss available to common stockholders by ~~the weighted average shares outstanding. Loss per common share has been computed using~~ the weighted average number of common shares ~~outstanding during~~outstanding. Diluted net loss per share is computed similar to basic loss per share except that the ~~year.~~denominator is adjusted for the potential dilution that could occur if stock options, warrants, and other convertible securities were exercised or converted into common stock. Potentially dilutive securities are not included in the calculation of the diluted loss per share if their effect would be anti-dilutive. The Company has 132,973,796 and 926,023,386 common stock equivalents at March 31, 2021 and 2020, respectively. For the three months ended March 31, 2021 and 2020, these potential shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would reduce net loss per share.

The cannabis industry is subject to numerous laws and regulations of federal, state and local governments. These laws and regulations include, but are not limited to, matters such as licensure, accreditation, and different taxation between federal and state. Federal government activity may increase in the future with respect to companies involved in the cannabis industry concerning possible violations of federal statutes and regulations.

Management believes that the Company is in compliance with local, state and federal regulations and, while no regulatory inquiries have been made, compliance with such laws and regulations can be subject to future government review and interpretation, as well as regulatory actions unknown or unasserted at this time.

The Company believes recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred losses since inception, its current liabilities exceed its current assets by $11,228,725 at March 31, 2021, and it has an accumulated deficit of $55,299,546 at March 31, 2021. These factors raise substantial doubt about its ability to continue as a going concern over the next twelve months. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company believes that it has sufficient cash on hand and cash generated by real estate leases to sustain operations provided that management and board members continue to agree to be paid company stock in exchange for accrued compensation. ~~Through September 30, 2017, management and board members have accepted stock for accrued compensation at the same discount that has been extended to the convertible noteholders of fifty percent.~~ There are other future noncash charges in connection with ~~financing~~financings such as a change in derivative liability that will affect income but have no effect on cash flow.

Although the Company has been successful raising additional capital, there is no assurance that the company will sell additional shares of stock or borrow additional funds. The Company’s ~~ability~~inability to raise additional cash could have a material adverse effect on its financial position, results of operations, and its ability to continue in existence. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management believes that the Company’s future success is dependent upon its ability to achieve profitable operations, generate cash from operating activities and obtain additional financing. There is no assurance that the Company will be able to generate sufficient cash from operations, sell additional shares of stock or borrow additional funds. However, cash generated from lease revenues is currently exceeding lease costs, but is insufficient to cover operating expenses.

As disclosed in Note 1, the Company subleases two properties in Colorado to Royal Asset Management at March 31, 2021. At March 31, 2021 and December 31, 2020, the Company had outstanding receivables from the subleases totaling $520,974 and $523,958, respectively, and during the three months ended March 31, 2021 and 2020 the Company’s subleases with RAM accounted for 100% of the Company’s revenues.

In ~~January 2014,~~addition to the receivables from the subleases, the Company has agreed to provide RAM and affiliates of RAM up to an aggregate amount of $1,030,000 in financing. These notes accrue interest at the rates ranging from 12% to 18% per annum. As of March 31, 2021 and December 31, 2020, the outstanding balance of these notes receivable total $1,057,272 and $1,030,422, respectively, including accrued interest of $327,272 and $300,422, respectively. The notes are secured by a UCC filing and also $400,000 of the balance is personally guaranteed by the managing member of RAM. Our position is subordinate to the CEO’s note described in Note 6. We have recorded interest income of $26,850 and $32,846 during the three months ended March 31, 2021 and 2020, respectively.

If we do consummate any agreement to acquire Royal Asset Management, part of the purchase price will be paid through receivables that are owed to us (see below).

On September 9, 2020, we closed on a Membership Interest Purchase Agreement dated September 4, 2020, and obtained the right to acquire a 15.13% membership interest in Blue Bronco, LLC. The purchase of the 15.13% interest in Blue Bronco LLC is subject to the approval of the Colorado Marijuana Enforcement Division. Necessary approval by governing authorities is expected to be received in the second quarter of 2021. Accrued interest receivable of approximately $68,000 will be applied to the purchase of the membership interest upon approval of the purchase by the Colorado Marijuana Enforcement Division.

On October 1, 2020, the master and sublease associated with the 18,600 sq. cultivation warehouse in Denver were terminated. In connection with that termination, we entered into a Sublease Termination Agreement (“Termination Agreement”) with RAM and an affiliate of RAM Venture Product Consulting, LLC (“VPC”). Pursuant to this agreement, ~~with Plandai Biotechnology, Inc. (a publicly traded company)~~RAM acknowledged a debt of deferred rent to ~~license~~the Company in the amount of $1,418,480 and VPC acknowledged a debt of deferred rent to ~~them certain intellectual property rights~~the Company in ~~exchange~~the amount of $64,344. RAM and VPC executed promissory notes for ~~warrants~~these amounts, respectively. The notes accrue interest on the unpaid balance at a rate equal to purchase 1,666,667 shares of Plandai Biotechnology, Inc. common stock. This licensing agreement carries a 10-year term with an exercise price of $0.01 per share. The Company was to obtain certain trademark rights certifiedthe Applicable Federal Rate for mid-term obligations as published by the ~~government. The warrant has a restriction on them requiring that~~Internal Revenue Service. No payment under the ~~sale of such shares must reach a certain traded price of $0.50 per share. In 2014,~~promissory notes will be due to the Company ~~used~~until the earlier of (i) the date on which RAM and the Company consummate a ~~third-party appraisal firm to ascertain~~change of control event, which is defined as: the ~~fair value~~acquisition of ~~warrants held~~RAM by the Company or an affiliated entity by means of any transaction or series of related transactions to which ~~was determined~~RAM is a party (including, without limitation, any membership interest acquisition, reorganization, merger or consolidation, (generally, a “Merger”), or, (ii) the date one (1) business day following the earlier of (x) at any time, receipt by the Company from RAM or VPC of a written notice stating such party no longer desires to ~~be $525,567 at~~pursue the Merger, or (y) beginning eighteen (18) months after the date of ~~issuance. During the year ended December 31, 2016,~~this Agreement, receipt by RAM or VPC from the Company of a written notice stating that the Company no longer desires to pursue the Merger (the “Maturity Date”).

We have recorded ~~an impairment loss~~the promissory notes as long term notes receivable of ~~$73,334. The~~$1,482,824 at March 31, 2021. Due to the uncertainty of the collectability, we have also recorded a long term deferred credit in the same amount. We will record income under the deferred rent notes as payments are received or deemed collectible. This asset and related credit have been netted on the accompanying condensed consolidated balance sheet.

Additionally, in connection with the termination of the sublease, RAM will continue to pay the remaining future sublease premium payments due to the company on the Denver sublease (the “Future Rent Debt”) beginning on the termination date, and until the earlier of the Maturity Date or June 30, 2024, notwithstanding the termination of the Subleases. However, no payment under the Future Rent Debt agreement will be due to the Company ~~recorded an additional impairment loss~~until the Maturity Date, at which time the entire Future Rent Debt shall be due and payable in full, except for any month in which RAM earns $725,000 of gross sales revenue, including taxes, at its Alameda location, in which case RAM shall pay the Future Rent Debt for the ~~nine~~following month to the Company on or before the 5th day of the following month, and such amount will not accrue as a Future Rent Debt. RAM shall continue to accrue debt to the company, assessed on the first day of each month, according to the schedule below:

We will record income pursuant to the Future Rent Debt as payments are received based on the Company’s analysis of collectability including, but not limited to, the potential application toward the purchase price. During 2021, we received three months ~~ended September 30, 2017~~ of ~~$43,333.~~payments and have recorded $33,851 as Lease Termination Payments in the Statement of Operations.

~~As of September 30, 2017, and December 31, 2016, fixed assets and the estimated lives used in the computation of depreciation are as follows:~~

Security ~~deposits~~deposits:: Security deposits reflect the deposits on various property leases, most of which require ~~for~~ two months’ rental expense in the form of a deposit.

As of March 31, 2021 and December 31, 2020, the Company has accrued compensation to its CEO and director and to its CFO aggregating $323,997 and $289,897, respectively. As of March 31, 2021 and December 31, 2020, accrued payable due to former officers was $1,009,922 and $1,042,859, respectively. For each of the three month periods ended March 31, 2021 and 2020, total cash-based compensation to related parties was $90,000. For the three months ended March 31, 2021 and 2020, total share-based compensation to related parties was $24,843 and $67,621, respectively. These ~~have remained unchanged,~~amounts are included in general and administrative expenses in the accompanying financial statements.

From 2017 to 2019, Mr. Gonfiantini, CEO, personally and through his Company, Crystal Bay Financial LLC, loaned an aggregate amount of $1,020,000 to Royal Asset Management. These notes accrue interest at 17% - 18% per annum, and require monthly payment approximately from $5,000 to $20,000. These notes are personally guaranteed by the managing member of Royal Asset Management, and are ~~reported as $170,000 for~~secured by certain equipment and other tangible properties of Royal Asset Management. Among these notes, $500,000 note was also secured by the medical marijuana licenses held by Royal Asset Management.

~~Deposits – end of lease~~: These deposits represent an additional two months of rent on various property leases that apply to the “end-of- lease” period. These have remained unchanged, and are reported as $150,000 for December 31, 2016, and for September 30, 2017.

~~On April 11, 2017,~~2020, the Company ~~issued two convertible notes (see~~owed Mr. Throgmartin, former CEO (See Note ~~8). These were issued~~10), $140,958 pursuant to ~~refinance~~a promissory note dated August 12, 2016. This note accrues interest at the ~~following notes:~~

~~On May 20, 2015,~~rate of 8% per annum and was past the maturity date at March 31, 2021, however the Company ~~issued~~has not yet received a ~~note in total amount of $450,000 with third parties for use as operating capital. As of December 31, 2016, the outstanding principle balance of~~default notice. Accrued interest on the note was ~~$450,000.~~$52,181 and $49,401 at March 31, 2021 and December 31, 2020, respectively.

On July 8, 2015, the Company issued a note in total amount of $135,628 with third parties for use as operating capital. As of December 31, 2016, the outstanding principle balance of the note is $135,628.Note 7 – Notes Payable

On February 8, 2016, the Company issued notes in total amount of $470,000 with third parties, bearing interest at 12% per annum with a maturity date of February 7, 2017. As of December 31, 2016, the outstanding principle balance of the note is $470,000.

In accordance with in accordance with FASB Codification- Liabilities, 470-50-40-10, these liabilities were considered extinguished and the cost of the new financing of $5,607,836 was expensed in the quarter ended June 30, 2017.

On August 31, 2015, the Company issued a note in ~~total~~the amount of $126,000 ~~with~~to a third ~~parties~~party for use as operating capital. The note was amended to include accrued interest on October 31, 2016 and ~~extended~~extend the maturity date to October 31, 2018. As of ~~September 30, 2017,~~March 31, 2021 and December 31, 2020 the outstanding principal balance of the note was ~~$126,000.~~$133,403, and accrued interest on the note was $71,746 and $70,101 at March 31, 2021 and December 31, 2020, respectively. As of March 31, 2021 the note was past the maturity date, however the Company has not yet received a default notice.

On April 22, 2020, the Company was granted a loan from Numerica Credit Union, in the aggregate amount of $56,444, pursuant to the Paycheck Protection Program, (the “PPP”) under Division A, Title I of the CARES Act. The loan, which was in the form of a note dated April 22, 2020 issued by the Borrower, was scheduled to mature on April 22, 2022 and bore interest at a rate of 1.0% per annum, payable monthly commencing October 22, 2020. There have not been any payments made towards this loan, as the full amount of the loan and accrued interest was forgiven in full during February 2021 and the Company recorded income of $56,908.

On June 30, 2020, the Company was granted a loan from the Small Business Association, in the aggregate amount of $150,000, pursuant to the Economic Injury Disaster Loan, (the “EIDL”) under Division A, Title I of the CARES Act. The loan, which is in the form of a note dated June 30, 2020 issued by the Borrower, matures on June 30, 2050 and bears interest at a rate of 3.75% per annum, payable monthly commencing June 30, 2021.

~~In addition to the two notes issued on April 11, 2017 referred to in Footnote 7, the~~The Company has issued several convertible notes ~~in the nine months ending September 30, 2017.~~which are outstanding. The note ~~holder shall~~holders have the right to convert ~~the amount~~principal and accrued interest outstanding into shares of common stock at a discounted ~~price.~~price to the market price of our common stock. The conversion ~~feature was~~features were recognized as an embedded ~~derivative~~derivatives and ~~was~~are valued using a ~~Black Scholes model~~Binomial Option Pricing Model that resulted in a derivative liability of $4~~,767,377~~ ~~for~~$5,326,730 and $5,997,865 at March 31, 2021 and December 31, 2020, respectively. All notes accrue interest at 10% and the ~~quarter ended September 30, 2017~~.notes had all matured at March 31, 2021. In connection with the issuance of certain of these notes, the Company also issued warrants to purchase its common stock. ~~The Company allocated the proceeds of the notes and warrants based on the relative fair value at inception for these notes.~~

Several convertible note holders elected to convert their notes to stock during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2021 and 2020. The tables below provide the note payable activity for the three months ended March 31, 2021 and 2020, and also a reconciliation of the beginning and ending balances for the derivative liabilities measured using Level 3 fair value inputs for the three months ended March 31, 2021 and 2020:

During the three months ended March 31, 2021, $100,000 of notes was converted into 4,444,444 shares of common stock with a value of $697,779. A gain on extinguishment of debt of $59,999 and reduction of derivative liabilities of $657,778 have been recorded related to these conversions.

During the three months ended March 31, 2021, $6,256 of accrued interest was converted into 581,969 shares of common stock with a value of $7,856. A gain on extinguishment of debt of $1,709 and reduction of derivative liabilities of $3,309 have been recorded related to these conversions.

During the three months ended March 31, 2021, we repaid an aggregate of $200,000 of note principal. A gain on extinguishment of debt of $177,116 and reduction of derivative liabilities of $177,116 have been recorded related to these payments.

During the three months ended March 31, 2021, we paid an aggregate of $70,000 in settlement of accrued interest in the amount of $95,390. A gain on extinguishment of debt of $150,726 and reduction of derivative liabilities of $125,336 have been recorded related to these payments.

During the three months ended March 31, 2021, we recorded noncash additions to convertible notes aggregating $2,000.

As of March 31, 2021, convertible notes in the aggregate principal amount of $2,941,274 were past their maturity dates; however the Company has not yet received any default notices. No default or penalty was paid or required to be paid.

The following assumptions were used in the Binomial Option Pricing Model in calculating the embedded conversion features and current liabilities for the three months ended March 31, 2021 and 2020:

On February 24, 2021, the Company sold 179,850 of its Series C Convertible Preferred Shares, with an annual accruing dividend of 10%, to Geneva Roth Remark Holdings, Inc. (“Geneva”), for $163,500 pursuant to a Series C Preferred Purchase Agreement with Geneva. The Company may redeem the Series C Shares at various increased prices at time intervals up to the 6-month anniversary of the closing and must redeem any outstanding shares on the 24-month anniversary. Geneva may convert the Series C Shares into our common shares, commencing on the 6-month anniversary of the closing at a 30% discount to the public market price. The Company recorded a derivative liability associated with Series C Preferred Shares of $1,082,441, valued using a Binomial Option Pricing Model. On March 16, 2021, the Company sold an additional 113,850 shares for $103,500 and recorded a derivative of $177,231. The Series C Preferred Stock is classified as temporary equity due to the fact that the shares are redeemable at the option of the holder. There were 293,700 shares outstanding at March 31, 2021, with an associated derivative liability of $386.845.

The tables below provide the preferred stock activity for the three months ended March 31, 2021 and 2020, and also a reconciliation of the beginning and ending balances for the derivative liabilities measured using Level 3 fair value inputs for the three months ended March 31, 2021 and 2020:

The following assumptions were used in the Binomial Option Pricing Model in calculating the embedded conversion features and current liabilities for the three months ended March 31, 2021 and 2020:

During the three months ended March 31, 2021, $100,000 of notes and $6,256 of accrued interest and fees were converted into 5,026,413 shares of common stock with a value of $705,635.

During the three months ended March 31, 2021, 606,769 shares of common stock, valued at $24,843, were accrued for related party services. At March 31, 2021 and December 31, 2020, shares to be issued for related party services were 2,338,456 and 1,731,687, respectively, and the value of shares to be issued at March 31, 2021 and December 31, 2020 was $38,207 and $13,364, respectively.

During the three months ended March 31, 2021, 31,696 shares of common stock, valued at $2,000, were accrued for services. At March 31, 2021 and December 31, 2020, shares to be issued for services were 1,137,553 and 1,105,857, respectively, and the value of shares to be issued at March 31, 2021 and December 31, 2020 was $16,000 and $14,000, respectively.

At March 31, 2021 and December 31, 2020, shares to be issued for debt conversions were 31,960, and the value of shares to be issued was $21,861.

During the three months ended March 31, 2021, we issued 30,000 shares of common stock, valued at $1,915, for consulting services.

During the three months ended March 31, 2020, $89,000 of notes, $6,282 of accrued interest and $210 additional fee was converted into 13,767,631 shares of common stock. As of March 31, 2020, 35,844 shares, valued at $35,844 for debt conversion were authorized, but not issued as of March 31, 2020.

As March 31, 2020, 406,160 shares, valued at $13,601 for services were authorized, but not issued as of March 31, 2020. These were classified as shares to be issued at March 31, 2020.

As March 31, 2020, 4,951,781 shares, valued at $106,842 for related party services were authorized, but not issued as of March 31, 2020. These were classified as shares to be issued at March 31, 2020.

The Company has determined that certain of its warrants are subject to derivative accounting. The table below provides a reconciliation of the beginning and ending balances for the warrant liabilities measured using fair significant unobservable inputs (Level 3): for the three months ended March 31, 2021 and 2020:

The following assumptions were used in ~~calculations of~~ the ~~Black Scholes model~~Binomial Option Pricing Model in calculating the embedded conversion features and current liabilities for the ~~period~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016.~~2020:

The following table presents the company’s warrants and option features which have no observable market data and are derived using Black-Scholes measured at fair value on a recurring basis, using Level 3 inputs, as of December 31, 2016 and September 30, 2017:

The Company maintains an Equity Incentive Plan pursuant to which 2,480,000 shares of Common Stock are reserved for issuance thereunder. This Plan was established to award certain founding members, who were instrumental in the development of the Company, as well as key employees, directors and consultants, and to promote the success of the Company’s business. The terms allow for each option to vest immediately, with a term no greater than 10 years from the date of grant, at an exercise price equal to par value at date of the grant. As of September 30, 2017, no shares had been granted under the plan.

As a condition of their employment, the Board of Directors approved employment agreements with three key executives. This agreement provided that additional shares will be granted each year over the term of the agreement should their shares as a percentage of the total shares outstanding fall below prescribed ownership percentages. The CEO received an annual grant of additional shares each year to maintain his ownership percentage at 10% of the outstanding stock. The other two executives received a similar grant each to maintain his ownership percentage at 7.5% of the outstanding stock.

~~Options have been granted to several executives and consultants as contractual incentives as shown below:~~

During the nine months ended September 30, 2017 3,609,990 common shares valued at $513,585 were issued as security for the payment of convertible notes. Among these shares issued for security deposits, 1,899,990 shares valued at $257,259 is refundable and were recorded in a contra equity account.

During the nine months ended September 30, 2017, 4,918,965 shares of common stock valued at $1,119,403 were issued as share-based compensation. 1,205,128 shares were authorized but not issued as of September 30, 2017.

~~During the nine months ended September 30, 2017, the Company incurred total option expense of $975,330.~~

~~During the nine months ended September 30, 2017, 1,000,000 shares of common stock valued at $245,600 were issued for a debt settlement.~~

During the nine months ended September 30, 2017, owners of convertible notes have converted their notes in exchange for 67,435,366 shares of common stock valued at $6,672,953. Among these shares issued for notes conversion, 66,966,106 were authorized but not issued as of September 30, 2017.

The ~~Company’s business is to~~Company leases property under operating leases. Property leases include retail and warehouse space with fixed rent payments and lease property in appropriate and desirable locations, and to make available such property for sub-lease to specifically assigned businesses that grow, process, and sell certain products to the public. Currently the Company has four separate properties under lease in the states of Colorado and Washington.

~~In Colorado, there are three properties leased in 2017 and 2016. Properties were leased for a~~terms ranging from three to five ~~year period with an option~~years. The Company is obligated to pay the lessor for ~~an additional five years,~~maintenance, real estate taxes, insurance and ~~carry terms requiring triple net payments. Each~~other operating expenses on certain property leases. These expenses are variable and are not included in the measurement of the ~~properties have fixed monthly rentals with periodic increases in~~lease asset or lease liability. These expenses are recognized as variable lease expense when incurred.

The Company records the ~~monthly~~lease asset and lease liability at the present value of lease payments over the lease term. The leases typically do not provide an implicit rate; therefore, the Company uses its estimated incremental borrowing rate at the time of lease commencement to discount the present value of lease payments. The Company’s discount rate for operating leases at March 31, 2021 was 12%. Leases often include rental ~~rate. In Washington, there~~escalation clauses, renewal options and/or termination options that are factored into the determination of lease payments when appropriate. Lease expense is ~~one property which was leased in 2014. The property was leased for~~recognized on a ~~five (5) year period with an option for an additional five (5) years, and carry terms requiring triple net (NNN) conditions. The property has an escalating annual rental.~~ straight-line basis over the lease term to the extent that collection is considered probable. As a result the Company been recognizing rents as they become payable. Our weighted-average remaining lease term is 3.47 years.

As of ~~September 30, 2017,~~March 31, 2021, the maturities of operating leases liabilities are as follows (in thousands):

Rent expense is recognized on a straight-line basis over the life of the lease. Rent expense consists of the following:

As of March 31, 2021, the aggregate remaining minimal annual lease payments under these operating leases plus NNN were as follows: (in thousands):

~~Rent expense for the Company’s operating leases for~~The Company recognized sublease income of $191,753 and $384,031 during the three months ended ~~September~~March 31, 2021 and 2020, respectively.

These two leases have three months and 3.8 year terms with optional extension, expiration dates range from July 2021 to June 2025, and monthly base rent approximately $22,000-$25,000 plus variable NNN.

As of March 31, 2021, the maturities of expected base sublease income are as follows (in thousands):

On January 30, ~~2017~~2020, the World Health Organization (“WHO”) announced a global health emergency in response to a new strain of a coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. Management is actively monitoring the global situation and ~~2016~~its effects on the Company’s industry, financial condition, liquidity, and operations. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for fiscal year 2021. However, if the pandemic continues, it may have a material adverse effect on the Company’s results of future operations, financial position, and liquidity in fiscal year 2021.

As a condition of their employment, the Board of Directors approved employment agreements with three key executives. These agreements provided that additional shares will be granted each year over the term of the agreements should their shares as a percentage of the total shares outstanding fall below prescribed ownership percentages. Nello Gonfiantini III, who became the Company’s CEO in October 2019 receives an annual grant of additional shares each year to maintain his ownership percentage at 10% of the outstanding stock. The Company’s CFO received a similar grant each to maintain his ownership percentage at 2% of the outstanding stock. During the three months ended March 31, 2021, the Company accrued compensation expense of approximately $25,000 on 606,769 shares of common stock under these agreements. During the three months ended March 31, 2020, the Company accrued compensation expense of approximately $27,000 on 1,652.116 shares of common stock. As of March 31, 2021 and December 31, 2020, the ending balance of accrued compensation was ~~$191,556~~$38,207 and ~~$257,599~~$13,364, respectively. The number of shares accrued to be issued was 2,338,456 at March 31, 2021.

On January 30, 2019, the Company executed a Separation Agreement and Release with David Thompson, its former Senior Vice President- Finance, finalizing his departure from the Company as an employee. Pursuant to its material terms, the Company agreed to pay Mr. Thompson aggregate cash payments of $206,250, based upon the Company’s receipt of certain gross sales receipts derived from its Alameda Store in Colorado, and certain stock grants based upon the Company’s outstanding common shares as of February 1, 2019, including a stock grant of 53,717 restricted common shares for accrued salary and 122,934 restricted common shares in exchange for his approximate 122,000 of stock options. During the three months ended March 31, 2021 and 2020, $17,936 and $0, respectively, was paid under this agreement. As of March 31, 2021, the outstanding balance was $144,326, and is included in Accrued payable – related party in the accompanying consolidated balance sheet.

On October 29, 2019, the Company accepted the resignation of Ron Throgmartin from his positions as CEO, President and Director. Mr. Throgmartin’s resignation was not the result of any disagreements with the Company’s plan of operations, policies or management. On the same date, we appointed Christopher D. Strachan, our Chief Financial Officer, to membership on our Board of Directors and appointed Nello Gonfiantini III, our Chief Operations Officer, to the additional post of Chief Executive Officer.

Ron Throgmartin signed a 5-year term Separation Agreement which, among other matters, terminated his Employment Agreement, as amended. On the date of the Separation Agreement, the Company acknowledged it owed Mr. Throgmartin the amount of $517,252 in principal and accrued interest of note payable, salary and fees, accrued during the 5 years of his employment. In addition, the Company further acknowledged that it will pay Mr. Throgmartin fifty (50%) percent of his compensation due under the remaining Employment Agreement, or $614,583 under certain conditions, which the Company accrued in full as the date of Mr. Throgmartin’s separation. This agreement provides that the Company will pay him $5,000 monthly against his accrued salary/fees and 50% of future compensation due under his terminated Employment Agreement, with certain accelerated payments in the event our financial results attain certain EBITA benchmarks. The Company shall have the right to require Mr. Throgmartin to provide consulting services to it for a per diem fee of $500. During the ~~nine~~three months ~~ending September 30, 2017~~ended March 31, 2021 and ~~2016~~2020, $15,000 and $15,000, respectively, were paid under this agreement. As of March 31, 2021, the outstanding balance was ~~$828,677~~$865,597, and ~~$831,262 respectively.~~is included in Accrued payable – related party in the accompanying consolidated balance sheet.

~~In November 2017,~~The Company evaluated subsequent events and transactions that occur after the balance sheet date up to the date that the consolidated financial statements are available to be issued. Any material events that occur between the balance sheet date and the date that the consolidated financial statements were available for issuance are disclosed as subsequent events, while the consolidated financial statements are adjusted to reflect any conditions that existed at the balance sheet date. Based upon this review, except as disclosed within the footnotes or as discussed below, the Company ~~notified its shareholders of its intention to amend its Certificate of Incorporation to increase~~did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the ~~number of authorized shares of Common Stock from 95,000,000 shares to 195,000,000 shares. A majority of shareholders of record as of September 17, 2017 approved this increase.~~consolidated financial statements.

The Company ~~has~~ issued ~~3,729,038~~ 1,137,826 shares of common stock, ~~to convertible notes holders who converted their notes during nine months ended September 30, 2017, resulting in the increase~~which had been included in shares ~~of common stock authorized and~~to be issued ~~from 57,008,298~~ at ~~September 30, 2017 to 60,737,336 as of November 20, 2017.~~March 31, 2021.

The Company received payment of $400,000 of principal and $93,770 of accrued interest related to one of the notes receivable described in Note 4.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF OPERATIONS

The following discussion and analysis of the results of operations and financial condition of Diego Pellicer Worldwide, Inc. (the “Company”, “we”, “us” or “our”) should be read in conjunction with the financial statements of Diego Pellicer Worldwide, Inc. and the notes to those financial statements that are included elsewhere in this Form 10-Q. This discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors and Business sections in the financial statements and footnotes included in the Company’s Form 10-K filed on ~~May 31, 2017~~April 12, 2021 for the year ended December 31, ~~2016.~~2020. Words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions are used to identify forward-looking statements.

Overview of the Market

Diego Pellicer Worldwide, Inc. was established on August 26, 2013 to take advantage of growing market for legalized cannabis being made possible by the escalating legislation allowing for the legalization of cannabis operations in the majority of ~~states:~~states. The cannabis market has a multi-billion dollar potential. The industry is in its infancy and is rapidly being propelled towards its potential by the state legalization and the rush by suppliers to meet the pent-up demand. Most suppliers are small unsophisticated but capable operators. The federal legal constraints provide an opportunity to those companies early to the market to gain a first mover advantage and to the successful ones, an opportunity to be a consolidator in the industry.

What is Diego’s Strategy, Phases One and Two?

Diego is a real estate and a consumer retail development company that is focused on high quality recurring revenues resulting from leasing real estate to licensed cannabis operators, and the management of operations for these and other third party cannabis operators deriving income from management and royalty fees. Diego provides a competitive advantage to these operators by developing “Diego Pellicer” as the world’s first premium marijuana brand and by establishing the highest quality standards for its facilities and products.

The ~~industry is operating under stringent regulations within the various state jurisdictions. The company’s primary business plan~~Company’s first phase strategy is to lease ~~various properties~~and develop the most prominent and convenient real estate locations for the purposes of leasing them to state licensed operators in ~~these jurisdictions to grow, process~~the cannabis industry. Diego’s first phase revenues result from leasing real estate and ~~sell cannabis and related products. The Company will also provide educational training, compliance consultation, branding, and~~selling non-cannabis related accessories to our tenants. The Company has developed a brand name strategy, providing training, design services, branded accessories, systems and systems training, locational selection, and other advisory services to their tenants. ~~These leases are expected provide~~We enter into branding agreements with our tenants. In addition, part of the vetting process in finding the proper tenant is selecting a ~~substantial stream of income. We believe~~tenant that asshares the Company’s values and strictly complies with respective state laws, ~~evolve, it is possible that we~~follows strict safety and testing requirements and provides consistent, high-quality products. If the tenants do not comply, they will ~~have~~not be allowed to use the ~~opportunity to participate directly in these operations. Accordingly, the Company will selectively negotiate an option on our tenants’ operating company.~~

~~The company has already established four facilities in markets that have experienced high growth, Washington and Colorado. This growth is illustrated in the tables below:~~

~~Source: Washington State Liquor and Cannabis Board and Colorado Department of Revenue~~brand.

The ~~legalization taking place~~second phase of our strategy is to secure options to purchase the tenant’s operations. When mutually advantageous for Diego and the tenant, Diego will negotiate acquisition contracts with selected Diego operators/tenants. When it becomes federally legal to do so, Diego will execute the acquisition contracts, consolidate our selected tenants and become a nationally branded marijuana retailer and producer concurrent with the change of federal law.

Diego Pellicer Management Company, a wholly owned subsidiary, will license the upscale Diego Pellicer (“DP”) brand to qualified operators and receive royalty payments, while providing expertise in ~~other states such as California~~retail, product and ~~Florida present opportunities many time~~manufacturing from Diego’s management team.

Recent Developments

During the fiscal quarter, the Company continued its focus on seeking complimentary acquisitions that ~~of Washington and Colorado. The Company is exploring opportunities in Oregon, California and Florida and is getting inquiries from other potential operators in other jurisdictions.~~are additive to the Company’s overall strategic plan

~~This market is projected to grow rapidly in the future as this chart below illustrates:~~RESULTS OF OPERATIONS

~~Source: Marijuana Business Daily~~

~~2017 A YEAR~~ ~~OF TRANSITION~~

~~This past nine~~Three months ~~has been a time of great transition for the Company. An effective and experienced team had~~ended March 31, 2021 compared to be assembled to complement the current executives with knowledge and experience in real estate operations, banking, site selection, branding, facility design, corporate finance, investor relations, Additional capital needed to be raised in order to have sufficient cash to finish construction of the four facilities, build more facilities, and achieve a positive cash flow. Much of the Company’s debt was delinquent and needed to be repaid or renegotiated. New markets had to be explored, new alliances forged, and opportunities prioritized.

Two experienced executives joined the management team in the first quarter 2017 after having served in a consulting capacity since the summer of 2016. One executive had been the CEO of a publicly traded company for 15 years and the other had founded and operated several financial institutions and served on the boards of several public companies. The Company also engaged an advisor with extensive experience in national brand retail site selection, a consultant for branding and design that had been instrumental in the design of Apple stores and other facilities, and a world-renowned architect to design and standardize our retail facilities.

~~$1,278,500 in new capital was raised. New markets were explored. Four facilities were opened and began generating rents. All delinquent notes were renegotiated.~~

~~RESULTS OF OPERATIONS~~three months ended March 31, 2020

After rental expense the gross margins on the lease were as follows:

Three Months Ended Three Months Ended Increase (Decrease)
September 30, 2017 September 30, 2016 $ %
Total revenues
Rental Income $ 297,428 $ 90,334 $ 207,094 230 %
Rent expense (191,556 ) (257,599 ) 66,043 26 %
Gross Profit $ 105,872 $ (167,265 ) $ 273,137 164 %
General and administrative expense
871,217
738,532
132,685
18 %
Selling expense 37,855 5,009 32,846 656 %
Depreciation expense 108,710 - 108,710 * %
Loss from operations $
(911,910
) $ (910,806 ) $
(1,104
) * %

	Three Months Ended			Three Months Ended			Increase (Decrease)
	March 31, 2021			March 31, 2020			$			%
Revenues
Net rental revenue	$	191,753		$	384,031		$	(192,278	)		-50	%
Rental expense		(159,027	)		(290,793	)		(131,766	)		-45	%
Gross profit		32,726			93,238			(60,512	)		-65	%
General and administrative expenses		198,251			267,003			(68,752	)		-26	%
Selling expense		9,881			6,804			3,077			45	%
Loss from operations	$	(175,406	)	$	(180,569	)	$	5,163			3	%

Revenues. For the three months ended March 31, 2021 and 2020, the Company leased two and three facilities, respectively, to licensees in Colorado (one lease was terminated October 1, 2020). Total revenue for the three months ended March 31, 2021 was $191,753, as compared to $384,031 for the three months ended March 31, 2020, a decrease of $192,278, primarily due to the lease termination in late 2020.

Nine Months Ended Nine Months Ended Increase (Decrease)
September 30, 2017 September 30, 2016 $ %
Total revenues
Rental Income $ 1,152,425 $ 313,202 $ 839,223 268 %
Rent expense (828,677 ) (831,262 ) 2,585 - %
Gross Profit $ 323,748 $ (518,060 ) $ 841,808 163 %
General and administrative expense 3,439,038 4,081,460 (642,422 ) (16 )%
Selling expense 71,744 5,009 66,735 1,333 %
Depreciation expense 348,209 - 348,209 * %
Loss from operations $ (3,535,243 ) $ (4,604,529 ) $ (1,069,286 ) (23 )%

* Not divisible by zero

Gross profit. ~~Rent~~Rental revenue ~~exceeded rental expense by $105,872 and $323,748~~for the period ended March 31, 2021 decreased over the prior three months ended March 31, 2020, resulting in a gross profit of $32,726, a decrease of $60,512 from a gross profit of $93,238 for the three ~~and nine~~ months ended ~~September 30, 2017 respectively, compared~~March 31, 2020, resulting from the decrease in revenue due to a ~~loss of $167,265 and $518,060 for the for the three and nine months ended September 30, 2016 respectively. The increase~~lease termination in ~~gross profit was primarily attributable to rental income from the completion of construction and the commencement of operations in the Company’s four facilities.~~October 2020.

General and ~~administrative.~~administrative expense. Our general and administrative expenses for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 were ~~$871,217, and $3,439,038 respectively,~~$198,251, compared to ~~$738,532 and $4,081,460~~$267,003 for the three ~~and nine~~ months ended ~~September 30, 2016 respectively.~~March 31, 2020. The decrease of ~~$642,422 for the 9 months~~$68,752 was ~~mostly~~largely attributable to a reduction in ~~salaries~~executive stock compensation and public company related expenses during the ~~nine~~three months ended ~~September 30, 2017. The increase of $132,685~~March 31, 2021.

Selling expense. Our selling expenses for the three months ended ~~September 30, 2017~~March 31, 2021 were $9,881, compared to $6,804 for the three months ended March 31, 2020. The increase of $3,077 was ~~relatively consistent with previous periods.~~due to additional expenditures for services related to marketing activities.

Three Months Ended Three Months Ended Increase (Decrease)
September 30, 2017 September 30, 2016 $ %
Other income (expense):
Interest expense $ (1,230,865 ) $ (111,254 ) $ (1,119,611 ) 1,007 %
Other income and expense 1,470,334 (713,724 ) 2,184,058 306 %
Change in fair value of derivative and warrant liabilities (3,378,706 ) (136,485 ) (3,242,221 ) (2,376 )%
Net other income $ (3,139,237 ) $ (961,463 ) $ (2,177,774 ) (227 )%

* Not divisible by zero

Nine Months Ended Nine Months Ended Increase (Decrease)
September 30, 2017 September 30, 2016 $ %
Other income (expense):
Interest expense $ (1,965,863 ) $ (216,910 ) $ (1,748,953 ) (807 )%
Other income and expense (4,147,150 ) (686,724 ) (3,460,426 ) 504 %
Change in fair value of derivative and warrant liabilities (2,695,303 ) (30,149) (2,665,154 ) (8,840 )%
Net other income $ (8,808,316 ) $ (933,783) $ (7,874,533 ) (844 )%

* Not divisible by zero

	Three Months Ended			Three Months Ended			Increase (Decrease)
	March 31, 2021			March 31, 2020			$			%
Other income (expense)
Interest income	$	26,912		$	32,891		$	(5,979	)		-18	%
Forgiveness of debt income		56,908			—			56,908			100	%
Interest expense		(209,542	)		(667,577	)		(458,035	)		-69	%
Lease termination payments		33,851			—			33,851			100	%
Extinguishment of debt		389,550			1,932			387,618			20,063	%
Change in derivative liabilities		698,449			302,004			396,445			131	%
Change in value of warrants		(4,442	)		97			(4,539	)		-4,679	%
Total other income (loss)	$	991,686		$	(330,653	)	$	1,322,339			400	%

The increase in net other ~~expense~~income resulted primarily from the effects that the changes in market value of ~~$7,874,533~~the Company’s stock had on the derivative liability associated with our convertible debt and ~~$2,177,774 respectively for~~preferred stock, including gain resulting from the ~~nine months~~extinguishment of derivative liabilities during the period, and from decreased financing costs of new debt incurred by the Company.

LIQUIDITY AND CAPITAL RESOURCES

	Three Months Ended			Three Months Ended			Increase (Decrease)
	March 31, 2021			March 31, 2020			$			%
Net Cash provided (used) in operating activities	$	(196,763	)	$	(373,721	)	$	(176,958	)		-47	%
Net Cash provided by financing activities		67,000			147,500			(80,500	)		-55	%
Net Decrease in Cash		(129,763	)		(226,221	)		(96,458	)		-43	%
Cash - beginning of period		327,864			317,446			10,418
Cash - end of period	$	198,101		$	91,225		$	106,876			117	%

Operating Activities. For the three months ended ~~September 30, 2017 September 30, 2016~~March 31, 2021, the net cash used of $196,763 was ~~largely~~a decrease over the ~~result~~same period of the prior year of $176,958. Cash used for operating assets and liabilities decreased by $190,798, which was partially offset by an increase in loss from operations after non-cash adjustments of $13,840.

Financing Activities. During the three months ended March 31, 2021, $267,000 in proceeds were received from the sale of preferred stock. Payments of convertible notes payable were $200,000. For the three months ended March 31, 2020, we received $100,000 in proceeds from convertible notes payable and $50,000 from the sale of preferred stock. Payment of debt cost was $2,500.

Going Concern

The Company believes that it has sufficient cash on hand and cash generated by real estate leases to sustain operations provided that management and board members continue to agree to be paid company stock in exchange for accrued compensation. There are other future noncash ~~financing costs,~~charges in connection with financings such as a change in derivative ~~liabilities and interest for the convertible notes issued in connection with the refinancing of notes~~liability that ~~had come due and the subsequent conversion of a portion of those notes.~~will affect income but have no effect on cash flow.

~~LIQUIDITY AND CAPITAL RESOURCES~~Although the Company has been successful raising additional capital, there is no assurance that the company will sell additional shares of stock or borrow additional funds. The Company’s inability to raise additional cash could have a material adverse effect on its financial position, results of operations, and its ability to continue in existence. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management believes that the Company’s future success is dependent upon its ability to achieve profitable operations, generate cash from operating activities and obtain additional financing. There is no assurance that the Company will be able to generate sufficient cash from operations, sell additional shares of stock or borrow additional funds. However, cash generated from lease revenues is currently exceeding lease costs, but is insufficient to cover operating expenses.

NineMonths Ended NineMonths Ended Increase (Decrease)
September 30, 2017 September 30, 2016 $ %
Net Cash used in operating activities $ (968,321 ) $ (644,558 ) (323,763 ) $ (50 )%
Net Cash used in investing activities (125,000 ) (412,090 ) $ 287,090 69 %
Net Cash used by financing activities 1,149,450 1,050,491 98,959 9 %
Net Increase in Cash 56,129 (6,157 ) 62,286 1,012 %
Cash - beginning of period 51,333 36,001 15,332 43 %
Cash - end of period $ 107,462 $ 29,844 $ 77,618 260 %

~~Net Cash used in Operating Activities.~~~~For the nine months ended September 30, 2017, the operations used net cash of $968,321.~~

~~Investing Activities.~~~~The cash used in investing activities for the nine months ended September 30, 2017 of $125,000 for acquisition of property and equipment for facility construction.~~Critical Accounting Policies

~~Financing Activities.~~~~During the nine months ended September 30, 2017, $1,149,450~~Our critical accounting policies are included in ~~net proceeds were from notes payable issued less notes paid. During the nine months ended September 30, 2016, the company received $1,050,491 from financing proceeds.~~Note 2 – “Summary of Significant Accounting Policies” of Notes to Condensed Consolidated Financial Statements included in this Quarterly Report.

~~Non-Cash Investing and Financing Activities.~~ Non-cash activities for the nine months ended September 30, 2017 was the conversion of a convertible note for $50,000 in principal and $3,303 in interest. 469,260 shares of common stock were issued for this conversionRecently Issued Accounting Standards

Our recently issued accounting standards are included in Note 2 – “Summary of Significant Accounting Policies” of Notes to Consolidated Financial Statements included in this Quarterly Report.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES.

(a) Disclosure Controls and Procedures

We carried out an evaluation required by Rule 13a-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” and “internal control over financial reporting” as of the end of the period covered by this Quarterly Report.

~~Evaluation of Disclosure Controls and Procedures~~

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act that are designed to ensure that information required to be disclosed in our reports filed or submitted to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that information is accumulated and communicated to management, including the principal executive and financial officer as appropriate, to allow timely decisions regarding required disclosures. Our principal executive officer and principal financial officer evaluated the effectiveness of disclosure controls and procedures as of the end of the period covered by this ~~Annual Report~~quarterly report (the “Evaluation Date”), pursuant to Rule ~~13a-15(b)~~13a- 15(b) under the Exchange Act.

Based on that evaluation, our principal executive officer and principal financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure, due to material weaknesses in our control environment and financial reporting process.

~~Limitations on the Effectiveness of Controls~~

Our management, including our principal executive officer and principal financial officer, does not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in ~~decision-making~~decision- making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

~~Changes~~(b) Management’s Quarterly Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). In evaluating the effectiveness of our internal control over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (b) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorizations of the our management and directors; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Based on our evaluation under the framework described above, as of March 31, 2021, our management concluded that we had “material weaknesses” (as such term is defined below) in our control environment and financial reporting process consisting of the following as of the Evaluation Date:

1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal control and procedures;

2) inadequate segregation of duties consistent with control objectives;

3) ineffective controls over period end financial disclosure and reporting processes; and

4) lack of accounting personnel with adequate experience and training.

A “material weakness” is defined under SEC rules as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.

As of the date of this Quarterly Report, the Company does not intend to remedy the foregoing and therefore such material weaknesses in our control environment and financial reporting process will continue due to lack of available capital. A system of controls, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the system of controls 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.

(c) Change in Internal Control over Financial Reporting

There were no significant changes into our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during ~~the three months ended September 30, 2017~~our first fiscal quarter that could materially ~~affected,~~affect, or are reasonably likely to materially affect, ~~the Company’s~~our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, ~~self-regulatory~~self- regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

COVID-19

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency in response to a new strain of a coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. Management is actively monitoring the global situation and its effects on the Company’s industry, financial condition, liquidity, and operations. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for fiscal year 2021. However, if the pandemic continues, it may have a material adverse effect on the Company’s results of future operations, financial position, and liquidity in fiscal year 2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None.~~During the three months ended March 31, 2021, $100,000 of convertible notes and $6,256 of accrued interest and fees associated with the notes were converted into 5,026,413 shares of common stock with a value of $705,635.

During the three months ended March 31, 2021, the Company issued 30,000 shares of common stock for consulting services with a value of $1,915.

On February 24, 2021, the Company sold 179,850 shares of Series C Convertible Preferred Shares, with an annual accruing dividend of 10%, to Geneva Roth Remark Holdings, Inc. (“Geneva”), for $163,500 pursuant to a Series C Preferred Purchase Agreement with Geneva.

On March 16, 2021, the Company sold 113,850 shares of Series C Convertible Preferred Shares, with an annual accruing dividend of 10%, to Geneva Roth Remark Holdings, Inc. (“Geneva”), for $103,500 pursuant to a Series C Preferred Purchase Agreement with Geneva.

The securities in the transactions described above were sold or issued in reliance on the exemption from registration provided in Section 4(a)(2) of the Securities Act for transactions not involving any public offering. All certificates evidencing the shares sold or issued bore a restrictive legend. No underwriter participated in the offer and sale of these securities, and no commission or other remuneration was paid or given directly or indirectly in connection therewith. The proceeds from these sales were used for general corporate purposes.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

~~Exhibits~~
~~31.1~~	Incorporated by Reference			~~Certification of Principal Executive Officer of the Registrant pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~Filed or Furnished
Exhibit Number		Exhibit Description	Form		Exhibit		Filing Date	Herewith

~~31.2~~		~~Certification of Principal Financial Officer of the Registrant pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

32.1*31.1		Certification of Principal Executive Officer, pursuant to ~~18U.S.C.~~Section 302 of the Sarbanes-Oxley Act of 2002						x
31.2		Certification of Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002						x
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.
						x
32.2*32.2		Certification of Principal Financial Officer, ~~of the Registrant~~ pursuant to ~~18U.S.C.~~18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002
						x
101.INS		XBRL Instance Document
						x
101.SCH		XBRL Taxonomy Extension Schema Document
						x
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
						x
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
						x
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
						x
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document						x

*In accordance with SEC Release 33-8238, Exhibit 32.1 and 32.2 are being furnished and not filed.

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.

	DIEGO PELLICER WORLDWIDE, INC.

Date: ~~November 20, 2017~~May 14, 2021	By:	/s/ ~~Ron Throgmartin~~Nello Gonfiantini III
		~~Ron Throgmartin,~~Nello Gonfiantini III, Chief Executive Officer
		(Principal Executive Officer)

Delaware		33-1223037
(State or other jurisdiction of		~~(I.R.S. Employer~~
incorporation or organization)		(I.R.S. Employer Identification No.)

Title of each class registered:		Trading Symbol(s):		Name of each exchange on which registered:
N/A		N/A		N/A

Large accelerated Filer	~~[ ]~~☐		Accelerated Filer	~~[ ]~~☐
Non-accelerated Filer	~~[ ]~~☒		Small Reporting Company	~~[X]~~☒
~~(Do not check if smaller reporting company)~~		Emerging ~~Growth Company~~growth company	~~[ ]~~☐

		Page

	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	41
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1714
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2116
Item 4.	Controls and Procedures	2116

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	2218
Item 1A.	Risk Factors	2218
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2218
Item 3.	Defaults Upon Senior Securities	2218
Item 4.	Mine Safety Disclosures	2218
Item 5.	Other Information	2218
Item 6.	Exhibits	2218

	September 30, 2017			December 31, 2016
		(Unaudited)
Assets

Current assets:
Cash and cash equivalents	$	107,462		$	51,333
Accounts receivable		25,355			-
Prepaid expenses		78,746	��		482,765
Inventory		29,975			47,025
Deferred rent receivable		20,867			-
Total current assets		262,405			581,123
Property and equipment net		517,838			758,112
Investments at cost		-			43,333
Security deposits		320,000			320,000

Total assets	$	1,100,243		$	1,702,568

Liabilities and deficiency in stockholders’ equity

Current liabilities:
Accounts payable	$	495,619		$	823,797
Accrued payable - related party		743,166			509,294
Accrued expenses		186,499			1,207,803
Notes payable - related party		307,312			307,312
Notes payable		126,000			1,310,678
Convertible notes, net of discount		369,162			334,156
Deferred rent		77,182			107,957
Deferred revenue		53,000			53,000
Derivative liabilities		4,767,377			338,282
Warrant liabilities		379,084			-

Total current liabilities		7,504,401			4,992,279

Deferred revenue		275,500			316,000

Total liabilities		7,779,901			5,308,279

Deficiency in stockholders’ equity:

Preferred stock, Series A and B, par value $.0001 per share; 5,000,000 shares authorized, none issued and outstanding		-			-
Common stock, par value $.000001 per share; 95,000,000 shares authorized, 57,008,298and 49,081,878 shares outstanding as of September 30, 2017 and December 31, 2016, respectively,		57			49
Additional paid-in capital		26,791,545			24,508,365
Stock to be issued		6,986,424			-
Accumulated deficit		(40,457,684	)		(28,114,125	)

Total deficiency in stockholders’ equity		(6,679,658	)		(3,605,711	)

Total liabilities and deficiency in stockholders’ equity	$	1,100,243		$	1,702,568

	March 31,			December 31,
	2021			2020
	(Unaudited)
Assets

Current assets:
Cash	$	198,101		$	327,864
Accounts receivable		520,974			523,958
Prepaid expenses		1,275			11,275

Total current assets		720,350			863,097

Other receivables		1,057,272			1,030,422
Security deposits		90,000			90,000
Right of use assets		951,324			1,062,592

Total assets	$	2,818,946		$	3,046,111

Liabilities and deficiency in stockholders’ equity

Current liabilities:
Accounts payable	$	508,218		$	526,377
Accrued payable - related parties		1,333,920			1,332,756
Accrued expenses		902,788			931,825
Notes payable - related party		140,958			140,958
Notes payable		133,403			133,403
Convertible notes, net of discount and costs		2,941,274			3,239,274
Derivative liabilities		5,713,575			5,997,865
Lease liabilities		270,021			327,685
Warrant liabilities		4,918			476

Total current liabilities		11,949,075			12,630,619

Notes payable - long term		150,000			206,444
Lease liabilities, net of current portion		668,309			715,488

Total liabilities		12,767,384			13,552,551

Redeemable convertible preferred stock, Series C, par value $.00001 per share; 1,500,000 shares authorized, 293,700 and no shares issued and outstanding, net of discount of $282,737 and $0, respectively,		13,155			—

Deficiency in stockholders’ equity:

Preferred stock, Series A and B, par value $.0001 per share; 5,000,000 shares authorized, none issued and outstanding		—			—
Common stock, par value $.000001 per share; 840,000,000 shares authorized, 222,327,908 and 217,271,495 shares issued and outstanding, respectively		221			216
Additional paid-in capital		45,261,664			44,554,119
Stock to be issued		76,068			49,225
Accumulated deficit		(55,299,546	)		(55,110,000	)

Total deficiency in stockholders’ equity		(9,961,593	)		(10,506,440	)

Total liabilities and deficiency in stockholders’ equity	$	2,818,946		$	3,046,111

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016

REVENUES
Net Rental Revenue	$	297,428		$	90,334		$	1,152,425		$	313,202
Rental Expense		(191,556	)		(257,599	)		(828,677	)		(831,262	)
Gross Profit		105,872			(167,265	)		323,748			(518,060	)

Operating expenses:
General and administrative expenses		871,217			738,532			3,439,038			4,081,460
Selling Expense		37,855			5,009			71,744			5,009
Depreciation Expense		108,710			-			348,209			-
Income (Loss) from Operations		(911,910	)		(910,806	)		(3,535,243	)		(4,604,529	)

Other Income (Expense)
Licensing Revenue		13,500			13,500			40,500			40,500
Other Income (Expense)		5,978						51,808
Interest Expense		(1,230,865	)		(111,254	)		(1,965,863	)		(216,910	)
Impairment Loss		-			(727,224	)		(82,478	)		(727,224	)
Extinguishment of Debt		1,450,856						(4,156,980	)
Change in Derivative Liabilities		(3,310,838	)		(136,485	)		(2,316,219	)		(30,149	)
Change in Value of Warrants		(67,868	)					(379,084	)
Total Other Income (Loss)		(3,139,237	)		(961,463	)		(8,808,316	)		(933,783	)

Provision for taxes
NET INCOME (LOSS)	$	(4,051,147	)	$	(1,872,269	)	$	(12,343,559	)	$	(5,538,312	)

Loss per share - basic and diluted		(0.07	)	$	(0.04	)		(0.24	)	$	(0.14	)

Weighted average common shares outstanding - basic and diluted		54,208,198			43,505,355			51,483,444			40,891,947

	Redeemable Convertible Preferred Stock Shares		Amount		Common Stock Shares		Amount		Preferred Stock Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Common Stock to be issued		Total
Balance - December 31, 2020		—	$	—		217,271,495		216		—	$	—	$	44,554,119	$	(55,110,000	)	$	49,225	$	(10,506,440	)
Issuance of common shares for services		—		—		30,000		—		—		—		1,915		—			2,000		3,915
Issuance of common shares for services - related parties		—		—		—		—		—		—		—		—			24,843		24,843
Common stock issued upon conversion of notes payable and accrued interest		—		—		5,026,413		5		—		—		705,630		—			—		705,635
Series C preferred stock issued for cash, net of costs and discounts		293,700		—		—		—		—		—		—		—			—		—
Accrued dividends and accretion of conversion feature on Series C preferred stock		—		13,155		—		—		—		—		—		(13,155	)		—		(13,155	)
Deemed dividends related to conversion feature of Series C preferred stock		—		—		—		—		—		—		—		(992,671	)		—		(992,671	)
Net income		—		—		—		—		—		—		—		816,280			—		816,280
Balance - March 31, 2021		293,700	$	13,155		222,327,908	$	221		—	$	—	$	45,261,664	$	(55,299,546	)	$	76,068	$	(9,961,593	)

Purpose	Size	City	State
Retail store (recreational and medical)	3,300 sq.	Denver	CO
Cultivation warehouse – terminated October 2020	18,600 sq.	Denver	CO
Cultivation warehouse	14,800 sq.	Denver	CO

As of March 31, 2021	Fair Value Measurement Using
	Level 1		Level 2		Level 3		Total
Derivative liabilities	$	—	$	—	$	5,714	$	5,714
Stock warrant liabilities		—		—		5		5
	$	—	$	—	$	5,719	$	5,719

As of December 31, 2020	Fair Value Measurement Using
	Level 1		Level 2		Level 3		Total
Derivative liabilities	$	—	$	—	$	5,998	$	5,998
Stock warrant liabilities		—		—		1		1
	$	—	$	—	$	5,999	$	5,999

Monthly Payments Accrued
October 1, 2020 to June 30, 2021	$	11,284
July 1, 2021 to June 30, 2022		11,622
July 1, 2022 to June 30, 2023		11,971
July 1, 2023 to June 30, 2024		12,330

	Estimated
	Useful Lives	September 30, 2017			December 31, 2016
Machinery and equipment	5 years		-		$	39,145
Leasehold improvements	10 years		853,413			728,413
Less: Accumulated depreciation and amortization			(335,575	)		(9,446	)

Property and equipment, net		$	517,838		$	758,112

	Convertible Notes			Discount		Convertible Notes, Net of Discount			Derivative Liabilities
Balance, December 31, 2020	$	3,239,274		$	—	$	3,239,274		$	5,997,865
Issuance of convertible notes		2,000			—		2,000			115,160
Conversion of convertible notes		(100,000	)		—		(100,000	)		(661,087	)
Repayment of convertible notes		(200,000	)		—		(200,000	)		(302,452	)
Change in fair value of derivatives		—			—		—			177,244
Amortization		—			—		—			—
Balance March 31, 2021	$	2,941,274		$	—	$	2,941,274		$	5,326,730

	March 31, 2021			March 31, 2020
Risk-free interest rates		0.02 – 0.09	%		0.11 – 1.58	%
Expected life (years)		0.25			0.25 – 1.0
Expected dividends		0	%		0	%
Expected volatility		164 – 544	%		179 – 214	%

	Preferred Stock and Accrued Dividends		Discount			Preferred Stock and Accrued Dividends, Net of Discount		Derivative Liabilities
Balance , December 31, 2020	$	—		—			—		—
Issuance of Series C Preferred shares		293,700		293,700			—		1,259,672
Accretion of discount		—		(10,963	)		10,963		—
Accretion of dividend on Series C preferred stock		2,192		—			2,192		2,866
Change in fair value of derivatives		—		—			—		(875,693	)
Balance March 31, 2021	$	295,892	$	282,737		$	13,155	$	386,845

	Convertible notes			Discount			Convertible Note Net of Discount			Derivative Liabilities
Balance, December 31, 2016		370,500			36,344			334,156			338,282
Issuance of convertible notes		3,762,342			1,278,500			2,483,842			7,622,392
Conversion of convertible notes		(3,031,843	)		(116,180	)		(2,915,663	)		(5,509,516	)
Change in fair value of derivatives		—			—			—			2,316,219
Amortization		—			(466,827	)		466,827			—
Balance September 30, 2017	$	1,100,999		$	731,837		$	369,162		$	4,767,377

	Three Months ended March 31,
	2021		2020
Balance at beginning of year	$	476	$	967
Additions to derivative instruments		—		—
Loss (gain) on change in fair value of derivative liability		4,442		(97	)
Balance at end of year	$	4,918	$	870

	For the Nine Months Ended September30, 2017			For the Year Ended December 31, 2016
Annual dividend yield		0	%		0	%
Expected life (years)		3-10			5
Risk-free interest rate		1.10 – 2.34	%		0.90	%
Expected volatility		232 - 234			266

	Number of Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Balance outstanding, December 31, 2016		2,027,313	$	1.18		3.43
Exercisable, December 31, 2016		2,027,313	$	1.18		3.43
Granted		2,900,000		-		-
Balance outstanding, September 30, 2017		4,927,313	$	0.65		5.07
Exercisable, September 30, 2017		4,927,313	$	0.65		5.07

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Balance outstanding, December 31, 2016		1,000,000	$	0.30		4.50
Exercisable, December 31, 2016		200,000	$	0.30		4.50
Granted		4,899,180		0.25		5.00
Exercised		-		-		-
Forfeited		-		-		-
Expired		-		-		-
Balance outstanding, September 30, 2017		5,899,180	$	0.26		8.40
Exercisable, September 30, 2017		2,849,590	$	0.26		8.56

	Operating Leases
2021		293
2022		270
2023		270
2024		270
2025		45
Total		1,148
Less: amount representing interest		(210	)
Present value of future minimum lease payments		938
Less: current obligations under leases		270
Long-term lease obligations	$	668

2017	$	541,110
2018		1,131,078
2019		746,039
2020		594,444
2021		431,227
2022		240,000
2023		240,000
2024		240,000
2025		40,000
Total	$	4,203,898

	Three Months ended March 31, 2021
Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	104,843
Weighted-average remaining lease term - operating leases		3.47yr
Weighted-average discount rate - operating leases		12	%

	NineMonths Ended			NineMonths Ended			Increase (Decrease)
	September 30, 2017			September 30, 2016			$			%
Net Cash used in operating activities	$	(968,321	)	$	(644,558	)		(323,763	)	$	(50	)%
Net Cash used in investing activities		(125,000	)		(412,090	)	$	287,090			69	%
Net Cash used by financing activities		1,149,450			1,050,491			98,959			9	%
Net Increase in Cash		56,129			(6,157	)		62,286			1,012	%
Cash - beginning of period		51,333			36,001			15,332			43	%
Cash - end of period	$	107,462		$	29,844		$	77,618			260	%