| Note 1 - Description Of The Business Of Acquired Sales Corp. | NOTE 1 – DESCRIPTION OF THE BUSINESS OF ACQUIRED SALES
CORP. Acquired Sales Corp. (hereinafter sometimes referred to as “Acquired
Sales”, the “Company”, “AQSP”, “Acquired”, the “Company”, “we”,
“us”, “our”, etc.) was organized under the laws of the State of Nevada on January 2, 1986. The Company
does not currently have any business or any sources of revenue. The Company wants to acquire all or a portion of one or more operating
businesses. Management of the Company currently is exclusively exploring potential
acquisitions of all or a portion of one or more operating businesses involving the manufacture and sale of cannabidiol (CBD)-infused
products such as beverages, muscle/joint rubs, oils, crystals, tinctures, bath bombs, isolate, relief balms, elixirs, body washes,
med sticks, lotions, vape pens and cartridges, shatter, and gummies (a “CBD-Infused Products Company”). In order to consummate a particular acquisition of a CBD-Infused
Products Company, management of the Company is open-minded to the concept of also acquiring all or a portion of one or more operating
businesses and/or assets that are related to such CBD-Infused Products Company, for example operating businesses and/or assets
involving distilled spirits, beer, wine, hemp, paraphernalia, cannabis, tetrahydrocannabinol (THC)-infused products, and real estate. Signing
of Letter of Intent to Acquire 100% of the Ownership Interests of Warrender Enterprise Inc. d/b/a Lifted Liquids On May 23, 2019, the Company, its CEO Gerard M. Jacobs (“GJacobs”),
its President and CFO William C. “Jake” Jacobs (“WJacobs”) and Erik S. Lundgren, CEO of CBD Lion LLC, entered
into a Letter of Intent with Warrender Enterprise Inc. d/b/a Lifted Liquids (“Lifted”), and its owner Nicholas S. Warrender
to, subject to a number of conditions, acquire 100% of the ownership of Lifted including its affiliated vape shops. The consideration
to be paid by the Company in the proposed purchase of Lifted is (i) cash in the amount of $7,500,000; and (ii) equity in the amount
of 4,545,455 shares of the Company’s common stock (“Stock Consideration”). In the event that the purchase of
Lifted occurs, Warrender shall enjoy so-called “piggyback registration rights” in regard to the Stock Consideration,
and provided further that Warrender shall enjoy so-called "demand registration rights" in regard to the Stock Consideration
if no piggyback registration statement is filed with the SEC within 120 days following the closing of the proposed sale. The terms of the proposed transaction must be set forth in a definitive
agreement. There are no assurances that the Company will be successful in negotiating an acceptable definitive agreement, when
or whether a definitive agreement will be reached between the parties, or that the proposed purchase will be consummated. Even
if a definitive agreement is executed, the terms of the proposed purchase may change materially from the terms set forth in the
Letter of Intent. There will be many conditions to closing, many of which are outside of the parties’ control and the Company
cannot predict whether these conditions will be satisfied. There are no assurances when or if closing will occur, even if the parties
successfully negotiate and sign a definitive agreement. Closing of the acquisition of Lifted is subject to a number of conditions,
including but not limited to the completion of due diligence investigation of Lifted by the Company that is acceptable to the Company,
completion of a capital raise by the Company of at least $9 million, completion of an audit of Lifted acceptable to the Company,
execution of definitive acquisition documents, execution of an employment agreement with Nicholas S. Warrender, obtaining necessary
third-party approvals, including a tax opinion to be provided by Lifted’s tax counsel indicating that the proposed acquisition
will qualify as a tax-free merger, execution of a shareholders agreement among GJacobs, WJacobs, Nicholas S. Warrender and Erik
S. Lundgren, and completion of all necessary securities filings. In the event that most of the foregoing conditions are met, as
detailed in the Letter of Intent, prior to the closing of the proposed acquisition, but only if AQSP is requested by Lifted in
writing to do so, the Company will make a $300,000 loan to Lifted to be used by Lifted exclusively for growth capital. The Company is currently engaged in due diligence of Lifted and
have not yet started to negotiate a definitive agreement for the proposed acquisition. The Letter of Intent will terminate if (i)
no audit of Lifted satisfactory to the Company has been delivered by September 30, 2019; (ii) the Company fails to raise $9 million
by October 31, 2019; or (iii) the proposed purchase has not closed by November 30, 2019 (or such other date as mutually agreed
by the parties). The letter of intent contains customary provisions prohibiting Lifted
from soliciting or encouraging any other acquisition proposal or entering into any negotiations or agreements for an alternative
acquisition transaction prior to the termination of the Letter of Intent. In the event that the proposed acquisition of Lifted is completed,
the Letter of Intent requires that Lifted shall operate as a wholly-owned subsidiary of the Company under the Lifted brand, led
by Nicholas S. Warrender as Lifted’s CEO. Signing
of Letter of Intent to Acquire 100% of the Ownership Interests of CBD Lion LLC On May 8, 2019, the Company, GJacobs
and WJacobs entered into a Letter of Intent with CBD Lion LLC (“Lion”) and its owners (the “Lion Owners”)
to, subject to a number of conditions, acquire 100% of the ownership of Lion (the “Transaction”). The consideration
to be paid by the Company in the proposed acquisition of Lion is: two million dollars ($2,000,000) in cash, plus unregistered
common stock of the Company (the "Stock Consideration") in an amount that is the greater of: (i) five million (5,000,000)
shares or (ii) a number of shares with a value at closing of the Transaction, based on the Company’s share price, equal
to 50% of the value of the aggregate consideration deemed paid to the Lion Owners for their ownership interests in Lion, which
could hypothetically increase the Stock Consideration to a number significantly higher than five million (5,000,000). The Lion
Owners shall have "piggyback registration rights" for the common stock shares underlying the Stock Consideration and "demand
registration rights" that are triggered if no registration statement covering the Stock Consideration is filed with the SEC
within 120 days following the closing of the Transaction. In addition, the Letter of Intent requires that at the closing of the
Transaction, the Company shall cause up to four hundred sixty-two thousand four hundred thirty dollars ($462,430) of related party
debt , plus accrued interest, owed by Lion to be repaid in full. The terms of the proposed Transaction must be set forth in a definitive
agreement. There are no assurances that the Company will be successful in negotiating an acceptable definitive agreement, when
or whether a definitive agreement will be reached between the parties, or that the proposed Transaction will be consummated. Even
if a definitive agreement is executed, the terms of the proposed Transaction may change materially from the terms set forth in
the Letter of Intent. There will be many conditions to closing of the Transaction, many of which are outside of the parties’
control and we cannot predict whether these conditions will be satisfied. There are no assurances when or if closing of the Transaction
will occur, even if the parties successfully negotiate and sign a definitive agreement. Closing of the acquisition of Lion is subject to a number of conditions,
including but not limited to the completion of due diligence investigation of Lion by the Company that is acceptable to the Company,
completion of a capital raise by the Company of at least $4 million, completion of an audit of Lion acceptable to the Company,
execution of definitive acquisition documents, execution of employment agreements with certain key Lion executives, obtaining necessary
third-party approvals, including a tax opinion to be provided by Lion’s tax counsel indicating that the proposed Transaction
will qualify as a tax-free reorganization, and completion of all necessary securities filings. The Company has substantially completed its due diligence of Lion
and is negotiating definitive agreements for the proposed Transaction. The Letter of Intent will terminate if (i) no audit of Lion
satisfactory to the Company has been delivered by August 31, 2019; the Company fails to raise $4 million by September 30, 2019;
or (iii) the proposed Transaction has not closed by October 31, 2019, and the outside closing date has not been extended by mutual
agreement of the parties. The Letter of Intent contains customary provisions prohibiting Lion
from soliciting or encouraging any other acquisition proposal or entering into any negotiations or agreements for an alternative
acquisition or financing transaction prior to the termination of the Letter of Intent. In the event that the proposed acquisition of Lion is completed,
the Letter of Intent requires that as soon as practicable following the closing of the proposed sale, the Company will change its
name to "CBD Lion Corp.” and request a new trading symbol that better relates to the new proposed name. Loan
for Growth Capital Made to Lion On
August 8, 2019, after the preparation of draft definitive documentation regarding the
Transaction, including a draft merger agreement, stockholders agreement, registration rights agreement, and employment agreements,
AQSP made an unsecured $300,000 loan to Lion (the “Loan”) evidenced by a promissory note (the “Note”).
The proceeds of the Loan are to be used by Lion exclusively for growth capital and not to be used to repay any related party debt
of Lion nor to pay any increased salaries or bonuses to any of the executives of Lion. If the Transaction closes, then the Loan
shall be extinguished, because post-closing of the Transaction, Lion and the Company will constitute the same entity. Pursuant
to the terms of the Note, if the Transaction does not close and the merger agreement is terminated, then the Loan shall be repaid
by Lion to the Company in six equal monthly installments of principal, together with accrued interest at the rate of 6% per year,
with the first such installment due and payable by Lion to the Company on the first day of the first calendar month following the
termination of the merger agreement. Stock
Sale and Purchase Agreement – Ablis Holding Company Ablis Holding Company
("Ablis") produces CBD-infused beverages and other products. Ablis' all-natural, shelf-stable, GMO-free,
non-alcoholic, lemon ginger, cranberry blood orange, and 0 calorie lemon water beverages target the mainstream health market
and contain no THC. Ablis also manufactures and sells CBD-infused rubs and oils. Ablis' beverages are now being distributed
in 11 states, online throughout the country, Puerto Rico and Guam. Also, Silver Moon Brewing, a brewery in Bend, has recently
begun producing and selling Hazibliss, Oregon’s first hemp CBD-infused draft beer that incorporates Ablis’
cranberry blood orange CBD beverage. On April 30,
2019, the Company, GJacobs, and WJacobs entered into a Stock Sale and Purchase Agreement with Ablis, Ablis, Inc., and James A.
Bendis (“Bendis”) wherein the Company paid $399,200 for a post transaction 4.99% ownership of Ablis' equity. The Stock
Sale and Purchase Agreement requires that Ablis use a portion of the purchase proceeds to pay off at least $381,000 of its liabilities.
A The Stock
Sale and Purchase Agreement set out terms for a potential additional equity purchase of Ablis, such that the Company could purchase
up to an additional 15% of Ablis for $1,200,000, so that the Company would then own 19.99% of the ownership equity of Ablis. T The management team of Ablis is continuing to lead Ablis. Pursuant
the terms of the Stock Sale and Purchase Agreement, GJacobs is now a member of the board of directors of Ablis, WJacobs is entitled
to be provided with access to Ablis' financial information, and WJacobs is entitled to be provided access to Ablis’ financial
information. The Stock Sale and Purchase Agreement also requires that GJacobs and WJacobs be introduced to the owners of Ablis’
CBD isolate suppliers, and any other companies in the hemp, CBD and cannabis industries with whom Ablis and/or Bendis have relationships,
and whom may potentially be interested in entering into a stock sale or merger with the Company. The Stock
Sale and Purchase Agreement requires that Ablis evaluate and seriously consider a sale of Ablis or taking Ablis public within 60
months from April 30, 2019 and that it use commercially reasonable best efforts, to close a mutually acceptable alternative exit
opportunity for the company within 72 months from April 30, 2019. The Company’s investment in Ablis made the Company a minority
owner of Ablis. As a minority owner, the Company is not able to recognize any portion of Ablis’ revenues or earnings in the
Company’s financial statements. The Company is monitoring its investment in Ablis and from time to time will evaluate whether
there has been a potential impairment of value. Stock
Purchase Agreement - Bendistillery Inc. and Bend Spirits, Inc. Founded in 1996, Bendistillery Inc. ("Bendistillery")
is an award-winning craft distillery, with an outstanding reputation for producing Crater Lake Spirits brands including vodkas,
gins, whiskeys, and white label brands offered through Bend Spirits, Inc. ("Bend Spirits"). On
April 30, 2019, the Company, GJacobs, and WJacobs entered into a Stock Purchase Agreement with Bendistillery, Bend Spirits, Bendis
Homes Pinehurst, LLC, an Oregon limited liability company (“Landowner”), Bendis, and Alan T. Dietrich (“Dietrich”)
wherein the Company paid $1,347,300 for a post transaction 4.99% ownership of Bendistillery’s equity and $149,700 for a post
transaction 4.99% ownership of Bend Spirits’ equity. Bendistillery and Bend Spirits are in the business of manufacturing
and sale of alcoholic beverages, and the manufacturing of CBD-infused beverages and CBD-infused products. The Stock Purchase Agreement
requires that Bendistillery and Bend Spirits use a portion of the purchase proceeds to pay off at least $835,000 of their collective
liabilities. The Stock
Purchase Agreement also set out terms for a potential additional equity purchase of Bendistillery, such that the Company could
purchase up to an additional 15% of Bendistillery for $4,050,000, so that the Company would then own 19.99% of the ownership equity
of Bendistillery. Per the terms of the Stock Purchase Agreement, the Company potentially could also purchase up to an additional
15% of Bend Spirits for $450,000, such that the Company would then own 19.99% of the ownership equity of Bend Spirits. Pursuant to
the Stock Purchase Agreement, Landowner (as landlord) and Bendistillery (as tenant) have entered into a long-term lease of the
23 acres in Tumalo outside Bend, Oregon, where Bendistillery and Bend Spirits conduct their businesses (the “Real Estate”),
which lease (the “Lease”) is consistent with the following terms: the initial term of the Lease is 20 years at a rent
of $17,500 per month; Tenant has the right, in its sole discretion, to exercise a series of options to extend the term of the Lease
up to a maximum of 99 years;
and Tenant has a 60-day right of first refusal if Landowner ever decides to sell all or any portion of the Real Estate. Bendis
is the owner of Landowner. The management teams of Bendistillery and Bend Spirits are continuing
to lead their respective companies. Pursuant the terms of the Stock Purchase
Agreement, GJacobs is now a member of the boards of directors of Bendistillery and Bend Spirits, WJacobs is entitled to be provided
with access to Bendistillery’s and Bend Spirits’ financial information, and WJacobs is entitled to be provided access
to Bendistillery’s and Bend Spirits’ financial information. Bendistillery and Bend Spirits are obligated to pay WJacobs
an advisory fee of not less than $5,000 per quarter. The Stock Purchase Agreement also requires that GJacobs and WJacobs be introduced
to the owners of Deschutes Brewery, Silver Moon Brewing, LBD Beverage, and any other companies in the distilled spirits, beer,
wine, hemp, CBD and cannabis industries with whom Bendistillery, Bend Spirits, Bendis and/or Dietrich have relationships, and whom
may potentially be interested in entering into a stock sale or merger with the Company. The Stock
Purchase Agreement requires that Bendistillery and Bend Spirits evaluate and seriously consider a sale of Bendistillery and Bend
Spirits or taking them public within 60 months from April 30, 2019 and that they use commercially reasonable best efforts to close
a mutually acceptable alternative exit opportunity for the companies within 72 months from April 30, 2019. The Company’s investments in Bendistillery
and Bend Spirits made the Company a minority owner of these companies. As a minority owner, the Company is not be able to recognize
any portion of Bendistillery’s or Bend Spirits’ revenues or earnings in the Company’s financial statements. The
Company is monitoring its investment in Ablis and from time to time will evaluate whether there has been a potential impairment
of value. Acceptance
of Subscriptions From Accredited Investors to Purchase Newly Issued Series A Convertible Preferred Stock (“Series A Preferred
Stock”) Between February
27, 2019 and May 13, 2019, the Company accepted subscriptions from accredited investors to purchase 66,150 shares of newly issued
Series A Preferred Stock for an aggregate purchase price of $6,615,000 in cash. These 66,150 shares of Series A Preferred Stock
are convertible at the option of the holders into 6,615,000 shares of newly issued common stock of the Company, or $1.00 per share
of common stock of the Company. The Company has covenanted to file a registration statement covering the shares of newly issued
common stock of the Company into which the Series A Preferred Stock can be converted (the "Registration Statement").
The Series A Preferred Stock will receive an annual dividend, and will be subject to mandatory conversion, under terms and conditions
set forth in the Certificate of Designation of the Series A Preferred Stock. Acceptance
of Subscriptions From Accredited Investors to Purchase Newly Issued Series B Convertible Preferred Stock (“Series B Preferred
Stock”) On June 28, 2019, we commenced a private placement to accredited
investors, offering to sell up to 5,000,000 shares of Series B Preferred Stock convertible into 5,000,000 shares of our common
stock at an exercise price of $5.00 per share. As of the date of this report, the Company has accepted a subscription from one
accredited investor to purchase 60,000 shares of Series B Preferred Stock for an aggregate purchase price of $300,000 in cash,
convertible at the option of the holder into 60,000 shares of newly issued
common stock of the Company, or $5.00 per share of common stock of the Company. Acquisition Process The structure of the Company’s participation in business opportunities
and ventures will continue to be situational. The Company is likely to structure future acquisitions as a purchase of 19.99% or
less, or 50.01% or more, of a target company’s equity ownership interest, or as a so-called tax-free reorganization. It is
likely that the anticipated value of the business and/or securities that the Company acquires relative to the current value of
the Company’s securities will result in the issuance of a relatively large number of newly issued shares of the Company,
and, as a result, substantial additional dilution to the percentage ownership of our current stockholders. Moreover, the Company’s
present management and shareholders may not have control of a majority of our voting shares following a merger or purchase of stock.
It is possible that the shareholders of the acquired entity or the persons who provide the capital to the Company to finance a
merger or purchase of stock will gain control of the Company’s voting stock and the Company’s directors may resign
and new directors may be appointed without any vote by the shareholders. Those directors are entitled to replace the Company’s
officers without stockholder vote. In regard to nearly all of the Company’s potential acquisitions,
the Company is typically focused upon acquiring 19.99% or less, or 50.01% or more, of existing privately held businesses whose
owners are willing to consider selling a percentage of the equity ownership interest of their businesses, or merging their entire
businesses into the Company or a wholly-owned subsidiary of the Company in a so-called tax-free reorganization, and whose management
teams are enthusiastic about continuing to operate their businesses following the transactions with the Company. Closing such purchases of stock or so-called tax-free reorganizations
will likely require the Company to raise millions of dollars of capital, in order to pay the cash portion of the transaction consideration.
The Company can provide no assurance or guaranty whatsoever that it will be able to raise such millions of dollars of capital on
acceptable terms and conditions, if at all. An Investment Committee appointed by the Company’s Board of
Directors, currently consisting of GJacobs, director Thomas W. Hines, CPA CFA, and WJacobs, CPA, will review material furnished
to it and will vote whether or not the Investment Committee believes a potential acquisition is in the Company’s best interests
and the interests of the Company’s shareholders. If the Investment Committee votes unanimously to approve a potential acquisition,
then such acquisition will be presented to the Board of Directors of the Company for their review and a vote. The Company does
not intend to proceed forward with a potential acquisition without the unanimous approval of the Investment Committee and approval
by a majority of the Company’s Board of Directors. The Company intends to source acquisition opportunities through
its CEO and directors and their contacts, and in some cases through finders. These contacts include the shareholders of Lion,
Lifted, Ablis, professional advisors such as attorneys and accountants, securities broker dealers, venture capitalists, members
of the financial community, other businesses and others who may present solicited and unsolicited proposals. Management believes
that business opportunities may become available to us due to a number of factors, including, among others: (1) The Company’s
ownership of shares in one or more CBD-Infused Products Companies; (2) management’s historical experience building large
public companies; (3) management’s contacts and acquaintances; and (4) the Company’s flexibility with respect to the
manner in which the Company may be able to structure, finance, merge with or acquire any business opportunity. The analysis of new business opportunities will be undertaken by
or under the supervision of the Investment Committee appointed by our Board of Directors. Inasmuch as the Company will have limited
funds available to search for business opportunities, the Company will not be able to expend significant funds on a complete and
exhaustive investigation of such business or opportunity. The Company will, however, investigate, to the extent believed reasonable
by the Investment Committee, such potential business opportunities by conducting a so-called “due diligence investigation”. In a due diligence investigation, the Company intends to obtain
and review materials regarding the business opportunity. Typically, such materials will include information regarding a target
business’ products, services, contracts, management, ownership, and financial information. In addition, the Company intends
to cause the Investment Committee to meet personally with management and key personnel of target businesses, ask questions regarding
the target businesses’ prospects, tour facilities, and conduct other reasonable investigation of the target businesses
to the extent of the Company’s limited financial resources and management and technical expertise. There is no guarantee that the Company can obtain or maintain the
funding needed for its operations, including the funds necessary to search for and investigate acquisition candidates, and to close
an acquisition including paying the substantial costs of legal, accounting and other relevant professional services. As of August 12, 2019, the Company has cash on hand of approximately
$4,364,648, which are proceeds from the sale of Series A Preferred Stock between February 27, 2019 and May 13, 2019, and proceeds
from the sale of Series B Preferred Stock. In prior years, the Company’s payables have been greater than their cash on hand.
The Company has inconsistent income generating ability and is therefore reliant on raising money from loans or stock sales. |
