Document:

ffntf-ex1024_1051.htm

Exhibit 10.24

TERMINATION AGREEMENT

 

This Termination Agreement (the “Termination Agreement”), dated as of August 11, 2020 (the “Effective Date”), is by and among Premium Medicine of Maryland, LLC, a Maryland limited liability company (“Premium”), Silver Spring Consulting Group, LLC, a Delaware limited liability company (“SSCG”), Eric Steenstra, an individual resident in the State of Maryland (“Mr. Steenstra”), Dawn Steenstra, an individual resident in the State of Maryland (“Ms. Steenstra”), 4Front Advisors, LLC, an Arizona limited liability company (“4Front Advisors”), 4Front PM InvestCo, LLC, a Maryland limited liability company (“4Front InvestCo”), 4Front Ventures Corp., a corporation amalgamated under the laws of the Province of British Columbia (“4Front”), and Bayside Partners, LLC, a Maryland limited liability company (“Bayside”). Each of Premium, SSCG, Mr. Steenstra, Ms. Steenstra, 4Front Advisors, 4Front InvestCo and Bayside is referred to herein as a “Party” and collectively as the “Parties”.

 

WHEREAS, Premium is the holder of a license (the “License”) to operate a medical cannabis dispensary (the “Dispensary”) in the State of Maryland, granted by the Maryland Medical Cannabis Commission (the “MMCC”);

 

WHEREAS, in connection with its operations, Premium has entered into that certain (i) Management Services Agreement, dated October 20, 2017, by and between Premium, SSCG, and Mr. and Ms. Steenstra relating to the provision of certain management services by SSCG to Premium (the “MSA”), and (ii) Advisory Services Agreement, October 20, 2017, by and between Premium and 4Front Advisors relating to the license by 4Front Advisors to Premium of certain of 4Front Advisor’s proprietary information and the provision by 4Front Advisors to Premium of certain advisory services (the “Advisory Agreement” and together with the MSA, the “Agreements”)’

 

WHEREAS, in connection with the MSA, 4Front InvestCo and Bayside formed SSCG and adopted that certain Limited Liability Company Agreement, dated October 20, 2017 (the “SSCG Agreement”);

 

WHEREAS, in connection with the initial capitalization of SSCG, 4Front InvestCo contributed funds to SSCG, which used all of such contributions to make intercompany loans to Premium evidenced by that certain Promissory Note, dated October 20, 2017, in the principal amount of $1,050,000.00, to fund the redemption by Premium of the Premium membership units owned by Premium Medicine USA (the “Redemption Note”);

 

WHEREAS, since Premium’s operating costs have exceeded its revenues, SSCG has been loaning Premium funds on a regular basis pursuant to that certain Amended and Restated Secured Demand Note, dated June 30, 2020, in the principal amount of $1,399,323.95 (the “Demand Note” and, together with the Redemption Note, the “Notes”);

 

WHEREAS, the 4Front Parties have made loans to SSCG in amounts equal to the balance reflected by the Notes;

 

WHEREAS, Premium’s performance under the Demand Note is secured by a lien on all of Premium’s collateral pursuant to that certain Security Agreement, dated October 20, 2017, by and between Premium in favor of SSCG, as secured party (the “Security Agreement”);

 

 

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WHEREAS, as further security for the Demand Note, Mr. Steenstra and Ms. Steenstra pledged their units representing membership interests in Premium (the “Units”) pursuant to that certain Pledge Agreement, dated October 20, 2017, in favor of SSCG (the “Pledge Agreement” and together with the Notes and Security Agreement, the “Loan Documents”);

 

WHEREAS, 4Front, the common parent of 4Front Advisors and 4Front InvestCo (collectively, 4Front, 4Front Advisors and 4Front InvestCo, are referred to as the “4Front Parties”), expressed a desire to exit operations in the State of Maryland;

 

WHEREAS, in connection with such desired exit, Premium will enter into a new management services agreement, substantially in the form of the attached Exhibit A (the “New MSA”) with a new management company (the “ManagerCo”);

 

WHEREAS, Premium and SSCG have agreed that Premium will repay $1,200,000.00 (the “Notes Repayment Amount”) in full satisfaction of the Notes;

 

WHEREAS, under the regulations applicable to the License, the entry by Premium into the New MSA is subject to the prior written approval by the MMCC (the “MMCC Consent”); and

 

WHEREAS, the Parties hereto desire to terminate all of the Agreements (as defined herein) and to cause the Notes to be repaid as provided herein, to be effective upon receipt of the MMCC Consent to the New MSA, on the terms and subject to the conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises set forth above and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

	
 
	
1.
	
Definitions. The following capitalized terms shall have the meanings ascribed

herein:

 

“Business” means the assets, liabilities and business operations of Premium.

 

“Claims” means, collectively, any and all actions, causes of action, suits, Losses, liabilities,

rights, debts, dues, sums of money, accounts, reckonings, obligations, costs, expenses, liens, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims, and demands, of every kind and nature whatsoever, whether now known or unknown, foreseen or unforeseen, matured or unmatured, suspected or unsuspected, in law, admiralty, or equity.

 

“Escrow Agent” means Offit Kurman, P.A.

 

“Improvements” means the improvements upon the Premises.

 

“Knowledge” means the actual knowledge of Joe Feltham, Karl Chowscano, Jake Wooten, and Mark Passerini, after reasonable inquiry, and the knowledge each such individual would have acquired after reasonable inquiry of the subject matter being represented.

 

 

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“Liability” means any liability or obligation of the Business of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, and whether or not the same is required to be accrued on the financial statements relating to the Business.

 

“Losses” means, collectively, losses, damages, liabilities, deficiencies, claims, actions, judgments, settlements, interest, awards, penalties, fines, costs, or expenses of whatever kind, including reasonable attorneys’ fees, fees and costs of enforcing any right to indemnification under this Termination Agreement, and the cost of pursuing any insurance providers.

 

“Notices” means all notices, requests, consents, claims, demands, waivers, summons, and other legal process, and other similar types of communications under this Termination Agreement.

 

“Premises” means the premises leased by Premium and located at 2355 Georgia Ave, Silver Spring, MD 20906.

“Premium Parties” means collectively Premium, Mr. Steenstra, and Ms. Steenstra. “Resignation” means the resignation of Kris Krane (or his replacement non-member

manager designee by SSCG) in the form attached hereto as Exhibit B.

 

“Satisfaction and Release” means the full release of the Loan Documents by SSCG in the form attached hereto as Exhibit C.

 

“SSCG Agreement” means that certain Limited Liability Company Agreement of SSCG, dated October 20, 2017, by and among 4Front InvestCo, Bayside, and the managers of SSCG.

 

“Taxes” means all federal, state, local, foreign, and other income, gross receipts, sales, use, production, ad valorem, transfer, documentary, franchise, registration, profits, license, withholding, payroll, employment, unemployment, excise, severance, stamp, occupation, premium, property (real or personal), customs, duties, or other taxes, fees, assessments, or charges of any kind whatsoever, together with any interest, additions, or penalties with respect thereto.

 

“Termination Date” means the date that is two business days after Premium’s receipt of the MMCC Consent.

 

“Working Capital” means the sum of Premium’s current assets consisting of (i) the wholesale value of all inventory on hand; (ii) accounts receivable; (iii) expenses prepaid by SSCG on behalf of Premium pursuant to the MSA; and (iv) all cash, wherever located, on the Termination Date; minus Premium’s current Liabilities consisting of (1) accounts payable; (2) accrued expenses, and (3) accrued income taxes (but excluding any Liabilities owed under the Notes).

 

	
 
	
2.
	
Termination of the Agreements.

 

(a)Termination. Subject to the terms and conditions of this Termination Agreement, the Agreements are hereby terminated as of 11:59 p.m. on the Termination Date. From and after the Termination Date, the Agreements will be of no further force or

 

 

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effect, and the rights and obligations of each of the Parties thereunder shall terminate, except (a) for the rights and obligations under this Termination Agreement, (b) with respect to the MSA, the rights and obligations of the Parties under Sections 2, 3(c), 7, 8(a), 8(g) and 8(h), and (c) with respect to the Advisory Agreement, the rights and obligations of the Parties under Sections 2, 3, 7, 8(a), 8(g) and 8(h), shall survive pursuant to their respective terms; provided, however, that to the extent that any such rights and obligations surviving the termination of the MSA or Advisory Agreement conflict with the terms or conditions of this Termination Agreement, then the terms of this Termination Agreement shall control.

 

(b)Use of “Mission” Name. On the Termination Date, Premium shall cease all use of the “Mission” name in connection with the Business and SSCG shall remove all signage with the “Mission” name from the Premises, and leave the Premises in such condition as is required under the lease agreement relating to the Premises.

 

(c)Resignation of Manager. Contemporaneously with the execution and delivery of this Termination Agreement by the Parties, the 4Front Parties shall cause Kris Krane to deliver to the Escrow Agent the executed, but undated, Resignation. The Escrow Agent shall release the Resignation to Premium on the Termination Date.

 

3.Working Capital. The Parties agree that the Working Capital of Premium should be $0.00. Within ten (10) days of the Termination Date, 4Front InvestCo shall prepare a statement setting forth its calculation of the Working Capital as of the Termination Date (the “Working Capital Statement”), calculated consistent with past practices. During the ten (10) days following Premium’s receipt of the Working Capital Statement, Premium shall have access to 4Front InvestCo’s working papers relating to the Working Capital Statement. The Working Capital Statement will become final on the 10th day following delivery thereof, unless Premium gives written notice to 4Front InvestCo of its disagreement specifying in reasonable detail the nature of any disagreement. If Premium provides such notice of disagreement, the Parties will work together in good faith to resolve their differences. Once the Parties resolve their differences, the Working Capital Statement (as adjusted if applicable) will become final and binding on the Parties. If the Working Capital exceeds $0.00, Premium will pay such excess to 4Front InvestCo within three business days of the Working Capital Statement becoming final. If the Working Capital is less than $0.00, 4Front InvestCo will pay such deficiency to Premium within three business days of the Working Capital Statement becoming final. For the avoidance of doubt, (i) until the Termination Date, the Parties will continue to operate Premium’s business as they have before the Effective Date, with all of the same authority and economic and other rights as existed before the Effective Date, and (ii) after the Termination Date, SSCG shall have no authority with respect to any bank accounts in the name of Premium, nor with respect to any funds maintained in such accounts.

 

4.SSCG Redemption of Bayside. Effective as of the 12:01 a.m. on the Termination Date, SSCG will redeem, and Bayside will transfer, assign, and sell, all of Bayside’s membership interests in SSCG for an aggregate redemption price of $1.00. Upon consummation of the redemption of Bayside’s membership interests in SSCG, Bayside will no longer be a member of SSCG and will not be entitled to any rights (a) with respect to the Notes Repayment Amount, or

(b)under the SSCG Agreement, except for any rights to distributions for Taxes with respect to any income allocated to Bayside for its period of ownership of SSCG.

 

 

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5.Repayment of the Notes; Termination of Loan Documents. Contemporaneously with the execution and delivery of this Termination Agreement by the Parties, (a) Premium will pay, or will cause to be paid, to the Escrow Agent, the Notes Repayment Amount in full satisfaction and release by SSCG of the Notes, and (b) SSCG will deliver to the Escrow Agent the fully executed, but undated, Satisfaction and Release. On the Termination Date and subsequent to SSCG’s redemption of Bayside, the Escrow Agent will release (i) the Notes Repayment Amount to SSCG and (ii) the Satisfaction and Release to Premium. The Parties acknowledge and agree that the Demand Note will continue to increase in its principal amount and accrued but unpaid interest thereon from the Effective Date though the Termination Date, and that SSCG will not be entitled to any additional sums in addition to the Notes Repayment Amount for the repayment in full of the Demand Note or the any of the other Notes.

 

6.Representations and Warranties of the Parties. Each Party, severally and not jointly, represents to each other Party as of the date hereof and at and as of the Termination Date as follows:

 

(a)Organization. With respect to each Party that is an entity, such Party is (a) a corporation or limited liability company, duly organized, validly existing, and in good standing under the laws of the state or province of its incorporation or organization; and

(b)duly qualified to do business and is in good standing in every jurisdiction in which such qualification is required for purposes of this Termination Agreement, except where the failure to be so qualified, in the aggregate, would not reasonably be expected to adversely affect its ability to perform its obligations under this Termination Agreement.

 

(b)Authority. With respect to each Party that is an entity, such Party has the full right, corporate or limited liability power, and authority to enter into this Termination Agreement and to perform its obligations hereunder. With respect to each Party who is an individual, such Party has the full capacity, power, and authority to enter into this Termination Agreement and to perform his or her obligations hereunder.

 

(c)Enforceability. This Termination Agreement and each document and instrument to be delivered hereunder has been duly executed and delivered by such Party, and (assuming due authorization, execution, and delivery by each other Party), this Termination Agreement and the documents and instruments to be delivered hereunder constitute the legal, valid, and binding obligations of the Party, enforceable against such Party in accordance with their respective terms, except as may be limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other similar laws affecting the enforcement of creditors’ rights generally or by general principals of equity.

 

(d)No Conflicts; Consents. The execution, delivery, and performance by the Party of this Termination Agreement and the documents and instruments to be delivered hereunder, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (i) violate or conflict with any judgement, order, decree, statute, law, ordinance, rule, or regulation applicable to such Party, or (ii) conflict with, or result in (with or without notice or lapse of time or both) any violation of, or default under any organizational document of the Party. Except for the MMCC Consent, no consent,

 

 

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approval, waiver, or authorization is required to be obtained from any person or entity (including any governmental authority) in connection with the execution, delivery, and performance by the Party of this Termination Agreement and the consummation of the transactions contemplated hereby.

 

(e)Legal Proceedings. There is no claim, action, suit, action, proceeding, or governmental investigation (a “Proceeding”) of any nature pending, or to such Party’s knowledge, threatened against or by such Party that challenges or seeks to prevent, enjoin, or otherwise delay the transactions contemplated by this Termination Agreement and the documents and instruments delivered hereunder.

 

(f)No Brokers. The Party has not dealt with any broker, investment banker, agent or other person that may be entitled to any commission or compensation in connection with the transactions contemplated in this Termination Agreement.

 

7.Representations and Warranties of the 4Front Parties. The 4Front Parties, jointly and severally, hereby represent and warrant to the Premium Parties as of the date hereof, and at and as of the and as of the Termination Date, as follows:

 

(a)Compliance With Legal Requirements. Premium is in material compliance with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards (“Legal Requirement”) to which its Business may be subject, except with respect to federal laws regarding the manufacture, possession, sale or distribution of cannabis. Premium has not received any written or oral notice from any government or governmental or regulatory body thereof, or political subdivision thereof, whether federal, state, local or foreign, or any agency, instrumentality or authority thereof, or any court or arbitrator (public or private), including without limitation, the MMCC, that alleges that Premium is not in compliance with any Legal Requirement applicable to the Business. To the Knowledge of the 4Front Parties, no event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of the License held by Premium necessary for its cannabis or cannabis- related activities and operations.

 

(b)Financial Statements. Complete copies of the financial statements of the Business consisting of (i) the unaudited monthly balance sheets for 2019 and the related monthly statements of income for each month of 2019, and (ii) the unaudited balance sheet (the “Interim Balance Sheet”) as of June 30, 2020 (“Interim Balance Sheet Date”) and the related monthly statements of income for January through June 2020 (collectively, the “Financial Statements”) are attached hereto as Schedule 7(b). The Financial Statements are based on the books and records of the Business, and fairly present in all material respects the financial condition of the Business as of the dates they were prepared and the results of the operations of the Business for the periods indicated.

 

(c)Absence of Certain Changes. Since the Interim Balance Sheet Date, the 4Front Parties have operated the Business in the ordinary course of business and consistent with past practices.

 

 

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(d)Improvements. To the Knowledge of the 4Front Parties, all of the Improvements upon the Premises have been constructed and installed in accordance with applicable codes, laws, ordinances, rules, regulations, permits and approvals and have been completed in a professional and workmanlike manner and are in good operating condition and repair. To the Knowledge of the 4Front Parties, all of the heating, ventilation and air conditioning systems, plumbing, fire protection, security and other mechanical and electrical systems of the Improvements have been constructed and installed in accordance with applicable codes, laws, ordinances, rules, regulations, permits and approvals, have been completed in a professional and workmanlike manner and are in good operating condition and repair.

 

(e)Contracts; Vendors and Suppliers. The only material contracts and agreements to which Premium is a party or is bound in connection with the Business and that will continue after the Closing Date are listed on Schedule 7(e) (the “Included Contracts”). Neither Premium nor, to the Knowledge of the 4Front Parties, any other party to any such Included Contract is in breach thereunder, or has provided or received any notice of any intention to terminate, any such Included Contract. No event or circumstance has occurred that would constitute an event of default under any Included Contract or result in a termination thereof. Complete and correct copies of each Included Contract (including all modifications, amendments, and supplements thereto and waivers thereunder) have been, or will be on or before the Closing Date, made available to Premium.

 

(f)Taxes. All Taxes due and owing by Premium and SSCG have been, or will be, timely paid. Extensions have been filed for the 2019 tax year for Premium and SSCG, and the returns will be filed by the extended due date. All returns, declarations, reports, information returns and statements, and other documents relating to Taxes (including amended returns and claims for refund) (“Tax Returns”) with respect to the Business required to be filed by Premium and/or SSCG for any tax periods prior to Closing Date not subject to an extension have been, or will be, timely filed. Such Tax Returns are, or will be, true, complete, and correct in all respects. Premium has (i) collected all sales, use, value added, goods and services and similar Taxes required to be collected by Premium in connection with the Business, and (ii) remitted, or will remit on a timely basis, such amounts to the appropriate taxing authority in compliance with all applicable laws.

 

(g)Labor and Employment Matters. All compensation, including wages, commissions and bonuses, that were required to be paid to employees, or independent contractors of Premium since the effective date of the MSA have been paid in full. Premium is not a party to any labor or collective bargaining contract that pertains to its employees. The employment of each employee of Premium is terminable at the will of Premium, and upon termination of the employment of any such employees, no severance or other payments or benefits will become due. Premium does not have any policy, practice, plan or program of paying severance pay or benefits or any form of severance compensation in connection with the termination of employment or services. There are no pending or, to the Knowledge of the 4Front Parties, threatened Proceedings concerning labor matters with respect to Premium. To the Knowledge of the 4Front Parties, Premium is, and since the effective date of the MSA has been, in compliance in all material respects

 

 

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with all applicable laws and ordinances pertaining to employment and employment practices to the extent they relate to the Premium.

 

(h)Employee Benefits. Schedule 7(h) lists each material employment, bonus, profit sharing, or other employee benefit plan, agreement, policy or arrangement maintained or contributed to, or required to be contributed to, by Premium for the benefit of any officer, employee, former employee, consultant, independent contractor or other service provider of Premium (collectively referred to herein as the “Employee Plans”). To the Knowledge of the 4Front Parties, all material obligations of Premium under the Employee Plans have been satisfied and there are no material defaults or violations by Premium or the 4Front Parties in respect of the Employee Plans. To the Knowledge of the 4Front Parties, Premium is in compliance in all material respects with all applicable laws and ordinances regarding employment and employment practice. There are no pending or, to the Knowledge of the 4Front Parties, threatened Proceedings concerning the Employee Plans. During the term of the MSA, Premium has not maintained any Employee Plan that is subject to Title IV of the Employee Retirement Income Security Act of 1974.

 

(i)Privacy and Data. To the Knowledge of the 4Front Parties, Premium’s use and dissemination of any personally-identifiable information concerning individuals is in compliance in all material respects with all applicable privacy policies, terms of use, applicable laws, and contractual obligations applicable to Premium or to which Premium is bound. Premium maintains policies and procedures regarding data security and privacy and maintains administrative, technical, and physical safeguards that are commercially reasonable and, in any event, to the Knowledge of the 4Front Parties, in compliance in all material respects with all applicable laws and contractual obligations applicable to Premium or to which Premium is bound. To the 4Front Parties’ Knowledge, and other than a claim pursuant to the Telephone Consumer Protection Act that has been settled and resolved, there have been no security breaches relating to, or violations of any security policy regarding, or any unauthorized access of, any data or information used or stored by Premium.

 

(j)Insurance. Schedule 7(j) sets forth a list of all insurance policies currently owned or maintained in connection with the Business. All premiums due to date under such policies have been paid and will be paid through the Closing Date and no material term of any such policy is void or voidable. None of the 4Front Parties has received any written notice of cancellation with respect to any such insurance policies and the 4Front Parties have no Knowledge of any threatened termination of, or premium increase with respect to, any of the insurance policies. There are no Claims that are pending under any of the insurance policies.

 

(k)Products. To the 4Front Parties’ Knowledge, all products sold or distributed by or on behalf of Premium have conformed in all material respects with all applicable Maryland law and regulations. The storage and labeling practices for each of the products sold in the Business (i) are in material compliance with all applicable Maryland law and regulations, including those relating to storage, preparation, packaging and labeling of cannabis products; and (ii) are in compliance with all internal quality management policies and procedures of the Business. To the 4Front Parties’ Knowledge,

 

 

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there have been no product recalls, withdrawals or seizures with respect to any products sold or distributed by or on behalf of Premium.

 

(l)Bank Accounts. The 4Front Parties do not maintain any deposit and disbursement accounts in which funds from the Business are deposited except for those set forth on Schedule 7(l).

 

(m)No Other Representations and Warranties. EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS SECTION 7 (A) THE 4FRONT PARTIES HAVE NOT MADE AND DO NOT MAKE ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WHATSOEVER, EITHER ORAL OR WRITTEN, WHETHER ARISING BY LAW, COURSE OF DEALING, COURSE OF PERFORMANCE, USAGE OF TRADE OR OTHERWISE RELATING TO THE BUSIENSS OR PREMIUM, ALL OF WHICH ARE EXPRESSLY DISCLAIMED, AND (B) THE BUYER ACKNOWLEDGES THAT, IN ENTERING INTO THIS AGREEMENT, IT HAS NOT RELIED UPON ANY REPRESENTATION OR WARRANTY RELATING TO THE LOANS, LOAN DOCUMENTS, BUSINESS OR PREMIUM MADE BY THE 4FRONT PARTIES, OR ANY OTHER PERSON OR ENTITY ON THE 4 FRONT PARTIES’ BEHALF, EXCEPT AS SPECIFICALLY PROVIDED IN THIS SECTION 7.

 

	
 
	
8.
	
Covenants of the Parties.

 

(a)Operations. From the date hereof until the Termination Date, the 4Front Parties shall continue to operate the Business consistent with past practices and in accordance with the terms and provisions of the MSA.

 

(b)Books and Records. All the books of account and other records of Premium relating to the Business and in the possession of the 4Front Parties will be delivered to Premium on or before the Termination Date.

 

(c)Bank Accounts. The Parties shall cooperate before and after the Termination Date to remove any 4Front Parties who are signatories to any bank accounts owned by Premium. With the exception of accounts at Bulldog Federal Credit Union, the 4Front Parties shall close any and all bank accounts that they have opened in the name of Premium within 5 business days of the Termination Date.

 

(d)Submission of New MSA to MMCC. Premium will submit the New MSA to the MMCC for approval within 3 business days of the Effective Date. Premium will work in good faith with the MMCC to obtain the MMCC Consent, and will provide such other information and make such updates to the New MSA, as are reasonably requested by the MMCC, to obtain the MMCC Consent.

 

(e)Notice of Developments. At any time prior to the Termination Date, the 4Front Parties, on the one hand, and the Premium Parties, on the other hand, shall notify the other Parties in writing of any events, circumstances, facts and occurrences arising subsequent to the Effective Date which would result in a breach of a representation,

 

 

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warranty or covenant of the 4Front Parties (in the case of the 4Front Parties) or the Premium Parties (in the case of the Premium Parties) in this Termination Agreement.

 

	
 
	
(f)
	
Transition Matters.

 

(i)The Parties agree that all of the employees of Premium will be permitted to remain employees of Premium after the Termination Date, except for the current general manager who is seconded from another dispensary managed by the 4Front Parties. It is understood that the 4Front Parties have no responsibility for or obligation to such employees after the Termination Date.

 

(ii)Prior to the Termination Date, certain employees of Premium participated in certain benefit plans sponsored by the 4Front Parties. It is the expectation of the Parties that ManagerCo will put in effect new benefit plans sponsored by it by the first day of the month following the Termination Date; provided, that if requested by Premium or ManagerCo, the 4Front Parties will allow such employees to continue to participate in the 4Front Parties’ sponsored plans for another month so long as Premium or ManagerCo reimburses the 4Front Parties for the cost of such employees’ continued participation.

 

(iii)The 4Front Parties agree that the standard operating procedures previously approved by the MMCC and in effect at the Dispensary (the “SOPs”) will remain with Premium. The 4Front Parties agree to deliver the SOPs to Premium following the submission of the New MSA to the MMCC.`

 

(iv)The Parties anticipate that ManagerCo will use at the Dispensary the same Point of Sale software (the “POS Software”), LeafLogix, as the 4Front Parties have used in Maryland. The Parties agree to work together to segregate all information and data related to the Dispensary’s customers, historical transactions, and inventory and export the same on the Termination Date or on the day following the Termination Date.

 

(g)Cooperation on Tax Matters. The 4Front Parties and the Premium Parties acknowledge that SSCG has filed a consolidated tax return for it and Premium and that all net income (and corresponding liability for income Taxes arising therefrom) of Premium up to and including the Termination Date shall be allocated between them in proportion to their ownership of SSCG. As a result, the 4Front Parties further agree to provide the owners of Bayside with all relevant information relating to their tax liability resulting from Premium up to and including the Termination Date and shall distribute to the owners of Bayside all accrued Taxes through the Termination Date within 45 days of the Termination Date. Each Party acknowledges that it has relied on its own Tax advisors in evaluating its respective Tax consequences of entering into this Agreement, and no Party is relying on any other Party for Tax advice related to this Agreement.

 

(h)Updated Financial Information. Contemporaneously with the delivery of the Working Capital Certificate, the 4Front Parties will deliver to Premium Financial Statements for Premium through the Termination Date.

 

 

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(i)Financing Statements. Effective upon the Termination Date, SSCG authorizes Premium to prepare and file and/or record, as applicable, a termination of the UCC financing statement no. 171023-1639000.

 

(j)Further Assurances. Subject to the terms and conditions hereof, each of the Parties hereto shall use commercially reasonable efforts (without further consideration being payable) to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable to consummate and give effect to the transactions contemplated hereby. Each of the Parties further agrees that any document delivery pursuant to this Termination Agreement that is delivered undated may be dated as of the Termination Date by the Escrow Agent without any further consent or action on the part of the Parties or persons signatory thereto.

 

9.Mutual Release. In consideration of the covenants, agreements, and undertakings of the Parties under this Termination Agreement, each Party, on behalf of itself and its respective present and former parents, subsidiaries, affiliates, officers, managers, directors, shareholders, members, successors, and assigns (collectively, “Releasors”) hereby releases, waives, and forever discharges each other Party and its respective present and former, direct and indirect, parents, subsidiaries, affiliates, employees, officers, directors, shareholders, members, agents, and permitted successors and permitted assigns (collectively, “Releasees”) of and from any and all Claims, which any of such Releasors ever had, now have, or hereafter can, shall, or may have against any of such Releasees for, upon, or by reason of any matter, cause, or thing whatsoever from the beginning of time through the Effective Date arising out of or relating to the Agreements, and, upon the sale of the Notes to ManagerCo, the Loan Documents, or otherwise relating to their business relationship prior to the Effective Date, except for any Claims relating to rights and obligations preserved by, created by, or otherwise arising out of this Termination Agreement.

 

	
 
	
10.
	
Indemnification.

 

(a)Indemnification Obligation. Each Party (as “Indemnifying Party”) shall defend, indemnify and hold harmless the other Parties, and its officers, directors, employees, agents, affiliates, permitted successors and assigns (each, an “Indemnified Party”), against any and all Losses, to the extent arising out of or resulting from any claim of a third party or Party alleging: (i) a breach by Indemnifying Party of any representation, warranty, covenant, or other obligations set forth in this Termination Agreement; or (ii) gross negligence or willful misconduct of an Indemnifying Party in connection with the performance of its obligations under this Termination Agreement.

 

(b)Procedure. An Indemnified Party seeking indemnification under this Section 10 shall give the Indemnifying Party: (i) prompt Notice (as defined below) of the relevant claim; provided, however, that failure to provide such notice shall not relieve the Indemnifying Party from its liability or obligation hereunder except to the extent of any material prejudice directly resulting from such failure; and (ii) reasonable cooperation in the defense of such claim. The Indemnifying Party shall have the right to control the defense and settlement of any such claim; provided, however, that the Indemnifying Party shall not, without the prior written approval of the Indemnified Party, settle or dispose of

 

 

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any claims in a manner that affects the Indemnified Party's rights or interests. The Indemnified Party shall have the right to participate in the defense at its own expense.

 

(c)Survival. The representations and warranties made by the Parties in this Termination Agreement shall survive the Termination Date and continue in full force and effect for a period of twelve (12) months from and after the Termination Date; provided, however, the representations and warranties set forth in Section 6 shall survive indefinitely. Upon expiration of the representation and warranty limitation periods set forth herein, such representations and warranties shall cease to be of any further force or effect. No such expiration shall affect the rights of a Party hereto in respect of a Claim made by such Party in writing received by another Party prior to the expiration of any such period until finally resolved.

 

	
 
	
(d)
	
Limitations.

 

(i)The aggregate amount of all Losses for which any 4Front Party shall be liable pursuant to Section 10(a) shall not exceed $600,000.00 (the “Cap”); provided, however, that the Cap shall not apply to any Losses arising from any claims based on a breach of a representation in Section 6 of this Termination Agreement or any claim based on the fraud or intentional misrepresentation of any 4Front Party. Notwithstanding the foregoing, the 4Front Parties will not have any liability under this Termination Agreement in excess of the total amount of the Notes Repayment Amount.

 

(ii)The 4Front Parties shall have no liability in respect of their indemnification obligations under Section 10(a), and there shall be no claim for indemnification asserted by any Indemnified Party against a 4Front Party pursuant to Section 10(a), until the aggregate amount of Losses exceeds $20,000 (the “Deductible”). Once the aggregate amount of Losses exceeds the Deductible, the 4Front Parties shall be jointly and severally liable for all such Losses, subject to the limitation set forth in Section 10(d)(i). The Deductible shall not apply to any Losses arising from any claims based on a breach of Section 6 of this Termination Agreement, or any claim based on the fraud or intentional misrepresentation of any 4Front Party.

 

(iii)Losses will be calculated net of actual recoveries under insurance policies. Each Indemnified Party recognizes that it has a common law obligation to mitigate the Losses for which it is entitled to seek indemnification under this Section 10.

 

(iv)No Party shall be liable to any other Party for (a) punitive or exemplary damages (b) any loss of profits arising out of or resulting from an anticipated, expected, projected or actual increase in profits after the Termination Date as compared to the historical profits of Premium before the Termination Date; and (c) Losses that are not, as of the date of this Termination Agreement, the probable and reasonably foreseeable result of (i) an inaccuracy or breach by a Party of its representations and warranties under this Termination Agreement or (ii) the

 

 

12

 

other matters giving rise to a claim for indemnification under this Termination Agreement, except in each case to the extent that any such Losses are required to be paid to a third party pursuant to a third party claim.

 

(e)Entire Liability. THIS SECTION 10 SETS FORTH THE ENTIRE LIABILITY AND OBLIGATION OF EACH INDEMNIFYING PARTY AND THE SOLE AND EXCLUSIVE REMEDY OF EACH INDEMNIFIED PARTY FOR ANY DAMAGES COVERED BY THIS SECTION 10.

 

11.Confidentiality. Subject to the terms and conditions of Section 12(a), each Party acknowledges the confidential nature of the terms and conditions of this Termination Agreement and the Premium customer list and transaction data (collectively, the “Confidential Information”) and agrees that it shall not (a) disclose any of such Confidential Information to any person or entity, except to such Party’s employees, advisors and other representatives who need to know the Confidential Information to assist such Party, or act on its behalf, to exercise its rights or perform its obligations under this Termination Agreement, or (b) use the Confidential Information, or permit it to be accessed or used, for any purpose other than to exercise its rights or perform its obligations under this Termination Agreement. Each Party shall be responsible for any breach of this Section 11 caused by any of its affiliates, employees, advisors, or other representatives. Notwithstanding the foregoing, if any Confidential Information is permissibly disclosed pursuant to Section 12(a), such information will no longer be deemed “Confidential Information” for the purposes of this Section 11.

 

	
 
	
12.
	
Publicity and Announcements.

 

(a)Public Announcements. No Party shall (orally or in writing) publicly disclose or issue any press release or make any other public statement, or otherwise communicate with the media, concerning the existence of this Termination Agreement or the subject matter hereof, without the prior written approval of the other Party (which shall not be unreasonably withheld or delayed), except to the extent that such Party (based upon the reasonable advice of counsel) is required to make any public disclosure or filing with respect to the subject matter of this Termination Agreement (i) by applicable law, or (ii) pursuant to any rules or regulations of any securities exchange of which the securities of such Party or any of its affiliates are listed or traded.

 

(b)Non-Disparagement. No Party shall make, publish, or communicate to any person or entity or in any public forum any comments or statements (written or oral) that denigrate or disparage, or are detrimental to, the reputation or stature of the other Party or Parties or its businesses, or any of its employees, managers, directors and officers.

 

	
 
	
13.
	
Termination. The Parties may terminate this Termination Agreement as provided

 

below:

(a)Mutual Agreement.The Parties may terminate this Termination Agreement by mutual written consent at any time prior to the Termination Date.

 

(b)Prohibited Transaction. The Premium Parties, on the one hand, or the 4Front Parties, on the other hand, may terminate this Termination Agreement in the event

 

 

13

 

that (i) there shall be any law that makes consummation of the transactions contemplated by this Termination Agreement illegal or otherwise prohibited, or (ii) any governmental body shall have issued an order restraining or enjoining the transactions contemplated by this Termination Agreement, and such order shall have become final and non-appealable.

 

(c)Passage of Time. The 4Front Parties may terminate this Termination Agreement by delivering a Notice to Premium if the MMCC Consent has not been obtained within 60 days of the Effective Date; provided, however, that Premium may extend such 60-day period for up to two additional 30-day periods, in each case, by paying, by wire transfer, $50,000.00 (each, an “Extension Payment”) to an account directed by the 4Front Parties in writing. For the avoidance of doubt, each Extension Payment, if any, shall be credited against the Notes Repayment Amount. Unless the Parties mutually agree otherwise, this Termination Agreement will terminate by its own terms, without any further action required by any Party, on the 121st day after the date on which the New MSA is submitted to the MMCC, if the MMCC Consent has not been received prior to such date.

 

(d)Effect of Termination. If this Termination Agreement is terminated prior to the Termination Date for any reason, all rights and obligations of the Parties hereunder shall terminate without any liability of any Party to any other Party except for any liability arising related to a Party’s intentional breach or violation of this Termination Agreement.

 

	
 
	
14.
	
Miscellaneous.

 

(a)Notices. All Notices must be in writing and addressed to the relevant Party at the address set forth on the signature of this Termination Agreement (or to such other address that may be designated by the receiving Party(ies) from time to time in accordance with this Section 14(a)). All Notices must be delivered by personal delivery, nationally recognized overnight courier (with all fees pre-paid), or certified or registered mail (in each case, return receipt requested, postage prepaid). A Notice is effective only (i) upon receipt by the receiving Party and (ii) if the Party giving the Notice has complied with the requirements of this Section 14(a).

 

(b)Governing Law and Jurisdiction. This Agreement will be deemed to have been made in, and will be construed and governed by, the laws of the State of Maryland. Subject to Section 14(c) below, any action to enforce this Agreement will be brought in the state courts located in Baltimore, Maryland. Each party hereby irrevocably consents and submits to the personal jurisdiction of such courts.

 

(c)Arbitration, Attorneys’ Fees. Except as otherwise provided to the contrary in this Agreement, any controversy or Claim arising out of, or relating to, this Agreement or breach of this Agreement, will be settled by arbitration using the rules of the American Arbitration Association with one (1) arbitrator selected by the mutual agreement of the Parties, the venue for which will be in Baltimore, Maryland. The arbitration judgment will be final and binding upon the Parties and may be entered in any court having the requisite jurisdiction. Except as otherwise set forth to the contrary in this Agreement, should an action, including arbitration, be brought by a Party to enforce any provision of this

 

 

14

 

Agreement, then the prevailing Party will be entitled to its costs and reasonable attorneys’ fees incurred in connection with such action.

 

(d)Amendment. This Termination Agreement and each of the terms and provisions hereof may only be amended, modified, waived, or supplemented by an agreement in writing signed by each Party.

 

(e)Assignment. No Party may assign, transfer, or delegate any or all of its rights or obligations under this Termination Agreement without the prior written consent of the other Parties; provided, however, that any Party may assign this Termination Agreement to an heir or a successor-in-interest by consolidation, merger, or operation of law or to a purchaser of all or substantially all of the Party’s assets. No assignment will relieve the assigning Party of any of its obligations hereunder. Any attempted assignment, transfer, or other conveyance in violation of the foregoing will be null and void. This Termination Agreement will inure to the benefit of and be binding upon each of the Parties and each of their respective permitted successors and permitted assigns.

 

(f)Construction. The Parties drafted this Termination Agreement without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

 

(g)Severability. If any term or provision of this Termination Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Termination Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.

 

(h)Further Assurances. Each of the Parties shall, and shall cause its respective affiliates to, from time to time at the request of any other Party, furnish the requesting Party such further information or assurances, execute and deliver such additional documents, instruments and conveyances, and take such other actions and do such other things, as may be reasonably necessary or appropriate to carry out the provisions of this Termination Agreement and give effect to the transactions contemplated hereby.

 

(i)Equitable Remedies. Each Party acknowledges and agrees that (i) a breach or threatened breach by such Party of any of its obligations under this Termination Agreement would give rise to irreparable harm to the other Party or Parties for which monetary damages would not be an adequate remedy and (ii) in the event of a breach or a threatened breach by such Party of any such obligations, the other Party or Parties will, in addition to any and all other rights and remedies that may be available to such Party or Parties at law, in equity or otherwise in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction, without any requirement to post a bond or other security, and without any requirement to prove actual damages or that monetary damages will not afford an adequate remedy. Each Party agrees that it shall not oppose or otherwise challenge the appropriateness of equitable relief or the entry by a court of competent jurisdiction of an order granting equitable relief, in either case, consistent with the terms of this Section 14(i).

 

 

15

 

(j)Entire Agreement. This Termination Agreement (including its exhibits) constitutes the sole and entire agreement between the Parties with respect to the subject matter contained herein and supersedes all prior and contemporaneous understandings, agreements, representations, and warranties, both written and oral, with respect to such subject matter.

 

(k)Third-Party Beneficiaries. Except as expressly set forth in the second sentence of this Section 14(k), this Termination Agreement benefits solely the Parties hereto and their respective permitted successors and permitted assigns, and nothing in this Termination Agreement, express or implied, confers on any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Termination Agreement. The Parties hereby designate all Releasees and Indemnified Parties as third-party beneficiaries of Sections 7 and 10, respectively, having the right to enforce such Sections.

 

(l)Counterparts. This Termination Agreement may be executed in two or more counterparts, each of which is deemed an original, but all of which constitutes one and the same agreement. Delivery of an executed counterpart of this Termination Agreement electronically or by facsimile shall be effective as delivery of an original executed counterpart of this Termination Agreement.

 

(m)Expenses. The Premium Parties will bear all of 4Front Parties’ reasonable attorney’s fees incurred in connection with the negotiation of this Termination Agreement up to an aggregate amount of $20,000.00 (the “Expenses Cap”). As of the date hereof, the Premium Parties have made two separate deposits with Saul Ewing Arnstein & Lehr, LP (the 4Front Parties’ counsel) in the aggregate of $6,000.00 to cover such costs. If the 4Front Parties incur less than $6,000.00 in connection with the negotiation of this Termination Agreement as of the Termination Date, the 4Front Parties will return the difference to the Premium Parties on the Termination Date. If the 4Front Parties incur more than $6,000.00 in connection with this Termination Agreement as of the Termination Date, upon delivery to the Premium Parties of invoices substantiating such fees, the Premium Parties will pay the difference to the 4Front Parties (or as they direct) on the Termination Date up to the Expenses Cap.

 

[Signature Pages Follow]

 

 

16

IN WITNESS WHEREOF, the Parties have executed this Termination Agreement as of the date first above written.

PREMIUM MEDICINE OF MARYLAND, LLC
 
 

 

 

By: /s/ Eric Steenstra

Name: Eric Steenstra

Title: Managing Member

 

Address: 1749 Algonquin Road

Frederick, Maryland 21701

 

SILVER SPRING CONSULTING GROUP, LLC

 

By:

Name: Kris Krane

Title: Manager

 

Address: 5060 N. 40th Street, Ste 120 Phoenix, AZ 85018

 

4FRONT VENTURES CORP.

 

By:   

Name: Joshua N. Rosen Title: Executive Chairman

 

Address: 5060 N. 40th Street, Ste 120 Phoenix, AZ 85018

 

4FRONT ADVISORS, LLC

 

By:

Name: Joshua N. Rosen

Title: Manager

 

Address: 5060 N. 40th Street, Ste 120 Phoenix, AZ 85018

 

Termination Agreement Signature Page
 

IN WITNESS WHEREOF, the Parties have executed this Termination Agreement as of the date first above written.

PREMIUM MEDICINE OF MARYLAND, LLC
 
 

 

 

By:

Name: Eric Steenstra

Title: Managing Member

 

Address: 1749 Algonquin Road

Frederick, Maryland 21701

 

SILVER SPRING CONSULTING GROUP, LLC

 

By: /s/ Kris Krane

Name: Kris Krane

Title: Manager

 

Address: 5060 N. 40th Street, Ste 120 Phoenix, AZ 85018

 

4FRONT VENTURES CORP.

 

By:/s/ Joshua N. Rosen

Name: Joshua N. Rosen

Title: Executive Chairman

Address: 5060 N. 40th Street, Ste 120 Phoenix, AZ 85018

 

4FRONT ADVISORS, LLC

 

By: /s/ Joshua N. Rosen

Name: Joshua N. Rosen

Title: Manager

Address: 5060 N. 40th Street, Ste 120 Phoenix, AZ 85018

 

Termination Agreement Signature Page
 

IN WITNESS WHEREOF, the Parties have executed this Termination Agreement as of the date first above written.

4FRONT PM INVESTOCO, LLC
 
 

 

By:/s/ Kris Krane

Name: Kris Krane

Title: Manager

 

Address: 5060 N. 40th Street, Ste 120 Phoenix, AZ 85018

 

BAYSIDE PARTNERS, LLC

 

 

By:

Name: Eric Steenstra

Title: Managing Member

 

Address: 1749 Algonquin Road

Frederick, Maryland 21701

 

 

Eric Steenstra

Address: 1749 Algonquin Road

Frederick, Maryland 21701

 

 

 

Dawn Steenstra

Address: 1749 Algonquin Road

Frederick, Maryland 21701

 

Termination Agreement Signature Page
 

IN WITNESS WHEREOF, the Parties have executed this Termination Agreement as of the date first above written.

4FRONT PM INVESTOCO, LLC
 
 

 

By:

Name: Kris Krane

Title: Manager

 

Address: 5060 N. 40th Street, Ste 120 Phoenix, AZ 85018

 

BAYSIDE PARTNERS, LLC

 

 

By: /s/ Eric Steenstra

Name: Eric Steenstra

Title: Managing Member

 

Address: 1749 Algonquin Road

Frederick, Maryland 21701

 

 

/s/ Eric Steenstra

 

Address: 1749 Algonquin Road

Frederick, Maryland 21701

 

 

/s/ Dawn Steenstra

 

Address: 1749 Algonquin Road

Frederick, Maryland 21701

 

Termination Agreement Signature Page
 

 

 

EXHIBIT A FORM OF NEW MSA

 

[ATTACHED]

 

Exhibit A to Termination Agreement
 

 

 

MANAGEMENT SERVICES AGREEMENT

 

THIS MANAGEMENT SERVICES AGREEMENT (this “Agreement”) is entered into as of August     , 2020, by and among, anlimited liability company qualified to conduct business in Maryland (the “Manager”), and PREMIUM MEDICINE OF MARYLAND, LLC, a Maryland limited liability company (the “Company” and together with Manager, the “Parties”).

 

WHEREAS, the Company is engaged in the operation of a medical cannabis dispensary (the “Business”), for which it has been issued that certain dispensary license #D-18-00044 (the “License”) to purchase, package, and sell medical cannabis and its derivatives by the Maryland Medical Cannabis Commission (the “MMCC”);

 

WHEREAS, in furtherance of the foregoing, the Company desires to engage Manager to provide the Management Services, and Manager is willing to provide such Management Services, subject to the terms and conditions set forth in this Agreement; and

WHEREAS, the Parties intend to submit this Agreement to the MMCC for approval in compliance with existing rules and regulations of the MMCC and the State of Maryland. This Agreement shall become effective only upon the approval of this Agreement by the MMCC under applicable laws and regulations. The date of such approval or deemed approval is referred to herein as the “Effective Date”.

 

NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants, conditions and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the Parties hereto, intending to be legally bound, hereby agree as follows:

 

	
 
	
1.
	
Appointment of Manager; Obligations of the Parties.

 

1.1The Company hereby engages Manager to provide the Management Services to it as an independent contractor, and Manager hereby accepts such engagement subject to the terms and conditions set forth in this Agreement.

 

1.2Manager agrees to undertake in good faith all commercially reasonable steps prudent or necessary to render the Management Services in a professional and workmanlike manner and in accordance with generally recognized industry standards for similar services. Manager shall retain sole and absolute discretion to select the employees and/or independent contractors (collectively, the “Manager Representatives”) who will perform the Management Services. The Parties acknowledge and agree that the Manager Representatives may include affiliates of Manager and/or their respective employees and/or independent contractors.

 

1.3The Company and its directors and officers agree to cooperate in good faith with Manager in furtherance of Manager’s performance of the Management Services.

 

1.4The Company shall not take any action in respect of the matters covered by the Management Services, other than at, and in accordance with, the direction of the Manager.

 

1
 

 

 

1.5Subject to Applicable Law, the Company shall take all corporate action as is necessary and fully cooperate with Manager to (i) add Manager’s designee as a required signatory to any and all Company bank accounts relating to the Business and remove any existing signatories in Manager’s discretion, and (ii) enable the Manager to establish, maintain, and administer bank accounts, for which its designee will be the signatory, for funds relating to the Business. Notwithstanding the foregoing, the Parties acknowledge that subject to the terms of this Agreement, the Company will retain sufficient financial control of the Business.

 

1.6Notwithstanding anything to the contrary in this Agreement, Manager’s obligation to perform services pursuant to this Agreement is limited to the performance of the Management Services, and the performance by Manager of additional services in furtherance of this Agreement will not obligate Manager to continue the performance of such additional services or otherwise render any services pursuant to this Agreement other than the Management Services; provided, however, that the Parties may, in Manager’s discretion, update Schedule A and/or Schedule B from time to time during the Term (as defined below) to, among other things, revise:

(i) the list and scope of Management Services provided by Manager; and/or (ii) the Service Fees payable by the Company pursuant to this Agreement; provided such Services and Fees shall only relate to the Business and not to any Excluded Businesses (as defined herein).

 

1.7The Parties shall meet and confer on a periodic basis, upon Manager’s request, to review the terms and conditions of this Agreement (including, without limitation, the list and scope of Management Services provided by Manager and the Service Fees payable by the Company pursuant to this Agreement) for purposes of identifying any amendments or modifications to such terms or conditions that may be necessary or desirable for purposes of giving continued effect, to the fullest extent practicable, to the Parties’ mutual intent for the arrangement contemplated by this Agreement. The Parties acknowledge and agree that such amendments or modifications may be necessary or desirable due to, among other things, changes in applicable federal, state or local laws, regulations, tax policies, general economic conditions, or other relevant facts and circumstances. Company shall: (i) consider in good faith any such amendments or modifications that may be requested or proposed by Manager from time to time during the Term; and (ii) not unreasonably withhold, condition or delay its consent to any such amendment or modification.

 

1.8Manager shall devote to the Company such time and effort as reasonably required for the proper performance of the Management Services. Manager, its members, managers and/or each of their respective affiliates, may engage in other business ventures of any nature and description independently or with others.

 

	
 
	
2.
	
Compensation for Management Services.

 

2.1As compensation for the Management Services, the Company shall pay to Manager and/or its designees, as determined by Manager in its sole discretion, the Service Fee, in the amount(s) set forth on Schedule B (as the same may be updated from time to time) in accordance with the terms and conditions set forth therein. Without limiting the generality of the foregoing, the Company shall promptly reimburse Manager for any cost recovery fees or expenses payable to Manager’s affiliates or subcontractors if the efforts required of any such party to support the Management Services exceed the scope contemplated by Manager as of the Effective Date.

 

2
 

 

 

 

2.2Costs and Expenses. Manager shall be responsible for all costs and expenses necessary to operate and manage the Business and perform the Management Services as outlined in Schedule A, including, without limitation, all materials, inventory, equipment, vehicles, phones, computers and labor, including, without limitation, all wages, benefits (if any), taxes, withholding, workers’ compensation insurance, payroll processing, uniforms, tools, training and education, and all other employee-related costs. Nothing contained herein shall be construed to be profit sharing or providing the Manager an ownership interest in the Company or any other beneficial interest which would violate the Company’s obligations under applicable laws and/or the License. Nothing contained herein shall create, contemplate, or permit recourse against the individual member(s) of the Company for Management Services except as described in Schedule A.

 

2.3Advancement Not Required. For clarity purposes, the Parties acknowledge and agree that the Company and its members, directors and officers shall not be required hereunder to advance or provide any funds whatsoever to pay the costs and expenses of providing the Management Services including, without limitation, any sums for the rentals or leases of property, taxes, or losses, if any, of the Company’s business; and that Manager shall be required to advance such funds on an as needed basis, as determined by Manager in its sole discretion, from time to time and shall reimburse itself, as aforesaid, solely from the Service Fee. Additionally, the Parties acknowledge and agree that Manager has incurred, and during the Term shall continue to incur, the commercially reasonable costs and expenses (of a capital nature or otherwise) of expanding, upgrading, or further developing the Business, and the operations and/or equipment therein, and that all of such costs and expenses shall be governed by the preceding sentence.

 

2.4Books and Records. Manager shall maintain and keep on behalf of the Company books of accounts and such other records as are necessary to reflect the results of the Business’ operations and the accurate and timely calculation and payment of amounts owed under this Agreement. The Company shall have the right to review or audit all records kept by Manager for the Company regarding the operations of the Business. Any such review or audit shall be performed during normal hours of operation for the Business upon advanced written notice and without disruption to the business operations of Manager. Each Party will assist and fully cooperate with the other Party in providing access to the necessary data within its possession or control in order to perform any such review or audit.

 

	
 
	
3.
	
Term and Termination.

 

3.1Subject to Section 3.2, the term of this Agreement (the “Term”) shall commence on the Effective Date, and shall continue for an initial term of six (6) years and shall automatically renew for an additional six (6) years unless the Manager notifies the Company at least sixty (60) days prior to the end of the initial term. This Agreement may be terminated sooner upon: (i) the Parties’ mutual written agreement; (ii) the occurrence of an Event of Default under that certain Membership Interest Pledge and Security Agreement (the “Security Agreement”) of even date herewith by and between the Parties and affiliates thereof (as Event of Default is defined in the Security Agreement); or (iii) by Manager, effective immediately upon written notice to the Company, if there is any change in the status of the License, or any law, rule, regulation and/or ordinance that prohibits, prevents or jeopardizes the Company’s ability to operate the Business;

 

3
 

 

 

provided that the Manager shall have the right to seek amendment to this Agreement and/or the Parties’ relationship in a manner that brings this Agreement into compliance with applicable laws, rules and regulations and that is consistent with the Parties’ intentions in entering into this Agreement and any other agreements between the Parties and their respective affiliates.

 

3.2Notwithstanding the foregoing, the end of the Term shall not relieve: (i) the Company from its payment obligations pursuant to Section 2 for Management Services performed or reimbursable expenses incurred by Manager prior to the end of the Term; (ii) any Party for its actions prior to the end of the Term; (iii) any Party of its confidentiality obligations under Section 7.1; or (iv) any Party from any liability for damages allowed under this Agreement or at law which are incurred by reason of any breach of this Agreement prior to the end of the Term, to the extent provided in this Agreement.

 

	
 
	
4.
	
Proprietary Information.

 

4.1All intellectual property rights, including, without limitation, copyrights, patents, patent disclosures and inventions (whether patentable or not), trademarks, service marks, trade secrets, know-how and other confidential information, trade dress, trade names, logos, corporate names and domain names, together with all of the goodwill associated therewith, derivative works and all other rights (collectively, “Intellectual Property Rights”) in and to all licensed property, documents, work product and other materials that are delivered to the Company under this Agreement or created, conceived, invented, developed, or prepared by or on behalf of Manager in the course of performing the Management Services (collectively, the “Deliverables”) shall be owned by Manager.

 

4.2Manager is not granting and will not grant in the future, and the Company has not or will not have in the future, any rights whatsoever to: (i) receive or utilize any confidential or proprietary intellectual property or other information of Manager; (ii) use the Deliverables for any purpose; (iii) except as otherwise expressly provided herein, disclose to, sublicense to or otherwise allow others to use the Deliverables or the underlying Intellectual Property Rights; or

(iv) create, reverse engineer or use any derivative works or other property from any aspect of the Deliverables or the underlying Intellectual Property Rights.

 

5.Representations and Warranties of Manager. Manager represents and warrants to the Company, with the understanding that Company is relying upon such representations and warranties, that: (a) subject to the MMCC’s approval of this Agreement, Manager has the full right, power and authority to enter into this Agreement and to perform fully all of its obligations under this Agreement; (b) the execution of this Agreement by Manager’s representative whose signature is set forth at the end hereof has been duly authorized by all necessary action; (c) entering into this Agreement and Manager’s performance of the Management Services do not and will not conflict with or result in any breach or default under any other agreement to which Manager is subject; (d) Manager will take all steps to procure or maintain all necessary approvals, licenses, permits, or other authorizations to operate the Business (collectively, the “Regulatory Requirements”), or cooperate with respect to the Company’s efforts to procure or maintain the same in a timely fashion, (e) Manager will fully cooperate with the Company in all aspects of the provision of the Management Services; and (f) Manager has the required skill, experience, resources, capital, and qualifications to perform the Management Services. MANAGEMENT COMPANY MAKES NO

 

4
 

 

 

REPRESENTATIONS OR WARRANTIES EXCEPT FOR THOSE PROVIDED IN THIS SECTION 5. ALL OTHER WARRANTIES, EXPRESS AND IMPLIED, ARE EXPRESSLY DISCLAIMED.

 

	
 
	
6.
	
Representations and Warranties the Company; Restrictive Covenants.

 

6.1The Company represents and warrants to Manager that: (a) subject to the MMCC’s approval of this Agreement, Company has the full right, power and authority to enter into this Agreement and to perform its obligations hereunder; (b) the execution of this Agreement by Company’s representative whose signature is set forth at the end hereof has been duly authorized by all necessary action; (c) entering into this Agreement, the Company’s performance hereunder does not and will not conflict with or result in any breach or default under any other agreement to which the Company is subject; (d) the Company has acted in compliance with all applicable state, local and federal laws, rules, regulations, ordinances, guidelines and interpretations relating to its Business and the License through the Effective Date of this Agreement and will continue to act in compliance through the duration of this Agreement; (e) it will take all steps to procure or maintain all Regulatory Requirements, or cooperate with respect to the Manager’s efforts to procure or maintain the same in a timely fashion, and (f) it will fully cooperate with the Manager in all aspects of the provision of the Management Services;

 

6.2From the date on which this Agreement is executed by the Parties hereto through the end of the Term:

 

(a)the Company shall not, directly or indirectly (including, without limitation, through its affiliates, members, shareholders, directors, managers, or other agents), cause or permit the Company to, enter into any agreement, whether verbal or written, with any individual, corporation, limited liability company, partnership, proprietorship, firm, joint venture, trust, or unincorporated, association or business entity of any kind (collectively, a “Person”), to procure any services or any deliverables from such Person that are in any way similar to or like the Management Services, the Deliverables and/or any other services and/or deliverables contemplated to be rendered or furnished by Manager or its affiliates and subcontractors to the Company under this Agreement;

 

(b)The Company shall not directly or indirectly (including, without limitation, through its affiliates, members, shareholders, directors, managers, or other agents) enter into any contract, agreement or arrangement with any Person which purports to relate to the operation, management or governance of the Company’s dispensary business in the State of Maryland.

 

For the avoidance of doubt, nothing in this Section 6.2 shall be interpreted or construed to limit the ability of Manager or its affiliates and/or subcontractors to engage in the activities described herein.

 

6.3The Company acknowledges and agrees that the restrictive covenants set forth in Section 6.2 above are supported by good and adequate consideration, and that such covenants are reasonable and necessary to protect the legitimate business interests of Manager and its affiliates in connection with the transactions contemplated by this Agreement.

 

5
 

 

 

	
 
	
7.
	
Miscellaneous Provisions.

 

	
 
	
7.1
	
Confidential Information.

 

(a)The Parties have entered into and will execute additional Confidentiality Agreements upon the execution of documents ratifying this Agreement upon MMCC approval of this Agreement. Said Confidentiality Agreements are an integral part of this Agreement and are incorporated by reference herein.

 

(b)For purposes of this Section 7.1, “Confidential Information” means all non-public, proprietary and/or confidential information of Disclosing Party, in oral, visual, written, electronic or other tangible or intangible form, whether or not marked or designated as “confidential,” and all notes, analyses, summaries and other materials prepared by Recipient or any of its Representatives that contain, are based on or otherwise reflect, to any degree, any of the foregoing (“Notes”); provided, however, that Confidential Information does not include any information that: (A) is or becomes generally available to the public other than as a result of Recipient’s or its Representatives’ breach of this Agreement; (B) is obtained by Recipient or its Representatives on a non-confidential basis from a third-party that was not legally or contractually restricted from disclosing such information; (C) was in Recipient’s or its Representatives’ possession prior to Disclosing Party’s disclosure hereunder; or (D) was or is independently developed by Recipient or its Representatives without using any Confidential Information.

 

(c)If Recipient or any of its Representatives is required by applicable law or a valid legal order to disclose any Confidential Information, Recipient shall, as soon as reasonably possible, notify Disclosing Party of such requirements so that Disclosing Party may seek, at Disclosing Party’s expense, a protective order or other remedy, and Recipient shall reasonably assist Disclosing Party therewith. If Recipient remains legally compelled to make such disclosure, it shall: (A) only disclose that portion of the Confidential Information that it is required to disclose; and (B) use reasonable efforts to ensure that such Confidential Information is afforded confidential treatment.

 

	
 
	
7.2
	
Independent Contractor Relationship.

 

(a)Subject to the other provisions of this Agreement, Manager acknowledges and agrees that it alone is responsible for and will pay: (i) all gross wages and salaries relating to the Business; (ii) associated federal, state and local payroll taxes, including, without limitation, any sales and use taxes on wages and benefits relating to the Business; (iii) fringe benefits relating to the Business; (iv) Social Security relating to the Business; (v) workers’ compensation insurance relating to the Business; and (vi) any other direct payroll costs related to or associated with the employment or engagement of the Manager Representatives (other than such Manager Representatives that are independent contractors or subcontractors) during the Term, and Manager will timely pay such amounts directly to the Manager Representatives (other than such Manager Representatives that are independent contractors or subcontractors) or the appropriate agency, division or department as applicable.

 

(b)During the Term, Manager shall maintain any required or desirable (in Manager’s sole discretion) employee healthcare benefits (medical and dental), life insurance,

 

6
 

 

 

long-term disability and accidental death and dismemberment insurance and provide eligible Manager Representatives (other than such Manager Representatives that are independent contractors or subcontractors) with such employee benefits and fringe benefits as authorized and provided pursuant to those benefit plans, programs and arrangements as are in effect from time to time.

 

(c)During the Term, Manager shall use commercially reasonable efforts to obtain and maintain such commercial general liability insurance (and administration of all aspects relating to such insurance) and other insurance coverages in such amounts as are customary for similarly situated businesses in connection with the operation of the Business and the performance of the Management Services under this Agreement, but in any event such insurance coverages and in such amounts as is required under that certain Lease Agreement, dated July 22, 2017, by and between the Company, as tenant, and Heller Brother Realty, LLC, as landlord.

 

(d)Manager shall maintain workers’ compensation coverage (and administration of such coverage) related to or associated with the employment of the Manager Representatives during the Term in such amounts as is required by applicable law.

 

(e)For purposes of federal and state employee income and related tax filings (such as the reporting of amounts withheld from wages for income and employment taxes), Manager shall accurately report and remit such taxes to federal and state authorities as are due and payable for the Manager Representatives (other than such Manager Representatives that are independent contractors or subcontractors). All compensation paid during the Term by the Manager shall be reported, and related taxes remitted, to the tax authorities by Manager under its Federal Employer Identification Number.

 

(f)Nothing herein shall be construed to create a joint venture or partnership between the parties hereto or an ownership, agency or employee/employer relationship. The Manager shall be an independent contractor pursuant to this Agreement. The Manager and the Company further acknowledge and agree that the Company: (a) does not require the Manager to perform work exclusively for the Company; (b) does not provide the Manager with any business registrations or licenses, if any, required to perform the Services set forth in this Agreement; (c) does not provide tools to the Manager and the Manager shall provide all materials, equipment, vehicles, phones, computers and any other items necessary to provide the Management Services and carry out the terms of this Agreement; (d) has not established the specific methods of how the Manager should perform the Management Services pursuant to this Agreement; (e) does not dictate the time of performance of the Management Services except for general timelines, if any, as set forth in Exhibit A and as may be amended from time to time; (f) shall pay the Manager in the name appearing in this Agreement; and (g) will not combine business operations with the Manager and will continue to maintain its operations separate from those of the Manager.

 

7.3Costs and Expenses. Except as contemplated by Section 8.9 below, each Party shall bear its own costs and expenses in connection with the execution and delivery of this Agreement and the performance hereof.

 

7
 

 

 

7.4Third Parties. It is agreed that none of the obligations of any party will run to or be enforceable by any third party.

 

7.5Captions. The article, section and paragraph headings contained in this Agreement are for the convenience of reference only and are not intended to define, limit or describe the scope or intent of any provision of this Agreement.

 

7.6No Manager Ownership or Change of Control. In complete compliance with applicable law, nothing contained herein shall be construed to be an actual, effective, or deemed grant of ownership or any other beneficial interest in, or change in control over, the License to the Manager. Regardless of any other provision of this Agreement, nothing herein shall be deemed or construed as a transfer, assignment, sale, or conveyance of the License to Manager or any of the Manager’s successors, affiliates, agents, volunteers, employees, owners or contractors.

 

7.7Change of Control of Manager. The Manager will promptly notify the Company and the MMCC as soon as practicable prior to a change of ownership of fifty percent (50%) or more of the membership interests of the Manager, but in any event at least ten (10) business days prior to the effective date of any change of ownership.

 

7.8Amendment, Severability; Blue-Penciling. This Agreement cannot be changed or modified except by a writing signed by Manager and the Company; provided that the Company will not unreasonably withhold its consent to any change, amendment or modification proposed by the Manager. If any term, provision, or part of a provision of this Agreement is determined to be invalid or unenforceable by a court or arbitrator of competent jurisdiction, then Parties desire and agree that the remaining terms, provisions, and parts of a provision, as applicable, of this Agreement will nevertheless continue to be valid and enforceable. If any term, provision, or part of a provision of this Agreement is held by a court with competent jurisdiction to be unenforceable, or unreasonable, as to time, geographic area or business limitation, the parties hereto agree that such provisions shall be and are hereby reformed to the maximum time, geographic area and/or business limitation permitted by applicable law.

 

7.9Governing Law. This Agreement will be deemed to have been made in, and will be construed and governed by, the laws of the State of Maryland, without regard to principles of conflicts of laws that would direct the application of the laws of any other jurisdiction.

 

7.10WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO HAVE A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND ANY DOCUMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH THIS AGREEMENT.

 

7.11Arbitration, Attorneys’ Fees. Any dispute, controversy or claim arising out of or relating to this Agreement or any of the transactions contemplated herein will be finally settled by binding arbitration in the State of Maryland in accordance with the then-current Commercial Arbitration Rules of the American Arbitration Association by one arbitrator appointed

 

8
 

 

 

in accordance with said rules. The arbitrator shall apply Maryland law to the resolution of any dispute, without reference to rules of conflicts of law or rules of statutory arbitration. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Notwithstanding the foregoing, the Parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this paragraph. The expenses of the arbitration, including the arbitrator’s fees and expert witness fees, incurred by the Parties to the arbitration, may be awarded to the prevailing Party, in the discretion of the arbitrator, or may be apportioned between the Parties in any manner deemed appropriate by the arbitrator. Unless and until the arbitrator decides that one Party is to pay for all (or a share) of such expenses, both parties shall share equally in the payment of the arbitrator’s fees as and when billed by the arbitrator. The term “prevailing party” means the party in whose favor final judgment by the arbitrator is rendered with respect to the dispute, controversy or claim asserted.

 

7.12Assignment. This Agreement may not be assigned by the Company without the prior written consent of Manager, which consent may be granted or withheld in the sole and absolute discretion of Manager. For the avoidance of doubt, subject to any required regulatory approval, Manager may freely assign this Agreement and its rights hereunder, including, without limitation, in connection with a sale of substantially all of Manager’s assets or membership interests to a third party. This Agreement will inure to the benefit of and be binding on the Parties, their respective heirs, legal representatives, successors and assigns.

 

7.13Time. Time is of the essence for this Agreement and each provision contained in this Agreement. Any extension of time granted for the performance of any obligation under this Agreement will not be considered an extension of time for the performance of any other obligation under this Agreement.

 

7.14Waiver. No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision, whether or not similar, nor will any waiver be a continuing waiver except as expressly provided in this Agreement. No waiver will be binding unless executed by the Party in writing making the waiver. Any Party may waive any provision of this Agreement intended for its benefit; provided, however, such waiver is in writing and will in no way excuse any other party from the performance of any of its other obligations under this Agreement.

 

7.15Further Acts. Each Party to this Agreement agrees to perform any further acts and execute and deliver any documents that may be necessary or appropriate to fully carry out the provisions, intent, and purposes of this Agreement.

 

7.16Notices. Any notice by either Party to this Agreement to the other will be in writing and will be delivered by: (A) personal delivery; or (B) registered or certified mail with return receipt service; or (C) nationally recognized overnight delivery service, addressed as set forth under the signature of the recipient party on the signature page to this Agreement. Notices delivered by personal delivery will be deemed delivered on the date of delivery, and all other notices will be deemed delivered on the third (3rd) calendar day following the day of the first attempt to deliver, as reflected in the records of the postal or delivery service. Either Party may at any time change its address for notices by written notification to the other Parties in accordance with the provisions of this Section 7.16.

 

9
 

 

 

7.17Force Majeure. Manager shall not be liable or responsible to the Company, nor be deemed to have defaulted or breached this Agreement, for any failure or delay in fulfilling or performing any term of this Agreement when and to the extent such failure or delay is caused by or results from acts or circumstances beyond the reasonable control of Manager including, without limitation, acts of God, flood, fire, earthquake, explosion, governmental actions, war, invasion or hostilities (whether war is declared or not), terrorist threats or acts, riot, or other civil unrest, national emergency, revolution, insurrection, pandemic, epidemic, lock-outs, strikes or other labor disputes (whether or not relating to either party’s workforce), or restraints or delays affecting carriers or inability or delay in obtaining supplies of adequate or suitable materials, materials or telecommunication breakdown or power outage.

 

7.18Interpretation; Absence of Presumption. This Agreement will be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted. In the event an ambiguity or question of intent or interpretation arises under any provision of this Agreement, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authoring any of the provisions of this Agreement. The Parties have been represented in the negotiations for and in the preparation of this Agreement by counsel of their own choosing or have had the opportunity to consult with counsel concerning the legal consequences of this Agreement; they have reviewed and understand the provisions of this Agreement; they have had this Agreement fully explained to them by their counsel or have had the opportunity to consult with counsel but declined to do so; and they are fully aware of and understand this Agreement’s contents and its legal effect and consequences. Each of the parties acknowledges it enters into this Agreement freely and voluntarily and is not acting under coercion, duress, economic compulsion, nor is entering into this Agreement because of any supposed disparity in bargaining power; rather, each Party is freely and voluntarily signing this Agreement for his or its own benefit.

 

7.19Counterparts. This Agreement may be executed in multiple counterparts and by facsimile signature, each of which shall be deemed an original and all of which together shall constitute a single instrument.

 

[Remainder of Page Intentionally Left Blank]

 

10
 

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement (or caused this Agreement to be executed by their duly authorized representatives), effective as of the Effective Date.

 

MANAGER:

 

By:_

 

Email:

 

Address for Notice:

 

 

 

COMPANY:

 

PREMIUM MEDICINE OF MARYLAND, LLC

 

 

By:_ Name: Eric Steenstra, Managing Member

 

Email: ericsteenstra@gmail.com

 

Address for Notice:1749 Algonquin Road

Frederick, MD 21701

 

Management Services Agreement Signature Page
 

 

 

SCHEDULE A

 

Management Services Provided by Manager

 

The Management Services shall include, but not be limited to, the following services relating to the Business.

 

	
 
	
A.
	
Human Resources

 

	
 
	
1.
	
Hire, terminate and otherwise manage the employment of employees and engagement of independent contractors by the Company relating to the Business.
	
 

 

	
 
	
2.
	
Supervise all facility staff (including managerial and operational staff) on behalf of the Company relating to the Business.
	
 

 

	
 
	
3.
	
Oversee and disburse payroll for eligible employees of the Company relating to the Business out of the Company’s general funds, including, without limitation, preparing employee end-of-year tax documentation.
	
 

 

	
 
	
4.
	
Track and maintain employee benefits, including, without limitation, health insurance, paid time off/sick leave accrual, and retirement contributions, in respect of the Company relating to the Business.
	
 

 

	
 
	
B.
	
Administrative Management; Advisory; Branding

 

	
 
	
1.
	
Provide ongoing advice and support in maintaining state and local relations through proactive, transparent and consistent communications and outreach relating to the Business.
	
 

 

	
 
	
2.
	
Provide ongoing advice and support in soliciting patient feedback and generating information to educate patients on medical cannabis, medical cannabis products, appropriate use cases, as well as potential for misuse, relating to the Business.
	
 

 

	
 
	
3.
	
Provide or arrange for the provision of bookkeeping and accounting services required for the operation of the dispensary business, including, without limitation, the following: (a) the maintenance, custody and supervision of all business records, ledgers and reports; (b) the establishment, administration and implementation of accounting procedures, controls and systems; (c) the preparation of the financial and management reports; and (d) the implementation and management of computer-based management information systems.
	
 

 

	
 
	
4.
	
Provide ongoing advice and support in ensuring full compliance with all applicable tax rules, including Internal Revenue Code section 280E, relating to the Business.
	
 

 

	
 
	
5.
	
Prepare and file or cause to be filed all tax returns for the Company under Company’s supervision, and make any payments relating thereto, solely to the extent related to the Business.
	
 

 

Schedule A to Management Services Agreement Page A-1
 

 

 

 

	
 
	
6.
	
Prepare, file, or cause to be filed, and pay, or cause to be paid, any and all Maryland gross sales tax relating to the Business.
	
 

 

	
 
	
7.
	
Identify potential depository relationships to ensure safe cash protocols and secure back-office payment services, including for payroll and taxes, relating to the Business.
	
 

 

	
 
	
8.
	
Continuously evaluate insurance needs and obtain all necessary insurance coverages, negotiate with brokers and carriers, and purchase on behalf of the Business, the range of policies and coverages suitable for the Business, provided that such insurance shall include, at minimum, business liability, property casualty, and workers’ compensation insurance policies on all regular employees, in commercially reasonable amounts sufficient to cover any foreseeable civil claims, property damage, or personal injury and to replace the applicable assets of the Business, and that Manager and Company shall each be either the insured party or an additional named insured, as appropriate, under all such policies, and Manager shall provide Company with current copies of all such insurance documentation;
	
 

 

	
 
	
9.
	
Manage all brand development, advertising, and outreach to target markets relating to the Business.
	
 

 

	
 
	
10.
	
Manage and direct the: (i) defense of claims, actions, proceedings or investigations against either Company and/or any of its officers, directors, managers, members, or other employees in their capacity as such with respect to the cannabis dispensary business of the Company; and (ii) initiation and prosecution of claims, actions or proceedings brought by the Company against any person other than Manager and its affiliates, employees or representatives relating to the Business.
	
 

 

	
 
	
11.
	
Provide key advisory support services, on an as-needed basis, including corporate counsel, compliance, strategic and other advisory functions, relating to the Business.
	
 

 

	
 
	
12.
	
Supervise, direct, and control the development of name, logo and look-and-feel relating to the Business.
	
 

 

	
 
	
13.
	
Provide ongoing advice and support in strict and full adherence to all applicable state and local laws, regulations and ordinances, to ensure safety and business continuity for employees, patients and communities, relating to the Business.
	
 

 

	
 
	
14.
	
Manage the Company’s capital requirements, including incurring debt when reasonably necessary.
	
 

 

	
 
	
C.
	
Dispensary Management and Operations

 

	
 
	
1.
	
Oversee the dispensary facility and manage vendors.

 

Schedule A to Management Services Agreement Page A-2
 

 

 

 

	
 
	
2.
	
Source and order all furniture, fixtures and equipment and operating supplies and equipment on an ongoing basis with such costs paid for by the Manager.
	
 

 

	
 
	
3.
	
Arrange for utilities, janitorial and maintenance services to be provided for the Business.
	
 

 

	
 
	
4.
	
Engage necessary vendors to ensure compliance with all laws and regulations relating to the Business.
	
 

 

	
 
	
5.
	
Work with security vendors to install and/or maintain required security systems and protocols of the Business.
	
 

 

	
 
	
6.
	
Develop and implement manuals, standard operating procedures, and training materials, if necessary, relating to the Business.
	
 

 

	
 
	
7.
	
Coordinate and deliver cannabis products to requisite independent testing facilities and coordinate with the testing facilities regarding the products.
	
 

 

	
 
	
8.
	
Manage all inventory control procedures relating to the Business.

 

	
 
	
9.
	
Lead continuous improvement of all regulatory compliance efforts relating to the Business.
	
 

 

	
 
	
10.
	
Determine product mix, select vendor products, interface with suppliers, and set pricing for products at the Business.
	
 

 

	
 
	
11.
	
Provide ongoing advice on products, pricing, and operations at the Business.

 

	
 
	
12.
	
Select vendors and IT specialist to provide and maintain technology for compliance, efficiency and informed management decision-making relating to the Business.
	
 

 

	
 
	
13.
	
Manage the bank accounts of the Company, a list of which has been made available to the Manager, the opening and closing thereof, and the administration of funds therefrom.
	
 

 

	
 
	
14.
	
Arrange for the payment by Company of all costs and expenses attendant to the operations of the Business of the Company, including, without limitation, rent, utilities, and real estate property taxes (if applicable).
	
 

 

	
 
	
15.
	
Arrange for the financing of any capital needs and/or other improvements as may be necessary from time to time relating to the Business.
	
 

 

NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SCHEDULE A OR ELSEHWERE IN THIS AGREEMENT, AND FOR THE AVOIDANCE OF DOUBT,

 

Schedule A to Management Services Agreement Page A-3
 

 

 

COMPANY AND MANAGEMENT COMPANY WILL COLLECTIVELY MAINTAIN JOINT RESPONSIBILITY, FOR THE FOLLOWING:

 

	
 
	
D.
	
License Maintenance

 

	
 
	
1.
	
Taking any and all actions necessary in furtherance of, in compliance with, or otherwise in any way related to any change whatsoever in any applicable state or local law, regulation, MMCC guidance or order relative to the procurement, entitlement, compliance, development, operation, or management of the Business that comes into being, occurs, accrues, becomes effective, or otherwise becomes applicable or required after the Effective Date;
	
 

 

	
 
	
2.
	
Preparing and filing as and when due or required all documents and compliance forms reasonably requested by Manager, whether or not they are required or requested by governmental authorities, including tax forms and documentation as it relates to the Business, and license renewal forms, and shall respond to such requests within three (3) days or otherwise as agreed by the Parties; and
	
 

 

	
 
	
3.
	
Refrain from engaging in acts or omissions which, by their nature, or given the passage of time, will or reasonably might result in the revocation and/or non-renewal of the License.
	
 

 

Schedule A to Management Services Agreement Page A-4
 

 

 

SCHEDULE B

 

Services Fees

 

In consideration for the Management Services, the Company shall pay the Manager a Service Fee (as described herein, the “Service Fee”) equal to the following, on a quarterly basis in arrears:

 

A.Fee Calculation Election The compensation for the Management Services to be provided hereunder shall be calculated either on a time and materials basis, or on the basis of Company’s Net Profit (as defined below), at the election of Manager. Prior to the first day of each calendar quarter, Manager shall deliver to Company a notice of election (the “Notice of Election”) detailing the manner in which the fees shall be calculated for the following calendar quarter, provided that such calculation is consistent with the provisions of this Schedule B. If Manager fails to provide a Notice of Election prior to any calendar quarter, the fees for the Management Services provided in such calendar quarter shall be calculated in the same manner as the fees were calculated for the prior calendar quarter. Notwithstanding the foregoing, if the MMCC or any other governmental or regulatory body indicates that payment for Management Services based on Net Profit is impermissible under the Maryland regulatory regime governing the activities described herein, then the fees shall be calculated on a time and materials basis unless and until payment of Net Profit is permitted under such regime.

 

B.Time and Materials If Manager elects (or the regulatory regime requires Manager) to charge Company on a time and materials basis, the Notice of Election shall include a list of rates for the various Management Services to be provided, the estimated costs of materials expected to be provided and the hourly rates for any Manager employees whose labor will be billed to Company at an hourly rate. The aforementioned rates and costs provided shall be reasonable for the industry and for the Management Services to be provided and shall be based on the actual costs of such time and materials to Manager, plus a standard mark-up not to exceed 35%.

 

	
 
	
C.
	
Net Profit

 

	
 
	
1.
	
If Manager elects to charge Company based on Net Profit, Company shall pay to Manager an amount equal to the gross revenue of Company for the applicable calendar quarter, less all salaries, operating expenses, taxes (including, without limitation, all sales, excise, gross receipts and other taxes attributable to Company and payable to any taxing authority having jurisdiction), interest, depreciation, chargebacks, returns, allowances, customer credits, bad debt and other reasonable third-party charges applicable to the conduct of Company’s business (as calculated the “Net Profit”). If Manager elects to be paid the Net Profit in exchange for the Management Services, all costs and expenses of Manager, including all costs and expenses (of a capital nature or otherwise) of expanding, upgrading, or further developing the facilities, operations or equipment of Company, shall be payable or reimbursable by Company to the Manager solely by the payment of the Net Profit. In providing the Management Services, all costs and expenses incurred by the Manager and paid to independent third parties for goods or services other than the Management Services shall be payable or reimbursable by Company at Manager’s actual out of pocket cost for each such item, to the extent
	
 

 

Schedule B to Management Services Agreement Page B-1
 

 

 

such payment is on commercially reasonable terms to an independent third party. Nothing contained herein shall be construed to be providing the Manager an ownership interest in Company or any other beneficial interest which would violate Company’s obligations under the Laws and/or Company’s good standing with the MMCC.

 

	
 
	
2.
	
The Service Fees to be paid by the Company to Manager may be increased or decreased by written agreement between Manager and the Company.
	
 

 

	
 
	
3.
	
Manager shall have full access to all books and records of the Company to verify its costs and sales and net revenue.
	
 

 

Schedule B to Management Services Agreement Page B-2
 

EXHIBIT B
 
 

 

RESIGNATION

 

 

To the Board of Managers of Premium Medicine of Maryland, LLC:

 

I hereby resign from all positions I hold with Premium Medicine of Maryland, LLC, a Maryland limited liability company (the “Company”) including as a Non-Member Manager and an officer of the Company effective on the date hereof.

 

Dated thisday of _2020.

 

 

 

Kris Krane

 

Exhibit B to Termination Agreement
 

EXHIBIT C
 
 

 

SATISFICATION AND RELEASE

 

SATISFACTION AND RELEASE OF PROMISSORY NOTES AND SECURITY INTERESTS

 

Witnesseth: That Silver Spring Consulting Group, LLC (“SSCG”), the owner and holder of various promissory notes and security agreements (collectively, the “Instruments”) issued or made by Premium Medicine of Maryland, LLC (the “Issuer”), Eric Steenstra, and Dawn Steenstra, f/k/a as Dawn Merrill including but not limited to:

 

	
 
	
1.
	
Promissory Note, dated October 20, 2017, in the principal amount of

$1,050,000.00 executed by Issuer in favor of SSCG.

 

2.Amended and Restated Secured Demand Note, dated June 30, 2020, in the principal amount of $1,399,323.95 executed by the Issuer in favor of SSCG.

 

3.Security Agreement, dated as of October 20, 2017, by Issuer in favor of SSCG as secured party.

 

4.Pledge Agreement, dated as of October 20, 2017, by and among Eric Steenstra and Dawn Steenstra (f/k/a Dawn Merrill), and SSCG.

 

Hereby acknowledges full release and satisfaction of said Instruments and agrees to surrender the same as cancelled.

 

In Witness Whereof, the said corporation has caused these presents to be executed in its name, and its corporate seal to be hereunto affixed, by its proper officer(s) thereunto duly authorized, on, 2020. Signed, sealed and delivered in our presence:

 

 

SILVER SPRING CONSULTING GROUP, LLC

 

 

By:

Name: Kris Krane

Title: Manager

 

Exhibit C to Termination Agreement
 

 

 

Schedule 7(b) Financial Statements See attached.

 

 

4:17 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Profit & Loss

January through December 2019

Jan 19

Feb 19

Mar 19

Apr 19

 

Ordinary Income/Expense Income

41000 ꞏ Mission Sales

47900 ꞏ Sales - Cannabis

 

								
	
47901 ꞏ Sales Cannabis
	
76,820.79
	
 
	
99,234.08
	
 
	
112,085.04
	
 
	
100,826.09

	
Total 47900 ꞏ Sales - Cannabis
	
76,820.79
	
 
	
99,234.08
	
 
	
112,085.04
	
 
	
100,826.09

	
47905 ꞏ Sales - Other Merchandise
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
47907 ꞏ Sales - Other Merchandise
	
1,620.00
	
 
	
1,326.00
	
 
	
885.00
	
 
	
1,055.50

	
Total 47905 ꞏ Sales - Other Merchandise
	
1,620.00
	
 
	
1,326.00
	
 
	
885.00
	
 
	
1,055.50

	
Total 41000 ꞏ Mission Sales
	
78,440.79
	
 
	
100,560.08
	
 
	
112,970.04
	
 
	
101,881.59

	
41500 ꞏ Mission Discounts
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
47908 ꞏ Discounts on Other Merchandise
	
-788.97
	
 
	
-653.67
	
 
	
-406.28
	
 
	
-493.32

	
41500 ꞏ Mission Discounts - Other
	
-9,760.11
	
 
	
-20,927.29
	
 
	
-27,929.18
	
 
	
-27,826.93

	
Total 41500 ꞏ Mission Discounts
	
-10,549.08
	
 
	
-21,580.96
	
 
	
-28,335.46
	
 
	
-28,320.25

	
Total Income
	
67,891.71
	
 
	
78,979.12
	
 
	
84,634.58
	
 
	
73,561.34

	
Cost of Goods Sold

51000 ꞏ Mission COGS
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
50100 ꞏ COGS - Cannabis
	
39,220.40
	
 
	
50,280.04
	
 
	
56,485.02
	
 
	
45,989.47

	
50200 ꞏ COGS - Other Merchandise
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
354.17

	
51000 ꞏ Mission COGS - Other
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total 51000 ꞏ Mission COGS
	
39,220.40
	
 
	
50,280.04
	
 
	
56,485.02
	
 
	
46,343.64

	
Total COGS
	
39,220.40
	
 
	
50,280.04
	
 
	
56,485.02
	
 
	
46,343.64

	
Gross Profit
	
28,671.31
	
 
	
28,699.08
	
 
	
28,149.56
	
 
	
27,217.70

	
Expense
	
 
	
 
	
 
	
 
	
 
	
 
	
 

61000 ꞏ SG&A Expenses 61100 ꞏ Labor

								
	
61140 ꞏ Payroll Taxes
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
66000 ꞏ Payroll Expenses
	
23,416.58
	
 
	
27,128.84
	
 
	
33,226.52
	
 
	
32,234.82

	
Total 61100 ꞏ Labor
	
23,416.58
	
 
	
27,128.84
	
 
	
33,226.52
	
 
	
32,234.82

	
61200 ꞏ Travel
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61210 ꞏ Meals & Entertainment
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61230 ꞏ Air Transportation
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total 61200 ꞏ Travel
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61300 ꞏ Marketing
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
6000 ꞏ Advertising and Promotion
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
349.00

	
61300 ꞏ Marketing - Other
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total 61300 ꞏ Marketing
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
349.00

	
61400 ꞏ Professional Services
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61410 ꞏ Legal
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
2,602.00

	
61490 ꞏ Other
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total 61400 ꞏ Professional Services
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
2,602.00

	
61500 ꞏ Facilities
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61510 ꞏ Rent
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61520 ꞏ Telephone/Internet
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61530 ꞏ Gas/Electric
	
0.00
	
 
	
205.00
	
 
	
0.00
	
 
	
116.38

 

Page 1 of 8
 

4:17 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Profit & Loss

January through December 2019

Jan 19

Feb 19

Mar 19

Apr 19

 

 

								
	
61535 ꞏ Water/Sewer
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61540 ꞏ Security
	
16,209.17
	
 
	
6,789.19
	
 
	
10,641.89
	
 
	
12,569.00

	
61550 ꞏ Repairs & Maintenance
	
2,475.75
	
 
	
248.00
	
 
	
2,511.61
	
 
	
4,078.00

	
61570 ꞏ Business Licenses & Permits
	
103.68
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total 61500 ꞏ Facilities
	
18,788.60
	
 
	
7,242.19
	
 
	
13,153.50
	
 
	
16,763.38

	
61600 ꞏ Supplies
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61610 ꞏ Office Supplies
	
3,192.53
	
 
	
1,308.00
	
 
	
1,561.73
	
 
	
1,261.18

	
61620 ꞏ Postage & Delivery
	
0.00
	
 
	
50.00
	
 
	
0.00
	
 
	
0.00

	
Total 61600 ꞏ Supplies
	
3,192.53
	
 
	
1,358.00
	
 
	
1,561.73
	
 
	
1,261.18

	
61700 ꞏ IT
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61710 ꞏ Hardware
	
4,846.67
	
 
	
0.00
	
 
	
718.00
	
 
	
6,212.07

	
61720 ꞏ Software
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61740 ꞏ Maintenance Contracts
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total 61700 ꞏ IT
	
4,846.67
	
 
	
0.00
	
 
	
718.00
	
 
	
6,212.07

	
61800 ꞏ Other SG&A
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
6180 ꞏ Conferences and Seminars
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61810 ꞏ Bank Fees
	
1,984.48
	
 
	
1,911.40
	
 
	
518.98
	
 
	
3,535.86

	
61820 ꞏ Dues & Subscriptions
	
0.00
	
 
	
0.00
	
 
	
143.34
	
 
	
95.56

	
61840 ꞏ Insurance Expense
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61850 ꞏ Expenses to be Allocated (DC)
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61890 ꞏ Misc. Expense
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total 61800 ꞏ Other SG&A
	
1,984.48
	
 
	
1,911.40
	
 
	
662.32
	
 
	
3,631.42

	
Total 61000 ꞏ SG&A Expenses
	
52,228.86
	
 
	
37,640.43
	
 
	
49,322.07
	
 
	
63,053.87

	
Total Expense
	
52,228.86
	
 
	
37,640.43
	
 
	
49,322.07
	
 
	
63,053.87

	
Net Ordinary Income
	
-23,557.55
	
 
	
-8,941.35
	
 
	
-21,172.51
	
 
	
-35,836.17

	
Other Income/Expense
	
 
	
 
	
 
	
 
	
 
	
 
	
 

Other Expense

75000 ꞏ Other Expense

 

								
	
75100 ꞏ Interest Expense
	
8,266.66
	
 
	
7,466.66
	
 
	
8,266.66
	
 
	
8,000.00

	
Total 75000 ꞏ Other Expense
	
8,266.66
	
 
	
7,466.66
	
 
	
8,266.66
	
 
	
8,000.00

	
Total Other Expense
	
8,266.66
	
 
	
7,466.66
	
 
	
8,266.66
	
 
	
8,000.00

	
Net Other Income
	
-8,266.66
	
 
	
-7,466.66
	
 
	
-8,266.66
	
 
	
-8,000.00

	
Net Income
	
-31,824.21
	
 
	
-16,408.01
	
 
	
-29,439.17
	
 
	
-43,836.17

 

Page 2 of 8
 

4:17 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Profit & Loss

January through December 2019

May 19

Jun 19

Jul 19

Aug 19

 

Ordinary Income/Expense Income

41000 ꞏ Mission Sales

47900 ꞏ Sales - Cannabis

 

								
	
47901 ꞏ Sales Cannabis
	
96,158.05
	
 
	
96,193.21
	
 
	
103,512.12
	
 
	
109,899.87

	
Total 47900 ꞏ Sales - Cannabis
	
96,158.05
	
 
	
96,193.21
	
 
	
103,512.12
	
 
	
109,899.87

	
47905 ꞏ Sales - Other Merchandise
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
47907 ꞏ Sales - Other Merchandise
	
791.00
	
 
	
891.00
	
 
	
1,238.50
	
 
	
2,314.06

	
Total 47905 ꞏ Sales - Other Merchandise
	
791.00
	
 
	
891.00
	
 
	
1,238.50
	
 
	
2,314.06

	
Total 41000 ꞏ Mission Sales
	
96,949.05
	
 
	
97,084.21
	
 
	
104,750.62
	
 
	
112,213.93

	
41500 ꞏ Mission Discounts
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
47908 ꞏ Discounts on Other Merchandise
	
-346.22
	
 
	
-551.91
	
 
	
-1,153.31
	
 
	
0.00

	
41500 ꞏ Mission Discounts - Other
	
-23,893.62
	
 
	
-26,053.02
	
 
	
-29,523.93
	
 
	
-33,397.18

	
Total 41500 ꞏ Mission Discounts
	
-24,239.84
	
 
	
-26,604.93
	
 
	
-30,677.24
	
 
	
-33,397.18

	
Total Income
	
72,709.21
	
 
	
70,479.28
	
 
	
74,073.38
	
 
	
78,816.75

	
Cost of Goods Sold

51000 ꞏ Mission COGS
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
50100 ꞏ COGS - Cannabis
	
96,771.17
	
 
	
39,349.36
	
 
	
57,567.79
	
 
	
72,186.67

	
50200 ꞏ COGS - Other Merchandise
	
280.21
	
 
	
213.63
	
 
	
780.25
	
 
	
1,457.86

	
51000 ꞏ Mission COGS - Other
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total 51000 ꞏ Mission COGS
	
97,051.38
	
 
	
39,562.99
	
 
	
58,348.04
	
 
	
73,644.53

	
Total COGS
	
97,051.38
	
 
	
39,562.99
	
 
	
58,348.04
	
 
	
73,644.53

	
Gross Profit
	
-24,342.17
	
 
	
30,916.29
	
 
	
15,725.34
	
 
	
5,172.22

	
Expense
	
 
	
 
	
 
	
 
	
 
	
 
	
 

61000 ꞏ SG&A Expenses 61100 ꞏ Labor

								
	
61140 ꞏ Payroll Taxes
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
66000 ꞏ Payroll Expenses
	
52,838.36
	
 
	
44,183.42
	
 
	
40,925.31
	
 
	
46,697.61

	
Total 61100 ꞏ Labor
	
52,838.36
	
 
	
44,183.42
	
 
	
40,925.31
	
 
	
46,697.61

	
61200 ꞏ Travel
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61210 ꞏ Meals & Entertainment
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61230 ꞏ Air Transportation
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total 61200 ꞏ Travel
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61300 ꞏ Marketing
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
6000 ꞏ Advertising and Promotion
	
3,845.00
	
 
	
0.00
	
 
	
845.00
	
 
	
1,845.00

	
61300 ꞏ Marketing - Other
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total 61300 ꞏ Marketing
	
3,845.00
	
 
	
0.00
	
 
	
845.00
	
 
	
1,845.00

	
61400 ꞏ Professional Services
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61410 ꞏ Legal
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61490 ꞏ Other
	
0.00
	
 
	
0.00
	
 
	
864.48
	
 
	
1,167.12

	
Total 61400 ꞏ Professional Services
	
0.00
	
 
	
0.00
	
 
	
864.48
	
 
	
1,167.12

	
61500 ꞏ Facilities
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61510 ꞏ Rent
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61520 ꞏ Telephone/Internet
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61530 ꞏ Gas/Electric
	
62.34
	
 
	
0.00
	
 
	
20.57
	
 
	
41.14

 

Page 3 of 8
 

4:17 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Profit & Loss

January through December 2019

May 19

Jun 19

Jul 19

Aug 19

 

 

								
	
61535 ꞏ Water/Sewer
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61540 ꞏ Security
	
11,075.35
	
 
	
8,863.93
	
 
	
4,882.02
	
 
	
8,363.42

	
61550 ꞏ Repairs & Maintenance
	
3,215.68
	
 
	
1,488.00
	
 
	
10,953.14
	
 
	
4,786.62

	
61570 ꞏ Business Licenses & Permits
	
0.00
	
 
	
40,000.00
	
 
	
795.00
	
 
	
0.00

	
Total 61500 ꞏ Facilities
	
14,353.37
	
 
	
50,351.93
	
 
	
16,650.73
	
 
	
13,191.18

	
61600 ꞏ Supplies
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61610 ꞏ Office Supplies
	
1,049.31
	
 
	
374.85
	
 
	
5,731.17
	
 
	
374.36

	
61620 ꞏ Postage & Delivery
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total 61600 ꞏ Supplies
	
1,049.31
	
 
	
374.85
	
 
	
5,731.17
	
 
	
374.36

	
61700 ꞏ IT
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61710 ꞏ Hardware
	
879.50
	
 
	
743.92
	
 
	
154.05
	
 
	
390.87

	
61720 ꞏ Software
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61740 ꞏ Maintenance Contracts
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
718.00

	
Total 61700 ꞏ IT
	
879.50
	
 
	
743.92
	
 
	
154.05
	
 
	
1,108.87

	
61800 ꞏ Other SG&A
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
6180 ꞏ Conferences and Seminars
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61810 ꞏ Bank Fees
	
1,188.23
	
 
	
1,903.52
	
 
	
1,486.38
	
 
	
1,611.82

	
61820 ꞏ Dues & Subscriptions
	
509.67
	
 
	
370.02
	
 
	
0.00
	
 
	
0.00

	
61840 ꞏ Insurance Expense
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
12,221.88

	
61850 ꞏ Expenses to be Allocated (DC)
	
60.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61890 ꞏ Misc. Expense
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total 61800 ꞏ Other SG&A
	
1,757.90
	
 
	
2,273.54
	
 
	
1,486.38
	
 
	
13,833.70

	
Total 61000 ꞏ SG&A Expenses
	
74,723.44
	
 
	
97,927.66
	
 
	
66,657.12
	
 
	
78,217.84

	
Total Expense
	
74,723.44
	
 
	
97,927.66
	
 
	
66,657.12
	
 
	
78,217.84

	
Net Ordinary Income
	
-99,065.61
	
 
	
-67,011.37
	
 
	
-50,931.78
	
 
	
-73,045.62

	
Other Income/Expense
	
 
	
 
	
 
	
 
	
 
	
 
	
 

Other Expense

75000 ꞏ Other Expense

 

								
	
75100 ꞏ Interest Expense
	
8,266.66
	
 
	
-40,266.64
	
 
	
0.00
	
 
	
0.00

	
Total 75000 ꞏ Other Expense
	
8,266.66
	
 
	
-40,266.64
	
 
	
0.00
	
 
	
0.00

	
Total Other Expense
	
8,266.66
	
 
	
-40,266.64
	
 
	
0.00
	
 
	
0.00

	
Net Other Income
	
-8,266.66
	
 
	
40,266.64
	
 
	
0.00
	
 
	
0.00

	
Net Income
	
-107,332.27
	
 
	
-26,744.73
	
 
	
-50,931.78
	
 
	
-73,045.62

 

Page 4 of 8
 

4:17 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Profit & Loss

January through December 2019

Sep 19

Oct 19

Nov 19

Dec 19

 

Ordinary Income/Expense Income

41000 ꞏ Mission Sales

47900 ꞏ Sales - Cannabis

 

								
	
47901 ꞏ Sales Cannabis
	
83,869.54
	
 
	
134,485.94
	
 
	
174,362.62
	
 
	
273,458.00

	
Total 47900 ꞏ Sales - Cannabis
	
83,869.54
	
 
	
134,485.94
	
 
	
174,362.62
	
 
	
273,458.00

	
47905 ꞏ Sales - Other Merchandise
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
47907 ꞏ Sales - Other Merchandise
	
1,377.45
	
 
	
2,404.01
	
 
	
1,625.65
	
 
	
6,388.10

	
Total 47905 ꞏ Sales - Other Merchandise
	
1,377.45
	
 
	
2,404.01
	
 
	
1,625.65
	
 
	
6,388.10

	
Total 41000 ꞏ Mission Sales
	
85,246.99
	
 
	
136,889.95
	
 
	
175,988.27
	
 
	
279,846.10

	
41500 ꞏ Mission Discounts
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
47908 ꞏ Discounts on Other Merchandise
	
-1,615.58
	
 
	
-874.67
	
 
	
-775.91
	
 
	
-3,079.77

	
41500 ꞏ Mission Discounts - Other
	
-22,168.10
	
 
	
-47,519.13
	
 
	
-61,052.11
	
 
	
-118,648.59

	
Total 41500 ꞏ Mission Discounts
	
-23,783.68
	
 
	
-48,393.80
	
 
	
-61,828.02
	
 
	
-121,728.36

	
Total Income
	
61,463.31
	
 
	
88,496.15
	
 
	
114,160.25
	
 
	
158,117.74

	
Cost of Goods Sold

51000 ꞏ Mission COGS
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
50100 ꞏ COGS - Cannabis
	
22,460.70
	
 
	
17,887.31
	
 
	
24,872.40
	
 
	
88,065.33

	
50200 ꞏ COGS - Other Merchandise
	
867.80
	
 
	
1,085.41
	
 
	
326.20
	
 
	
2,516.01

	
51000 ꞏ Mission COGS - Other
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
350,724.64

	
Total 51000 ꞏ Mission COGS
	
23,328.50
	
 
	
18,972.72
	
 
	
25,198.60
	
 
	
441,305.98

	
Total COGS
	
23,328.50
	
 
	
18,972.72
	
 
	
25,198.60
	
 
	
441,305.98

	
Gross Profit
	
38,134.81
	
 
	
69,523.43
	
 
	
88,961.65
	
 
	
-283,188.24

	
Expense
	
 
	
 
	
 
	
 
	
 
	
 
	
 

61000 ꞏ SG&A Expenses 61100 ꞏ Labor

								
	
61140 ꞏ Payroll Taxes
	
0.00
	
 
	
2,606.56
	
 
	
2,330.88
	
 
	
2,500.04

	
66000 ꞏ Payroll Expenses
	
33,029.14
	
 
	
50,887.99
	
 
	
29,077.08
	
 
	
31,280.95

	
Total 61100 ꞏ Labor
	
33,029.14
	
 
	
53,494.55
	
 
	
31,407.96
	
 
	
33,780.99

	
61200 ꞏ Travel
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61210 ꞏ Meals & Entertainment
	
0.00
	
 
	
135.49
	
 
	
498.88
	
 
	
247.00

	
61230 ꞏ Air Transportation
	
0.00
	
 
	
46.99
	
 
	
0.00
	
 
	
0.00

	
Total 61200 ꞏ Travel
	
0.00
	
 
	
182.48
	
 
	
498.88
	
 
	
247.00

	
61300 ꞏ Marketing
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
6000 ꞏ Advertising and Promotion
	
7,754.40
	
 
	
6,200.00
	
 
	
6,200.00
	
 
	
5,000.00

	
61300 ꞏ Marketing - Other
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
110.00

	
Total 61300 ꞏ Marketing
	
7,754.40
	
 
	
6,200.00
	
 
	
6,200.00
	
 
	
5,110.00

	
61400 ꞏ Professional Services
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61410 ꞏ Legal
	
0.00
	
 
	
0.00
	
 
	
63.00
	
 
	
0.00

	
61490 ꞏ Other
	
0.00
	
 
	
3,708.00
	
 
	
0.00
	
 
	
0.00

	
Total 61400 ꞏ Professional Services
	
0.00
	
 
	
3,708.00
	
 
	
63.00
	
 
	
0.00

	
61500 ꞏ Facilities
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61510 ꞏ Rent
	
47,777.66
	
 
	
5,150.00
	
 
	
5,150.00
	
 
	
5,150.00

	
61520 ꞏ Telephone/Internet
	
-177.87
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61530 ꞏ Gas/Electric
	
0.00
	
 
	
41.14
	
 
	
0.00
	
 
	
0.00

 

Page 5 of 8
 

4:17 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Profit & Loss

January through December 2019

Sep 19

Oct 19

Nov 19

Dec 19

 

 

								
	
61535 ꞏ Water/Sewer
	
277.78
	
 
	
32.14
	
 
	
0.00
	
 
	
0.00

	
61540 ꞏ Security
	
13,787.94
	
 
	
8,776.44
	
 
	
10,220.72
	
 
	
11,231.89

	
61550 ꞏ Repairs & Maintenance
	
768.00
	
 
	
3,254.14
	
 
	
4,382.12
	
 
	
1,328.89

	
61570 ꞏ Business Licenses & Permits
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total 61500 ꞏ Facilities
	
62,433.51
	
 
	
17,253.86
	
 
	
19,752.84
	
 
	
17,710.78

	
61600 ꞏ Supplies
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61610 ꞏ Office Supplies
	
1,453.29
	
 
	
1,475.91
	
 
	
1,559.52
	
 
	
2,272.38

	
61620 ꞏ Postage & Delivery
	
0.00
	
 
	
0.00
	
 
	
26.86
	
 
	
0.00

	
Total 61600 ꞏ Supplies
	
1,453.29
	
 
	
1,475.91
	
 
	
1,586.38
	
 
	
2,272.38

	
61700 ꞏ IT
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61710 ꞏ Hardware
	
1,305.79
	
 
	
1,938.96
	
 
	
177.87
	
 
	
177.87

	
61720 ꞏ Software
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61740 ꞏ Maintenance Contracts
	
0.00
	
 
	
0.00
	
 
	
718.00
	
 
	
718.00

	
Total 61700 ꞏ IT
	
1,305.79
	
 
	
1,938.96
	
 
	
895.87
	
 
	
895.87

	
61800 ꞏ Other SG&A
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
6180 ꞏ Conferences and Seminars
	
178.80
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61810 ꞏ Bank Fees
	
1,117.73
	
 
	
1,558.12
	
 
	
1,558.58
	
 
	
1,712.99

	
61820 ꞏ Dues & Subscriptions
	
0.00
	
 
	
0.35
	
 
	
0.70
	
 
	
0.70

	
61840 ꞏ Insurance Expense
	
780.64
	
 
	
-357.15
	
 
	
1,204.13
	
 
	
423.49

	
61850 ꞏ Expenses to be Allocated (DC)
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61890 ꞏ Misc. Expense
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
-18.36

	
Total 61800 ꞏ Other SG&A
	
2,077.17
	
 
	
1,201.32
	
 
	
2,763.41
	
 
	
2,118.82

	
Total 61000 ꞏ SG&A Expenses
	
108,053.30
	
 
	
85,455.08
	
 
	
63,168.34
	
 
	
62,135.84

	
Total Expense
	
108,053.30
	
 
	
85,455.08
	
 
	
63,168.34
	
 
	
62,135.84

	
Net Ordinary Income
	
-69,918.49
	
 
	
-15,931.65
	
 
	
25,793.31
	
 
	
-345,324.08

	
Other Income/Expense
	
 
	
 
	
 
	
 
	
 
	
 
	
 

Other Expense

75000 ꞏ Other Expense

 

								
	
75100 ꞏ Interest Expense
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total 75000 ꞏ Other Expense
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total Other Expense
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Net Other Income
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Net Income
	
-69,918.49
	
 
	
-15,931.65
	
 
	
25,793.31
	
 
	
-345,324.08

 

Page 6 of 8
 

4:17 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Profit & Loss

January through December 2019

TOTAL

 

Ordinary Income/Expense Income

41000 ꞏ Mission Sales

47900 ꞏ Sales - Cannabis

 

		
	
47901 ꞏ Sales Cannabis
	
1,460,905.35

	
Total 47900 ꞏ Sales - Cannabis
	
1,460,905.35

	
47905 ꞏ Sales - Other Merchandise
	
 

	
47907 ꞏ Sales - Other Merchandise
	
21,916.27

	
Total 47905 ꞏ Sales - Other Merchandise
	
21,916.27

	
Total 41000 ꞏ Mission Sales
	
1,482,821.62

	
41500 ꞏ Mission Discounts
	
 

	
47908 ꞏ Discounts on Other Merchandise
	
-10,739.61

	
41500 ꞏ Mission Discounts - Other
	
-448,699.19

	
Total 41500 ꞏ Mission Discounts
	
-459,438.80

	
Total Income
	
1,023,382.82

	
Cost of Goods Sold

51000 ꞏ Mission COGS
	
 

	
50100 ꞏ COGS - Cannabis
	
611,135.66

	
50200 ꞏ COGS - Other Merchandise
	
7,881.54

	
51000 ꞏ Mission COGS - Other
	
350,724.64

	
Total 51000 ꞏ Mission COGS
	
969,741.84

	
Total COGS
	
969,741.84

	
Gross Profit
	
53,640.98

	
Expense
	
 

61000 ꞏ SG&A Expenses 61100 ꞏ Labor

		
	
61140 ꞏ Payroll Taxes
	
7,437.48

	
66000 ꞏ Payroll Expenses
	
444,926.62

	
Total 61100 ꞏ Labor
	
452,364.10

	
61200 ꞏ Travel
	
 

	
61210 ꞏ Meals & Entertainment
	
881.37

	
61230 ꞏ Air Transportation
	
46.99

	
Total 61200 ꞏ Travel
	
928.36

	
61300 ꞏ Marketing
	
 

	
6000 ꞏ Advertising and Promotion
	
32,038.40

	
61300 ꞏ Marketing - Other
	
110.00

	
Total 61300 ꞏ Marketing
	
32,148.40

	
61400 ꞏ Professional Services
	
 

	
61410 ꞏ Legal
	
2,665.00

	
61490 ꞏ Other
	
5,739.60

	
Total 61400 ꞏ Professional Services
	
8,404.60

	
61500 ꞏ Facilities
	
 

	
61510 ꞏ Rent
	
63,227.66

	
61520 ꞏ Telephone/Internet
	
-177.87

	
61530 ꞏ Gas/Electric
	
486.57

 

Page 7 of 8
 

4:17 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Profit & Loss

January through December 2019

TOTAL

 

 

		
	
61535 ꞏ Water/Sewer
	
309.92

	
61540 ꞏ Security
	
123,410.96

	
61550 ꞏ Repairs & Maintenance
	
39,489.95

	
61570 ꞏ Business Licenses & Permits
	
40,898.68

	
Total 61500 ꞏ Facilities
	
267,645.87

	
61600 ꞏ Supplies
	
 

	
61610 ꞏ Office Supplies
	
21,614.23

	
61620 ꞏ Postage & Delivery
	
76.86

	
Total 61600 ꞏ Supplies
	
21,691.09

	
61700 ꞏ IT
	
 

	
61710 ꞏ Hardware
	
17,545.57

	
61720 ꞏ Software
	
0.00

	
61740 ꞏ Maintenance Contracts
	
2,154.00

	
Total 61700 ꞏ IT
	
19,699.57

	
61800 ꞏ Other SG&A
	
 

	
6180 ꞏ Conferences and Seminars
	
178.80

	
61810 ꞏ Bank Fees
	
20,088.09

	
61820 ꞏ Dues & Subscriptions
	
1,120.34

	
61840 ꞏ Insurance Expense
	
14,272.99

	
61850 ꞏ Expenses to be Allocated (DC)
	
60.00

	
61890 ꞏ Misc. Expense
	
-18.36

	
Total 61800 ꞏ Other SG&A
	
35,701.86

	
Total 61000 ꞏ SG&A Expenses
	
838,583.85

	
Total Expense
	
838,583.85

	
Net Ordinary Income
	
-784,942.87

	
Other Income/Expense
	
 

 

 

Other Expense

75000 ꞏ Other Expense 75100 ꞏ Interest Expense

Total 75000 ꞏ Other Expense Total Other Expense

Net Other Income Net Income

 

 

0.00

 

0.00

 

0.00

 

0.00

 

-784,942.87

 

Page 8 of 8
 

4:15 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Balance Sheet

As of December 31, 2019

Jan 31, 19

Feb 28, 19

Mar 31, 19

Apr 30, 19

 

ASSETS

Current Assets Checking/Savings

								
	
10000 ꞏ Bulldog FCU - Checking
	
78,070.22
	
 
	
28,464.84
	
 
	
-44,388.05
	
 
	
13,722.16

	
10001 ꞏ Bulldog FCU - Savings
	
10,025.00
	
 
	
10,025.00
	
 
	
10,025.00
	
 
	
10,025.00

	
10005 ꞏ Union Bank - PR Acct
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
10002 ꞏ ATM Cash
	
9,000.00
	
 
	
9,000.00
	
 
	
9,000.00
	
 
	
4,480.00

	
10003 ꞏ Cash in Vault
	
100.00
	
 
	
100.00
	
 
	
100.00
	
 
	
100.00

	
10004 ꞏ Petty Cash
	
895.00
	
 
	
1,634.00
	
 
	
2,534.00
	
 
	
2,534.00

	
Total Checking/Savings Other Current Assets

Payroll Clearing
	
98,090.22

 

 

0.00
	
 
	
49,223.84

 

 

0.00
	
 
	
-22,729.05

 

 

0.00
	
 
	
30,861.16

 

 

0.00

	
1200 ꞏ Undeposited Funds
	
7,246.96
	
 
	
50,681.56
	
 
	
56,138.06
	
 
	
59,838.10

	
1510 ꞏ Inventory
	
88,506.30
	
 
	
144,495.29
	
 
	
149,322.30
	
 
	
156,905.98

	
Total Other Current Assets
	
95,753.26
	
 
	
195,176.85
	
 
	
205,460.36
	
 
	
216,744.08

	
Total Current Assets Fixed Assets

1650 ꞏ Furniture, Fixtures & Equipment
	
193,843.48

 

 

2,466.00
	
 
	
244,400.69

 

 

9,247.00
	
 
	
182,731.31

 

 

0.00
	
 
	
247,605.24

 

 

5,000.00

	
Total Fixed Assets
	
2,466.00
	
 
	
9,247.00
	
 
	
0.00
	
 
	
5,000.00

	
TOTAL ASSETS
	
196,309.48
	
 
	
253,647.69
	
 
	
182,731.31
	
 
	
252,605.24

	
LIABILITIES & EQUITY
	
 
	
 
	
 
	
 
	
 
	
 
	
 

Liabilities

Current Liabilities Accounts Payable

								
	
20000 ꞏ Accounts Payable
	
84,933.96
	
 
	
149,724.14
	
 
	
61,555.27
	
 
	
52,231.89

	
Total Accounts Payable
	
84,933.96
	
 
	
149,724.14
	
 
	
61,555.27
	
 
	
52,231.89

	
Other Current Liabilities
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
24000 ꞏ Payroll Liabilities
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
24700 ꞏ Sales Tax Payable
	
49.86
	
 
	
90.20
	
 
	
118.84
	
 
	
152.32

	
Total Other Current Liabilities
	
49.86
	
 
	
90.20
	
 
	
118.84
	
 
	
152.32

	
Total Current Liabilities
	
84,983.82
	
 
	
149,814.34
	
 
	
61,674.11
	
 
	
52,384.21

	
Long Term Liabilities

Intercompany Liability
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
24800 ꞏ CIHI Due To/From
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
26000 ꞏ SSCG - Loan 150K
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
26000.1 ꞏ SSCG - Principal
	
150,000.00
	
 
	
150,000.00
	
 
	
150,000.00
	
 
	
150,000.00

	
26000.2 ꞏ SSCG - Accrued Interest
	
15,599.97
	
 
	
16,533.30
	
 
	
17,566.63
	
 
	
18,566.63

	
Total 26000 ꞏ SSCG - Loan 150K
	
165,599.97
	
 
	
166,533.30
	
 
	
167,566.63
	
 
	
168,566.63

	
26001 ꞏ SSCG - Loan 1.05M
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
26001.2 ꞏ SSCG-Loan 1.05M Accrued Inter
	
61,066.66
	
 
	
67,599.99
	
 
	
74,833.32
	
 
	
81,833.32

	
26001 ꞏ SSCG - Loan 1.05M - Other
	
1,050,000.00
	
 
	
1,050,000.00
	
 
	
1,050,000.00
	
 
	
1,050,000.00

	
Total 26001 ꞏ SSCG - Loan 1.05M
	
1,111,066.66
	
 
	
1,117,599.99
	
 
	
1,124,833.32
	
 
	
1,131,833.32

	
26002 ꞏ SSCG - Loan
	
183,743.55
	
 
	
185,192.59
	
 
	
223,588.95
	
 
	
338,588.95

	
Total Intercompany Liability
	
1,460,410.18
	
 
	
1,469,325.88
	
 
	
1,515,988.90
	
 
	
1,638,988.90

	
Total Long Term Liabilities
	
1,460,410.18
	
 
	
1,469,325.88
	
 
	
1,515,988.90
	
 
	
1,638,988.90

 

Page 1 of 8
 

4:15 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Balance Sheet

As of December 31, 2019

Jan 31, 19

Feb 28, 19

Mar 31, 19

Apr 30, 19

 

								
	
Total Liabilities Equity

30500 ꞏ Ramirez
	
1,545,394.00
	
1,619,140.22
	
1,577,663.01
	
1,691,373.11

	
30500-2 ꞏ Ramirez - Distributions
	
-1,200,000.00
	
 
	
-1,200,000.00
	
 
	
-1,200,000.00
	
 
	
-1,200,000.00

	
Total 30500 ꞏ Ramirez
	
-1,200,000.00
	
 
	
-1,200,000.00
	
 
	
-1,200,000.00
	
 
	
-1,200,000.00

	
32000 ꞏ Retained Earnings
	
-117,260.31
	
 
	
-117,260.31
	
 
	
-117,260.31
	
 
	
-117,260.31

	
Net Income
	
-31,824.21
	
 
	
-48,232.22
	
 
	
-77,671.39
	
 
	
-121,507.56

	
Total Equity
	
-1,349,084.52
	
 
	
-1,365,492.53
	
 
	
-1,394,931.70
	
 
	
-1,438,767.87

	
TOTAL LIABILITIES & EQUITY
	
196,309.48
	
 
	
253,647.69
	
 
	
182,731.31
	
 
	
252,605.24

 

Page 2 of 8
 

4:15 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Balance Sheet

As of December 31, 2019

May 31, 19

Jun 30, 19

Jul 31, 19

 

ASSETS

Current Assets Checking/Savings

						
	
10000 ꞏ Bulldog FCU - Checking
	
-11,132.12
	
 
	
25,170.55
	
 
	
48,427.45

	
10001 ꞏ Bulldog FCU - Savings
	
1,025.00
	
 
	
1,025.00
	
 
	
1,025.00

	
10005 ꞏ Union Bank - PR Acct
	
0.00
	
 
	
0.00
	
 
	
0.00

	
10002 ꞏ ATM Cash
	
4,480.00
	
 
	
9,000.00
	
 
	
9,000.00

	
10003 ꞏ Cash in Vault
	
100.00
	
 
	
100.00
	
 
	
100.00

	
10004 ꞏ Petty Cash
	
4,128.51
	
 
	
3,189.11
	
 
	
3,189.11

	
Total Checking/Savings Other Current Assets

Payroll Clearing
	
-1,398.61

 

 

2,606.53
	
 
	
38,484.66

 

 

0.00
	
 
	
61,741.56

 

 

0.00

	
1200 ꞏ Undeposited Funds
	
43,827.24
	
 
	
20,893.31
	
 
	
58,274.73

	
1510 ꞏ Inventory
	
72,561.50
	
 
	
55,525.00
	
 
	
62,375.90

	
Total Other Current Assets
	
118,995.27
	
 
	
76,418.31
	
 
	
120,650.63

	
Total Current Assets Fixed Assets

1650 ꞏ Furniture, Fixtures & Equipment
	
117,596.66

 

 

9,750.00
	
 
	
114,902.97

 

 

9,750.00
	
 
	
182,392.19

 

 

9,750.00

	
Total Fixed Assets
	
9,750.00
	
 
	
9,750.00
	
 
	
9,750.00

	
TOTAL ASSETS
	
127,346.66
	
 
	
124,652.97
	
 
	
192,142.19

	
LIABILITIES & EQUITY
	
 
	
 
	
 
	
 
	
 

Liabilities

Current Liabilities Accounts Payable

						
	
20000 ꞏ Accounts Payable
	
26,326.91
	
 
	
65,663.60
	
 
	
62,239.04

	
Total Accounts Payable
	
26,326.91
	
 
	
65,663.60
	
 
	
62,239.04

	
Other Current Liabilities
	
 
	
 
	
 
	
 
	
 

	
24000 ꞏ Payroll Liabilities
	
0.00
	
 
	
0.00
	
 
	
2,922.16

	
24700 ꞏ Sales Tax Payable
	
-135.67
	
 
	
-154.68
	
 
	
-115.48

	
Total Other Current Liabilities
	
-135.67
	
 
	
-154.68
	
 
	
2,806.68

	
Total Current Liabilities
	
26,191.24
	
 
	
65,508.92
	
 
	
65,045.72

	
Long Term Liabilities

Intercompany Liability
	
 
	
 
	
 
	
 
	
 

	
24800 ꞏ CIHI Due To/From
	
0.00
	
 
	
0.00
	
 
	
28,884.20

	
26000 ꞏ SSCG - Loan 150K
	
 
	
 
	
 
	
 
	
 

	
26000.1 ꞏ SSCG - Principal
	
150,000.00
	
 
	
150,000.00
	
 
	
150,000.00

	
26000.2 ꞏ SSCG - Accrued Interest
	
19,599.96
	
 
	
14,566.64
	
 
	
14,566.64

	
Total 26000 ꞏ SSCG - Loan 150K
	
169,599.96
	
 
	
164,566.64
	
 
	
164,566.64

	
26001 ꞏ SSCG - Loan 1.05M
	
 
	
 
	
 
	
 
	
 

	
26001.2 ꞏ SSCG-Loan 1.05M Accrued Inter
	
89,066.65
	
 
	
53,833.33
	
 
	
53,833.33

	
26001 ꞏ SSCG - Loan 1.05M - Other
	
1,050,000.00
	
 
	
1,050,000.00
	
 
	
1,050,000.00

	
Total 26001 ꞏ SSCG - Loan 1.05M
	
1,139,066.65
	
 
	
1,103,833.33
	
 
	
1,103,833.33

	
26002 ꞏ SSCG - Loan
	
338,588.95
	
 
	
363,588.95
	
 
	
453,588.95

	
Total Intercompany Liability
	
1,647,255.56
	
 
	
1,631,988.92
	
 
	
1,750,873.12

	
Total Long Term Liabilities
	
1,647,255.56
	
 
	
1,631,988.92
	
 
	
1,750,873.12

 

Page 3 of 8
 

4:15 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Balance Sheet

As of December 31, 2019

May 31, 19

Jun 30, 19

Jul 31, 19

 

						
	
Total Liabilities Equity

30500 ꞏ Ramirez
	
1,673,446.80
	
1,697,497.84
	
1,815,918.84

	
30500-2 ꞏ Ramirez - Distributions
	
-1,200,000.00
	
 
	
-1,200,000.00
	
 
	
-1,200,000.00

	
Total 30500 ꞏ Ramirez
	
-1,200,000.00
	
 
	
-1,200,000.00
	
 
	
-1,200,000.00

	
32000 ꞏ Retained Earnings
	
-117,260.31
	
 
	
-117,260.31
	
 
	
-117,260.31

	
Net Income
	
-228,839.83
	
 
	
-255,584.56
	
 
	
-306,516.34

	
Total Equity
	
-1,546,100.14
	
 
	
-1,572,844.87
	
 
	
-1,623,776.65

	
TOTAL LIABILITIES & EQUITY
	
127,346.66
	
 
	
124,652.97
	
 
	
192,142.19

 

Page 4 of 8
 

4:15 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Balance Sheet

As of December 31, 2019

Aug 31, 19

Sep 30, 19

Oct 31, 19

 

ASSETS

Current Assets Checking/Savings

						
	
10000 ꞏ Bulldog FCU - Checking
	
33,065.26
	
 
	
143,740.77
	
 
	
80,539.84

	
10001 ꞏ Bulldog FCU - Savings
	
125.00
	
 
	
125.00
	
 
	
125.00

	
10005 ꞏ Union Bank - PR Acct
	
0.00
	
 
	
0.00
	
 
	
18,631.58

	
10002 ꞏ ATM Cash
	
9,000.00
	
 
	
2,320.00
	
 
	
8,240.00

	
10003 ꞏ Cash in Vault
	
100.00
	
 
	
100.00
	
 
	
100.00

	
10004 ꞏ Petty Cash
	
3,189.11
	
 
	
4,419.02
	
 
	
1,811.90

	
Total Checking/Savings Other Current Assets

Payroll Clearing
	
45,479.37

 

 

0.00
	
 
	
150,704.79

 

 

575.81
	
 
	
109,448.32

 

 

0.00

	
1200 ꞏ Undeposited Funds
	
83,955.46
	
 
	
12,453.28
	
 
	
6,194.62

	
1510 ꞏ Inventory
	
61,304.00
	
 
	
69,167.20
	
 
	
150,610.63

	
Total Other Current Assets
	
145,259.46
	
 
	
82,196.29
	
 
	
156,805.25

	
Total Current Assets Fixed Assets

1650 ꞏ Furniture, Fixtures & Equipment
	
190,738.83

 

 

9,750.00
	
 
	
232,901.08

 

 

9,750.00
	
 
	
266,253.57

 

 

9,750.00

	
Total Fixed Assets
	
9,750.00
	
 
	
9,750.00
	
 
	
9,750.00

	
TOTAL ASSETS
	
200,488.83
	
 
	
242,651.08
	
 
	
276,003.57

	
LIABILITIES & EQUITY
	
 
	
 
	
 
	
 
	
 

Liabilities

Current Liabilities Accounts Payable

						
	
20000 ꞏ Accounts Payable
	
110,275.10
	
 
	
27,365.57
	
 
	
69,204.82

	
Total Accounts Payable
	
110,275.10
	
 
	
27,365.57
	
 
	
69,204.82

	
Other Current Liabilities
	
 
	
 
	
 
	
 
	
 

	
24000 ꞏ Payroll Liabilities
	
5,073.86
	
 
	
7,490.99
	
 
	
15,017.54

	
24700 ꞏ Sales Tax Payable
	
-105.93
	
 
	
-160.45
	
 
	
-242.11

	
Total Other Current Liabilities
	
4,967.93
	
 
	
7,330.54
	
 
	
14,775.43

	
Total Current Liabilities
	
115,243.03
	
 
	
34,696.11
	
 
	
83,980.25

	
Long Term Liabilities

Intercompany Liability
	
 
	
 
	
 
	
 
	
 

	
24800 ꞏ CIHI Due To/From
	
30,079.15
	
 
	
30,079.15
	
 
	
30,079.15

	
26000 ꞏ SSCG - Loan 150K
	
 
	
 
	
 
	
 
	
 

	
26000.1 ꞏ SSCG - Principal
	
150,000.00
	
 
	
150,000.00
	
 
	
150,000.00

	
26000.2 ꞏ SSCG - Accrued Interest
	
14,566.64
	
 
	
14,566.64
	
 
	
14,566.64

	
Total 26000 ꞏ SSCG - Loan 150K
	
164,566.64
	
 
	
164,566.64
	
 
	
164,566.64

	
26001 ꞏ SSCG - Loan 1.05M
	
 
	
 
	
 
	
 
	
 

	
26001.2 ꞏ SSCG-Loan 1.05M Accrued Inter
	
53,833.33
	
 
	
53,833.33
	
 
	
53,833.33

	
26001 ꞏ SSCG - Loan 1.05M - Other
	
1,050,000.00
	
 
	
1,050,000.00
	
 
	
1,050,000.00

	
Total 26001 ꞏ SSCG - Loan 1.05M
	
1,103,833.33
	
 
	
1,103,833.33
	
 
	
1,103,833.33

	
26002 ꞏ SSCG - Loan
	
483,588.95
	
 
	
676,216.61
	
 
	
676,216.61

	
Total Intercompany Liability
	
1,782,068.07
	
 
	
1,974,695.73
	
 
	
1,974,695.73

	
Total Long Term Liabilities
	
1,782,068.07
	
 
	
1,974,695.73
	
 
	
1,974,695.73

 

Page 5 of 8
 

4:15 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Balance Sheet

As of December 31, 2019

Aug 31, 19

Sep 30, 19

Oct 31, 19

 

						
	
Total Liabilities Equity

30500 ꞏ Ramirez
	
1,897,311.10
	
2,009,391.84
	
2,058,675.98

	
30500-2 ꞏ Ramirez - Distributions
	
-1,200,000.00
	
 
	
-1,200,000.00
	
 
	
-1,200,000.00

	
Total 30500 ꞏ Ramirez
	
-1,200,000.00
	
 
	
-1,200,000.00
	
 
	
-1,200,000.00

	
32000 ꞏ Retained Earnings
	
-117,260.31
	
 
	
-117,260.31
	
 
	
-117,260.31

	
Net Income
	
-379,561.96
	
 
	
-449,480.45
	
 
	
-465,412.10

	
Total Equity
	
-1,696,822.27
	
 
	
-1,766,740.76
	
 
	
-1,782,672.41

	
TOTAL LIABILITIES & EQUITY
	
200,488.83
	
 
	
242,651.08
	
 
	
276,003.57

 

Page 6 of 8
 

4:15 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Balance Sheet

As of December 31, 2019

Nov 30, 19

Dec 31, 19

 

ASSETS

Current Assets Checking/Savings

				
	
10000 ꞏ Bulldog FCU - Checking
	
11,375.64
	
 
	
4,035.62

	
10001 ꞏ Bulldog FCU - Savings
	
125.00
	
 
	
125.00

	
10005 ꞏ Union Bank - PR Acct
	
22,543.42
	
 
	
27,943.31

	
10002 ꞏ ATM Cash
	
9,000.00
	
 
	
7,420.00

	
10003 ꞏ Cash in Vault
	
9,100.00
	
 
	
-30,313.35

	
10004 ꞏ Petty Cash
	
1,169.91
	
 
	
3,393.12

	
Total Checking/Savings Other Current Assets

Payroll Clearing
	
53,313.97

 

 

0.00
	
 
	
12,603.70

 

 

0.00

	
1200 ꞏ Undeposited Funds
	
20,601.62
	
 
	
115,345.54

	
1510 ꞏ Inventory
	
318,624.34
	
 
	
97,748.20

	
Total Other Current Assets
	
339,225.96
	
 
	
213,093.74

	
Total Current Assets Fixed Assets

1650 ꞏ Furniture, Fixtures & Equipment
	
392,539.93

 

 

9,750.00
	
 
	
225,697.44

 

 

9,750.00

	
Total Fixed Assets
	
9,750.00
	
 
	
9,750.00

	
TOTAL ASSETS
	
402,289.93
	
 
	
235,447.44

	
LIABILITIES & EQUITY
	
 
	
 
	
 

Liabilities

Current Liabilities Accounts Payable

				
	
20000 ꞏ Accounts Payable
	
154,409.34
	
 
	
138,530.01

	
Total Accounts Payable
	
154,409.34
	
 
	
138,530.01

	
Other Current Liabilities
	
 
	
 
	
 

	
24000 ꞏ Payroll Liabilities
	
10,383.04
	
 
	
2,173.93

	
24700 ꞏ Sales Tax Payable
	
-319.08
	
 
	
-184.74

	
Total Other Current Liabilities
	
10,063.96
	
 
	
1,989.19

	
Total Current Liabilities
	
164,473.30
	
 
	
140,519.20

	
Long Term Liabilities

Intercompany Liability
	
 
	
 
	
 

	
24800 ꞏ CIHI Due To/From
	
30,079.15
	
 
	
37,514.84

	
26000 ꞏ SSCG - Loan 150K
	
 
	
 
	
 

	
26000.1 ꞏ SSCG - Principal
	
150,000.00
	
 
	
150,000.00

	
26000.2 ꞏ SSCG - Accrued Interest
	
14,566.64
	
 
	
14,566.64

	
Total 26000 ꞏ SSCG - Loan 150K
	
164,566.64
	
 
	
164,566.64

	
26001 ꞏ SSCG - Loan 1.05M
	
 
	
 
	
 

	
26001.2 ꞏ SSCG-Loan 1.05M Accrued Inter
	
53,833.33
	
 
	
53,833.33

	
26001 ꞏ SSCG - Loan 1.05M - Other
	
1,050,000.00
	
 
	
1,050,000.00

	
Total 26001 ꞏ SSCG - Loan 1.05M
	
1,103,833.33
	
 
	
1,103,833.33

	
26002 ꞏ SSCG - Loan
	
696,216.61
	
 
	
891,216.61

	
Total Intercompany Liability
	
1,994,695.73
	
 
	
2,197,131.42

	
Total Long Term Liabilities
	
1,994,695.73
	
 
	
2,197,131.42

 

Page 7 of 8
 

4:15 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Balance Sheet

As of December 31, 2019

Nov 30, 19

Dec 31, 19

 

				
	
Total Liabilities Equity

30500 ꞏ Ramirez
	
2,159,169.03
	
2,337,650.62

	
30500-2 ꞏ Ramirez - Distributions
	
-1,200,000.00
	
 
	
-1,200,000.00

	
Total 30500 ꞏ Ramirez
	
-1,200,000.00
	
 
	
-1,200,000.00

	
32000 ꞏ Retained Earnings
	
-117,260.31
	
 
	
-117,260.31

	
Net Income
	
-439,618.79
	
 
	
-784,942.87

	
Total Equity
	
-1,756,879.10
	
 
	
-2,102,203.18

	
TOTAL LIABILITIES & EQUITY
	
402,289.93
	
 
	
235,447.44

 

Page 8 of 8
 

4:16 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Balance Sheet

As of June 30, 2020

Jan 31, 20

Feb 29, 20

Mar 31, 20

 

ASSETS

Current Assets Checking/Savings

						
	
10000 ꞏ Bulldog FCU - Checking
	
16,051.24
	
 
	
107,459.18
	
 
	
211,343.06

	
10001 ꞏ Bulldog FCU - Savings
	
125.00
	
 
	
125.00
	
 
	
125.00

	
10005 ꞏ Union Bank - PR Acct
	
30,147.67
	
 
	
44,726.78
	
 
	
47,517.94

	
10002 ꞏ ATM Cash
	
6,980.00
	
 
	
6,240.00
	
 
	
2,340.00

	
10003 ꞏ Cash in Vault
	
-125,147.74
	
 
	
-215,829.35
	
 
	
75,637.02

	
10004 ꞏ Petty Cash
	
4,899.96
	
 
	
5,672.00
	
 
	
5,574.02

	
Total Checking/Savings Other Current Assets

1200 ꞏ Undeposited Funds
	
-66,943.87

 

 

192,850.10
	
 
	
-51,606.39

 

 

270,615.50
	
 
	
342,537.04

 

 

0.00

	
1510 ꞏ Inventory
	
101,097.97
	
 
	
211,537.61
	
 
	
166,913.85

	
Total Other Current Assets
	
293,948.07
	
 
	
482,153.11
	
 
	
166,913.85

	
Total Current Assets Fixed Assets

1650 ꞏ Furniture, Fixtures & Equipment
	
227,004.20

 

 

9,750.00
	
 
	
430,546.72

 

 

9,750.00
	
 
	
509,450.89

 

 

9,750.00

	
1700 ꞏ Accumulated Depreciation
	
0.00
	
 
	
0.00
	
 
	
-487.50

	
Total Fixed Assets Other Assets

1550 ꞏ Right-of-use asset
	
9,750.00

 

 

143,284.09
	
 
	
9,750.00

 

 

143,284.09
	
 
	
9,262.50

 

 

129,852.05

	
Total Other Assets
	
143,284.09
	
 
	
143,284.09
	
 
	
129,852.05

	
TOTAL ASSETS
	
380,038.29
	
 
	
583,580.81
	
 
	
648,565.44

	
LIABILITIES & EQUITY
	
 
	
 
	
 
	
 
	
 

Liabilities

Current Liabilities Accounts Payable

						
	
20000 ꞏ Accounts Payable
	
35,593.37
	
 
	
243,189.29
	
 
	
322,054.54

	
Total Accounts Payable
	
35,593.37
	
 
	
243,189.29
	
 
	
322,054.54

	
Other Current Liabilities

24000 ꞏ Payroll Liabilities
	
 
	
 
	
 
	
 
	
 

	
24001 ꞏ Federal 941 & State SIT
	
0.00
	
 
	
0.00
	
 
	
0.00

	
24002 ꞏ Unemployment SUI
	
0.00
	
 
	
0.00
	
 
	
0.00

	
24000 ꞏ Payroll Liabilities - Other
	
-933.71
	
 
	
-7,192.34
	
 
	
-6,688.46

	
Total 24000 ꞏ Payroll Liabilities
	
-933.71
	
 
	
-7,192.34
	
 
	
-6,688.46

	
24700 ꞏ Sales Tax Payable
	
-267.80
	
 
	
-331.80
	
 
	
112.82

	
Total Other Current Liabilities
	
-1,201.51
	
 
	
-7,524.14
	
 
	
-6,575.64

	
Total Current Liabilities
	
34,391.86
	
 
	
235,665.15
	
 
	
315,478.90

	
Long Term Liabilities

Intercompany Liability
	
 
	
 
	
 
	
 
	
 

	
24800 ꞏ CIHI Due To/From
	
37,514.84
	
 
	
37,514.84
	
 
	
0.00

	
26000 ꞏ SSCG - Loan 150K
	
 
	
 
	
 
	
 
	
 

	
26000.1 ꞏ SSCG - Principal
	
150,000.00
	
 
	
150,000.00
	
 
	
150,000.00

	
26000.2 ꞏ SSCG - Accrued Interest
	
14,566.64
	
 
	
14,566.64
	
 
	
14,566.64

	
Total 26000 ꞏ SSCG - Loan 150K
	
164,566.64
	
 
	
164,566.64
	
 
	
164,566.64

 

Page 1 of 4
 

4:16 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Balance Sheet

As of June 30, 2020

Jan 31, 20

Feb 29, 20

Mar 31, 20

 

26001 ꞏ SSCG - Loan 1.05M

 

						
	
26001.2 ꞏ SSCG-Loan 1.05M Accrued Inter
	
53,833.33
	
 
	
53,833.33
	
 
	
53,833.33

	
26001 ꞏ SSCG - Loan 1.05M - Other
	
1,050,000.00
	
 
	
1,050,000.00
	
 
	
1,050,000.00

	
Total 26001 ꞏ SSCG - Loan 1.05M
	
1,103,833.33
	
 
	
1,103,833.33
	
 
	
1,103,833.33

	
26002 ꞏ SSCG - Loan
	
1,014,369.99
	
 
	
1,034,369.99
	
 
	
1,071,884.83

	
Total Intercompany Liability
	
2,320,284.80
	
 
	
2,340,284.80
	
 
	
2,340,284.80

	
25000 ꞏ Lease liability
	
152,767.71
	
 
	
152,767.71
	
 
	
140,665.87

	
Total Long Term Liabilities
	
2,473,052.51
	
 
	
2,493,052.51
	
 
	
2,480,950.67

	
Total Liabilities
	
2,507,444.37
	
 
	
2,728,717.66
	
 
	
2,796,429.57

	
Equity

30500 ꞏ Ramirez
	
 
	
 
	
 
	
 
	
 

	
30500-2 ꞏ Ramirez - Distributions
	
-1,200,000.00
	
 
	
-1,200,000.00
	
 
	
-1,200,000.00

	
Total 30500 ꞏ Ramirez
	
-1,200,000.00
	
 
	
-1,200,000.00
	
 
	
-1,200,000.00

	
32000 ꞏ Retained Earnings
	
-911,686.80
	
 
	
-911,686.80
	
 
	
-911,686.80

	
Net Income
	
-15,719.28
	
 
	
-33,450.05
	
 
	
-36,177.33

	
Total Equity
	
-2,127,406.08
	
 
	
-2,145,136.85
	
 
	
-2,147,864.13

	
TOTAL LIABILITIES & EQUITY
	
380,038.29
	
 
	
583,580.81
	
 
	
648,565.44

 

Page 2 of 4
 

4:16 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Balance Sheet

As of June 30, 2020

Apr 30, 20

May 31, 20

Jun 30, 20

 

ASSETS

Current Assets Checking/Savings

						
	
10000 ꞏ Bulldog FCU - Checking
	
-15,627.21
	
 
	
14,203.66
	
 
	
41,782.13

	
10001 ꞏ Bulldog FCU - Savings
	
125.00
	
 
	
125.00
	
 
	
125.00

	
10005 ꞏ Union Bank - PR Acct
	
56,845.81
	
 
	
41,780.57
	
 
	
54,100.97

	
10002 ꞏ ATM Cash
	
5,320.00
	
 
	
2,700.00
	
 
	
960.00

	
10003 ꞏ Cash in Vault
	
48,445.67
	
 
	
71,486.94
	
 
	
67,992.70

	
10004 ꞏ Petty Cash
	
4,768.19
	
 
	
6,274.93
	
 
	
4,306.15

	
Total Checking/Savings Other Current Assets

1200 ꞏ Undeposited Funds
	
99,877.46

 

 

0.00
	
 
	
136,571.10

 

 

0.00
	
 
	
169,266.95

 

 

0.00

	
1510 ꞏ Inventory
	
179,548.17
	
 
	
180,541.01
	
 
	
159,426.40

	
Total Other Current Assets
	
179,548.17
	
 
	
180,541.01
	
 
	
159,426.40

	
Total Current Assets Fixed Assets

1650 ꞏ Furniture, Fixtures & Equipment
	
279,425.63

 

 

9,750.00
	
 
	
317,112.11

 

 

9,750.00
	
 
	
328,693.35

 

 

9,750.00

	
1700 ꞏ Accumulated Depreciation
	
-487.50
	
 
	
-487.50
	
 
	
-487.50

	
Total Fixed Assets Other Assets

1550 ꞏ Right-of-use asset
	
9,262.50

 

 

129,852.05
	
 
	
9,262.50

 

 

129,852.05
	
 
	
9,262.50

 

 

129,852.05

	
Total Other Assets
	
129,852.05
	
 
	
129,852.05
	
 
	
129,852.05

	
TOTAL ASSETS
	
418,540.18
	
 
	
456,226.66
	
 
	
467,807.90

	
LIABILITIES & EQUITY
	
 
	
 
	
 
	
 
	
 

Liabilities

Current Liabilities Accounts Payable

						
	
20000 ꞏ Accounts Payable
	
92,694.54
	
 
	
87,464.32
	
 
	
51,869.36

	
Total Accounts Payable
	
92,694.54
	
 
	
87,464.32
	
 
	
51,869.36

	
Other Current Liabilities

24000 ꞏ Payroll Liabilities
	
 
	
 
	
 
	
 
	
 

	
24001 ꞏ Federal 941 & State SIT
	
0.00
	
 
	
0.00
	
 
	
6,080.13

	
24002 ꞏ Unemployment SUI
	
0.00
	
 
	
0.00
	
 
	
118.45

	
24000 ꞏ Payroll Liabilities - Other
	
-4,142.00
	
 
	
-7,596.58
	
 
	
-11,938.32

	
Total 24000 ꞏ Payroll Liabilities
	
-4,142.00
	
 
	
-7,596.58
	
 
	
-5,739.74

	
24700 ꞏ Sales Tax Payable
	
43.82
	
 
	
30.52
	
 
	
23.39

	
Total Other Current Liabilities
	
-4,098.18
	
 
	
-7,566.06
	
 
	
-5,716.35

	
Total Current Liabilities
	
88,596.36
	
 
	
79,898.26
	
 
	
46,153.01

	
Long Term Liabilities

Intercompany Liability
	
 
	
 
	
 
	
 
	
 

	
24800 ꞏ CIHI Due To/From
	
0.00
	
 
	
0.00
	
 
	
0.00

	
26000 ꞏ SSCG - Loan 150K
	
 
	
 
	
 
	
 
	
 

	
26000.1 ꞏ SSCG - Principal
	
150,000.00
	
 
	
150,000.00
	
 
	
150,000.00

	
26000.2 ꞏ SSCG - Accrued Interest
	
14,566.64
	
 
	
14,566.64
	
 
	
14,566.64

	
Total 26000 ꞏ SSCG - Loan 150K
	
164,566.64
	
 
	
164,566.64
	
 
	
164,566.64

 

Page 3 of 4
 

4:16 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Balance Sheet

As of June 30, 2020

Apr 30, 20

May 31, 20

Jun 30, 20

 

26001 ꞏ SSCG - Loan 1.05M

 

						
	
26001.2 ꞏ SSCG-Loan 1.05M Accrued Inter
	
53,833.33
	
 
	
53,833.33
	
 
	
53,833.33

	
26001 ꞏ SSCG - Loan 1.05M - Other
	
1,050,000.00
	
 
	
1,050,000.00
	
 
	
1,050,000.00

	
Total 26001 ꞏ SSCG - Loan 1.05M
	
1,103,833.33
	
 
	
1,103,833.33
	
 
	
1,103,833.33

	
26002 ꞏ SSCG - Loan
	
1,071,884.83
	
 
	
1,165,123.05
	
 
	
1,249,323.95

	
Total Intercompany Liability
	
2,340,284.80
	
 
	
2,433,523.02
	
 
	
2,517,723.92

	
25000 ꞏ Lease liability
	
140,665.87
	
 
	
140,665.87
	
 
	
140,665.87

	
Total Long Term Liabilities
	
2,480,950.67
	
 
	
2,574,188.89
	
 
	
2,658,389.79

	
Total Liabilities
	
2,569,547.03
	
 
	
2,654,087.15
	
 
	
2,704,542.80

	
Equity

30500 ꞏ Ramirez
	
 
	
 
	
 
	
 
	
 

	
30500-2 ꞏ Ramirez - Distributions
	
-1,200,000.00
	
 
	
-1,200,000.00
	
 
	
-1,200,000.00

	
Total 30500 ꞏ Ramirez
	
-1,200,000.00
	
 
	
-1,200,000.00
	
 
	
-1,200,000.00

	
32000 ꞏ Retained Earnings
	
-911,686.80
	
 
	
-911,686.80
	
 
	
-911,686.80

	
Net Income
	
-39,320.05
	
 
	
-86,173.69
	
 
	
-125,048.10

	
Total Equity
	
-2,151,006.85
	
 
	
-2,197,860.49
	
 
	
-2,236,734.90

	
TOTAL LIABILITIES & EQUITY
	
418,540.18
	
 
	
456,226.66
	
 
	
467,807.90

 

Page 4 of 4
 

4:17 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Profit & Loss

January through June 2020

Jan 20

Feb 20

Mar 20

Apr 20

 

Ordinary Income/Expense Income

								
	
41000 ꞏ Mission Sales
	
 

	
41010 ꞏ Flower
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
41020 ꞏ Edibles
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
41030 ꞏ Concentrates
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
41040 ꞏ MIP
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
41060 ꞏ Pre-Roll
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
41070 ꞏ Merchandise
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
47900 ꞏ Sales - Cannabis
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
47901 ꞏ Sales Cannabis
	
216,651.78
	
 
	
209,923.70
	
 
	
251,525.32
	
 
	
161,282.06

	
Total 47900 ꞏ Sales - Cannabis
	
216,651.78
	
 
	
209,923.70
	
 
	
251,525.32
	
 
	
161,282.06

	
47905 ꞏ Sales - Other Merchandise
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
47907 ꞏ Sales - Other Merchandise
	
4,095.51
	
 
	
1,606.09
	
 
	
2,926.45
	
 
	
889.49

	
Total 47905 ꞏ Sales - Other Merchandise
	
4,095.51
	
 
	
1,606.09
	
 
	
2,926.45
	
 
	
889.49

	
41000 ꞏ Mission Sales - Other
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total 41000 ꞏ Mission Sales
	
220,747.29
	
 
	
211,529.79
	
 
	
254,451.77
	
 
	
162,171.55

	
41500 ꞏ Mission Discounts
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
47908 ꞏ Discounts on Other Merchandise
	
-1,879.78
	
 
	
-418.07
	
 
	
-1,023.31
	
 
	
-159.21

	
41500 ꞏ Mission Discounts - Other
	
-77,770.92
	
 
	
-72,946.76
	
 
	
-75,224.84
	
 
	
-30,765.53

	
Total 41500 ꞏ Mission Discounts
	
-79,650.70
	
 
	
-73,364.83
	
 
	
-76,248.15
	
 
	
-30,924.74

	
Total Income
	
141,096.59
	
 
	
138,164.96
	
 
	
178,203.62
	
 
	
131,246.81

	
Cost of Goods Sold

51000 ꞏ Mission COGS
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
50100 ꞏ COGS - Cannabis
	
61,538.83
	
 
	
90,601.93
	
 
	
115,454.82
	
 
	
80,711.29

	
50200 ꞏ COGS - Other Merchandise
	
1,691.35
	
 
	
445.66
	
 
	
1,188.99
	
 
	
252.56

	
51010 ꞏ Flower
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
51020 ꞏ Edibles
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
51030 ꞏ Concentrates
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
51040 ꞏ MIP
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
51060 ꞏ Pre-Roll
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
51000 ꞏ Mission COGS - Other
	
0.00
	
 
	
0.00
	
 
	
5,154.13
	
 
	
-17,067.61

	
Total 51000 ꞏ Mission COGS
	
63,230.18
	
 
	
91,047.59
	
 
	
121,797.94
	
 
	
63,896.24

	
Total COGS
	
63,230.18
	
 
	
91,047.59
	
 
	
121,797.94
	
 
	
63,896.24

	
Gross Profit
	
77,866.41
	
 
	
47,117.37
	
 
	
56,405.68
	
 
	
67,350.57

	
Expense
	
 
	
 
	
 
	
 
	
 
	
 
	
 

61000 ꞏ SG&A Expenses 61100 ꞏ Labor

								
	
61110 ꞏ Regular Wages
	
0.00
	
 
	
0.00
	
 
	
-110.82
	
 
	
0.00

	
61140 ꞏ Payroll Taxes
	
3,888.92
	
 
	
3,838.12
	
 
	
3,230.35
	
 
	
2,934.67

	
61150 ꞏ Health Insurance
	
0.00
	
 
	
0.00
	
 
	
-27.72
	
 
	
0.00

	
61190 ꞏ Other
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
66000 ꞏ Payroll Expenses
	
35,842.17
	
 
	
35,834.53
	
 
	
34,537.49
	
 
	
34,139.43

	
61100 ꞏ Labor - Other
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total 61100 ꞏ Labor
	
39,731.09
	
 
	
39,672.65
	
 
	
37,629.30
	
 
	
37,074.10

 

Page 1 of 6
 

4:17 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Profit & Loss

January through June 2020

Jan 20

Feb 20

Mar 20

Apr 20

 

61200 ꞏ Travel

 

								
	
61210 ꞏ Meals & Entertainment
	
1,503.39
	
 
	
-300.93
	
 
	
194.71
	
 
	
53.40

	
61220 ꞏ Ground Transportation
	
200.27
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61240 ꞏ Lodging
	
305.24
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total 61200 ꞏ Travel
	
2,008.90
	
 
	
-300.93
	
 
	
194.71
	
 
	
53.40

	
61300 ꞏ Marketing
	
6,422.50
	
 
	
4,202.29
	
 
	
4,400.00
	
 
	
5,500.00

	
61400 ꞏ Professional Services
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61410 ꞏ Legal
	
1,000.00
	
 
	
0.00
	
 
	
0.00
	
 
	
10,000.00

	
Total 61400 ꞏ Professional Services
	
1,000.00
	
 
	
0.00
	
 
	
0.00
	
 
	
10,000.00

	
61500 ꞏ Facilities
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61510 ꞏ Rent
	
14,280.00
	
 
	
5,305.00
	
 
	
-15,913.50
	
 
	
5,305.00

	
61520 ꞏ Telephone/Internet
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
53.60

	
61530 ꞏ Gas/Electric
	
29.88
	
 
	
0.00
	
 
	
73.03
	
 
	
99.12

	
61535 ꞏ Water/Sewer
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
138.45

	
61540 ꞏ Security
	
20,363.22
	
 
	
11,781.35
	
 
	
12,820.89
	
 
	
8,916.53

	
61550 ꞏ Repairs & Maintenance
	
1,373.16
	
 
	
1,157.78
	
 
	
1,090.00
	
 
	
751.76

	
61570 ꞏ Business Licenses & Permits
	
886.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61590 ꞏ Other
	
0.00
	
 
	
25.00
	
 
	
0.00
	
 
	
0.00

	
Total 61500 ꞏ Facilities
	
36,932.26
	
 
	
18,269.13
	
 
	
-1,929.58
	
 
	
15,264.46

	
61600 ꞏ Supplies
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61610 ꞏ Office Supplies
	
3,002.80
	
 
	
1,538.32
	
 
	
382.34
	
 
	
794.66

	
61620 ꞏ Postage & Delivery
	
17.75
	
 
	
0.00
	
 
	
49.85
	
 
	
0.00

	
61690 ꞏ Other
	
11.12
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61600 ꞏ Supplies - Other
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total 61600 ꞏ Supplies
	
3,031.67
	
 
	
1,538.32
	
 
	
432.19
	
 
	
794.66

	
61700 ꞏ IT
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61710 ꞏ Hardware
	
895.87
	
 
	
179.46
	
 
	
371.24
	
 
	
179.46

	
61720 ꞏ Software
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61740 ꞏ Maintenance Contracts
	
0.00
	
 
	
718.00
	
 
	
0.00
	
 
	
0.00

	
61790 ꞏ Other
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61700 ꞏ IT - Other
	
0.00
	
 
	
0.00
	
 
	
0.00
	
 
	
-718.00

	
Total 61700 ꞏ IT
	
895.87
	
 
	
897.46
	
 
	
371.24
	
 
	
-538.54

	
61800 ꞏ Other SG&A
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
61810 ꞏ Bank Fees
	
1,843.57
	
 
	
1,687.96
	
 
	
1,972.04
	
 
	
1,832.24

	
61820 ꞏ Dues & Subscriptions
	
0.00
	
 
	
0.00
	
 
	
-143.34
	
 
	
0.00

	
61830 ꞏ Depreciation Expense
	
0.00
	
 
	
0.00
	
 
	
13,919.54
	
 
	
0.00

	
61840 ꞏ Insurance Expense
	
1,719.13
	
 
	
-1,137.80
	
 
	
423.48
	
 
	
423.48

	
61890 ꞏ Misc. Expense
	
0.00
	
 
	
18.36
	
 
	
0.00
	
 
	
88.79

	
Total 61800 ꞏ Other SG&A
	
3,562.70
	
 
	
568.52
	
 
	
16,171.72
	
 
	
2,344.51

	
61000 ꞏ SG&A Expenses - Other
	
0.70
	
 
	
0.70
	
 
	
-1,948.28
	
 
	
0.70

	
Total 61000 ꞏ SG&A Expenses
	
93,585.69
	
 
	
64,848.14
	
 
	
55,321.30
	
 
	
70,493.29

	
Total Expense
	
93,585.69
	
 
	
64,848.14
	
 
	
55,321.30
	
 
	
70,493.29

	
Net Ordinary Income
	
-15,719.28
	
 
	
-17,730.77
	
 
	
1,084.38
	
 
	
-3,142.72

	
Other Income/Expense
	
 
	
 
	
 
	
 
	
 
	
 
	
 

Other Expense

 

Page 2 of 6
 

4:17 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Profit & Loss

January through June 2020

Jan 20

Feb 20

Mar 20

Apr 20

 

75000 ꞏ Other Expense

 

								
	
75100 ꞏ Interest Expense
	
0.00
	
 
	
0.00
	
 
	
3,811.66
	
 
	
0.00

	
Total 75000 ꞏ Other Expense
	
0.00
	
 
	
0.00
	
 
	
3,811.66
	
 
	
0.00

	
Total Other Expense
	
0.00
	
 
	
0.00
	
 
	
3,811.66
	
 
	
0.00

	
Net Other Income
	
0.00
	
 
	
0.00
	
 
	
-3,811.66
	
 
	
0.00

	
Net Income
	
-15,719.28
	
 
	
-17,730.77
	
 
	
-2,727.28
	
 
	
-3,142.72

 

Page 3 of 6
 

4:17 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Profit & Loss

January through June 2020

May 20

Jun 20

TOTAL

 

Ordinary Income/Expense Income

						
	
41000 ꞏ Mission Sales
	
 

	
41010 ꞏ Flower
	
94,316.00
	
 
	
98,350.00
	
 
	
192,666.00

	
41020 ꞏ Edibles
	
14,242.00
	
 
	
16,308.00
	
 
	
30,550.00

	
41030 ꞏ Concentrates
	
58,753.66
	
 
	
52,346.17
	
 
	
111,099.83

	
41040 ꞏ MIP
	
1,530.00
	
 
	
1,015.00
	
 
	
2,545.00

	
41060 ꞏ Pre-Roll
	
8,315.02
	
 
	
10,203.00
	
 
	
18,518.02

	
41070 ꞏ Merchandise
	
1,271.90
	
 
	
822.48
	
 
	
2,094.38

	
47900 ꞏ Sales - Cannabis
	
 
	
 
	
 
	
 
	
 

	
47901 ꞏ Sales Cannabis
	
0.00
	
 
	
0.00
	
 
	
839,382.86

	
Total 47900 ꞏ Sales - Cannabis
	
0.00
	
 
	
0.00
	
 
	
839,382.86

	
47905 ꞏ Sales - Other Merchandise
	
 
	
 
	
 
	
 
	
 

	
47907 ꞏ Sales - Other Merchandise
	
0.00
	
 
	
0.00
	
 
	
9,517.54

	
Total 47905 ꞏ Sales - Other Merchandise
	
0.00
	
 
	
0.00
	
 
	
9,517.54

	
41000 ꞏ Mission Sales - Other
	
-495.00
	
 
	
-271.11
	
 
	
-766.11

	
Total 41000 ꞏ Mission Sales
	
177,933.58
	
 
	
178,773.54
	
 
	
1,205,607.52

	
41500 ꞏ Mission Discounts
	
 
	
 
	
 
	
 
	
 

	
47908 ꞏ Discounts on Other Merchandise
	
-772.05
	
 
	
-432.66
	
 
	
-4,685.08

	
41500 ꞏ Mission Discounts - Other
	
-30,956.20
	
 
	
-31,794.66
	
 
	
-319,458.91

	
Total 41500 ꞏ Mission Discounts
	
-31,728.25
	
 
	
-32,227.32
	
 
	
-324,143.99

	
Total Income
	
146,205.33
	
 
	
146,546.22
	
 
	
881,463.53

	
Cost of Goods Sold

51000 ꞏ Mission COGS
	
 
	
 
	
 
	
 
	
 

	
50100 ꞏ COGS - Cannabis
	
0.00
	
 
	
0.00
	
 
	
348,306.87

	
50200 ꞏ COGS - Other Merchandise
	
483.37
	
 
	
290.08
	
 
	
4,352.01

	
51010 ꞏ Flower
	
51,855.99
	
 
	
53,258.76
	
 
	
105,114.75

	
51020 ꞏ Edibles
	
6,685.48
	
 
	
7,852.17
	
 
	
14,537.65

	
51030 ꞏ Concentrates
	
29,020.75
	
 
	
25,825.29
	
 
	
54,846.04

	
51040 ꞏ MIP
	
663.00
	
 
	
560.00
	
 
	
1,223.00

	
51060 ꞏ Pre-Roll
	
3,198.60
	
 
	
4,403.00
	
 
	
7,601.60

	
51000 ꞏ Mission COGS - Other
	
0.00
	
 
	
27,875.50
	
 
	
15,962.02

	
Total 51000 ꞏ Mission COGS
	
91,907.19
	
 
	
120,064.80
	
 
	
551,943.94

	
Total COGS
	
91,907.19
	
 
	
120,064.80
	
 
	
551,943.94

	
Gross Profit
	
54,298.14
	
 
	
26,481.42
	
 
	
329,519.59

	
Expense
	
 
	
 
	
 
	
 
	
 

61000 ꞏ SG&A Expenses 61100 ꞏ Labor

						
	
61110 ꞏ Regular Wages
	
-212.26
	
 
	
0.00
	
 
	
-323.08

	
61140 ꞏ Payroll Taxes
	
4,270.16
	
 
	
2,501.58
	
 
	
20,663.80

	
61150 ꞏ Health Insurance
	
0.00
	
 
	
0.00
	
 
	
-27.72

	
61190 ꞏ Other
	
2,361.79
	
 
	
0.00
	
 
	
2,361.79

	
66000 ꞏ Payroll Expenses
	
51,516.71
	
 
	
30,989.16
	
 
	
222,859.49

	
61100 ꞏ Labor - Other
	
0.00
	
 
	
0.00
	
 
	
0.00

	
Total 61100 ꞏ Labor
	
57,936.40
	
 
	
33,490.74
	
 
	
245,534.28

 

Page 4 of 6
 

4:17 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Profit & Loss

January through June 2020

May 20

Jun 20

TOTAL

 

61200 ꞏ Travel

 

						
	
61210 ꞏ Meals & Entertainment
	
88.13
	
 
	
120.00
	
 
	
1,658.70

	
61220 ꞏ Ground Transportation
	
108.41
	
 
	
0.00
	
 
	
308.68

	
61240 ꞏ Lodging
	
0.00
	
 
	
0.00
	
 
	
305.24

	
Total 61200 ꞏ Travel
	
196.54
	
 
	
120.00
	
 
	
2,272.62

	
61300 ꞏ Marketing
	
10,283.53
	
 
	
6,700.00
	
 
	
37,508.32

	
61400 ꞏ Professional Services
	
 
	
 
	
 
	
 
	
 

	
61410 ꞏ Legal
	
1,690.00
	
 
	
0.00
	
 
	
12,690.00

	
Total 61400 ꞏ Professional Services
	
1,690.00
	
 
	
0.00
	
 
	
12,690.00

	
61500 ꞏ Facilities
	
 
	
 
	
 
	
 
	
 

	
61510 ꞏ Rent
	
5,305.00
	
 
	
5,768.00
	
 
	
20,049.50

	
61520 ꞏ Telephone/Internet
	
442.94
	
 
	
1,292.42
	
 
	
1,788.96

	
61530 ꞏ Gas/Electric
	
0.00
	
 
	
24.94
	
 
	
226.97

	
61535 ꞏ Water/Sewer
	
0.00
	
 
	
0.00
	
 
	
138.45

	
61540 ꞏ Security
	
9,046.24
	
 
	
11,236.68
	
 
	
74,164.91

	
61550 ꞏ Repairs & Maintenance
	
1,519.04
	
 
	
833.61
	
 
	
6,725.35

	
61570 ꞏ Business Licenses & Permits
	
75.00
	
 
	
0.00
	
 
	
961.00

	
61590 ꞏ Other
	
0.00
	
 
	
0.00
	
 
	
25.00

	
Total 61500 ꞏ Facilities
	
16,388.22
	
 
	
19,155.65
	
 
	
104,080.14

	
61600 ꞏ Supplies
	
 
	
 
	
 
	
 
	
 

	
61610 ꞏ Office Supplies
	
1,030.78
	
 
	
627.68
	
 
	
7,376.58

	
61620 ꞏ Postage & Delivery
	
83.07
	
 
	
57.20
	
 
	
207.87

	
61690 ꞏ Other
	
0.00
	
 
	
0.00
	
 
	
11.12

	
61600 ꞏ Supplies - Other
	
95.70
	
 
	
0.00
	
 
	
95.70

	
Total 61600 ꞏ Supplies
	
1,209.55
	
 
	
684.88
	
 
	
7,691.27

	
61700 ꞏ IT
	
 
	
 
	
 
	
 
	
 

	
61710 ꞏ Hardware
	
2,487.56
	
 
	
2,597.56
	
 
	
6,711.15

	
61720 ꞏ Software
	
8,776.02
	
 
	
0.00
	
 
	
8,776.02

	
61740 ꞏ Maintenance Contracts
	
0.00
	
 
	
0.00
	
 
	
718.00

	
61790 ꞏ Other
	
0.00
	
 
	
0.00
	
 
	
0.00

	
61700 ꞏ IT - Other
	
0.00
	
 
	
0.00
	
 
	
-718.00

	
Total 61700 ꞏ IT
	
11,263.58
	
 
	
2,597.56
	
 
	
15,487.17

	
61800 ꞏ Other SG&A
	
 
	
 
	
 
	
 
	
 

	
61810 ꞏ Bank Fees
	
1,759.43
	
 
	
1,844.57
	
 
	
10,939.81

	
61820 ꞏ Dues & Subscriptions
	
0.00
	
 
	
338.25
	
 
	
194.91

	
61830 ꞏ Depreciation Expense
	
0.00
	
 
	
0.00
	
 
	
13,919.54

	
61840 ꞏ Insurance Expense
	
423.48
	
 
	
423.48
	
 
	
2,275.25

	
61890 ꞏ Misc. Expense
	
0.00
	
 
	
0.00
	
 
	
107.15

	
Total 61800 ꞏ Other SG&A
	
2,182.91
	
 
	
2,606.30
	
 
	
27,436.66

	
61000 ꞏ SG&A Expenses - Other
	
1.05
	
 
	
0.70
	
 
	
-1,944.43

	
Total 61000 ꞏ SG&A Expenses
	
101,151.78
	
 
	
65,355.83
	
 
	
450,756.03

	
Total Expense
	
101,151.78
	
 
	
65,355.83
	
 
	
450,756.03

	
Net Ordinary Income
	
-46,853.64
	
 
	
-38,874.41
	
 
	
-121,236.44

	
Other Income/Expense
	
 
	
 
	
 
	
 
	
 

Other Expense

 

Page 5 of 6
 

4:17 PM

08/07/20

Accrual Basis

Premium Medicine of Maryland, LLC

Profit & Loss

January through June 2020

May 20

Jun 20

TOTAL

 

75000 ꞏ Other Expense

 

						
	
75100 ꞏ Interest Expense
	
0.00
	
 
	
0.00
	
 
	
3,811.66

	
Total 75000 ꞏ Other Expense
	
0.00
	
 
	
0.00
	
 
	
3,811.66

	
Total Other Expense
	
0.00
	
 
	
0.00
	
 
	
3,811.66

	
Net Other Income
	
0.00
	
 
	
0.00
	
 
	
-3,811.66

	
Net Income
	
-46,853.64
	
 
	
-38,874.41
	
 
	
-125,048.10

 

Page 6 of 6
 

 

 

Schedule 7(e) Contracts

1. Lease Agreement, dated July 22, 2017, between Premium and Heller Brothers Realty, LLC (the “Lease”).

 

 

 

 

 

 

 

	
 
	
1.
	
Open Access Plan (Cigna)

Schedule 7(h)

 Employee Benefit Plans

 

	
 
	
2.
	
Dental PPO Standard (Cigna)

	
 
	
3.
	
Vision (Cigna)

	
 
	
4.
	
Life Insurance

	
 
	
5.
	
AD&D Insurance

 

 

 

 

Schedule 7(j) Insurance

1.Commercial Excess Liability, (Policy No. FLF-MD-XS-00540-01) General Liability, Property, Crop and Other Commercial Coverage Policy, issued by Falls Lake Fire and Casualty Company.

	
 
	
2.
	
Workers’ Compensation Policy #2306376-02, issued by Protective Insurance.

 

3.Products/Completed Operations Liability Policy #ELMMD002121-01, issued by CannGen Insurance Services, LLC.

 

 

 

 

Schedule 7(l) Bank Accounts

 

					
	
 

 

Name
	
 

 

Address
	
 

Nature of Account
	
 

Account Number
	
 

 

Authorized Persons

	
Bulldog Federal Credit Union
	
580 Northern Ave. Hagerstown, MD 21742
	
Savings
	
681456440
	
Clay Crolius, Josh Rosen, Nicolle Dorsey, Eric Steenstra

	
Bulldog Federal Credit Union
	
580 Northern Ave. Hagerstown, MD 21742
	
Checking
	
111232149
	
Clay Crolius, Josh Rosen, Nicolle Dorsey, Eric Steenstra

	
Union Bank
	
933 Fourth Avenue Lake Odessa, MI 48849
	
Payroll
	
12000086047
	
Andrew Thut, Clay Crolius, Nicolle DorseyEXHIBIT A: SECURITIES PURCHASE AGREEMENT

    

    

    NOTE: Certain of the portions of this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5)
      and (6) and Regulation S-K Item 601(b)(10)(iv). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.  [****] indicates location within the Exhibit that sections, schedules or information has been
      omitted.

    

    

    THE SECURITIES BEING SOLD UNDER THIS
        SECURITIES PURCHASE AGREEMENT HAVE NOT BEEN REGISTERED UNDER FEDERAL OR STATE SECURITIES LAWS AND ARE “RESTRICTED SECURITIES” (AS DEFINED IN RULE 144 OF THE SECURITIES ACT OF 1933, AS AMENDED, (“ACT”)) AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT
        REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR QUALIFICATION FOR AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS. THE SECURITIES ARE “PENNY STOCK” UNDER THE RULES OF SECURITIES AND EXCHANGE
        COMMISSION AND ANY INVESTMENT IN THE SECURITIES IS HIGHLY RISKY AND ONLY SUITABLE FOR INVESTORS WHO CAN AFFORD THE LOSS OF THEIR INVESTMENT AND
        DO NOT REQUIRE LIQUIDITY.

    

    

    SECURITIES PURCHASE AGREEMENT

    

    

    This SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated April 5, 2021 (“Effective Date”), is made by Capstone Companies, Inc., a
      Florida corporation, (“Company”) and ____________________, a limited liability company formed under the laws of ________________, (“Investor”).  Company and Investor
      may be referred to individually as a “party” and collectively, as the “parties.”

    

    

    RECITALS

    

    

    A. The Company and the Investor is executing and delivering this Agreement in reliance upon the exemption from securities
      registration afforded by the provisions of Section 4(a)(2) of the 1933 Act (as defined below), and Rule 506(b) of Regulation D (“Regulation D”) as promulgated by the SEC (as defined below) under the 1933 Act.

    

    

    B. The Investor wishes to and has agreed to purchase from the Company and the Company wishes to sell and issue to the Investor, upon
      the terms and subject to the conditions stated in this Agreement, the shares (as set forth below) (the “Purchase Shares”) of the Company’s common stock, par value $0.0001 per share (“Common Stock”).

    

    

    C. Contemporaneously with the sale of the Shares, the parties will execute and deliver a Registration Rights Agreement, in the form
      attached hereto as Exhibit A (the “Registration Rights Agreement”),   pursuant to which the Company will agree to provide certain piggyback registration rights in respect of the Purchase Shares under the 1933 Act and applicable state securities laws.

    

    

    D.  The net proceeds from the sale of the Purchase Shares will be used to purchase product inventory, including components, and
      general working capital.  Company’s revenues from operations and cash reserves are insufficient to pay for product inventory and cover basic operating costs.

    

    

    
      

      
        

      

    

    E.  The per share purchase price for the Purchase Shares was negotiated at arm’s length and based on the average closing price of the
      Shares on The OTC Markets Group, Inc. QB Venture Market (“OTCQB”) from. January 14, 2021 through February 26, 2021, less a 33% discount.  The pricing of the Purchase Shares reflects the declining revenues and overall financial condition of the
      Company as well as the fact that the Connected Surfaces Smart Mirror product line, which is designed to be the primary revenue source of the Company in 2021, was just launched in late February 2021 and whether that new product line will stabilize the
      financial condition of the Company is uncertain as of and prior to the Effective Date.

    

    

    In consideration of the mutual promises made herein and for other good and valuable consideration, the receipt and sufficiency of
      which are hereby acknowledged, the parties agree as follows:

    

    

    1. Definitions. For the purposes of this Agreement, the following terms shall have the meanings set forth below:

    

    

    “Affiliate” means, with respect to any Person, any other person which directly or indirectly through one or more intermediaries
      Controls, is controlled by, or is under common Control with such Person.

    

    

    “Business Day” means a day, other than a Saturday or Sunday, on which banks in Miami, Florida are open for the general transaction of
      business.

    

    

    “Closing” has the meaning set forth in Section 3.1.

    

    

    “Closing Date” means April 5, 2021.

    

    

    “Common Stock” has the meaning set forth in the recitals to this Agreement.

    

    

    “Company Counsel” means PW Richter, plc with offices located in Richmond, Virginia.

    

    

    “Company Covered Person” means, with respect to the Company as an “issuer” for purposes of Rule 506 promulgated under the 1933 Act,
      any person listed in the first paragraph of Rule 506(d)(1).

    

    

    “Intellectual Property” has the meaning set forth in Section 5.14.

    

    

    “Company’s Knowledge” means the actual knowledge of the senior executive officers (as defined in Rule 405 under the 1933 Act) of the
      Company, being Stewart Wallach, Chief Executive Officer, and James McClinton, Chief Financial Officer.

    

    

    “Control” (including the terms “controlling,” “controlled by” or “under common control with”) means the possession, direct or
      indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

    

    

    “Disclosure Time” means, (i) if this Agreement is signed on a day that is not a Trading Day or after 9:00 a.m. (Miami Florida City
      time) and before midnight (Miami Florida City time) on any Trading Day, 9:01 a.m. (Miami Florida City time) on the Trading Day immediately following the date hereof, unless an earlier time is agreed to in writing by the parties, and (ii) if this
      Agreement is signed between midnight (Miami Florida City time) and 9:00 a.m. (Miami Florida City time) on any Trading Day, no later than 9:01 a.m. (Miami Florida City time) on the date hereof, unless an earlier time is agreed to in writing by the
      parties.

    

    

    “Disqualification Event” has the meaning set forth in Section 5.33.

    

    

    “EDGAR system” has the meaning set forth in Section 5.9.

    

    

    “Effective Date” has the meaning set forth in Section 7.2(b).

    

    

    
      

      
        

      

    

    “Environmental Laws” has the meaning set forth in Section 5.18.

    

    

    “GAAP” has the meaning set forth in Section 5.17.

    

    

    “Governmental Entity” means any national, federal, state, municipal, local, territorial, foreign or other government or any
      department, commission, board, bureau, agency, regulatory authority or instrumentality thereof, or any court, judicial, administrative or arbitral body or public or private tribunal.

    

    

    “Losses” has the meaning set forth in Section 8.2.

    

    

    “Material Adverse Effect” means any material adverse effect on the business, operations, assets, financial condition or prospects of the
      Company or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith.

    

    

    “Material Contract” means any contract, instrument or other agreement to which the Company is a party or by which it is bound that
      has been filed or was required to have been filed as an exhibit to the SEC Filings pursuant to Item 601(b)(10) of Regulation S-K.

    

    

    “Person” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock
      company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein – in each instance, not a party.

    

    

    “Press Release” has the meaning set forth in Section 7.7.

    

    

    “Principal Trading Market” means the Trading Market on which the Common Stock is quoted for trading, which, as of the date of this
      Agreement and the Closing Date, will be the OTC Markets Group, Inc. QB Venture Market (“OTCQB”).

    

    

    “Purchase Shares” has the meaning set forth in the recitals to this Agreement.

    

    

    “Registration Rights Agreement” has the meaning set forth in the recitals to this Agreement.

    

    

    “Regulation D” has the meaning set forth in the recitals to this Agreement.

    

    

    “SEC” means the U.S. Securities and Exchange Commission.

    

    

    “SEC Filings” has the meaning set forth in Section 5.8.

    

    

    “Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the 1934 Act (but shall not be deemed to include
      the location and/or reservation of borrowable shares of Common Stock).

    

    

    “Subscription Amount” has the meaning set forth in Section 3.1.

    

    

    “Trading Day” means (i) a day on which the Common Stock is listed or quoted and traded on its Principal Trading Market or (ii) if the
      Common Stock is not quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported in the “pink sheets” by OTC Markets Group Inc. (or any similar organization or agency succeeding to its functions
      of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i) and (ii) hereof, then Trading Day shall mean a Business Day.

    

    

    “Trading Market” means OTCQB.

    

    

    
      

      
        

      

    

    “Transfer” means (i) to sell, offer, transfer, assign, mortgage, hypothecate, gift, pledge or dispose of, or (ii) to enter into or
      agree to enter into any contract, option or other arrangement or understanding with respect to any sale, transfer, pledge, mortgage, hypothecation, gift, assignment or similar disposition.

    

    

    “Transfer Agent” has the meaning set forth in Section 7.2(a).

    

    

    “Transfer Documents” means the irrevocable instructions from the Company to the Transfer Agent instructing the Transfer Agent to
      deliver, on an expedited basis, a book-entry confirmation evidencing a number of  Purchase Shares as set forth opposite the Investor’s name in Schedule One hereto, and other documents required by the Transfer Agent to effect the issuance of Purchase
      Shares to the Investor in book entry form.

    

    

    “Transaction Documents” means this Agreement, Transfer Documents and the Registration Rights Agreement.

    

    

    “1933 Act” means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated
      thereunder.

    

    

    “1934 Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated
      thereunder.

    

    

    2. Purchase and Sale of the Purchase Shares.

    

    

    2.1 Closing. (a) Purchase of Securities. On the Closing Date, upon the terms and subject to the conditions set forth herein,
      including the condition precedent in Section 2.2 below, the Company will issue and sell, and Investor will purchase, severally and not jointly, the number of Purchase Shares set forth opposite under the heading “Purchase Shares” on Schedule One
      attached hereto for the Investor. The purchase price per Purchase Share to be paid to the Company shall be SIXTY Cents ($0.60) (“Per Share Purchase Price”), which Per Share Purchase Price represents the average bid price of the Company’s Common Stock from January 14, 2021,  through February 26, 2021, less a 33% discount as privately placed, restricted securities and was negotiated at arm’s length by the
      parties. The Investor agrees to 155,333 Purchase Shares from the Company. The aggregate
        purchase price paid to the Company for the 155,333 Purchase Shares to be issued and purchased under this Agreement is $93,200.00 (“Aggregate Purchase Price”).

    

    

    2.2  Condition Precedent – Right of Termination.  The parties agree that the Investor may terminate this Agreement during the period
      commencing on the date that the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (“2020 10-K”) is first publicly available on the SEC EDGAR website and ending at 6:00 p.m., local Miami, Florida time, being March 31,
      2021 and ending at 5:00 p.m., EST, on April 3, 2021 (“Section 2.2 Termination Period”) by timely and confirmed delivery of a written or emailed termination notice to the Company’s Chief Financial Officer. The parties will have no liabilities to each
      other under this Agreement or otherwise upon timely termination of this Agreement in accordance with this Section 2.2.  The Closing Date shall not occur until the expiration of the Section 2.2 Termination Period.

    

    

    
      

      
        

      

    

    2.3. Risk Factors.  Investor has reviewed the contents of, including risk factors in, the Company filings with the SEC,  including
      the 2020 10-K,  and Investor agrees and understands that an investment in the Purchase Shares is a highly risky investment and only suitable for investors who can afford the loss of their investment and do not require liquidity.  The risk factors
      reviewed by Investor include those risk factors included in all Company filings and documents supplied to or made available to the Investor by the Company or readily available from public sources, including at www.sec.gov.  The Investor agrees,
      understands and acknowledges that: (a) the Company was significantly impacted by COVID-19 pandemic, the declining sales of the Company’s matured LED lighting products and the launch of a new product line, the Connected Surfaces Smart Mirrors, in late
      February 2021; (b) The Aggregate Purchase Price is required to fund in part the purchase of inventory for Connected Surfaces Smart Mirror and related operating costs; and (c) the success of the new Connected Surfaces Smart Mirror product line is
      essential to stabilizing the business and financial condition of the Company and providing a revenue stream to replace the LED lighting products.  The Company requires adequate and affordable debt and equity funding to be able to transition to a new
      product line and a new revenue source. The Purchase Shares are “penny stock” under SEC rules and are subject to the burdens and limitations imposed on such securities by regulators, stock transfer agents and broker-dealers.  The Investor has had a
      reasonable opportunity to discuss all disclosures made to the Investor by the Company and all disclosures that publicly available to Investor from public sources.

    

    

    3. Closing.

    

    

    3.1 General. Upon the satisfaction of the conditions set forth in Section 4 below, and subject to Sections 2.2 Termination Period
      expiring without termination of this Agreement by the Investor, the completion of the purchase and sale of the Purchase Shares (the “Closing”) shall occur remotely via exchange of documents and signatures on the Closing Date. On the Closing Date,
      Investor shall deliver or cause to be delivered to the Company, via wire transfer of immediately available funds pursuant to the wire instructions in Schedule One hereto, an amount equal to the Subscription Amount set forth in Schedule One hereto and
      to be paid by that Investor for its number of the Purchase Shares as set forth opposite the heading “Purchase Shares” corresponding to that Investor’s name in Schedule One hereto.  Parties will use their best efforts to cause the Closing to occur as
      soon as possible after the date on which the Company files its Annual Report on Form 10-K for the fiscal period ended December 31, 2020 with the SEC.

    

    

    3.2  Deliveries.

    

    

    (a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered to the Investor, the following:

    

    

    (i) this completed Agreement duly executed by the Company;

    

    

    (ii) The Transfer Documents (to be sent to Company stock transfer agent instead of Investor);

    

    

    (iii) the Company shall provide Investor with the Company’s wire instructions (attached as Attachment One hereto); and

    

    

    (v) the completed Registration Rights Agreement duly executed by the Company and in the form attached to this Agreement as Exhibit A
      hereto.

    

    

    (b) On or prior to the Closing Date, Investor shall deliver or cause to be delivered to the Company, the following:

    

    

    (i) this completed Agreement and Registration Rights Agreement duly executed by Investor (as Registration Rights Agreement is
      attached as Exhibit A hereto);

    

    

    
      

      
        

      

    

    (ii) such Investor’s Subscription Amount by wire transfer to the account specified in Attachment One hereto; and

    

    

    (iii) the any documents, instruments or certifications required by the Transfer Agent for the issuance of the Purchase Shares to the
      Investor under and in accordance with this Agreement.

    

    

    3.3. Further Acts.  Each party will sign and provide any other documents, agreements, instruments or certifications reasonably
      required to consummate this Agreement, absent termination of this Agreement and transactions contemplated herein in accordance with the terms and conditions of this Agreement.

    

    

    4. Conditions to Closing.  This Agreement shall only be legally binding on the parties when each and every party signs this
      Agreement, this Agreement has been approved by resolution by the governing body or board of party, the parties satisfy all other conditions to the Closing and all termination of agreement rights have expired without being exercised by the eligible
      parties.

    

    

    4.1 Conditions to the Investor’s Obligations. The obligation of Investor to purchase the Purchase Shares at the Closing is subject to
      the fulfillment to Investor’s satisfaction, on or prior to the Closing Date, of the following conditions, any of which may be waived by such Investor (as to itself or himself only):

    

    

    (a) The representations and warranties made by the Company in Section 5 hereof, as qualified by the Disclosure Schedules and the SEC
      Filings, including 2020 10-K, shall be true and correct in all material respects, except for those representation and warranties qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects, as of the date
      hereof and as of the Closing Date, as though made on and as of such date, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct in all
      material respects as of such earlier date. The Company shall have performed in all material respects all obligations and covenants herein required to be performed by it on or prior to the Closing Date.

    

    

    (b) The Company shall have obtained any and all consents, permits, approvals, registrations and waivers necessary for the
      consummation of the purchase and sale of the Purchase Shares and the consummation of the other transactions contemplated by the Transaction Documents, all of which shall be in full force and effect.

    

    

    (c) The Company shall have delivered the items set forth in Section 3.2(a).

    

    

    (d) Compliance with all applicable federal and state securities laws and OTC Markets Group, Inc. requirements for issuance of
      Purchase Shares.

    

    

    (e) No judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any
      bankruptcy court or judge, or any order of or by any governmental authority, shall have been issued, and no action or proceeding shall have been instituted by any governmental authority, enjoining or preventing the consummation of the transactions
      contemplated hereby or in the other Transaction Documents.

    

    

    (f) There shall have been no Material Adverse Effect with respect to the Company since the Effective Date.

    

    

    (g) No stop order or suspension of trading shall have been imposed by OTCQB, the SEC or any other governmental or regulatory body
      with respect to public trading in the Common Stock.

    

    

    4.2 Conditions to Obligations of the Company. The Company’s obligation to sell and issue Purchase Shares at the Closing is subject to
      the fulfillment to the satisfaction of the Company on or prior to the Closing Date of the following conditions, any of which may be waived by the Company:

    

    

    
      

      
        

      

    

    (a) The representations and warranties made by the Investor in Section 6 hereof shall be true and correct in all material respects as
      of the date hereof, and shall be true and correct as of the Closing Date with the same force and effect as if they had been made on and as of such date, except to the extent any such representation or warranty expressly speaks as of an earlier date,
      in which case such representation or warranty shall be true and correct in all material respects as of such earlier date. The Investor shall have performed in all material respects all obligations and covenants herein required to be performed by them
      on or prior to the Closing Date.

    

    

    (b) The Investor shall have executed and delivered a completed and signed Agreement and the Registration Rights Agreement at the
      Closing.

    

    

    (c) The Investor shall have paid in full its or his Subscription Amount to the Company by wire to account in Attachment One hereto.

    

    

    5. Representations and Warranties of the Company. The Company hereby represents and warrants to the Investor that, except (a) as
      described in the Company’s SEC Filings (including the 2020 10-K) and (b) as set forth on the disclosure schedules (the “Disclosure Schedules”) set forth as an exhibit to this Agreement, each of which qualify these representations and warranties in
      their entirety:

    

    

    5.1 Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted and to own or lease its properties. The Company is duly qualified to do business as a foreign
      corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or leasing necessary unless the failure to so qualify has not had and would not reasonably
      be expected to have a Material Adverse Effect. The Company’s subsidiaries are set forth on Exhibit 21.1 to its most recent Annual Report on Form 10-K, and the Company owns 100% of the outstanding equity of all such subsidiaries. The Company’s
      subsidiaries are duly organized, validly existing and in good standing under the laws of their jurisdiction of incorporation and have all requisite power and authority to carry on their business as now conducted and to own or lease their properties.
      The Company’s subsidiaries are duly qualified to do business as foreign corporations and are in good standing in each jurisdiction in which the conduct of their business or their ownership or leasing of property makes such qualification or leasing
      necessary unless the failure to so qualify has not had and would not reasonably be expected to have a Material Adverse Effect.

    

    

    5.2 Authorization. The Company has the requisite corporate power and authority and has taken all requisite corporate action necessary
      for, and no further action on the part of the Company, its officers, directors and stockholders is necessary for, (i) the authorization, execution and delivery of the Transaction Documents, (ii) the authorization of the performance of all obligations
      of the Company hereunder or thereunder, and (iii) the authorization, issuance (or reservation for issuance) and delivery of the Purchase Shares. The Transaction Documents constitute the legal, valid and binding obligations of the Company, enforceable
      against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally and to general
      equitable principles.

    

    

    
      

      
        

      

    

    5.3 Capitalization. The capitalization of the Company as of the date hereof is as set forth on Schedule 5.3. All of the issued and
      outstanding shares of the Company’s capital stock have been duly authorized and validly issued and are fully paid and nonassessable; none of such shares were issued in violation of any preemptive rights; and such shares were issued in compliance in
      all material respects with applicable state and federal securities law and any rights of third parties. No person is entitled to preemptive or similar statutory or contractual rights with respect to the issuance by the Company of any securities of
      the Company, including, without limitation, the Purchase Shares. Except as set forth in Schedule 5.3, there are no outstanding warrants, options, convertible securities or other rights, agreements or arrangements of any character under which the
      Company is or may be obligated to issue any equity securities of any kind, except as contemplated by this Agreement. There are no voting agreements, buy-sell agreements, option or right of first purchase agreements or other similar agreements among
      the Company and any of the securityholders of the Company relating to the securities of the Company held by them. Except as provided in the Registration Rights Agreement, no person has the right to require the Company to register any securities of
      the Company under the 1933 Act, whether on a demand basis or in connection with the registration of securities of the Company for its own account or for the account of any other Person.

    

    

    The issuance and sale of the Purchase Shares hereunder will not obligate the Company to issue shares of Common Stock or other
      securities to any other person (other than the Investor) and will not result in the adjustment of the exercise, conversion, exchange or reset price of any outstanding security. The Company does not have outstanding stockholder purchase rights or
      “poison pill” or any similar arrangement in effect giving any person the right to purchase any equity interest in the Company upon the occurrence of certain events.

    

    

    5.4 Valid Issuance. The Shares have been duly and validly authorized and, when issued and paid for pursuant to this Agreement, will
      be validly issued, fully paid and nonassessable, and shall be free and clear of all encumbrances and restrictions (other than those created by the Investor), except for restrictions on transfer set forth in the Transaction Documents or imposed by
      applicable securities laws.

    

    

    5.5 Consents. Subject to the accuracy of the representations and warranties of Investor set forth in Section 6 hereof, the execution,
      delivery and performance by the Company of the Transaction Documents and the offer, issuance and sale of the Purchase Shares require no consent of, action by or in respect of, or filing with, any Person, governmental body, agency, or official other
      than (a) filings that have been made pursuant to applicable state securities laws, (b) post-sale filings pursuant to applicable state and federal securities laws, (c) filings pursuant to the rules and regulations of OTCQB and (d) filing of the
      registration statement required to be filed by the Registration Rights Agreement, each of which the Company has filed or undertakes to file within the applicable time. Subject to the accuracy of the representations and warranties of Investor set
      forth in Section 6 hereof, the Company has taken all action necessary to exempt (i) the issuance and sale of the Purchase Shares and (ii) the other transactions contemplated by the Transaction Documents from the provisions of any stockholder rights
      plan or other “poison pill” arrangement, any anti-takeover, business combination or control share law or statute binding on the Company or to which the Company or any of its assets and properties is subject that is or could reasonably be expected to
      become applicable to the Investor as a result of the transactions contemplated hereby, including without limitation, the issuance of the Purchase Shares and the ownership, disposition or voting of the Purchase Shares by the Investor or the exercise
      of any right granted to the Investor pursuant to this Agreement or the other Transaction Documents.

    

    

    5.6 Use of Proceeds. The net proceeds of the sale of the Shares hereunder shall be used by the Company for working capital and
      general corporate purposes.

    

    

    
      

      
        

      

    

    5.7 No Material Adverse Change.  The parties agree, understand and acknowledge that the Coronavirus/COVID-19 pandemic has
      significantly, adversely impacted the business and financial condition of the Company in fiscal year ended December 31, 2020 and that adverse impact has continued in the first fiscal quarter of fiscal year ended December 31, 2021.  The public
      auditors of the Company have issued a going concern notice in the auditor letter for certain fiscal quarters in fiscal year ended December 31, 2020. Investor is  also aware of the adverse impact of the maturation of the Company’s traditional core
      product line in LED lighting for consumers, and resulting declining revenues from that traditional core product line in fiscal year ended December 31, 2020 and continuing into fiscal year ended December 31, 2021. The Company launched a new Connected
      Surfaces Smart Mirror product line in late February 2021, but the potential of this new product line as a replacement core product line for the declining LED lighting product line is uncertain as of the Effective Date.  There is insufficient
      information to project the potential of this new product line in terms of revenues and whether sales from the new product line will remedy the business and financial condition of the Company.  Further, the Company has transitioned some of its
      original product manufacturing sources from China to Thailand to address disruptions caused by the COVID-19 pandemic in China, specifically, on Company’s Chinese OEM’s, and to guard against potential adverse impact from ongoing Chinese-U.S. trade and
      tariff disputes.  Establishing a new OEM in a new country is inherently prone to delays in production and establishment of efficient product production and the transition delayed launch of new Connected Surfaces Smart Mirror.  Due to these factors,
      the Company’s future busines and financial performance and condition is highly uncertain.  INVESTMENT IN THE PURCHASE SHARES IS HIGHLY RISKY AND ONLY
        SUITABLE TO INVESTORS WHO CAN WITHSTAND THE LOSS OF THEIR ENTIRE INVESTMENT AND DO NOT REQUIRE LIQUIDITY OR REQUIRE APPRECIATION IN INVESTMENT. Investor has reviewed the Company’s SEC filings, including the 2020 10-K. Since September 30,
      2020, except as identified and described in the SEC Filings filed at least one Trading Day prior to the Closing Date and except as known to Investor pursuant to their due diligence review of the Company’s business and financial condition, there has
      not been:

    

    

    (i) any declaration or payment by the Company of any dividend, or any authorization or payment by the Company of any distribution, on
      any of the capital stock of the Company, or any redemption or repurchase by the Company of any securities of the Company;

    

    

    (ii) any material damage, destruction or loss, whether or not covered by insurance, to any assets or properties of the Company;

    

    

    (iii) any waiver, not in the ordinary course of business, by the Company of a material right or of a material debt owed to it;

    

    

    (iv) any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company, except in the
      ordinary course of business and which is not material to the assets, properties, financial condition, operating results or business of the Company (as such business is presently conducted);

    

    

    (v) any change or amendment to the Company’s Certificate of Incorporation or Bylaws, or material change to any material contract or
      arrangement by which the Company is bound or to which any of its assets or properties is subject;

    

    

    (vii) any material labor difficulties or, to the Company’s Knowledge, labor union organizing activities with respect to employees of
      the Company, except for COVID-19 pandemic forcing or causing Company personnel to work remotely and outside of the Company offices.  The inability of Company personnel to work as a group in Company offices and to travel has caused disruption in
      normal operating efficiencies and business development work that has contributed to the deleterious economic impact of COVID-19 pandemic on the general economy, the market for Company products and Company operations;

    

    

    (vii) any material transaction entered into by the Company other than in the ordinary course of business or as disclosed in Company
      SEC filings; and

    
      

      
        

      

    

    

    

    (ix) the loss of the services of any key employee, or material change in the composition or duties of the senior management of the
      Company.

    

    

    5.8 SEC Filings. Except as set forth in the Disclosure Schedules hereto, the Company has timely filed all reports, schedules, forms,
      statements and other documents required to be filed by the Company under the 1933 Act and the 1934 Act, including pursuant to Section 13(a) or 15(d) thereof, preceding the date hereof (collectively, the “SEC Filings”). At the time of filing thereof,
      the SEC Filings complied in all material respects with the requirements of the 1933 Act or the 1934 Act, as applicable, and the rules and regulations of the SEC thereunder. The Company will file a Form D for the sale of Purchase Shares with the SEC
      within fifteen days of the sale of Purchase Shares hereunder.  As of their respective dates, none of the SEC filings, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or
      necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  All material agreements to which the Company or any subsidiary is a party or to which the property or assets of the
      Company or any subsidiary are subject are included as part of or specifically identified in the SEC Filings.

    

    

    5.9 No Conflict, Breach, Violation or Default. The execution, delivery and performance of the Transaction Documents by the Company
      and the issuance and sale of the Purchase Shares in accordance with the provisions thereof will not, except (solely in the case of clauses (i)(b) and (ii)) for such violations, conflicts or defaults as would not reasonably be expected, individually
      or in the aggregate, to have a Material Adverse Effect, (i) conflict with or result in a breach or violation of (a) any of the terms and provisions of, or constitute a default under, the Company’s Certificate of Incorporation or the Company’s Bylaws,
      both as in effect on the date hereof (true and complete copies of which have been made available to the Investor through the Electronic Data Gathering, Analysis, and Retrieval system (the “EDGAR system”)), or (b) assuming the accuracy of the
      representations and warranties in Section 6, any applicable statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or its subsidiaries, or any of their assets or
      properties, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any lien, encumbrance or other adverse claim upon any of the properties or
      assets of the Company or its subsidiaries or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any Material Contract. This Section does not relate to matters with
      respect to tax status, which are the subject of Section 5.10, employee relations and labor matters, which are the subject of Section 5.13, or environmental laws, which are the subject of Section 5.15.

    

    

    5.10 Tax Matters. The Company and its subsidiaries have timely prepared and filed all material tax returns required to have been
      filed by them with all appropriate governmental agencies and timely paid all material taxes shown thereon or otherwise owed by them. There are no material unpaid assessments against the Company nor, to the Company’s Knowledge, any audits by any
      federal, state or local taxing authority. All material taxes that the Company is required to withhold or to collect for payment have been duly withheld and collected and paid to the proper governmental entity or third party when due. There are no tax
      liens pending or, to the Company’s Knowledge, threatened against the Company or any of its assets or property. With the exception of agreements or other arrangements that are not primarily related to taxes entered into in the ordinary course of
      business, there are no outstanding tax sharing agreements or other such arrangements between the Company and any other corporation or entity (other than a subsidiary of the Company).

    

    

    5.11 Title to Properties. The Company and its subsidiaries do not own or have any ownership interest in real property.

    

    

    
      

      
        

      

    

    5.12 Certificates, Authorities and Permits. The Company possesses adequate certificates, authorities or permits issued by appropriate
      governmental agencies or bodies necessary to conduct the business now operated by it, except where failure to so possess would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. The Company has not
      received any written notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that would reasonably be expected to have a Material Adverse Effect, individually or in the aggregate, on the Company.

    

    

    5.13 Labor Matters. The Company is not party to or bound by any collective bargaining agreements or other agreements with labor
      organizations. To the Company’s Knowledge, the Company has not violated in any material respect any laws, regulations, orders or contract terms affecting the collective bargaining rights of employees or labor organizations, or any laws, regulations
      or orders affecting employment discrimination, equal opportunity employment, or employees’ health, safety, welfare, wages and hours.

    

    

    5.14 Intellectual Property. The Company and its subsidiaries own, possess, license or have other rights to use, all patents, patent
      applications, trade and service marks, trade and service mark registrations, trade names, copyrights, licenses, inventions, trade secrets, technology, know-how and other intellectual property (collectively, the “Intellectual Property”) necessary for
      the conduct of the Company’s business in all material respects as now conducted or as proposed in the SEC Filings to be conducted; and (a) there are no rights of third parties to any such Intellectual Property, including no liens, security interests
      or other encumbrances; (b) to the Company’s Knowledge, there is no material infringement by third parties of any such Intellectual Property; (c) there is no pending or, to the Company’s Knowledge, threatened action, suit, proceeding or claim by
      others challenging the Company’s rights in or to any such Intellectual Property; (d) such Intellectual Property that is described in the SEC Filings has not been adjudged by a court of competent jurisdiction invalid or unenforceable, in whole or in
      part; (e) there is no pending or, to the Company’s Knowledge, threatened action, suit, proceeding or claim by others challenging the validity or scope of any such Intellectual Property that is owned or licensed by the Company, including
      interferences, oppositions, reexaminations or government proceedings; (f) there is no pending or, to the Company’s Knowledge, threatened action, suit, proceeding or claim by others that the Company infringes, misappropriates, or otherwise violates
      any patent, trademark, copyright, trade secret or other proprietary rights of others; and (g) to the Company’s Knowledge, each key employee of the Company and each Company employee involved with the development of Intellectual Property has entered
      into an invention assignment agreement with the Company.

    

    

    5.15 Environmental Matters. The Company is not in violation of any statute, rule, regulation, decision or order of any governmental
      agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances
      (collectively, “Environmental Laws”), has not released any hazardous substances regulated by Environmental Law onto any real property that it owns or operates and has not received any written notice or claim it is liable for any off-site disposal or
      contamination pursuant to any Environmental Laws, which violation, release, notice, claim, or liability would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, and to the Company’s Knowledge, there is no
      pending or threatened investigation that would reasonably be expected to lead to such a claim.  Company products are made by foreign OEM’s and this Section 5.15 does not cover or constitute a representation about those OEM’s.

    

    

    5.16 Legal Proceedings. There are no legal, governmental or regulatory investigations, actions, suits or proceedings pending or, to
      the Company’s Knowledge, threatened to which the Company or its subsidiaries are a party or to which any property of the Company or its subsidiaries are the subject that, individually or in the aggregate, would reasonably be expected to have a
      Material Adverse Effect.  The parties agree and acknowledge that the Company’s common stock has experienced significant increase in trading activity and market price in 2021 and that these circumstances cause increased awareness of the Company and
      trading in its common stock among regulators, plaintiffs’ class action law firms and investors – all of which enhances the chances of regulatory scrutiny and legal proceedings.

    

    

    
      

      
        

      

    

    5.17 Financial Statements. The financial statements included in each SEC Filing (including the 2020 10-K) comply in all material
      respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing (or to the extent corrected by a subsequent restatement) and present fairly, in all material respects,
      the consolidated financial position of the Company as of the dates shown and its consolidated results of operations and cash flows for the periods shown, subject in the case of unaudited financial statements to normal, immaterial year-end audit
      adjustments, and such consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”) (except as may be disclosed
      therein or in the notes thereto, and except that the unaudited financial statements may not contain all footnotes required by GAAP, and, in the case of quarterly financial statements, except as permitted by Form 10-Q under the 1934 Act). Except as
      set forth in the financial statements of the Company included in the SEC Filings filed prior to the date hereof, the Company has not incurred any liabilities, contingent or otherwise, except those incurred in the ordinary course of business,
      consistent (as to amount and nature) with past practices since the date of such financial statements.

    

    

    5.18 Insurance Coverage.  The Company maintains in full force and effect insurance coverage that is customary for comparably situated
      companies for the business being conducted and properties owned or leased by the Company, and the Company reasonably believes such insurance coverage to be adequate against all casualty claims against which it is customary for comparably situated
      companies to insure.

    

    

    5.19 Compliance with OTQB Continued Listing Requirements. The Company is in compliance with applicable OTCQB continued listing
      requirements. There are no proceedings pending or, to the Company’s Knowledge, threatened against the Company relating to the continued listing of the Common Stock on OTCQB and the Company has not received any notice of, nor to the Company’s
      Knowledge is there any reasonable basis for, the delisting of the Common Stock from OTCQB.  The significant increase in the trading of the Company’s Common Stock in 2021 increases the likelihood of unauthorized stock promotion by third parties
      seeking to illegally manipulate the market price of the Common Stock.  Such stock promotion can cause regulatory scrutiny, including The OTC Markets Group, Inc. demanding certain public disclosures attesting to the company having no involvement in
      third party stock promotion. Such demand is issued solely on the basis of knowledge of any illegal or improper third-party stock promotion efforts.

    

    

    5.20 Brokers and Finders. Any obligation to pay fees in respect with the transactions contemplated under this Agreement is governed
      by a separate agreement by the Company and Wilmington Capital Securities LLC.

    

    

    5.21 No Directed Selling Efforts or General Solicitation. Neither the Company nor any person acting on its behalf has conducted any
      general solicitation or general advertising (as those terms are used in Regulation D) in connection with the offer or sale of any of the Purchase Shares.

    

    

    5.22 No Integrated Offering. Neither the Company nor its subsidiaries nor any person acting on their behalf has, directly or
      indirectly, made any offers or sales of any Company security or solicited any offers to buy any Company security, under circumstances that would adversely affect reliance by the Company on Section 4(a)(2) and Regulation D for the exemption from
      registration for the transactions contemplated hereby or would require registration of the Purchase Shares under the 1933 Act, nor will the Company take any action or steps that would adversely affect reliance by the Company on Section 4(a)(2) and
      Regulation D for the exemption from registration for the transactions contemplated hereby or require registration of the Purchase Shares under the 1933 Act.

    

    

    5.23 Private Placement. Assuming the accuracy of the representations and warranties of the Investor set forth in Section 6, the offer
      and sale of the Purchase Shares to the Investor as contemplated hereby is exempt from the registration requirements of the 1933 Act. The issuance and sale of the Purchase Shares does not contravene the rules and regulations of OTCQB.

    

    

    
      

      
        

      

    

    5.24 Questionable Payments. Neither the Company nor its subsidiaries nor, to the Company’s Knowledge, any of their current or former
      directors, officers, employees, agents or other Persons acting on behalf of the Company or its subsidiaries, has on behalf of the Company or its subsidiaries in connection with their business: (a) used any corporate funds for unlawful contributions,
      gifts, entertainment or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payments to any governmental officials or employees from corporate funds; (c) established or maintained any unlawful or
      unrecorded fund of corporate monies or other assets which is in violation of law; (d) made any false or fictitious entries on the books and records of the Company; or (e) made any unlawful bribe, rebate, payoff, influence payment, kickback or other
      unlawful payment of any nature.

    

    

    5.25 Transactions with Affiliates. Other than as disclosed in the SEC Filings, none of the executive officers or directors of the
      Company and, to the Company’s Knowledge, none of the employees of the Company is presently a party to any transaction with the Company (other than as holders of stock options, restricted stock units, warrants and/or restricted stock, and for services
      as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from
      any officer, director or such employee or, to the Company’s Knowledge, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

    

    

    5.26 Internal Controls. The Company has established and maintains disclosure controls and procedures (as defined in Rules 13a-15 and
      15d-15 under the 1934 Act), which (a) are designed to ensure that material information relating to the Company, including its subsidiaries, is made known to the Company’s principal executive officer and its principal financial officer by others
      within those entities; (b) have been evaluated by management of the Company for effectiveness as of the end of the Company’s most recent fiscal quarter; and (c) are effective in all material respects to perform the functions for which they were
      established. Since the end of the Company’s most recent audited fiscal year, there have been no material weaknesses in the Company’s internal control over financial reporting (whether or not remediated) and no change in the Company’s internal control
      over financial reporting that has materially affected, or would reasonably be expected to materially affect, the Company’s internal control over financial reporting. The Company is not aware of any change in its internal controls over financial
      reporting that has occurred during its most recent fiscal quarter that has materially affected, or would reasonably be expected to materially affect, the Company’s internal control over financial reporting. Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Company’s projections of any evaluation of the effectiveness of internal control over financial
        reporting as to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. A material weakness is 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 the Company’s annual or interim financial statements will not be prevented or detected on a
        timely basis.  Further, the Company’s business and financial condition have been significantly, adversely impacted by COVID-19 pandemic and the maturation and declining sales of the LED lighting products and the launch of the new Connected Surfaces
        Smart Mirrors, as a new product line of the Company, after fiscal year 2020.  COVID-19 pandemic contributed to declining sales of LED lighting products in 2020 and 2021 and launch of a replacement product line after fiscal year 2020.

    

    

    5.27 Disclosures. Neither the Company nor any person acting on its behalf has provided the Investor or their agents or counsel with
      any information that constitutes or would reasonably be expected to constitute material nonpublic information concerning the Company or its subsidiaries as of the Effective Date, other than with respect to the transactions contemplated hereby, which
      will be disclosed in the Press Release (as defined below). The SEC Filings do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the
      circumstances under which they were made, not misleading. The Company understands and confirms that the Investor will rely on the foregoing representations in effecting transactions in securities of the Company.

    

    

    
      

      
        

      

    

    5.28 Required Filings. Except for the transactions contemplated by this Agreement or in the Disclosure Schedules hereto, including
      the acquisition of the Purchase Shares contemplated hereby, no event or circumstance has occurred or information exists with respect to the Company or its business, properties, operations or financial condition, which, under applicable law, rule or
      regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed as of the Closing Date.

    

    

    5.29 Investment Company. The Company is not required to be registered as, and immediately following the Closing will not be required
      to register as, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

    

    

    5.30 Regulation M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or
      indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Shares, (ii) sold, bid for, purchased, or paid any compensation for
      soliciting purchases of, any of the Shares, or (iii) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii).

    

    

    5.31 Anti-Bribery and Anti-Money Laundering Laws. Each of the Company, its subsidiaries and any of their respective officers,
      directors, supervisors, managers, agents, or employees are and have at all times been in compliance with and its participation in the offering will not violate: (A) anti-bribery laws, including but not limited to, any applicable law, rule, or
      regulation of any locality, including but not limited to any law, rule, or regulation promulgated to implement the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, signed December 17, 1997,
      including the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.K. Bribery Act 2010, or any other law, rule or regulation of similar purposes and scope or (B) anti-money laundering laws, including, but not limited to, applicable federal,
      state, international, foreign or other laws, regulations or government guidance regarding anti-money laundering, including, without limitation, Title 18 US. Code sections 1956 and 1957, the Patriot Act, the Bank Secrecy Act, and international
      anti-money laundering principles or procedures by an intergovernmental group or organization, such as the Financial Action Task Force on Money Laundering, of which the United States is a member and with which designation the United States
      representative to the group or organization continues to concur, all as amended, and any Executive order, directive, or regulation pursuant to the authority of any of the foregoing, or any orders or licenses issued thereunder.

    

    

    5.32 No Bad Actors. No “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) of the 1933 Act (a “Disqualification
      Event”) is applicable to the Company or, to the Company’s Knowledge, any Company Covered Person, except for a Disqualification Event as to which Rule 506(d)(2)(ii–iv) or (d)(3) is applicable. There are no matters to be disclosed by the Company under
      Rule 506(e) as of the Closing Date.

    

    

    5.33. No Additional Agreements. The Company has no other agreements or understandings (including, without limitation, side letters)
      with any Investor to purchase the Purchase Shares on terms more favorable to such Investor than as set forth herein.

    

    

    5.34  Shell Company Status. The Company is not a “shell company” as of the Effective Date. The Company was a former shell company
      under SEC Rule 144(i)(1) prior to 2005. As a former shell company, restricted shares of Common Stock may not have restrictive legends permanently removed without registration under the 1933 Act or sale under Rule 144 to a third-party purchaser.

    

    

    
      

      
        

      

    

    5.35 Investor Representations. The Company acknowledges and agrees that the Investor’s representations contained in Section 6 below
      shall not modify, amend or affect any such Investor’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or
      instrument executed and/or delivered by or on behalf of the Company in connection with this Agreement or the consummation of the transactions contemplated hereby

    

    

    6. Representations and Warranties of the Investor.  Investor hereby represents and warrants to the Company that:

    

    

    6.1 Authority.  6.1 Organization and Existence.  Investor is a duly incorporated or organized and validly existing corporation,
      limited partnership, limited liability company or other legal entity, has all requisite corporate, partnership or limited liability company power and authority to enter into and consummate the transactions contemplated by the Transaction Documents
      and to carry out its obligations hereunder and thereunder, and to invest in the Purchase Shares pursuant to this Agreement, and is in good standing under the laws of the jurisdiction of its incorporation or organization.

    

    

    6.2 Authorization. The execution, delivery and performance by such Investor of the Transaction Documents to which Investor is a party
      have been duly authorized and the party has been duly executed and when delivered will constitute the valid and legally binding obligation of the Investor, enforceable against the Investor in accordance with their respective terms, subject to
      bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally, and general principles of equity.

    

    

    6.3 Purchase Entirely for Own Account. The Purchase Shares to be received by the Investor hereunder will be acquired for the
      Investor’s own account, not as nominee or agent, for the purpose of investment and not with a view to the resale or distribution of any part thereof in violation of the 1933 Act, and the Investor has no present intention of selling, granting any
      participation in, or otherwise distributing the same in violation of the 1933 Act without prejudice, however, to the Investor’s right at all times to sell or otherwise dispose of all or any part of the Purchase Shares in compliance with applicable
      federal and state securities laws. The Purchase Shares are being purchased by the Investor in the ordinary course of his business. Nothing contained herein shall be deemed a representation or warranty by the Investor to hold the Purchase Shares for
      any period of time. Such Investor is not a broker-dealer registered with the SEC under the 1934 Act or an entity engaged in a business that would require it to be so registered.

    

    

    6.4 Investment Experience. Such Investor acknowledges that he can bear the economic risk and complete loss of its investment in the
      Purchase Shares and has the knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby.  The Purchase Shares are a “penny stock” under SEC rules and suffers
      the regulatory burdens and liquidity problems of a “penny stock.”

    

    

    
      

      
        

      

    

    6.5 Disclosure of Information.  Investor has had an opportunity to receive, review and understand all information related to the
      Company requested by him or it and to ask questions of and receive answers from the Company regarding the Company, its business and the terms and conditions of the offering of the Purchase Shares, and has conducted and completed its own independent
      due diligence. Such Investor acknowledges that copies of the SEC Filings are available on the SEC EDGAR system (www.sec.gov). Based on the information the Investor has deemed appropriate, he has independently made his own analysis and decision to
      enter into the Transaction Documents. Such Investor is relying exclusively on its own investment analysis and due diligence (including professional advice he deems appropriate) with respect to the execution, delivery and performance of the
      Transaction Documents, the Purchase Shares and the business, condition (financial and otherwise), management, operations, properties and prospects of the Company, including but not limited to all business, legal, regulatory, accounting, credit and
      tax matters. Neither the inquiries nor any other due diligence investigation conducted by the Investor shall modify, limit or otherwise affect the Investor’s right to rely on the Company’s representations and warranties contained in this Agreement.

    

    

    6.6 Restricted Securities. Such Investor understands that the Purchase Shares are characterized as “restricted securities” under the
      U.S. federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under the laws and applicable regulations such securities may be resold without registration under the 1933
      Act only in certain limited circumstances.

    

    

    6.7 Legends. It is understood that, except as provided below, certificates evidencing the Purchase Shares will bear the following or
      any similar legend:

    

    

    (a) “These securities represented hereby have not been registered with the Securities and Exchange Commission or the securities
      commission of any state but have been issued in reliance upon an exemption from registration under the Securities Act of 1933, as amended, and, accordingly, may not be transferred unless (i) the securities have been registered for sale pursuant to
      the Securities Act of 1933, as amended, (ii) the securities are eligible to be sold and may be sold pursuant to Rule 144, (iii) the Company has received an opinion of counsel reasonably satisfactory to it that the transfer may lawfully be made
      without registration under the Securities Act of 1933, as amended, or (iv) the securities are transferred without consideration to an affiliate of the holder or a custodial nominee (which for the avoidance of doubt shall require neither consent nor
      the delivery of an opinion).”

    

    

    (b) If required by the authorities of any state or mandated by any state law or regulation in connection with the issuance of sale of
      the Purchase Shares, the legend required by the state authority.

    

    

    6.8 Accredited Investor.  Investor is (a) an “accredited investor” within the meaning of Rule 501(a) of Regulation D. Investor is a
      sophisticated investor with sufficient knowledge and experience in investing in private equity transactions to properly evaluate the risks and merits of his purchase of the Purchase Shares. Such Investor has determined based on his own independent
      review and such professional advice as he deems appropriate that its purchase of the Purchase Shares and participation in the transactions contemplated by the Transaction Documents (i) are fully consistent with its financial needs, objectives and
      condition, (ii) comply and are fully consistent with all investment policies, guidelines and other restrictions applicable to the Investor, (iii) have been duly authorized and approved by all necessary action, (iv) do not and will not violate or
      constitute a default under  any law, rule, regulation, agreement or other obligation by which the Investor is bound and (v) are a fit, proper and suitable investment for such Investor, notwithstanding the substantial risks inherent in investing in or
      holding the Purchase Shares.   Investor will complete and sign and tender to the Company an investor questionnaire and requested supporting documents thereto and do so on the Effective Date but no later than April 4, 2021.

    

    

    
      

      
        

      

    

    6.9 No General Solicitation. Such Investor did not learn of the investment in the Purchase Shares as a result of any general or
      public solicitation or general advertising, or publicly disseminated advertisements or sales literature, including (a) any advertisement, article, notice or other communication published in any newspaper, magazine, website, or similar media, or
      broadcast over television or radio, or (b) any seminar or meeting to which such Investor was invited by any of the foregoing means of communications.

    

    

    6.10 Brokers and Finders. Except for the agreement between the Company and Wilmington Capital Securities, LLC, no person will have,
      as a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim against or upon the Company or an Investor for any commission, fee or other compensation pursuant to any agreement, arrangement or
      understanding entered into by or on behalf of such Investor.

    

    

    6.11 Short Sales and Confidentiality Prior to the Date Hereof. Other than consummating the transactions contemplated hereunder, such
      Investor has not, nor has any person acting on behalf of or pursuant to any understanding with such Investor, directly or indirectly executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing
      as of the time that such Investor was first contacted by the Company, or any other person regarding the transactions contemplated hereby and ending immediately prior to the date hereof. Notwithstanding the foregoing, in the case of an Investor that
      is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Investor’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other
      portions of such Investor’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Purchase Shares covered by this
      Agreement. Other than to other Persons party to this Agreement and other than to such Person’s outside attorney, accountant, auditor or investment advisor only to the extent necessary to permit evaluation of the investment, and the performance of the
      necessary or required tax, accounting, financial, legal, or administrative tasks and services and other than as may be required by law, such Investor has agreed to maintain and has maintained the confidentiality of all disclosures made to it in
      connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with
      respect to the identification of the availability of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the future.  Investor agrees, understands and acknowledges that trading in the Purchase Shares
      or other shares of Common Stock based on non-public material information is a violation of federal and state anti-insider and fraud laws and regulations.

    

    

    6.12 No Government Recommendation or Approval.  Investor understands that no United States federal or state agency, or similar agency
      of any other country, has reviewed, approved, passed upon, or made any recommendation or endorsement of the Company or the purchase of the Purchase Shares.

    

    

    6.13 No Intent to Effect a Change of Control.  Investor has no present intent to effect a “change of control” of the Company as such
      term is understood under the rules promulgated pursuant to Section 13(d) of the 1934 Act.

    

    

    6.14 Residency.  Investor’s domicile in which its investment decision with respect to the Purchase Shares was made is located at the
      address immediately below the Investor’s name on its signature page hereto.

    

    

    
      

      
        

      

    

    6.15 No Conflicts. The execution, delivery and performance by such Investor of the Transaction Documents and the consummation by such
      Investor of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Investor or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both
      would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Investor is a party, or (iii) result in a violation of any law, rule,
      regulation, order, judgment or decree (including federal and state securities laws) applicable to such Investor, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or
      in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Investor to perform its obligations hereunder.

    

    

    6.16 No “Bad Actor” Disqualification Events. Investor is not subject to any Disqualification Event, except for Disqualification
      Events covered by Rule 506(d)(2)(ii) or (iii) or (d)(3) under the Securities Act and disclosed reasonably in advance of the Closing in writing in reasonable detail to the Company. There are no matters to be disclosed by the Investor under Rule 506(e)
      as of the Closing Date.

    

    

    7. Covenants and Agreements of the Parties.

    

    

    7.1 OTCQB Listing. The Company will use commercially reasonable efforts to continue the listing and trading of its Common Stock on
      OTCQB and, in accordance therewith, will use commercially reasonable efforts to comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of such market or exchange, as applicable.

    

    

    7.2 Lifting of Restrictive Legends.  (a) Removal of restrictive legends for the Purchase Shares are subject to restrictions imposed
      by federal and state securities laws, including Rule 144 under the 1933 Act, and the requirements of the Transfer Agent.

    

    

    (b) In connection with any sale, assignment, transfer or other disposition of the Purchase Shares by an Investor pursuant to Rule 144
      or pursuant to any other exemption under the 1933 Act such that the third party purchaser acquires freely tradable shares and upon compliance by the Investor with the requirements of this Agreement, if requested by the Investor, the Company shall
      request the transfer agent for the Common Stock (the “Transfer Agent”) to remove any restrictive legends related to the book entry account holding such shares and make a new, unlegended entry for such book entry shares sold or disposed of without
      restrictive legends within two (2) Trading Days of any such request therefor from such Investor, provided that the Company has timely received from the Investor customary representations and other documentation reasonably acceptable to the Company in
      connection therewith.  Parties agree and acknowledge that removal of restrictive legends is controlled by the stock transfer agent in its sole discretion.

    

    

    
      

      
        

      

    

    (c) Subject to receipt from the Investor by the Company and the Transfer Agent of customary representations and other documentation
      reasonably acceptable to the Company and the Transfer Agent in connection therewith. upon the earliest of such time as the Purchase Shares (i) have been registered under the 1933 Act pursuant to an effective registration statement, (ii) have been
      sold pursuant to Rule 144, or (iii) are eligible for resale under Rule 144(b)(1) or any successor provision (such earliest date, the “Effective Date”), the Company shall, in accordance with the provisions of this Section 7.2(b) and within two (2)
      Trading Days of any request therefor from an Investor accompanied by such customary and reasonably acceptable documentation referred to above, (A) deliver to the Transfer Agent irrevocable instructions that the Transfer Agent shall make a new,
      unlegended entry for such book entry shares, except that, with respect to (iii) above,  any shares not sold under Rule 144 will have restrictive legends re-imposed after 90 days from the date of the initial lifting of legends (or such shorter period
      as required or permitted by Transfer Agent); and (B) cause its legal counsel to deliver to the Transfer Agent one or more opinions to the effect that the removal of such legends in such circumstances may be effected under the 1933 Act if required by
      the Transfer Agent to effect the lifting of the legend (subject to re-imposition of restrictive legends on shares not sold under (iii) above after a 90-day lift-legend period, or shorter period, required or permitted by Company’s stock transfer
      agent) in accordance with the provisions of this Agreement. Any shares subject to legend removal under this Section 7 may be transmitted by the Transfer Agent to the Investor by crediting the account of the Investor’s prime broker with the DTC System
      as directed by such Investor. The Company shall be responsible for the fees of its Transfer Agent and all DTC fees associated with such issuance. The Company is a former shell company and, under the current prevailing interpretation of Rule 144, any
      shares, whether held by affiliates or non-affiliates of the Company, will not have the legends permanently removed by a stock transfer agent unless registered under the Securities Act or sold to and owned by a third-party purchaser of the shares in a
      sale in accordance with Rule 144.

    

    

    7.3 Transfer Restrictions. Investor agrees with the Company that the Investor will only sell any Purchase Shares pursuant to either
      an effective registration requirements of the 1933 Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Purchase Shares are sold pursuant to a Registration Statement, they will be sold in compliance
      with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Purchase Shares as set forth in this Section 7.3 is predicated upon the Company’s reliance upon this
      understanding.

    

    

    7.4 Subsequent Sales by the Company. The Company shall not, and shall use its commercially reasonable efforts to ensure that no
      Affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the 1933 Act) that will be integrated with the offer or sale of the Purchase Shares in a
      manner that would require the registration under the 1933 Act of the sale of the Purchase Shares to the Investor,  or that will be integrated with the offer or sale of the Purchase Shares for purposes of the rules and regulations of any trading
      market such that it would require stockholder approval prior to the closing of such other transaction unless stockholder approval is obtained before the closing of such subsequent transaction.

    

    

    7.5 Fees. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or broker’s
      commissions (other than for Persons engaged by an Investor or the Investor) relating to or arising out of the transactions contemplated hereby.

    

    

    7.6 Short Sales and Confidentiality After the Date Hereof. Each Investor covenants that until such time as the transactions
      contemplated by this Agreement are publicly disclosed by the Company, such Investor will maintain the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction), other
      than to such Person’s outside attorney, accountant, auditor or investment advisor only to the extent necessary to permit evaluation of the investment, and the performance of the necessary or required tax, accounting, financial, legal, or
      administrative tasks and services and other than as may be required by law.

    

    

    
      

      
        

      

    

    7.7 Securities Laws Disclosure; Publicity. The Company shall (a) by the Disclosure Time, issue a press release (“Press Release”)
      disclosing the material terms of the transactions contemplated hereby, and (b) file a Current Report on Form 8-K, including the Transaction Documents as exhibits thereto (except the Transfer Documents), with the Commission within the time required by
      the 1934 Act. From and after the issuance of such Press Release, the Company represents to the Investor that it shall have publicly disclosed all material, non-public information delivered to any of the Investor by the Company or any of its
      Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the issuance of such Press Release, the Company acknowledges
      and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates on the one
      hand, and any of the Investor or any of their Affiliates on the other hand, shall terminate. The Company and  Investor shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither
      the Company nor the Investor shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of the Investor, or without the prior consent of the Investor,
      with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice
      of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Investor, or include the name of the Investor in any filing with the Commission or any regulatory agency or Trading
      Market, without the prior written consent of the Investor, except (a) as required by federal and state securities laws and regulations in connection with (i) any registration statement contemplated by the Registration Rights Agreement and (ii) the
      filing of final Transaction Documents with the Commission, (b) as required by Trading Market regulations, and (c) to the extent such disclosure is otherwise required by law, in which case the Company shall provide the Investor with prior notice of
      such disclosure permitted under this clause (c).

    

    

    7.8 Equal Treatment of Investor.  No consideration (including any modification of any Transaction Document) shall be offered or paid
      to any person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration is also offered to all of the parties to this Agreement. For clarification purposes, this provision constitutes a separate
      right granted to the Investor by the Company and negotiated separately by the Investor, and is intended for the Company to treat the Investor as a class and shall not in any way be construed as the Investor acting in concert or as a group with
      respect to the purchase, disposition or voting of securities or otherwise.

    

    

    8. Survival and Indemnification.

    

    

    8.1 Survival. The representations, warranties, covenants and agreements contained in this Agreement shall survive the Closing of the
      transactions contemplated by this Agreement for one (1) year.

    

    

    8.2 Indemnification. The Company agrees to indemnify and hold harmless the Investor from and against any and all losses, claims,
      damages, liabilities and expenses (including without limitation reasonable and documented attorney fees and disbursements and other documented out-of-pocket expenses reasonably incurred in connection with investigating, preparing or defending any
      action, claim or proceeding, pending or threatened and the costs of enforcement thereof) (collectively, “Losses”, which term does not include speculative, incidental or punitive damages) to which indemnitee may become subject as a direct result of
      any breach of representation, warranty, covenant or agreement made by or to be performed on the part of the Company under the Transaction Documents, and will reimburse any indemnitee for all such amounts as they are incurred by indemnitee solely to
      the extent such amounts have been finally judicially determined not to have resulted from indemnitee’s fraud or willful misconduct or violation of law. The Investor will indemnify the Company for any Losses incurred by the Investor misrepresenting
      his or its status as an accredited investor under Rule 501(a) of Regulation D of 1933 Act.

    

    

    
      

      
        

      

    

    8.3 Conduct of Indemnification Proceedings. Any party entitled to indemnification hereunder shall (i) give prompt written notice to
      the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any person
      entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (a) the indemnifying party
      has agreed in writing to pay such fees or expenses, (b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (c) in the reasonable judgment of any such person, based
      upon written advice of its counsel, a conflict of interest exists between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that the party elects to employ
      separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); and provided, further, that the failure of any indemnified party to give written
      notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or
      litigation. It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties.
      No indemnifying party will, except with the consent of the indemnified party, which consent shall not be unreasonably withheld, conditioned or delayed, consent to entry of any judgment or enter into any settlement that does not include as an
      unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. No indemnified party will, except with the consent of the indemnifying party, which
      consent shall not be unreasonably withheld, conditioned or delayed, consent to entry of any judgment or enter into any settlement.

    

    

    9. Miscellaneous.

    

    

    9.1 Termination.  This Agreement may be terminated in accordance with Section 2.2 above and, if and only if the Closing has not been
      consummated on or before April 9, 2021, a party may terminate this Agreement upon five (5) days’ prior written notice to the other parties, except the termination based on failure to consummate the Closing by April 9, 2021, will not affect the right
      of any party to sue for any breach by any other party (or parties).  In the event that this Agreement is terminated in accordance with its terms and conditions, Investor’s Subscription Amount will be refunded without set off or charge within three
      (3) business days after the effective date of the termination.  There is no termination or break-up fee, or similar charge or damages, owed by one party to the other party or other parties if this Agreement is terminated in accordance with its terms
      and conditions and the purchase of the Purchase Shares is not consummated by the parties as required under this Agreement.

    

    

    9.2 Successors and Assigns. This Agreement may not be assigned by a party without the prior written consent of the Company or the
      Investor, as applicable. The provisions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Without limiting the generality of the foregoing, in the event that the
      Company is a party to a merger, consolidation, share exchange or similar business combination transaction in which the Common Stock is converted into the equity securities of another Person, from and after the effective time of such transaction, such
      person shall, by virtue of such transaction, be deemed to have assumed the obligations of the Company hereunder, the term “Company” shall be deemed to refer to such person and the term “Purchase Shares” shall be deemed to refer to the securities
      received by the Investor in connection with such transaction. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties or their respective permitted successors and assigns any rights, remedies,
      obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

    

    

    
      

      
        

      

    

    9.3 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of
      which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signatures complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other
      transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

    

    

    9.4 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered
      in construing or interpreting this Agreement.

    

    

    9.5 Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be
      deemed effectively given as hereinafter described (i) if given by personal delivery, then such notice shall be deemed given upon such delivery, (ii) if given by facsimile or e-mail, then such notice shall be deemed given upon receipt of confirmation
      of complete facsimile transmittal or confirmation of receipt of an e-mail transmission, (iii) if given by mail, then such notice shall be deemed given upon the earlier of (A) receipt of such notice by the recipient or (B) three days after such notice
      is deposited in first class mail, postage prepaid, and (iv) if given by an internationally recognized overnight air courier, then such notice shall be deemed given one Business Day after delivery to such carrier. All notices shall be addressed to the
      party to be notified at the address as follows, or at such other address as such party may designate by ten days’ advance written notice to the other party:

    

    

    If to the Company:

    

    

    James McClinton, Chief Financial Officer

    Capstone Companies, Inc.

    431 Fairway Drive, #200

    Deerfield Beach, Florida 33441

    Telephone:

    Email:

    

    

    With a copy (which shall not constitute notice) to:

    

    

    Paul W. Richter

    PW Richter plc

    3901 Dominion Townes Circle

    Richmond, Virginia 23223

    Telephone: 703 725 7299

    Email: pwr@pwrichtersec.com

    

    

    

    

    If to the Investor:

    

    

    Only to the addresses set forth on the signature pages hereto.

    

    

    9.6 Expenses. Except as expressly set forth otherwise herein, the parties shall pay their own costs and expenses in connection
      herewith regardless of whether the transactions contemplated hereby are consummated.

    

    

    
      

      
        

      

    

    9.7 Amendments and Waivers. Prior to Closing, no amendment or waiver of any provision of this Agreement will be effective with
      respect to any party unless made in writing and signed by a duly authorized representative of such party. Following the Closing, any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either
      generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Investor.  Notwithstanding the foregoing, this Agreement may not be amended and the observance of any term of this
      Agreement may not be waived with respect to any Investor without the written consent of such Investor unless such amendment or waiver applies to all Investor in the same fashion. Any amendment or waiver effected in accordance with this paragraph
      shall be binding upon (i) prior to Closing, Investor that signed such amendment or waiver and (ii) following the Closing, holder of any Purchase Shares purchased under this Agreement at the time outstanding, and in each case, each future holder of
      all such Purchase Shares and the Company.

    

    

    9.8 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such
      jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by
      applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision
      of law which renders any provision hereof prohibited or unenforceable in any respect.

    

    

    9.9 Entire Agreement. This Agreement, including the signature pages, Exhibits, the other Transaction Documents and any
      confidentiality agreement between the Company and  Investor constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, between
      the parties with respect to the subject matter hereof and thereof.  The exhibits and schedules referenced in this Agreement are incorporated by reference into this Agreement (including Schedule One hereto, Disclosure Schedule hereto, other referenced
      Schedules hereto and Exhibit A hereto).

    

    

    9.10 Further Assurances. The parties shall execute and deliver all such further instruments and documents and take all such other
      actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

    

    

    9.11 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Florida. Service
      of process in connection with any such suit, action or proceeding may be served on each party anywhere in the world by the same methods as are specified for the giving of notices under this Agreement.

    

    

    
      

      
        

      

    

    9.12 Independent Nature of Investor’s Obligations and Rights. Except for the requirements imposed by Section 2.2 above, and the
      obligation of the Investor to purchase the 155,333 Purchase Shares under this Agreement for the Aggregate Purchase Price of $93,200.00,  the obligations of  Investor under any Transaction Document are several and not joint with the obligations of any
      other investor, and no investor shall be responsible in any way for the performance of the obligations of any other investor under any Transaction Document. The decision of Investor to purchase Purchase Shares pursuant to the Transaction Documents
      has been made by the Investor independently of any other investor. Nothing contained herein or in any Transaction Document, and no action taken by Investor pursuant thereto, shall be deemed to constitute the Investor as a partnership, an association,
      a joint venture or any other kind of entity, or create a presumption that the Investor is  in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents.  Investor
      acknowledges that no other person has acted as agent for such Investor in connection with making its investment hereunder and that the Investor will be acting as agent of a person  in connection with monitoring its investment in the Purchase Shares
      or enforcing his rights under the Transaction Documents.  Investor shall be entitled to independently protect and enforce his or its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction
      Documents, and it shall not be necessary for any person to be joined as an additional party in any proceeding for such purpose. The Company acknowledges that  the Investor has been provided with the same Transaction Documents for the purpose of
      closing a transaction with multiple investors and not because it was required or requested to do so by the Investor. It is expressly understood and agreed that each provision contained in this Agreement is between the Company and the Investor,
      solely, and not between the Company and any other investors collectively.

    

    

    9.13 Accuracy of Investor’s Information.  Investor’s information stated in Exhibit A hereto, Schedule One hereto and under the
      Investor’s signature line below (collectively, “Investor Data”) was provided by the Investor and, by signing below,   Investor attests that he or it has verified the accuracy of his or its Investor Data and did so prior to signing this Agreement. If
      Investor does not provide information for any line or item in Exhibit A hereto, in Schedule One hereto and set forth below the Investor’s signature line to this Agreement,  then the parties agree that the Investor’s response thereto is “not
      applicable.”

    

    

    IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of
      the Effective Date.

    

    

    CAPSTONE COMPANIES, INC., a Florida corporation

    

    

    By:__________________________________________________

     James McClinton, Chief
        Financial Information

    

    

    Attest: By:_________________________________________________ Date: April 5, 2021

    Aimee Gaudet Brown, Corporate Secretary

    

    

    SEAL

    

    

    
      

      
        

      

    

    IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase Agreement to be duly executed by the party or, if applicable,
      by party’s respective authorized signatory,  as of the Effective Date.

    

    

    INVESTOR:__________________________________________

    

    

    Signature/By:_________________________________________

    

    

    Name: _________________________________________________

    

    

    Title: _______________________________________________

    

    

    [Personal Information about Investor]

    OMITTED  [****]

    

    

    

    

    SCHEDULE ONE:  NAME TO BE REGISTERED FOR PURCHASER OF PURCHASE SHARES

    

    

    OMITTED [****]

    

    

    Schedule 5.3. Capitalization Table

    

    

    CROSS REFERENCED TO 2020 10-K AND INCORPORATED HEREIN BY REFERENCE

    

    

    DISCLOSURE SCHEDULE

    

    

    OMITTED [****]

    

    

    

    

    
      

      
        

      

    

    EXHIBIT A

     

    FORM OF REGISTRATION RIGHTS AGREEMENT

    

    

    NOTE: Certain of the portions of this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5)
      and (6) and Regulation S-K Item 601(b)(10)(iv). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.  [****] indicates location within the Exhibit that sections, schedules or information has been
      omitted.

    REGISTRATION RIGHTS AGREEMENT

    

    

    THIS REGISTRATION RIGHTS AGREEMENT
        (“Agreement”), dated and effective as of April 5, 2021,  is made by Capstone Companies, Inc., a Florida corporation, (“Company”) and stockholder listed in Exhibit A hereto  (“Stockholder”). The Company and Stockholder may be referred to individually as a “party” and collectively as the “parties.”

    

    

    Background:

    

    

    A.  Subject to the terms and conditions of the Securities
        Purchase Agreement, of even date herewith, by and between the Company and
        Stockholder, the Company has sold shares (“Shares”) of its restricted Common Stock, $0.0001 par value, of Company (“common stock”)  to Stockholder; and

    B. Subject to the terms and conditions set forth herein,
        the Company has agreed to grant certain registration rights to  Stockholder with
        respect to its Purchase Shares.

    

    

    In consideration of the promises, mutual covenants and conditions herein contained, and of other good and valuable consideration, the
      receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

    

    

    1. DEFINITIONS. For purposes of this Agreement, the following terms shall have the following respective meanings:

    

    

    (a) “1933 Act” means the Securities Act of 1933, as amended.

    (b) “1934 Act” means the Securities Exchange Act of 1934, as amended.

    (c) “Affiliates’ has the meaning set forth in 17 Code of Federal Regulations §230.405).

    (d) “Business Day” means a day that the banks in Miami, Florida are open for business under regular hours of operation.

    (e) “Eligible Period” means the period (i) commencing on
        the Transfer Restriction Termination Date and (ii) terminating on the fifth annual anniversary of the date of this Agreement.

    (f) “Purchase Shares” means the Company’s Common Stock owned by Stockholder.

    (g) “Register,” “registered,” and “registration” refers to a registration effected by preparing and filing a registration statement or similar document in compliance with the 1933 Act, and the declaration or ordering of effectiveness of such registration statement or document.

    (h) “Registrable Shares” means the Purchase Shares.

    (i) “Registration Statement” means any registration statement described in Sections 2.1 or 2.2 of this Agreement.

    

    

    2. REGISTRATION RIGHTS.

    

    

    2.1. DEMAND REGISTRATION. No demand registration rights are granted under this Agreement or otherwise.

    
      

      
        

      

    

    2.2. PIGGYBACK REGISTRATION. If and only if the
      Company proposes to file a registration statement under the 1933 Act with respect to an offering of Common Stock or securities convertible into, or exchangeable or exercisable for, Common Stock, whether or not for sale for its own account (other than
      a registration statement (i) on Form S-4, Form S-8 or any successor forms thereto or (ii) filed to effectuate an exchange offer or any employee benefit or dividend reinvestment plan), in a manner that would permit registration of the Registrable
      Securities for sale for cash to the public under the 1933 Act, then the Company shall give prompt written notice of such filing, which notice shall be given, no later than ten (10) Business Days prior to the filing date (the “Piggyback Notice”) to
      the Stockholder of Registrable Securities. The Piggyback Notice shall offer of the Stockholder the opportunity to include (or cause to be included) in such registration statement the number of shares of Registrable Securities as Stockholder may
      request (each, a “Piggyback Registration Statement”). Subject to Section 2.2(b) below, the Company shall include in each Piggyback Registration Statement all Registrable
        Securities with respect to which the Company has received written requests for inclusion therein (each, a “Piggyback Request”) within five (5) Business Days after the date of the Piggyback Notice. The Company shall not be required to maintain the
        effectiveness of a Piggyback Registration Statement beyond the earlier of (x) 120 days after the effective date thereof and (y) consummation of the distribution by the Stockholder  of the Registrable Securities included in such registration
        statement. The Company may withdraw a Piggyback Registration Statement at any time prior to any sales being made pursuant to the Piggyback Registration Statement without incurring any liability to the Stockholder.  Subject to the terms of this Agreement, the Company shall use its best efforts to cause a Piggyback Registration Statement filed under this Agreement to be declared effective under the 1933 Act
        as promptly as possible after the filing thereof and shall use its best efforts to keep the Piggyback Registration Statement continuously effective under the Securities Act until the date that all Registrable Securities covered by the Piggyback
        Registration Statement, subject to SEC approval of post-effective amendments to the Registration Statement to maintain the effectiveness of the Piggyback Registration Statement, have been sold thereunder or pursuant to Rule 144.  There is no
        penalty or similar charge owed by, and no liquidated damages recoverable against, the Company by Stockholder or a Stockholder in the event that Company cannot maintain the effectiveness of the Piggyback Registration Statement in accordance with
        this Section 2.2.

    (b)    If any of the securities to be registered pursuant to the registration giving rise to the rights under
      this Section 2.2 are to be sold in an underwritten registered securities offering under the 1933 Act (“Underwritten Offering”), the Company shall use commercially reasonable efforts to cause the managing underwriter or underwriters of a proposed
      Underwritten Offering to permit Stockholder of Registrable Securities who has timely submitted a Piggyback Request in connection with such offering to include in such offering all Registrable Securities included in Stockholder’s Piggyback Request on
      the same terms and subject to the same conditions as any other shares of capital stock, if any, of the Company included in the Underwritten Offering. Notwithstanding the foregoing, if the managing underwriter or underwriters of such offering advise
      the Company in writing that in its or their good faith opinion the number of securities exceeds the number of securities which can be sold in such offering in light of market conditions or is such so as to adversely affect the success of such
      offering, the Company will include in such Underwritten Offering only such number of securities that can be sold without adversely affecting the marketability of the offering, which securities will be so included in the following order of priority:
      (i) first, the securities proposed to be sold by the Company for its own account and (ii) second, the Registrable Securities of the Stockholder and any other persons with piggyback registration rights who has the right to participate and that has
      requested to participate in such offering, allocated pro rata among the selling shareholders according to the total amount of securities entitled
      to be included therein owned by each selling shareholder and its Affiliates (other than the Company) or in such other proportions as shall mutually be agreed to by such selling shareholders. 

    

    

    
      

      
        

      

    

    3. FURTHER OBLIGATIONS OF THE COMPANY AFTER REGISTRATION.

    

    

    3.1. BLUE SKY COMPLIANCE. The Company shall, as soon as
        reasonably possible after the effectiveness of a Registration Statement, use its
        best efforts to register and qualify the Registrable Shares covered by the Registration Statement under such other securities or “blue sky” laws of such jurisdictions
        as shall be reasonably requested by the Stockholder, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states
        or jurisdictions unless the Company is already subject to service in such jurisdiction and except as may be required by the 1933 Act. Further, the parties agree and acknowledge that if the Company does not satisfy applicable Blue Sky standards,
        including any applicable NASAA guidelines concerning going concern or financial viability, that approval of the Registration Statement in merit review states may not be attainable or possible.

    

    

    3.2. FURNISHING OF PROSPECTUS. With respect to a Registration Statement filed pursuant to Section 2.1, the Company shall furnish to the
        Stockholder copies of any preliminary prospectus and, as soon as reasonably possible after the effectiveness of the Registration Statement, furnish to the Stockholder such numbers of copies of a final prospectus in conformity with the requirements of the 1933 Act (“Final Prospectus”), and such other documents as the Stockholder
        may reasonably request, in order to facilitate the resale or other disposition of Registrable Shares owned by it.

    

    

    3.3. AMENDMENTS. With respect to a Registration Statement filed pursuant to Section 2.1 of this Agreement, and, subject to Section 4.1 of this Agreement, the Company shall prepare and file with the SEC such amendments to the Registration Statement and amendments or supplements to the prospectus contained therein as may be necessary to keep such Registration Statement effective and such Registration Statement and prospectus accurate and complete for the entire period for which the Registration Statement remains effective.

    

    

    3.4. NOTICES. The Company shall:

    

    

    (a) Notify the Stockholder, promptly after it shall
        receive notice thereof, of the date and time when any Registration Statement and
        each post-effective amendment thereto has become effective;

    (b) Notify the Stockholder promptly of any request by
        the SEC for the amending or supplementing of any Registration Statement or
        prospectus or for additional information;

    (c) Notify the Stockholder, at any time when a
        prospectus relating to the Registrable Shares is required to be delivered under
        the Securities Act, of any event which would cause any such prospectus or any other prospectus as then in effect to include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make
        the statements therein, in light of the circumstances under which they were made, not misleading, and, subject to Section 4.1, promptly prepare and file with the SEC, and promptly notify the Stockholder of the filing of, such amendments or
        supplements to any Registration Statement or prospectus as may be necessary to
        correct any such statements or omissions; and

    (d) Notify Stockholder, promptly after it shall receive
        notice of the issuance of any stop order by the SEC suspending the effectiveness of any Registration Statement or the initiation or threatening of any proceeding for that purpose and, subject to Section 4.1, promptly use commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if
        such stop order should be issued.

    

    

    4. CONDITIONS AND LIMITATIONS ON REGISTRATION RIGHTS. The registration rights granted by this Agreement are subject to the following additional conditions and limitations:

    

    

    
      

      
        

      

    

    4.1. DELAYS AND SUSPENSION. The Company may delay the
        filing of or suspend or delay the effectiveness of a Registration Statement, if
        the Company shall furnish to the Stockholder a certificate signed by the Chief Executive Officer of the Company stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or its shareholders
        for such a registration statement to be filed or declared effective or for an
        effective registration statement not to be suspended. In such event, the
        Company's obligation under this Agreement to file a registration statement, seek effectiveness of a registration statement or keep such registration statement effective shall be deferred. If the Company suspends the effectiveness of a Registration Statement, the Company will promptly deliver notice to the Stockholder of such suspension and will again deliver notice to
        the Stockholder when such suspension is no longer necessary. The duration for which the Company is required to keep a Registration Statement effective shall be extended by an additional number of days equal to the length of any suspension period.

    

    

    4.2. AMENDED OR SUPPLEMENTED PROSPECTUS. The Stockholder
        agree that, upon receipt of any notice from the Company described in Section 4.1 hereof that suspends an effective registration statement, the Stockholder shall forthwith discontinue disposition of Registrable Shares until such Stockholder's receipt of copies of a supplemented or amended prospectus from the Company, or until it is advised in writing by the Company that the use of the prospectus may be
        resumed, and has received copies of any additional or supplemental filings which are incorporated by reference in the prospectus. If so directed by the Company, the Stockholder will deliver to the Company all copies of the prospectus covering such Registrable Shares current at the time of receipt of such notice of suspension.

    

    

    5. INDEMNIFICATION.

    

    

    
      

      
        

      

    

    5.1. The Company will indemnify the Stockholder, any of
        Stockholder’s officers, directors and partners, agents and each person controlling the Stockholder within the meaning of Section 15 of the 1933 Act, with respect to which registration, qualification or compliance has been effected pursuant to this Agreement, and each underwriter, if any, and each person who controls any underwriter within the meaning of Section 15 of the 1933 Act, against all
        expenses, claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, (commenced or threatened), arising out of or based on any untrue statement (or alleged
        untrue statement) of a material fact contained in any registration statement,
        prospectus, or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under
        which they were made, not misleading, or any violation by the Company of the 1933 Act, the 1934 Act, and any state securities laws or any rule, regulation or qualification promulgated thereunder, and the Company will reimburse the Stockholder, any
        Stockholder’s officers, directors, and partners, legal counsel, agents and each person controlling the Stockholder, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred,
        in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, PROVIDED, HOWEVER, that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or
        expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by the Stockholder, controlling person or
        underwriter expressly for use therein. The foregoing indemnity is subject to the condition that, insofar as it relates to any such untrue statement, alleged untrue statement, omission or alleged omission made in a preliminary prospectus on file
        with the SEC at the time the registration statement becomes effective or the
        amended prospectus filed with the SEC pursuant to Rule 424(b), as amended from time to time, such indemnity shall not inure to the benefit of: (a) the Stockholder (i) if a copy of the Final Prospectus was not furnished by the Stockholder to the
        person asserting the loss, liability, claim or damage at or prior to the time such action as required by the 1933 Act and such Final Prospectus would have cured the defect giving rise to the loss, liability, claim or damage or (ii) to the extent
        that such untrue statement, alleged untrue statement, omission or alleged omission is made in reliance upon and in conformity with written information furnished to the Company by the Stockholder expressly for use therein, or (b) any underwriter (i)
        if a copy of the Final Prospectus was not furnished to the person asserting the loss, liability, claim or damage at or prior to the time such action as required by the 1933 Act and the Final Prospectus would have cured the defect giving rise to the
        loss, liability, claim or damage or (ii) to the extent that such untrue statement, alleged untrue statement, omission or alleged omission is made in reliance on and in conformity with written information furnished to the Company by the underwriter
        for use therein.

    

    

    
      

      
        

      

    

    5.2. The Stockholder will, if Registrable Shares held by the Stockholder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of
        its directors and officers, each underwriter, if any, of the Company's securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the 1933 Act, against all expenses, claims, losses, damages and liabilities (or actions in respect thereof),
        including any of the foregoing incurred in settlement of any litigation (commenced or threatened), arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any amendment or supplement
        thereto, incident to such registration, qualification or compliance, or any
        omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and, severally, and not
        jointly, will reimburse the Company, such directors, officers, persons, underwriters or control persons for any legal and any other expenses reasonably incurred, in connection with investigating or defending any such claim, loss, damage, liability
        or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company
        by the Stockholder expressly for use therein. Notwithstanding the foregoing, the liability of the Stockholder under this Section 5 shall be limited to an amount equal to the net proceeds received by the Stockholder from the sale of shares in such registration.

    

    

    5.3. Each party entitled to indemnification under this
        Section 5 shall give notice to the party required to provide indemnification promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense
        of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably
        be withheld), and the Indemnified Party may participate in such defense at such party's expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its or his
        obligations under this Agreement, unless the failure to give such notice is
        materially prejudicial to an Indemnifying Party's ability to defend such action, and provided further that an Indemnified Party shall have the right to retain its or his own counsel, with the fees and expenses of such counsel to be paid by the Indemnifying Party, if representation of such Indemnified Party by the counsel
        retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests between such Indemnified Party and any other party represented by such counsel in such proceeding. No Indemnifying Party, in the defense of any
        such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to
        such Indemnified Party of a release from all liability in respect to such claim or litigation.

    

    

    
      

      
        

      

    

    5.4. If the indemnification provided for in this Section 5 is held by a court of competent jurisdiction to be unavailable to an
      Indemnified Party with respect to any losses, claims, damages or liabilities referred to herein, the Indemnifying Party, in lieu of indemnifying such Indemnified Party thereunder, shall to the extent permitted by applicable law contribute to the
      amount paid or payable by such Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the
      other in connection with the violations that resulted in such loss, claim, damage or liability, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by a
      court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the
      parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, that in no event shall any contribution by the Stockholder hereunder exceed the net proceeds from the offering
      received by the Stockholder.

    

    

    5.5. The obligations of the Company and the Stockholder
        under this Section 5 shall survive completion of any offering of Registrable Securities
        in a registration statement and the termination of this Agreement.

    

    

    6. INFORMATION FROM STOCKHOLDER. It shall be a condition
        precedent to the obligations of the Company to take any action pursuant to this Agreement with respect to the Registrable Shares of the Stockholder that the
        Stockholder shall furnish to the Company such information regarding himself or itself, the Registrable Shares held by it or him, and the intended method of disposition of such securities, as shall be required to effect the registration of the Registrable Shares.

    

    

    7. EXPENSES OF REGISTRATION. The Company shall pay all registration, filing and qualification fees (including SEC filing fees and the listing fees of any stock exchange or quotation system on which the Company
        securities are traded) attributable to the Registrable Shares registered under
        this Agreement, and any legal, accounting or other professional fees or expenses
        incurred by the Company. The Stockholder shall pay all underwriting discounts, selling commissions and stock transfer taxes, if any, attributable to the sale of such securities registered by the Stockholder and any legal, accounting or other
        professional fees incurred by the Stockholder.

    

    

    8. REPORTS UNDER THE SECURITIES EXCHANGE ACT. The
        Company agrees to file with the SEC in a timely manner all reports and other documents and information required of the Company under the 1934 Act, and take such other actions as may be necessary to assure the availability of Form S-1 for use in connection with the registration rights provided in this Agreement.

    

    

    9. MISCELLANEOUS.

    

    

    9.1. NOTICES. All notices and other communications
        required or permitted hereunder shall be made in the manner and to addresses set forth in the Securities Purchase Agreement.

    

    

    9.2. INTERPRETATION. The words “include,” “includes” and
        “including” when used herein shall be deemed in each case to be followed by the words “without limitation.” The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

    

    

    9.3. COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each
        of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

    
      

      
        

      

    

    

    

    9.4. ENTIRE AGREEMENT. This Agreement and the documents and instruments and other agreements among the parties hereto referenced herein: (a) constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof; and (b) are not intended to confer upon any other person any rights or remedies hereunder.  Exhibit A hereto is incorporated herein by reference.

    

    

    9.5. ASSIGNMENT. Stockholder may transfer or assign
        its or his rights and obligations hereunder together with any Registrable Shares transferred or assigned to any Affiliate of Stockholder, as long as such
        transferee or assignee of the Registrable Shares executes and delivers a
        counterpart copy of this Agreement thereby agreeing to be bound by the terms and
        provisions set forth herein. Except as permitted herein, any assignment of rights or
        delegation of duties under this Agreement by a party without the prior written
        consent of the other parties, if such consent is hereby required, shall be void ab initio. This Agreement shall be binding upon and inure to the benefit of the parties  and their respective successors and assigns.

    

    

    9.6. SEVERABILITY. In the event that any provision of
        this Agreement or the application thereof, becomes or is declared by a court of
        competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace
        such void or unenforceable provision of this Agreement with a valid and
        enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

    

    

    9.7. CERTAIN COMPANY REPRESENTATIONS. This Agreement has been duly authorized by all necessary action by the Company, and the Company's
        execution, delivery and performance of this Agreement does not violate any
        other agreement or instrument to which it is currently a party. As of the date
        hereof, the Company has not granted registration rights to any holder of its or
        his securities except pursuant to this Agreement, The Company hereby agrees not
        to grant any registration rights that materially impair the registration rights granted
        to the Stockholder hereunder.

    

    

    9.8. ATTORNEYS' FEES. In any action at law or suit in
        equity in relation to this Agreement, the prevailing party in such action or
        suit shall be entitled to receive a reasonable sum for its or his attorneys' fees and all other reasonable costs and expenses incurred in such action or suit.

    

    

    9.9. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of Florida, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws
        thereof.

    

    

    9.10. ACCURACY OF  INFORMATION.   Stockholder’s
      information stated in Exhibit A hereto (“Data”) was provided by the Stockholder and, by signing below,   Stockholder attests that he or it has verified the accuracy of his or its Data and did so prior to signing this Agreement.

    

    

    9.11. TERM. Except as expressly provided herein, the rights and obligations hereunder shall terminate five (5) years from the date first written above.

    

    

    
      

      
        

      

    

    IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the date first above written.

    

    

    CAPSTONE COMPANIES, INC., a Florida corporation

    

    

    By:___________________________________________________________

    James McClinton, Chief Financial Officer

    

    

    STOCKHOLDER:  ___________________________________

    

    

    

    

    By:___________________________________________

    

    

    _________________, Managing Member

    

    

    

    

    

    

    	
            Name of Stockholder

          	
            Address for Notices

          	
            Telephone Number

          	
            Email Address

          	
            Registrable Shares

          

    Personal Data OMITTED [****]

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