EDGAR 10-K Filing

Company CIK: 1508348
Filing Year: 2025
Filename: 1508348_10-K_2025_0001437749-25-001189.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS.
AmeriCann, Inc. (“AmeriCann”) designs, develops, leases and operates state-of-the-art cannabis cultivation, processing and manufacturing facilities. Our business plan is based on the continued growth of the regulated marijuana market in the United States.
AmeriCann’s team includes board members, consultants, engineers and architects who specialize in real estate development, traditional horticulture, lean manufacturing, medical research, facility construction, regulatory compliance, security, marijuana cultivation and genetics, extraction processes, and infused product development.
AmeriCann uses greenhouse technology which is superior to the current industry standard of growing cannabis in warehouse facilities under artificial lights. According to industry experts, by capturing natural sunlight, greenhouses use 25 percent fewer lights, and utility bills are up to 75 percent less than in typical warehouse cultivation facilities. As such, AmeriCann’s Canopy System enables cannabis to be produced with a greatly reduced carbon footprint, making the final product less expensive. Additionally, greenhouse construction costs can be nearly half of warehouse construction costs. AmeriCann’s business is committed to sustainable, clean cultivation of cannabis and to social and environmental ethics, transparency and accountability.
AmeriCann’s flagship project is the Massachusetts Cannabis Center (“MCC”). AmeriCann may replicate the brands, technology and innovations developed at its MCC project to additional markets.
Massachusetts Cannabis Center
On October 17, 2016, we closed on the acquisition of the 52.6-acre parcel of undeveloped land in Freetown, Massachusetts. The property is located approximately 47 miles southeast of Boston. We are developing the property as the Massachusetts Cannabis Center (“MCC”).
As part of a simultaneous transaction, we assigned the property rights to Massachusetts Medical Properties, LLC (“MMP”) for a nominal fee and entered a lease agreement pursuant to which MMP agreed to lease the property to us for an initial term of fifty (50) years. We have the option to extend the term of the lease for four (4) additional ten (10) year periods. The lease is a triple net lease. We pay all real estate taxes, repairs, maintenance and insurance. A portion of these expenses are reimbursed by the tenant.
The lease payments were the greater of (a) $30,000 per month; (b) $0.38 per square foot per month of any structure built on the property; or (c) 1.5% of all gross monthly sales of products sold by the Company, any assignee of the Company, or any subtenant of the Company.
By agreement dated November 19, 2024, the Company transferred the undeveloped portion of the leased property to MMP (approximately 48.3 acres) for:
●
$650,000; and
●
20% of the net sales price of the transferred portion of the undeveloped leased property.
The net sales price will be increased by an amount equal to the Base Rent paid by the Company to MMP under a separate lease covering 4.29 acres from November 19, 2024 through the date of conveyance of the 4.29 acres to the Company by MMP and decreased by $1,722,000.
The lease payments are now the greater of (a) $13,407 per month; or (b) 1.5% of all gross monthly sales of products sold by the Company, any assignee of the Company, or any subtenant of the Company. The lease has an initial term of fifty (50) years. The Company has the option to extend the term of the lease for four (4) additional ten (10) year periods. The lease is a triple net lease, with the Company paying all real estate taxes, repairs, maintenance and insurance.
The description of the terms of the November 19, 2024 agreement between the Company and MMP is qualified in its entirety by the agreement between the Company and MMP filed as Exhibit 10.18 to the Company’s 8-K report filed on December 13, 2024.
On July 26, 2019 we entered into a Triple Net Lease for Building 1 with BASK, Inc. ("BASK"). Building 1, an Adult-Use and Medical cannabis cultivation and processing facility, is the first phase of the MCC. BASK commenced operations in Building 1 in February of 2020 and is licensed by the Massachusetts Cannabis Control Commission to cultivate, process and sell cannabis.
The 15-year lease for Building 1 with BASK provided, in addition to a monthly Base Rent, a Revenue Participation Fee whereby we will receive 15% of all gross monthly sales of cannabis, cannabis-infused products and non-cannabis products produced at Building 1.
On May 13, 2024, the Company and BASK mutually agreed to modify the lease effective August 31, 2024. AmeriCann and BASK have agreed that, for the last five months of the lease effective April 1 2024, the new monthly payment by BASK will be $57,588 per month, inclusive of property taxes and Host Community Agreement fees. After August 31, 2024, AmeriCann intends to operate the building as a regulated cannabis cultivation and manufacturing operator. Bask agreed to transfer to the Company its provisional Cultivation and provisional Product Manufacturing licenses. BASK will receive a credit of $40,000 for each license transferred. Any transfer of licenses is contingent upon approval from the Massachusetts Cannabis Control Commission. An application for the Change of Ownership and Control of the licenses was filed on June 19, 2024. BASK granted the Company the option to purchase any furniture and equipment located in the space currently occupied by BASK. A third-party valuation of the items to be purchased is expected to be finalized by the end of August 2024. In the event the amount of the past due rent exceeds the credit (or credits) for any licenses which may be transferred to the Company by BASK and the value of any furniture or equipment purchased by the Company, the remaining amount, plus the amount remaining due on the promissory note from BASK dated September 30, 2023 will be converted to a promissory note which will be paid in 24 equal monthly installments without interest.
Building 1 of the MCC, a state of the art 30,000 square foot cultivation and processing facility, is fully-operational. Using Building 1 as its base of operations, AmeriCann plans to cultivate cannabis and provide extraction and product manufacturing support to other licensed cannabis farmers throughout regulated markets. In addition to large-scale extraction of cannabis plant material, AmeriCann Brands plans to produce branded consumer packaged goods including cannabis beverages, vaporizer products, edible products, non-edible products and concentrates at Building 1.
Market Conditions
While the industry is growing rapidly, the cannabis industry faces several major obstacles that challenge its growth and profitability. First, the cultivation of cannabis is a very capital-intensive enterprise. Many cannabis entrepreneurs do not have access to the capital required to build the infrastructure required to meet growing demand and sales projections. Traditional sources of financing, such as banks, are not available currently to cannabis producers and retailers in the United States. Second, there is a significant shortage of knowledge related to virtually all areas of the cannabis business. When new states are added to the list of regulated cannabis markets, there is a scarcity of experience and expertise to serve the needs of cultivators, processors and retailers in these states. As explained below, marijuana is illegal under federal law. These obstacles to the cannabis industry require financial resources, expertise and dedicated advocacy to change regulations on the state level.
Government Regulation
Marijuana is a Schedule-I controlled substance and is illegal under federal law. Even in those states in which the use of marijuana has been legalized, its use remains a violation of federal law.
A Schedule I controlled substance is defined as a substance that has no currently accepted medical use in the United States, a lack of safety for use under medical supervision and a high potential for abuse. The Department of Justice defines Schedule 1 controlled substances as “the most dangerous drugs of all the drug schedules with potentially severe psychological or physical dependence.” If the federal government decides to enforce the Controlled Substances Act with respect to marijuana, persons that are charged with distributing, possessing with intent to distribute, or growing marijuana could be subject to fines and terms of imprisonment, the maximum being life imprisonment and a $50 million fine.
Although many states have legalized cannabis for medical and recreational use by adults, the state laws are in conflict with the federal Controlled Substances Act, which makes marijuana use and possession illegal on a national level. Although previous administrations have indicated that they are not opposed to the legalization of marijuana any change in the federal government’s enforcement of current federal laws could cause significant financial damage to us and our shareholders.
Competition
Currently, there are a number of other companies that are involved in the cannabis industry, many of which we consider to be our competition. Many of these companies provide services similar to those which we provide or plan to provide. We expect that other companies will recognize the value of serving the cannabis industry and become our competitors.
General
We were incorporated in Delaware on June 25, 2010. The Company changed its corporate domicile to Colorado in 2022.
Our offices are located at 1555 Blake Street, Unit 502, Denver, CO 80202. We lease this space on a month-to-month basis at a rate of $2,500 per month.
As of December 31, 2024, we had three full time employees, that being Timothy Keogh, our Chief Executive Officer, Benjamin Barton, our Chief Financial Officer and our Office Manager. As of December 31, 2024, Mr. Keogh was spending approximately 90% of his time on our business and Mr. Barton was spending approximately 95% of his time on our business.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item. However, our activities are subject to significant risks and uncertainties including failure to secure funding to properly fund our business plan.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES.
See Item 1. Business.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS.
None.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Our common stock is quoted on the OTCQB under the trading symbol “ACAN”. Shown below is the range of high and low closing prices for our common stock as reported by the OTCQB for the periods presented:
Quarter Ended
High
Low
December 31, 2022
$ 0.74
$ 0.44
March 31, 2023
$ 0.74
$ 0.38
June 30, 2023
$ 0.55
$ 0.31
September 30, 2024
$ 0.45
$ 0.28
December 31, 2023
$ 0.14
$ 0.051
March 31, 2024
$ 0.10
$ 0.053
June 30, 2024
$ 0.07
$ 0.027
September 30, 2024
$ 0.04
$ 0.015
Holders of our common stock are entitled to receive dividends as may be declared by the Board of Directors. Our Board of Directors is not restricted from paying any dividends but is not obligated to declare a dividend. No cash dividends have ever been declared and it is not anticipated that cash dividends will ever be paid. We currently intend to retain any future earnings to finance future growth. Any future determination to pay dividends will be at the discretion of our directors and will depend on our financial condition, results of operations, capital requirements and other factors the board of directors considers relevant.
Our Articles of Incorporation authorize the Board of Directors to issue up to 20,000,000 shares of preferred stock. The provisions in the Articles of Incorporation relating to the preferred stock allow our directors to issue preferred stock with multiple votes per share and dividend rights, which would have priority over any dividends paid to the holders of our common stock. The issuance of preferred stock with these rights may make the removal of management difficult even if the removal would be considered beneficial to shareholders generally, and will have the effect of limiting shareholder participation in certain transactions such as mergers or tender offers if these transactions are not favored by management.
As of December 31, 2024, we had approximately 120 shareholders of record and 24,391,961 outstanding shares of common stock.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA.
Not applicable.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Material changes in the line items in our Statement of Operations for the year ended September 30, 2024 as compared to the same period last year, are discussed below:
Item
Increase (I) or
Decrease (D)
Reason
Rental Income
D
The decrease in revenue is primarily due to the modification of the lease with our tenant that was effective May of 2024.
Professional fees
I
The increase in professional fees is primarily due to an increase in legal, accounting, auditing and consulting fees.
Interest income
I
The increase in interest income is a result of loan payments received by the Company.
Interest expense
D
The decrease is primarily attributable to amortization of debt discounts in prior period.
LIQUIDITY AND CAPITAL RESOURCES
Loans
On August 2, 2019 we secured a $4,000,000 loan from an unrelated third party. The loan was evidenced by a note which bears interest at the rate of 11% per year. On December 4, 2020, the loan was increased by $500,000 and the maturity date was extended from August 2, 2022 to August 1, 2023. In July 2023, the maturity date was further extended to December 1, 2023 while all other provisions of the original loan remained the same. On November 30, 2023, the maturity date was extended to January 31, 2024 while all other provisions of the original loan remained the same. On December 1, 2024 the maturity date of the loan was extended to April 30, 2025 while all other provisions of the original loan remained the same. The loan is secured by a first lien on Building 1 at the MCC.
The note holder also received a warrant which allows the holder to purchase 600,000 shares of the Company’s common stock at a price of $1.50 per share. The warrant will expire on the earlier of (i) August 2, 2024 or (ii) twenty days after written notice to the holder that the daily Volume Weighted Average Price of the Company’s common stock was at least $4.00 for twenty consecutive trading days and the average daily volume of trades of the Company’s common stock during the twenty trading days was at least 150,000 shares.
Sale of Common Stock and Warrants
Currently the company has 1,500,000 warrants issued and outstanding with exercise prices of $1.25 and an expiration date of December 31, 2024 associated with transactions prior to October 1, 2019.
Contractual obligations
Prior to November 19, 2024, the Company leased approximately 52.6 acres from MMP under an operating lease commencing October 17, 2016. By agreement dated November 19, 2024, the Company transferred the undeveloped portion of the leased property (approximately 48.3 acres) to MMP. (See Item 1 of this report). The lease payments are now the greater of (a) $13,407 per month; or (b) 1.5% of all gross monthly sales of products sold by the Company, any assignee of the Company, or any subtenant of the Company. The lease has an initial term of fifty (50) years. The Company has the option to extend the term of the lease for four (4) additional ten (10) year periods. The lease is a triple net lease, with the Company paying all real estate taxes, repairs, maintenance and insurance.
Analysis of Cash Flows
Our sources and (uses) of cash for the years ended September 30, 2024 and 2023 are shown below:
Cash (used) provided by operations
$ (1,170,000 )
$ 579,860
Construction costs
(956 )
(32,705 )
Acquisition of property and equipment
--
(246,461 )
Payments received from notes receivable
84,857
43,185
Advances to third parties
--
(400,000 )
Repayment of notes
--
(150,000 )
Going concern
The accompanying consolidated unaudited financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $(21,107,773) and $(19,853,444) at September 30, 2024 and 2023, respectively, and had a net loss of $(1,254,329) for the year ended September 30, 2024.
Management believes that the actions presently being taken to further implement the Company’s business plan and generate additional revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate additional revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company's ability to further implement its business plan and generate additional revenues. The consolidated unaudited financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Trends
The factors that will most significantly affect our future operating results, liquidity and capital resources will be:
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Government regulation of the cannabis industry;
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Revision of Federal banking regulations for the cannabis industry; and
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Legalization of the use of cannabis for medical or recreational use in other states.
Other than the foregoing, we do not know of any trends, events or uncertainties that have had, or are reasonably expected to have, a material impact on:
●
revenues or expenses;
●
any material increase or decrease in liquidity; or
●
expected sources and uses of cash.
RECENT ACCOUNTING PRONOUNCEMENTS
Recent accounting pronouncements which may be applicable to us are described in Note 1 to the Consolidated Financial Statements included as part of this report.
SIGNIFICANT ACCOUNTING POLICIES
Our significant accounting policies are set forth below. We have consistently applied these policies in all material respects.
Use of Estimates
The preparation of consolidated unaudited financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated unaudited financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant estimates and assumptions made by management are valuation of equity instruments, deferred tax asset valuation and allowance and collectability of accounts receivable and long-lived assets. Actual results could differ from those estimates as the current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposit accounts and temporary cash investments with maturities of ninety days or less at the date of purchase.
Income Taxes
The Company follows FASB Codification Topic 740-10-25 (ASC 740-10-25) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.
We expect to recognize the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a "more-likely-than-not" threshold, the amount to be recognized in the consolidated unaudited financial statements will be the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. As of September 30, 2024 and 2023, we had no uncertain tax positions. We recognize interest and penalties, if any, related to uncertain tax positions as general and administrative expenses. We currently have no federal or state tax examinations nor have we had any federal or state examinations since our inception. To date, we have not incurred any interest or tax penalties.
For federal tax purposes, our 2021 through 2023 tax years remain open for examination by the tax authorities under the normal three-year statute of limitations.
Concentration of Credit Risks and Significant Customers
Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash, notes receivables, deposits, and tenant receivables. We place our cash with high credit quality financial institutions. As of September 30, 2024, we had outstanding notes receivable of $315,143 and a tenant receivable of $57,588 with a customer, previously a related party.
Financial Instruments and Fair Value of Financial Instruments
We adopted ASC Topic 820, Fair Value Measurements, for assets and liabilities measured at fair value on a recurring basis. ASC Topic 820 requires the use of fair value measurements, establishes a framework for measuring fair value and expands disclosure concerning such fair value measurements.
ASC Topic 820 defines fair value as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC Topic 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
Level 1:
Observable inputs such as quoted market prices in active markets for identical assets or liabilities
Level 2:
Observable market-based inputs or unobservable inputs that are corroborated by market data
Level 3:
Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.
The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. We had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. We had no financial assets or liabilities carried and measured on a recurring basis during the reporting periods. The carrying value of short-term financial instruments, including cash, tenant and notes receivable, accounts payable and accrued expenses, and short-term borrowings approximate fair value due to the relatively short period to maturity for these instruments. The long-term borrowings approximate fair value since the related rates of interest approximates current market rates.
Derivative Liabilities
We evaluate stock options, stock warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of ASC Topic 815-40, Derivative Instruments and Hedging: Contracts in Entity’s Own Equity. The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument and is marked-to-market at each consolidated unaudited balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated unaudited statement of operations as other income or other expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Financial instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815-40 are reclassified to a liability account at the fair value of the instrument on the reclassification date. We determined that none of our financial instruments meet the criteria for derivative accounting as of September 30, 2024 and 2023.
Operating leases
Effective October 1, 2019, we adopted ASC 842 Lease Accounting using the effective date method. Under the method, periods prior to adoption remain unchanged. We determine if an arrangement is a lease at inception.
Right of Use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Variable lease payments are not included in the calculation of the right-of-use asset and lease liability due to uncertainty of the payment amount and are recorded as lease expense in the period incurred. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Under the available practical expedient, we account for the lease and non-lease components as a single lease component for all classes of underlying assets as both a lessee and lessor. Further, we elected a short-term lease exception policy on all classes of underlying assets, permitting us to not apply the recognition requirements of this standard to short-term leases (i.e. leases with terms of 12 months or less).
Long-lived assets
Our long-lived assets consist of property and equipment and are reviewed for impairment in accordance with the guidance of the Topic ASC Topic 360, Property, Plant, and Equipment. We test for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management's estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial positions. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. There were no impairment losses recognized for the years ended September 30, 2024 and 2023.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment begins in the month following the month when the asset is placed into service and is provided using the straight-line method for financial reporting purposes at rates based on the estimated useful lives of the assets. Estimated useful lives range from three to twenty years.
Non-Cash Equity Transactions
Shares of equity instruments issued for noncash consideration are recorded at the estimated fair market value of the consideration granted based on the estimated fair market value of the equity instrument, or at the estimated fair market value of the goods or services received, whichever is more readily determinable.
Stock-Based Compensation
We account for share-based awards to employees in accordance with ASC Topic 718, Stock Compensation. Under this guidance, stock compensation expense is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the estimated service period (generally the vesting period) on the straight-line attribute method. Share-based awards to non-employees are accounted for in accordance with ASU 2018-07 Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting, which aligns the accounting for nonemployee share-based payments with accounting of share-based payments to employees.
Related Parties
A party is considered to be related to us if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with us. Related parties also include our principal owners, our management, members of the immediate families of our principal owners and our management and other parties with which we may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties, or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests, is also a related party.
Revenue Recognition
Property lease revenue is earned through annual leases for facilities used in agricultural/manufacturing activities and the Company records revenues on a straight-line basis over the term of these leases. Property lease revenues from these sources are recurring on an annual basis. Unearned property lease revenues were $0 at both September 30, 2024 and 2023.
The Company also receives a revenue participation fee which is considered a variable payment and thus is recorded in the period earned in accordance with ASC 842.
Advertising Expense
Advertising, promotional and selling expenses consist of sales and marketing expenses, and promotional activity expenses. Expenses are recognized when incurred.
General and Administrative Expense
General and administrative expenses consist of professional service fees, rent and utility expenses, meals, travel and entertainment expenses, and other general and administrative overhead costs. Expenses are recognized when incurred.
Loss per Share
We compute net loss per share in accordance with the ASC Topic 260. The ASC specifies the computation, presentation and disclosure requirements for loss per share for entities with publicly held common stock.
Basic loss per share amounts is computed by dividing the net loss by the weighted average number of common shares outstanding. Shares issuable upon the exercise of equity instruments such as warrants and options were not included in the loss per share calculations for 2024 and 2023 because the inclusion would have been anti-dilutive.
OFF-BALANCE SHEET ARRANGEMENTS
As of September 30, 2024, we did not have any off-consolidated unaudited balance sheet arrangements.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
Not applicable.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Attached.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A.
CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
An evaluation was carried out under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-K. Disclosure controls and procedures are procedures designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Form 10-K, is recorded, processed, summarized and reported within the time period specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and is communicated to our management, including our Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our management concluded that, as of September 30, 2024, our disclosure controls and procedures were not effective for the same reasons that our internal control over financial reporting was not adequate.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as required by Sarbanes-Oxley Act, Section 404.A. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated unaudited financial statements in accordance with generally accepted accounting principles in the United States and includes those policies and procedures that:
(1)
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets;
(2)
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors; and
(3)
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer's assets that could have a material effect on the issuer’s financial statements.
We carried out an evaluation under the supervision and with the participation of management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our internal control over financial reporting as of September 30, 2024. In making this evaluation, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework, published in 2013. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our internal control over financial reporting was not effective as of September 30, 2024 at the reasonable assurance level, as a result of material weaknesses related to a lack of a sufficient number of personnel with appropriate training and experience in accounting principles generally accepted in the United States of America, or GAAP, limited or no segregation of duties, and lack of independent directors. As a result, we did not adequately document or test whether our financial activity level controls or our information technology general controls were operating sufficiently to identify a deficiency, or combination of deficiencies, that may result in a reasonable possibility that a material misstatement of the consolidated unaudited financial statements would not be prevented or detected on a timely basis. While management has reviewed the consolidated unaudited financial statements and underlying information included in this Annual Report on Form 10-K in detail and believes the procedures performed are adequate to fairly present our financial position, results of operations and cash flows for the periods presented in all material respects, the material weaknesses that existed in fiscal 2023 could have led to an error in the original accounting of the estimated fair market value of certain equity instruments.
Remediation of Material Weaknesses
A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 2201), or combination of control deficiencies, that result in more than a remote likelihood that a material misstatement of the annual or interim consolidated unaudited financial statements will not be prevented or detected. While management believes that the Company’s consolidated unaudited financial statements previously filed in the Company’s SEC reports have been properly recorded and disclosed in accordance with US GAAP, we have designed and plan to implement, or in some cases have already implemented, the specific remediation initiatives described below:
We plan to obtain and hire additional accounting personnel, and continue to enhance our internal finance and accounting organizational structure.
We have hired a third-party consultant who has the required background and experience in accounting principles generally accepted in the United States of America and with SEC rules and regulations.
We are in the process of further enhancing the supervisory procedures to include additional levels of analysis and quality control reviews within the accounting and financial reporting functions.
We are in the process of strengthening our internal policies and ensuring that the consistent validation of our conclusions regarding significant accounting policies and their application to our business transactions are carried out by personnel with an appropriate level of accounting knowledge, experience and training.
While we have not yet remediated these material weaknesses, we will continue our remediation efforts during fiscal 2025.
This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to such attestation pursuant to rules of the Securities and Exchange Commission that permits us to provide only management’s report in this Annual Report.
Changes in Internal Control over Financial Reporting
No changes in our internal control over financial reporting have come to management's attention during our last fiscal quarter that have materially affected, or are likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
ITEM 9B.
OTHER INFORMATION
During the three months ended September 30, 2024, none of the Company’s directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or adopted or terminated a “non-Rule 10b5-1 trading arrangement.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Name
Age
Position
Timothy Keogh
Chief Executive Officer and a Director
Benjamin J. Barton
Chief Financial and Accounting Officer and a Director
The following is a brief summary of the background of each officer and director including their principal occupations during the past several years. All directors will serve until their successors are elected and qualified or until they are removed.
Timothy Keogh was appointed our Chief Executive Officer and a director on March 25, 2014. As our Chief Executive Officer, Mr. Keogh has developed sustainable practices and traditional horticultural approaches to the production of cannabis to benefit patients and adults (21+) in regulated markets. Prior to joining AmeriCann, Mr. Keogh was the Chief Executive Officer and a director of Bask, Inc (f/k/a Coastal Compassion, Inc.), a non-profit corporation that has entered the medical marijuana business in Massachusetts. BASKS’s efforts began in September of 2012 and was formalized under Massachusetts G.L. Chapter 180 in August of 2013. Under the direction of Mr. Keogh, Bask, Inc. received a limited number Final Certificates for cultivation, processing and dispensing of cannabis in Massachusetts.
Between November 2010 and November 2013 Mr. Keogh owned and managed Dock Promotions, LLC, a company which provided consulting services to waterfront developments and marinas in the areas of design, construction, and operations. Between 2003 and 2010, Mr. Keogh was the Director of Business Services for Marina Management Services, Inc., a corporation which provided management and consulting solutions to waterfront developments, marinas and boatyards throughout the Americas and the Caribbean.
Mr. Keogh was recognized by Marijuana Business Daily as one of the top entrepreneurs in the cannabis industry and continues to be an invited speaker at investment and cannabis industry events throughout the United States. Mr. Keogh holds a Bachelor of Science in Business Administration from Mount St. Mary’s College.
Ben Barton was appointed a director on January 14, 2014 and Chief Financial Officer on January 22, 2014. Since 1986, Mr. Barton has been active in all aspects of venture capital and public stock offerings. Since 2005, Mr. Barton has been the Managing Director of Strategic Capital Partners, LLC, a private investment company specializing in emerging companies. Mr. Barton was one of the founders of SRC Energy, Inc., an energy company that traded on the NYSE. Prior to earning an MBA in Finance from UCLA, Mr. Barton received his Bachelor of Science degree in Political Science from Arizona State University.
In March 25, 2014, we entered into an employment agreement with Mr. Keogh. The agreement with Mr. Keogh has since expired. Pursuant to the employment agreement, Strategic Capital Partners, LLC, our largest shareholder, sold 1,200,000 shares of our common stock to Mr. Keogh at a price of $0.001 per share.
See Item 12 of this report for information concerning options granted to Mr. Keogh.
Our directors serve until the next annual meeting of our shareholders and until their successors have been duly elected and qualified. Our officers serve at the discretion of our directors.
We believe our directors are qualified to act as such for the following reasons:
Timothy Keogh - experience in cannabis industry
Benjamin J. Barton - experience in the capital markets
Timothy Keogh and Benjamin J. Barton are not independent as that term is defined in Section 803 of the NYSE American Company Guide.
We do not have a financial expert as that term is defined by the Securities and Exchange Commission.
Our Board of Directors does not have standing audit, nominating or compensation committees, committees performing similar functions, or charters for such committees. Instead, the functions that might be delegated to such committees are carried out by our Board of Directors, to the extent required. Our Board of Directors believes that these committees are not needed since we only have three directors.
Our Board of Directors believes that its current members have sufficient knowledge and experience to fulfill the duties and obligations of an audit committee. None of the current Board members is an “audit committee financial expert” within the meaning of the rules and regulations of the Securities and Exchange Commission. The Board has determined that each of its members is able to read and understand fundamental consolidated unaudited financial statements and has substantial business experience that results in that member’s financial sophistication.
Our Board of Directors does not have a “leadership structure” since each board member is free to introduce any resolution at any meeting of our directors and is entitled to one vote at any meeting.
Holders of our common stock may send written communications to our entire board of directors, or to one or more board members, by addressing the communication to “the Board of Directors” or to one or more directors, specifying the director or directors by name, and sending the communication to our offices in Denver, Colorado. Communications addressed to the Board of Directors as whole will be delivered to each board member. Communications addressed to a specific director (or directors) will be delivered to the director (or directors) specified.
Security holder communications not sent to the Board of Directors as a whole or to specified board members will not be relayed to other board members.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION.
During the years ended September 30, 2024 and 2023 the following amounts were earned by our officers:
Name and
Principal Position
Fiscal
Year
Salary
Bonus
Stock
Awards
()
Option
Awards
All Other
Compensation
(1)
Total
$
$
$
$
$
$
Timothy Keogh
$ 180,000
$ 180,000
Chief Executive Officer
$ 180,000
-
-
-
-
$ 180,000
Benjamin J. Barton
$ 180,000
180,000
Chief Financial Officer
-
-
-
-
$ 180,000
$ 180,000
(1)
Consulting fees earned by Strategic Capital Partners, LLC, an entity controlled by Mr. Barton.
Our executive officers are compensated through the following three components:
●
base salary;
●
long-term incentives (stock options and/or grants of stock); and
●
benefits.
These components provide a balanced mix of base compensation and compensation that is contingent upon the executive officer’s individual performance. A goal of the compensation program is to provide executive officers with a reasonable level of security through base salary and benefits. We want to ensure that our compensation program is appropriately designed to encourage executive officer retention and motivation to create shareholder value. Salaries generally have been targeted to be competitive when compared to the salary levels of persons holding similar positions in other publicly traded companies of comparable size. The executive officer’s responsibilities, experience, expertise and individual performance are also considered.
The Company has a Stock Incentive Plan (“the plan”) that provides for the grant of Incentive Stock Options, Non-Qualified Stock Options or Stock Bonuses to persons who are employees of the Company, employees of subsidiaries of the Company, directors, officers, and consultants. Under the plan, the Company may grant stock bonuses or options (up to a combined maximum of 2,500,000 shares or options). Each option allows for the purchase of one share of common stock, subject to an exercise price and vesting schedule to be established by the board of directors at the time of the grant.
The Plan is administered by our Board of Directors which has the authority to determine the number of shares to be issued as a stock bonus, and the number of shares issuable upon the exercise of options, the exercise price and expiration date of options, and when, and upon what conditions options granted under the Plan will vest or otherwise be subject to forfeiture and cancellation.
The following table shows the weighted average exercise price of the outstanding options granted pursuant to the Company’s Stock Incentive Plan as of September 30, 2024, the Company’s recently completed fiscal year:
Plan
Total Shares
Reserved
Under the Plan
Number of
			Securities to
be Issued Upon
			Exercise
of Outstanding
			Options
Weighted-
Average
Exercise Price
			of Outstanding
			Options
Number of Securities
Remaining Available
			for Future Issuances
			Under Equity
			Compensation
Plans (Excluding
Securities Reflected in
Column (a))
(a)
(b)
(c)
Stock Incentive Plan
2,500,000
1,000,000
2.25
1,500,000
The Company’s Stock Incentive Plan has not been approved by the Company’s shareholders.
The following shows certain information as of December 31, 2024 concerning the stock options and stock bonuses granted pursuant to the Stock Incentive Plan. Each option represents the right to purchase one share of our common stock.
Total Shares
Reserved
Under the
Plan
Shares Reserved for
Outstanding Options
Shares Issued As
Stock
Bonus
Remaining
Options/Shares Under
the Plan
2,500,000
1,000,000
-
1,50,000

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table shows the ownership, as of December 31, 2024, of those persons owning beneficially 5% or more of our common stock and the number and percentage of outstanding shares owned by each of our directors and officers and by all officers and directors as a group. Each owner has sole voting and investment power over their shares of common stock.
Name
Shares Owned
(2)
Percentage of
			Outstanding shares
Timothy Keogh
1,365,625
5.6 %
Benjamin J. Barton
160,625
0.7 %
Strategic Capital Partners, LLC (1)
8,966,665
36.8 %
All officers and directors as a group (two persons)
10,492,915
43.1 %
(1)
Strategic Capital Partners, LLC is controlled by Mr. Barton.
(2)
Does not include shares issuable upon the exercise of the warrants and options listed below, all of which were exercisable as of December 31, 2024.
Name
Date of
Issuance
Shares upon
			exercise of
warrants or
			options
Exercise
			Price
Expiration
Date
Strategic Capital Partners, LLC (1)
9/30/2019
1,500,000
$ 1.25
12/31/2024
Timothy Keogh
9/30/2020
250,000
$ 1.50
9/30/2025
9/30/2020
250,000
$ 3.00
9/30/2025
Ben Barton
9/30/2020
250,000
$ 1.50
9/30/2025
9/30/2020
250,000
$ 3.00
9/30/2025
(1)
Strategic Capital Partners, LLC, is controlled by Mr. Barton.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On September 30, 2019, we amended and modified two notes payable due to Strategic Capital Partners, LLC a company controlled by Benjamin J. Barton, one of our officers and directors with balances of $1,000,000 and $756,646, into one note, in the principal amount of $1,756,646, bearing interest of 9% per year and maturing on December 31, 2022. Additionally, the conversion option in the first note was eliminated. As additional consideration for the modification of the notes we issued SCP warrants to purchase 1,500,000 shares of our common stock. The warrants are exercisable at a price of $1.25 per share at any time on or before December 31, 2024.
On April 7, 2016, we signed agreements with BASK (formerly Coastal Companion, Inc). BASK is one of a limited number of organizations that has received a provisional or final registration to cultivate, process and sell medical cannabis by the Massachusetts Cannabis Control Commission.
Pursuant to the agreements, we provided BASK with financing for construction and working capital required for BASK’s approved dispensary and cultivation center in Fairhaven, MA.
On August 15, 2018, the Company combined the construction and working capital advances of $129,634 and accrued interest of $44,517 into a new loan with payments over 5 years with 18% interest. As of September 30, 2024, the outstanding loan balance was $0.
BASK has entered into a 15-Year NNN lease of Building 1 of the MCC. The lease commenced on September 1, 2019 and includes a base rent and a revenue participation fee. As of September 30, 2024, the BASK tenant receivable balance was $103,450.
Tim Keogh, our Chief Executive Officer, was a Board Member of BASK between August 2013 and November 2021. Effective December 1, 2021, BASK was no longer classified as a related party.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
For the year ended September 30, 2023, MaloneBailey, LLP served as our independent registered public accounting firm.
Audit ID: 9999 Audit Firm: NA Audit location: NA
The following table sets forth the aggregate fees paid or accrued for professional services rendered by our independent accountants for the audit of our annual consolidated financial statements for the year ended September 30, 2023, and the aggregate fees paid or accrued for audit-related services and all other services rendered by our independent accountants for those years.
Year Ended September 30,
Audit fees
$ 92,700
$ 88,310
Tax fees
Other
Total
$ 92,700
$ 88,310
The category of “Audit fees” includes fees for our annual audit, quarterly reviews of our 10-Q reports, and services rendered in connection with statutory or regulatory filings with the SEC.
Our Board of Directors, which serves as our audit committee, pre-approves the scope and estimated costs of all services rendered by our Principal Accountants.
AMERICANN, INC.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED
SEPTEMBER 30, 2024 AND 2023
Consolidated Unaudited Financial Statements
Consolidated Unaudited Balance Sheets
Consolidated Unaudited Statements of Operations
Consolidated Unaudited Statement of Changes in Stockholders' Equity
Consolidated Unaudited Statements of Cash Flows
Notes to the Consolidated Unaudited Financial Statements
AMERICANN, INC.
CONSOLIDATED UNAUDITED BALANCE SHEETS
September 30, 2024
September 30, 2023
Assets
Current Assets:
Cash and cash equivalents
$ 48,841
$ 1,135,006
Restricted cash
9,967
9,967
Tenant receivable
57,588
103,450
Prepaid expenses and other current assets
128,226
23,415
Current portion of note receivable
171,896
62,116
Total current assets
416,518
1,333,954
Note receivable
143,247
337,884
Construction in progress
372,638
371,682
Property and Equipment, net
6,492,085
6,402,531
Operating lease - right-of-use asset
6,638,679
6,708,843
Total assets
$ 14,063,167
$ 15,154,894
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued expenses
$ 140,578
$ 87,247
Accounts payable - related party
-
15,000
Interest payable (including $8,749 and $0 to related parties)
174,201
40,686
Other payables
9,325
6,365
Operating lease liability, short term
13,201
12,204
Note payable - related party
581,646
581,646
Notes payable (net of unamortized discounts of $0)
4,500,000
4,500,000
Total current liabilities
5,418,951
5,243,148
Operating lease liability, long term
4,191,188
4,204,389
Total liabilities
9,610,139
9,447,537
Commitments and contingencies - see Note 10
Stockholders' Equity:
Preferred stock, $0.0001 par value; 20,000,000 shares authorized; no shares issued and outstanding
-
-
Common stock, $0.0001 par value; 100,000,000 shares authorized; 24,391,961 shares issued and outstanding as of September 30, 2024 and 2023
2,439
2,439
Additional paid in capital
25,558,362
25,558,362
Accumulated deficit
(21,107,773 )
(19,853,444 )
Total stockholders' equity
4,453,028
5,707,357
Total liabilities and stockholders' equity
$ 14,063,167
$ 15,154,894
See accompanying notes to consolidated unaudited financial statements.
AMERICANN, INC.
CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS
Year Ended September 30,
Rental income
$ 1,274,810
2,552,200
Cost of revenues
2,354
16,170
Gross profit
1,272,456
2,536,030
Operating expenses:
Advertising and marketing
5,741
9,743
Professional fees
412,234
359,669
General and administrative expenses
1,600,089
1,554,948
Total operating expenses
2,018,064
1,924,360
(Loss) income from operations
(745,608 )
611,670
Other income (expense):
Interest income
41,223
3,440
Interest expense
(497,452 )
(657,517 )
Interest expense - related party
(52,492 )
(52,348 )
Total other income (expense)
(508,721 )
(706,425 )
Net (loss)/income
$ (1,254,329 )
$ (94,755 )
Basic and diluted (loss)/income per common share
$ (0.05 )
$ 0.00
Weighted average common shares outstanding
24,391,961
24,391,961
See accompanying notes to consolidated unaudited financial statements.
AMERICANN, INC.
CONSOLIDATED UNAUDITED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Additional
Preferred Stock
Common Stock
Paid In
Accumulated
Shares
Amount
Shares
Amount
Capital
Deficit
Total
Balances, September 30, 2022
-
$ -
24,391,961
2,439
25,558,362
(19,758,689 )
5,802,112
Net loss
-
-
-
-
-
(94,755 )
(94,755 )
Balances, September 30, 2023
-
$ -
24,391,961
$ 2,439
$ 25,558,362
$ (19,853,444 )
$ 5,707,357
Net loss
-
-
-
-
-
(1,254,329 )
(1,254,329 )
Balances, September 30, 2024
-
$ -
24,391,961
$ 2,439
$ 25,558,362
$ (21,107,773 )
$ 4,453,028
See accompanying notes to consolidated unaudited financial statements.
AMERICANN, INC.
CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS
Year Ended
Cash flows from operating activities:
Net (loss)/income
$ (1,254,329 )
$ (94,755 )
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Depreciation and amortization
462,246
455,891
Amortization of right of use assets
70,164
69,242
Amortization of debt discount
-
162,353
Changes in operating assets and liabilities:
Tenant receivable
(505,938 )
148,012
Prepaid expenses
(104,811 )
39,351
Accounts payable and accrued expenses
53,331
(105,923 )
Operating lease liability
(12,204 )
(11,286 )
Accounts payable - related party
(15,000 )
(67,500 )
Interest payable
133,515
(13,278 )
Other payables
2,960
(2,247 )
Net cash flows (used in)/provided by operations
(1,170,066 )
579,860
Cash flows from investing activities:
Additions to construction in progress
(956 )
(32,705 )
Additions to property and equipment
-
(246,461 )
Payments received on notes receivable
84,857
43,185
Advances made on notes receivable
-
(400,000 )
Net cash flows provided by/(used in) investing activities
83,901
(635,981 )
Cash flows from financing activities:
Principal payments on notes payable
-
(150,000 )
Net cash flows (used in) financing activities
-
(150,000 )
Net change in cash, cash equivalents, and restricted cash
(1,086,165 )
(206,121 )
Cash, cash equivalents, and restricted cash at beginning of period
1,144,973
1,351,094
Cash, cash equivalents, and restricted cash at end of period
$ 58,808
$ 1,144,973
Supplementary Disclosure of Cash Flow Information:
Cash paid for interest
$ 416,428
$ 560,790
Cash paid for income taxes
$ -
$ -
See accompanying notes to consolidated unaudited financial statements.
AMERICANN, INC.
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
NOTE 1.
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Description of Business
AmeriCann, Inc. ("the Company", “we”, “our”, or "the Issuer") was organized under the laws of the State of Delaware on June 25, 2010. The Company changed its corporate domicile to Colorado in 2022.
On January 17, 2014, a privately held limited liability company acquired approximately 93% of the Company's outstanding shares of common stock from several of the Company's shareholders which resulted in a change in control of the Company.
The Company's business plan is to design, develop, lease and operate state-of-the-art cultivation, processing and manufacturing facilities for licensed cannabis businesses throughout the United States.
Summary of Significant Accounting Policies
This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s consolidated unaudited financial statements. The consolidated unaudited financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States and have been consistently applied in the preparation of the consolidated unaudited financial statements.
Principles of Consolidation
The consolidated unaudited financial statements include the accounts of AmeriCann, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in the consolidated unaudited financial statements.
All significant intercompany balances and transactions have been eliminated in the consolidated unaudited financial statements.
Use of Estimates
The preparation of consolidated unaudited financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated unaudited financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant estimates and assumptions made by management are valuation of equity instruments, deferred tax asset valuation and allowance and collectability of accounts receivable and long-lived assets. Actual results could differ from those estimates as the current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.
The Company's activities are subject to significant risks and uncertainties including failure to secure funding to expand its operations.
Certain prior period amounts have been reclassified to conform with current period presentation. These reclassifications have no impact on net loss.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposit accounts and temporary cash investments with maturities of ninety days or less at the date of purchase.
Income Taxes
The Company follows FASB Codification Topic 740-10-25 (ASC 740-10-25) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.
We expect to recognize the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a "more-likely-than-not" threshold, the amount to be recognized in the consolidated unaudited financial statements will be the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. As of September 30, 2024 and 2023, we had no uncertain tax positions. We recognize interest and penalties, if any, related to uncertain tax positions as general and administrative expenses. We currently have no federal or state tax examinations nor have we had any federal or state examinations since our inception. To date, we have not incurred any interest or tax penalties.
For federal tax purposes, our 2021 through 2023 tax years remain open for examination by the tax authorities under the normal three-year statute of limitations.
Concentration of Credit Risks and Significant Customers
Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash, notes receivable, deposits tenant receivables and notes receivable. We place our cash with high credit quality financial institutions. As of September 30, 2024 and 2023, we had outstanding notes receivable of $315,143 and $400,000, respectively and tenant receivables of $57,588 and $103,450, respectively, with BASK, Inc. ("BASK").
For the year ended September 30, 2024, all of the Company’s revenue was earned from one customer, BASK (which was a related party prior to December 2021, see (Note 6).
Financial Instruments and Fair Value of Financial Instruments
We adopted ASC Topic 820, Fair Value Measurement, for assets and liabilities measured at fair value on a recurring basis. ASC Topic 820 establishes a common definition for fair value to be applied to existing US GAAP that requires the use of fair value measurements that establishes a framework for measuring fair value and expands disclosure of fair value measurements.
ASC Topic 820 defines fair value as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC Topic 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data
Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.
The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. We had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. We had no financial assets or liabilities carried and measured on a recurring basis during the reporting periods. The carrying value of short-term financial instruments, including cash and cash equivalents, tenant and notes receivable, accounts payable and accrued expenses, and short-term borrowings approximate fair value due to the relatively short period to maturity for these instruments. The long-term borrowings approximate fair value since the related rates of interest approximates current market rates.
Derivative Liabilities
We evaluate stock options, stock warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of ASC Topic 815-40, Derivative Instruments and Hedging: Contracts in Entity’s Own Equity. The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument and is marked-to-market at each consolidated unaudited balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated unaudited statement of operations as other income or other expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Financial instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815-40 are reclassified to a liability account at the fair value of the instrument on the reclassification date. We determined that none of our financial instruments meet the criteria for derivative accounting as of September 30, 2024 and 2023.
Operating leases
Effective October 1, 2019, we adopted Topic 842 using the effective date method. Under this method, periods prior to adoption remain unchanged. We determine if an arrangement is a lease at inception.
Right of Use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Variable lease payments are not included in the calculation of the right-of-use asset and lease liability due to uncertainty of the payment amount and are recorded as lease expense in the period incurred. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Under the available practical expedient, we account for the lease and non-lease components as a single lease component for all classes of underlying assets as both a lessee and lessor. Further, we elected a short-term lease exception policy on all classes of underlying assets, permitting us to not apply the recognition requirements of this standard to short-term leases (i.e. leases with terms of 12 months or less).
Long-Lived Assets
Our long-lived assets consisted of property, plant and equipment and are reviewed for impairment in accordance with the guidance of the Topic ASC Topic 360, Property, Plant, and Equipment. We test for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management's estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial positions. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. There were no impairment losses recognized for the years ended September 30, 2024 and 2023.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment begins in the month following the month when the asset is placed into service and is provided using the straight-line method for financial reporting purposes at rates based on the estimated useful lives of the assets. Estimated useful lives range from three to twenty years. Property, plant and equipment consist of:
September 30,
September 30,
Buildings and improvements
$ 7,854,548
$ 7,854,548
Computer equipment
349,576
349,576
Furniture and equipment
2,764
2,764
Equipment
551,800
-
Total
8,758,688
8,206,888
Accumulated depreciation
(2,266,603 )
(1,804,357 )
Property and equipment, net
$ 6,492,085
$ 6,402,531
Depreciation expense for the years ended September 30, 2024 and 2023 amounted to $462,246 and $455,891, respectively.
Equity Instruments Issued to Non-Employees for Acquiring Goods or Services
Effective October 1, 2019, the Company adopted ASU 2018-07, Compensation - “Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting”, which addresses aspects of the accounting for nonemployee share-based payment transactions. Upon adoption, all of the issuances of stock to non-employees for goods and services are treated in the same matter as share based awards to employees. The adoption did not have an impact on the Company’s financial statements.
Non-Cash Equity Transactions
Shares of equity instruments issued for noncash consideration are recorded at the estimated fair market value of the consideration granted based on the estimated fair market value of the equity instrument, or at the estimated fair market value of the goods or services received, whichever is more readily determinable.
Stock-Based Compensation
The Company accounts for share-based awards to employees in accordance with ASC Topic 718, Stock Compensation Under this guidance, stock compensation expense is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the estimated service period (generally the vesting period) on the straight-line attribute method. Effective October 1, 2019, the Company adopted ASU 2018-07, Compensation - “Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting”, which aligns the accounting for nonemployee share-based payments with accounting of share-based payments to employees.
Related Parties
A party is considered to be related to us if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with us. Related parties also include our principal owners, our management, members of the immediate families of our principal owners and our management and other parties with which we may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties, or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests, is also a related party.
Revenue Recognition
Effective October 1, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under the new standard, we recognize revenues when the following criteria are met: (i) persuasive evidence of a contract with a customer exists, (ii) identifiable performance obligations under the contract exist, (iii) the transaction price is determinable for each performance obligation, (iv) the transaction price is allocated to each performance obligation, and (v) when the performance obligations are satisfied. Currently, we derive all of our revenues from property leases. Property leases are not within the scope of ASC 606.
Property lease revenue is earned through annual leases for facilities used in agricultural/manufacturing activities and the Company records revenues on a straight-line basis over the term of these leases. Property lease revenues from these sources are recurring on an annual basis. Unearned property lease revenues were $0 at both September 30, 2024 and 2023. The Company also receives a revenue participation fee which is considered a variable payment and thus is recorded in the period earned in accordance with ASC 842.
Advertising Expense
Advertising, promotional and selling expenses consist of sales and marketing expenses, and promotional activity expenses. Expenses are recognized when incurred.
General and Administrative Expense
General and administrative expenses consist of professional service fees, rent and utility expenses, meals, travel and entertainment expenses, and other general and administrative overhead costs. Expenses are recognized when incurred.
Loss per Share
We compute net loss per share in accordance with the ASC Topic 260. The ASC specifies the computation, presentation and disclosure requirements for loss per share for entities with publicly held common stock.
Basic loss per share amounts is computed by dividing the net loss by the weighted average number of common shares outstanding. Shares issuable upon the exercise of equity instruments such as warrants and options were not included in the loss per share calculations for 2024 and 2023 because the inclusion would have been anti-dilutive.
Recently Issued Accounting Pronouncements
The Company has reviewed all the recently issued, but not yet effective, accounting pronouncements and do not believe any of these pronouncements will have a material impact on its unaudited consolidated unaudited financial statements.
ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.
In November 2024, the FASB issued this ASU which requires a public entity to disclose additional information about specific expense categories in the notes to financial statements on an annual and interim basis. The amendments are effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. A public entity should apply the amendments either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements. We do not expect that this guidance will not have a significant impact on the Company's consolidated unaudited financial statements.
Accounting Standards Updates ("ASUs") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. In November 2023, the FASB issued this ASU to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We do not expect that this guidance will have a material impact on our consolidated unaudited financial statements and disclosures.
ASU 2023-09, Income Taxes (Topic 740): Improvements to Tax Disclosures. In December 2023, the FASB issued this ASU which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024. We do not expect that this guidance will have a material impact on our consolidated unaudited financial statements and disclosures.
NOTE 2.
GOING CONCERN
The accompanying consolidated unaudited financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $21,107,773 and $19,853,444 at September 30, 2024 and 2023, respectively, and had a net loss of $1,254,329 and $94,755 for the years ended September 30, 2024 and 2023, respectively. These matters, among others, raise substantial doubt about the Company’s ability to continue as a going concern. While the Company is attempting to increase operations and generate additional revenues, the Company's cash position may not be significant enough to support the Company's daily operations. Management intends to raise additional funds through the sale of its securities.
Management believes that the actions presently being taken to further implement its business plan and generate additional revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate additional revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company's ability to further implement its business plan and generate additional revenues. The consolidated unaudited financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 3.
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated unaudited balance sheets that sum to the total of the same such amounts in the consolidated unaudited statements of cash flows:
September 30,
September 30,
Cash and cash equivalents
$ 48,841
$ 1,135,006
Restricted cash
9,967
9,967
Total cash, cash equivalents, and restricted cash shown in the cash flow statement
$ 58,808
$ 1,144,973
Amounts included in restricted cash represent those required to be set aside by the Cannabis Control Commission in Massachusetts as well as by a contractual agreement with a lender for the payment of specific construction related expenditures as part of the Company’s property development in Massachusetts.
NOTE 4.
NOTES RECEIVABLE
Notes and other receivables as of September 30, 2024 and 2023, consisted of the following:
September 30,
September 30,
Note receivable from BASK, interest rate of 0%; monthly principal and interest payments of $14,325, maturing in 2026.
315,143
-
Note receivable from BASK, interest rate of 12.0%; monthly principal and interest payments of $8,898, maturing in 2028.
-
400,000
315,143
400,000
Less: Current portion
(171,896 )
(62,116 )
$ 143,247
$ 337,884
NOTE 5.
NOTES PAYABLE
On August 2, 2019 the Company secured a $4,000,000 investment from an unrelated third party in the form of a loan. The loan was evidenced by a note which bore interest at the rate of 11% per year, was originally due and payable on August 2, 2022 and was secured by a first lien on Building 1 at the Massachusetts Cannabis Center (“MCC”).
The note holder also received a warrant which allows the holder to purchase 600,000 shares of the Company’s common stock at a price of $1.50 per share. The warrant will expire on the earlier of (i) August 2, 2024 or (ii) twenty days after written notice of the holder that the daily Volume Weighted Average Price of the Company’s common stock was at least $4.00 for twenty consecutive trading days and the average daily volume of trades of the Company’s common stock during the twenty trading days was at least 150,000 shares. The warrant expired on August 2, 2024.
The broker for the loan received a cash commission of $320,000 plus warrants to purchase 48,000 shares of the Company's common stock. The warrants are exercisable at a price of $1.50 per share and expired on August 2, 2024. The cash commission and the fair value of the warrants amounting to $52,392 were recognized as a discount to the note.
The Company allocated the proceeds between the note and the warrants based on their relative fair values. The relative fair value of the 600,000 warrants was $562,762 which was recognized as additional paid in capital and a corresponding debt discount.
On December 4, 2020, the loan was modified and increased by $500,000 and the maturity of the loan was extended to August 1, 2023. All other provisions of the original loan remain the same. The debt modification was deemed not substantial and was accounted for as a debt modification. The broker for the loan received a cash commission of $40,000 which was expensed when incurred.
On July 31, 2023, the maturity date was further extended to December 1, 2023. On November 30, 2023, the maturity of the loan was extended to January 31, 2024. All other provisions of the previously modified loan remain the same. The debt modification was deemed not substantial and was accounted for as a debt modification. The broker for the loan received a cash commission of $7,500 which was expensed when incurred. On January 31, 2024, the maturity date of the loan was further extended until April 15, 2024. All other provisions of the previously modified loan remain the same. On April 12, 2024, the maturity of the loan was further extended until August 31, 2024. All other provisions of the previously modified loan remain the same. On August 31, 2024, the maturity of the loan for further extended until December 1, 2024, all other provision of the previously modified loan remain the same.
At September 30, 2024, the outstanding principal on this note was $4,500,000 and the unamortized debt discount was $0. All debt discounts are being amortized on a straight-line basis over the term of the modified note. Amortization expense related to the debt discounts was $0 and $162,353 for the years ended September 30, 2024 and 2023, respectively.
The modified note is secured by a first lien on Building 1 at the Company’s Massachusetts Cannabis Center (“MCC”).
BASK.
On April 7, 2016, we signed agreements with BASK. BASK is one of a limited number of organizations that has received a provisional or final registration to cultivate, process and sell medical and adult use cannabis by the Massachusetts Cannabis Control Commission.
Pursuant to the agreements, we agreed to provide BASK with financing for construction and working capital required for BASK’s approved dispensary and cultivation center in Fairhaven, MA.
On July 26, 2019, the Company entered into a 15-Year Triple Net lease of Building 1 of the MCC with BASK. The lease commenced on September 1, 2019 and includes an annual base rent of $138,762 and a revenue participation fee equivalent to 15% of BASK's gross revenues. As of September 30, 2024, the BASK tenant receivable balance was $57,588.
On May 13, 2024, the Company and BASK mutually agreed to modify the lease effective August 31, 2024. During the last five months of the lease effective April 1, 2024 the new monthly payment by BASK will be $57,588 per month.
Tim Keogh, our Chief Executive Officer, was a Board Member of BASK between August 2013 and November 2021. Effective December 1, 2021, BASK was no longer classified as a related party.
NOTE 6.
RELATED PARTY TRANSACTIONS
Strategic Capital Partners
On September 30, 2019, we entered into an amended note with Strategic Capital Partners, LLC (“SCP”), in the principal amount of $1,756,646, bearing interest of 9% per year and maturing on December 31, 2022. During the year ended September 30, 2022, the maturity of the note was extended to December 31, 2023. In December 2023, the note was further extended to March 31, 2024. In March 2024, the note was further extended to August 15, 2024. On August 14, 2024, the note was further extended to April 15, 2025.
Accrued interest on the note was $8,749 and $0 at September 30, 2024 and September 30, 2023, respectively.
At September 30, 2024 and 2023, the outstanding principal on this note was $581,646.
During the year ended September 30, 2024, the Company incurred $180,000 of consulting expenses with SCP and paid $195,000. As of September 30, 2024, $0 remains unpaid. During the year ended September 30, 2023 the Company incurred $180,000 of consulting expenses with SCP of which $15,000 remained outstanding at September 30, 2023.
The Company leases office space from SCP. Lease expense for office space was $30,000 for the years ended September 30, 2024 and 2023.
SCP is controlled by Benjamin J. Barton, one of our officers and directors and principal shareholders.
NOTE 7.
LOSS PER SHARE
The following table sets forth the computation of basic and diluted net loss per share:
Year ended
September 30,
Net loss attributable to common stockholders
$ (1,254,329 )
$ (94,755 )
Basic weighted average outstanding shares of common stock
24,391,961
24,391,961
Dilutive effects of common share equivalents
-
-
Dilutive weighted average outstanding shares of common stock
24,391,961
24,391,961
Basic and diluted net loss per share of common stock
$ (0.05 )
(0.00 )
As of September 30, 2024, we excluded 1,000,000 of stock options and 1,500,000 of warrants from the computation of diluted net loss per share since the effects are anti-dilutive. As of September 30, 2023, we excluded 1,700,000 of stock options and 2,148,000 of warrants from the computation of diluted net loss per share since the effects are anti-dilutive.
NOTE 8.
INCOME TAXES
Deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses. These loss carryovers are limited under the Internal Revenue Code should a significant change in ownership occur. The Company accounts for income taxes pursuant to ASC Topic 740. The Company has made an early adoption of ASU 2015-17 Balance Sheet Classification of Deferred Taxes.
Deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses and other items. Loss carryovers are limited under the Internal Revenue Code should a significant change in ownership occur.
The components of the deferred income tax assets and liabilities arising under ASC Topic 740 were as follows:
September 30,
Deferred tax assets
$ 2,811,204
$ 2,539,487
Deferred tax liabilities
-
-
Valuation allowance
(2,811,204
)
(2,539,487
)
Net deferred tax assets/(liabilities)
-
-
The types of temporary differences between the tax basis of assets and their financial reporting amounts that give rise to a significant portion of the deferred assets and liabilities are as follows:
September 30,
Temporary Difference
Tax Effect
Temporary Difference
Tax Effect
Deferred tax assets
Net operating loss
$ (1,254,329 )
$ (230,797 )
$ 94,755
$ 29,185
Tax impact true up
-
-
-
-
Other temporary differences
220,902
$
40,646
(438,313
)
$ (135,000 )
Net deferred tax assets
(1,033,427
)
(190,151
)
(343,558
)
(105,815 )
Valuation allowance
1,033,427
190,151
343,558
105,815
Total deferred tax asset
-
-
-
-
Deferred tax liabilities
Total deferred liability
-
-
-
-
Total net deferred tax asset
$ -
$ -
$ -
$ -
Deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses. These loss carryovers are limited under the Internal Revenue Code should a significant change in ownership occur.
At September 30, 2024 and September 30, 2023, the Company had approximately $12,073,338 and $11,037,777 respectively, in unused federal net operating loss carryforwards, which will begin to expire principally in the year 2036. A deferred tax (liability)/asset at each date of approximately $2,811,204 and $2,539,487 resulting from the loss carryforwards and other temporary differences has been offset by a 100% valuation allowance. The change in the valuation allowance for the years ended September 30, 2024 and September 30, 2023 was approximately $271,717 and $(112,353).
A reconciliation of the U.S. statutory federal income tax rate to the effective tax rate is as follows:
September 30,
U.S. Federal statutory graduated rate
21.00
%
21.00
%
State income tax rate, net of federal benefit
9.80
%
9.80
%
Total rate
30.80
%
30.80
%
Less: Net operating loss for which no benefit is currently available
(30.80
)%
(30.80
)%
Net effective rate
0.00
%
0.00
%
The Company’s income tax filings are subject to audit by various taxing authorities. The Company’s open audit periods are September 30, 2021, 2022, and 2023. In evaluating the Company’s provisions and accruals, future taxable income, and reversal of temporary differences, interpretations and tax planning strategies are considered. The Company believes its estimates are appropriate based on current facts and circumstances.
We recorded a valuation allowance against all of our deferred tax assets as of both September 30, 2024, and September 30, 2023. We intend to continue maintaining a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, given our current earnings and anticipated future earnings, we believe that there is a reasonable possibility that within the near future, sufficient positive evidence may become available to allow us to reach a conclusion that a significant portion of the valuation allowance will no longer be needed.
NOTE 9.
EQUITY
Preferred Stock
The Company has authorized 20,000,000 shares of $.0001 par value preferred stock. No preferred shares were outstanding at September 30, 2024 and 2023.
Common Stock
During the year ended September 30, 2024, we did not issue any stock.
During the year ended September 30, 2023, we did not issue any stock.
Stock Options
On August 18, 2017, our board of directors adopted a stock incentive plan (“the plan”) that provides for the grant of Incentive Stock Options, Non-Qualified Stock Options or Stock Bonuses to persons who are employees of the Company, employees of subsidiaries of the Company, directors, officers, and consultants. Under the plan, the Company may grant stock bonuses or options (up to a combined maximum of 2,500,000 shares or options). Each option allows for the purchase of one share of common stock, subject to an exercise price and vesting schedule to be established by the board of directors at the time of the grant.
Options Issuances in 2024
The Company did not issue any options during the year ended September 30, 2024.
Options Issuances in 2023
The Company did not issue any options during the year ended September 30, 2023.
The following table shows the stock option activity for the years ended September 30, 2024 and 2023:
Weighted
Weighted
Average
Average
Contractual
Aggregate
Number of
Exercise
Term
Intrinsic
Shares
Price
(Years)
Value
Exercisable at September 30, 2023
1,700,000
$ 1.94
3.4
$ -
Expired
(700,000 )
Outstanding as of September 30, 2024
1,000,000
$ 2.25
3.0
$ -
Vested and expected to vest at September 30, 2024
1,000,000
$ 2.25
3.0
$ -
Exercisable at September 30, 2024
1,000,000
$ 2.25
3.0
$ -
Warrants
Warrant Issuances in 2024
The Company did not issue any warrants during the year ended September 30, 2024.
Warrant Issuances in 2023
The Company did not issue any warrants during the year ended September 30, 2023.
The following table shows the warrant activity for the years ended September 30, 2024 and 2023:
Weighted
Weighted
Average
Average
Contractual
Aggregate
Number of
Exercise
Term
Intrinsic
Shares
Price
(Years)
Value
Outstanding as of September 30, 2023
2,148,000
1.33
1.13
$ -
Expired
(648,000 )
Outstanding as of September 30, 2024
1,500,000
1.25
0.25
$ -
Exercisable at September 30, 2024
1,500,000
1.25
0.25
$ -
NOTE 10.
COMMITMENTS AND CONTINGENCIES
Operating Leases
Land
On October 17, 2016, the Company closed on the acquisition of the 52.6-acre parcel of undeveloped land in Freetown, Massachusetts. The property is located approximately 47 miles southeast of Boston. The Company is developing the property as the MCC. Plans for the property may include the construction of sustainable greenhouse cultivation and processing facilities that will be leased or sold to Registered Marijuana Dispensaries under the Massachusetts Medical Marijuana Program.
As part of a simultaneous transaction, the Company assigned the property rights to Massachusetts Medical Properties, LLC (“MMP”) for a nominal fee and entered a lease agreement pursuant to which MMP agreed to lease the property to the Company for an initial term of fifty (50) years. We have the option to extend the term of the lease for four (4) additional ten (10) year periods. The lease is a triple net lease, with the Company paying all real estate taxes, repairs, maintenance and insurance.
The lease payments will be the greater of (a) $30,000 per month; (b) $0.38 per square foot per month of any structure built on the property; or (c) 1.5% of all gross monthly sales of products sold by the Company, any assignee of the Company, or any subtenant of the Company. The lease payments will be adjusted up (but not down) every five (5) years by any increase in the Consumer Price Index.
Effective October 1, 2019, the Company adopted Topic 842 and recorded ROU assets and lease liabilities of $6,980,957 and $4,256,869, respectively. As part of the adoption, prepaid land lease balance of $2,724,088 was classified as a component of the Company’s ROU assets. (See Note 11)
The Company completed the construction of Building 1 on the leased land and on September 1, 2019, BASK, commenced its 15-year sublease of Building 1 which includes a base rent plus 15% of BASK’s gross revenues.
On May 13, 2024, the Company and BASK mutually agreed to modify the lease effective August 31, 2024. AmeriCann and BASK have agreed that, for the last five months of the lease effective April 1 2024, the new monthly payment by BASK will be $57,588 per month, inclusive of property taxes and Host Community Agreement fees. After August 31, 2024, AmeriCann intends to operate the building as a regulated cannabis cultivation and manufacturing operator. Bask agreed to transfer to the Company its provisional Cultivation and provisional Product Manufacturing licenses. BASK will receive a credit of $40,000 for each license transferred. Any transfer of licenses is contingent upon approval from the Massachusetts Cannabis Control Commission. An application for the Change of Ownership and Control of the licenses was filed on June 19, 2024. BASK granted the Company the option to purchase any furniture and equipment located in the space currently occupied by BASK. A third-party valuation of the items to be purchased was completed and valued the assets at $551,800. Additionally, the remaining balance due and the existing promissory note from BASK were converted to a new promissory note which will be paid in 24 equal monthly installments without interest.
As of September 30, 2024, the Company’s right-of-use assets were $6,638,679, the Company’s current maturities of operating lease liabilities were $13,201 and the Company’s noncurrent lease liabilities were $4,191,188. During the year ended September 30, 2024, the Company had operating cash flows from operating leases of $341,450.
The table below presents lease related terms and discount rates as of September 30, 2024.
As of
September 30,
Weighted average remaining lease term
Operating leases
42.00
Weighted average discount rate
Operating leases
7.9
%
The reconciliation of the maturities of the operating leases to the lease liabilities recorded in the Consolidated Unaudited Balance Sheet as of September 30, 2024 are as follows:
341,500
341,500
341,500
341,500
341,500
Thereafter
12,635,501
Total lease payments
14,343,001
Less: Interest
(10,138,612 )
$ 4,204,389
Less: operating lease liability, current portion
(13,201 )
Operating lease liability, long term
$ 4,191,188
Office space
The Company leases its office space located at 1555 Blake St., Unit 502, Denver, CO 80202 for $2,500 per month with a lease term of less than 12 months from SCP, a related party. See Note 6.
Aggregate rental expense under all leases totaled $481,375 and $481,375 for the years ended September 30, 2024 and 2023, respectively.
NOTE 11.
SUBSEQUENT EVENTS
On November 19, 2024, the Company transferred the development rights and control of the undeveloped portion of the MCC property, approximately 48.3 acres, to MMP. The Company maintains sole discretion on how the undeveloped portion of the property can be developed by MMP. If the undeveloped land is sold, the Company would receive 20% of the net sales price. In November of 2024 the Company received an initial deposit of $650,000 from MMP. The Agreement provides the Company the opportunity to purchase, fee simple, the developed portion of the property, approximately 4.3 acres, from MMP at a predetermined purchase price.
On December 1, 2024, the maturity of the $4,500,000 (Note 5) loan for further extended until April 30, 2025, all other provision of the previously modified loan remained the same.
PART IV

---

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed with this Report:
3.1.1
Certificate of Incorporation (1)
3.1.2
Certificate of Ownership and Merger (name change to AmeriCann) (2)
3.2
Bylaws (2)
10.2
Loan Modification Agreement with Strategic Capital Partners, LLC,together with Warrants and Promissory Notes (2)
10.4
Share Purchase Agreement with Massachusetts Medical Properties, LLC, together with Warrant (Series IV) and Ground Lease (2)
10.7
Loan Agreement, including form of warrant (Series CL) ($800,000) (2)
10.8
Loan Agreement ($128,000) (2)
10.9
Loan Agreement ($68,000) (2)
10.14
Promissory Note (5)
10.15
Mortgage and Security Agreement (5)
10.18
Real Estate Agreement (6)
Insider Trading Policies and Procedures
31.1
Rule 13a-14(a) Certifications
31.2
Rule 13a-14(a) Certifications
Section 1350 Certifications
101.INS
Inline XBRL Instance Document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
(1)
Incorporated by reference to Exhibit 3.1 filed with the Company’s Registration Statement on Form 10.
(2)
Incorporated by reference to same exhibit filed with Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File #333-222207).
(3)
Incorporated by reference to same exhibit filed with the Company’s Registration Statement on Form S-1 (File #333-224256).
(4)
Incorporated by reference to the same exhibit filed with the Company’s Registration Statement on Form S-1 (File #333-227388).
(5)
Incorporated by reference to the same exhibit filed with the Company’s Registration Statement on Form S-1 (File # 333-233981).
(6)
Incorporated by reference to the same exhibit filed with the Company’s 8-K report on December 13, 2024. Portions of this Exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K since the omitted portions are not material and would likely cause competitive harm to the Company if publicly disclosed.