Form 1-SA Mystic Holdings Inc./NV For: Jun 30

 

 

United States

Securities And Exchange Commission

Washington, D.C. 20549

 

FORM 1-SA

 

☒ SEMIANNUAL REPORT PURSUANT TO REGULATION A

 

For the semiannual period ended June 30, 2021

 

Mystic Holdings, Inc.

(Exact name of issuer as specified in its charter)

 

Nevada		81-3431472
(State or other jurisdiction of organization)		(I.R.S. Employer Identification Number)

 

4145 Wagon Trail Avenue, Las Vegas, Nevada 89118

(Address of principal executive office)

 

(702)-960-7778

(Registrant’s telephone number, including area code)

 

Common Stock

(Title of each class of securities issued pursuant to Regulation A)

 

 

  

TABLE OF CONTENTS

 

		Page
Item 1.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
Item 2.	Other Information	7
Item 3.	Financial Statements	7
Item 4.	Exhibits	29

 

  

PART II

 

Item 1. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto contained in this Semiannual Report on Form 1-SA (“Semiannual Report”). The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the Statements Regarding Forward Looking Information contained in our latest offering circular (the “Offering Circular”) qualified by the Securities and Exchange Commission (“SEC”) which may be accessed here. Unless otherwise indicated, the latest results discussed below are as of June 30, 2021. The consolidated financial statements included in this filing as of June 30, 2021 and for the six months ended June 30, 2021 and 2020 are unaudited, and may not include year-end adjustments necessary to make those financial statements comparable to audited results.

 

Overview

 

Mystic Holdings, Inc. (the “Company” or “Mystic”) is a holding company which, through its wholly-owned subsidiaries, is a fully integrated cannabis company in the State of Nevada. Since obtaining Nevada wholesale licenses for the cultivation and production of medical cannabis in 2014 and for recreational cannabis in 2016, Qualcan, LLC, Mystic’s wholly-owned operating subsidiary (“Qualcan”), has operated a highly efficient, state-of-the-art 24,000 square foot cannabis cultivation and production facility with the capacity to produce as much as 600 pounds of sellable cannabis per month utilizing the latest concepts in agronomic farming practices and sustainable technologies. Qualcan’s facility adheres to best practices in quality control standards and regulatory compliance that are believed to be as good as or better than those used throughout the cannabis industry. Qualcan currently wholesales its products, which include cannabis flowers, edibles and concentrates, under the trademark “Qualcan” to state-licensed dispensaries utilizing METRC, a state-mandated tracking system.

 

In addition to its wholesale operations, Mystic, through its wholly-owned subsidiaries Picksy, LLC and Picksy Reno, LLC (both of which also do business under the brand name Jade Cannabis Co.), operates two recreational/medical retail dispensaries (one in Clark County, Las Vegas and one in Reno). Mystic has also recently acquired two additional retail dispensary licenses (one in the City of Las Vegas and one in Carson City), which Mystic plans to operate under at two new dispensaries that Mystic is in the process of establishing. See “Our Proposed Expansion of a Retail Channel and Planned Dispensaries” for a description of our dispensary operations and planned expansion.

 

The Company has solidified its Nevada footprint by becoming a vertically-integrated company providing medical and recreational cannabis cultivation and production, and retail dispensary operations for high quality cannabis and cannabis consumer products. We intend to expand our wholesale operations to capture expected retail demand for our cultivation and production activities, including from our own retail locations that we plan to build (and license) or acquire. A key element of our strategic plan is to make acquisitions of or investments in complementary businesses, products and technologies in the cannabis industry.

 

Risk Factors

 

We face risks and uncertainties that could affect us and our business as well as the cannabis industry generally. These risks are outlined under the heading “Risk Factors” contained in our Offering Circular, which may be accessed here, as the same may be updated from time to time by our future filings under Regulation A (“Regulation A”) of the Securities Act of 1933, as amended (the “Securities Act”). In addition, new risks may emerge at any time and we cannot predict such risks or estimate the extent to which they may affect our financial performance. These risks could result in a decrease in the value of our common shares.

 

Recent Developments

 

First Regulation A+ Offering

 

In March 2020, the Company received qualification from the SEC to proceed with the Company’s initial public offering of its common stock pursuant to Regulation A (Regulation A+) of Section 3(6) of the Securities Act of 1933, as amended, for Tier 2 offerings (the “First Reg A+ Offering”). In June 2021, the Company completed the final closing of the First Reg A+ Offering, bringing the total proceeds from closed sales of the Company’s common stock pursuant to the First Reg A+ Offering to $15,401,373. The First Reg A+ Offering is now completed.

 

Current Regulation A+ Offering

 

On September 21, 2021, the Company received qualification from the SEC to proceed with the Company’s new public offering of its common stock pursuant to Regulation A (Regulation A+) of Section 3(6) of the Securities Act of 1933, as amended, for Tier 2 offerings (the “Current Reg A+ Offering”). Discussions and marketing efforts with investors are ongoing.

 

Stock Listing

 

In July 2021, the Company’s common stock became quoted for the first time on the Pink Open Market operated by the OTC Markets Group, Inc. (the “OTC Markets”), under the symbol “MSTH”. In August 2021, we submitted an application for listing the Company’s common stock for quotation on the OTCQX tier of the OTC Markets.

 

Exchange Offer Transaction

 

In August 2021, the Company launched an offering (the “Exchange Offer”) to holders of our common stock as of a record date of July 1, 2021, to exchange all properly tendered and accepted shares of our common stock for up to 150,000 newly issued shares of our series A preferred stock, par value $0.001 per share. Under the Exchange Offer, each holder of our common stock was entitled to, for each 1,000 shares of common stock held as of July 1, 2021, tender one share of common stock in exchange for one share of series A preferred stock. Holders of our series A preferred stock are entitled to 1,100 votes per share on all matters submitted generally to a vote of stockholders. The Exchange Offer period closed on September 20, 2021.

 

  

Results of Operations - Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

 

Revenue for the six months ended June 30, 2021 was $7,679,766, with $4,135,690 in gross profit, and 53.8% gross margin. Average quarterly revenue was $3,839,383 over the two first quarters of 2021, compared to average quarterly revenue of $3,344,927 over the four quarters of 2020, an increase of $494,456.

 

Operating expenses for the six months ended June 30, 2021 were $5,229,597, and include depreciation of equipment expense of $67,934, amortization of intangible assets of $589,007, and selling, office and administration expenses of $4,153,609. Given the expenses observed within the first six months of 2021, we anticipate that operating expenses for the fiscal year 2021 to be approximately 50% higher than in 2020. An increase in expenses in 2021 is anticipated due to the costs associated with hiring for retail admin/operations, holding inventory in exchange for the forfeiture of sales, and increasing administrative functions in preparation for the opening of our dispensary outlets.

 

Liquidity and Capital Resources

 

As of June 30, 2021, we had cash and cash equivalents of $2,934,063, compared to $2,741,087 as of December 31, 2020, an increase of $192,976. Management anticipates that going forward, we will be able to generate sufficient cash flows from our operating activities to meet our short-term capital requirements.

 

As of June 30, 2021, our short-term debt consisted of the following:

 

		June 30, 2021				December 31, 2020
Note payable to Qualcan Canada (1)		$	501,509			$	501,509
Note payable to Medifarm LLC (2)		$	800,000			$	2,800,000
Note payable to CEG Capital, LLC (3)		$	2,500,000			$
Note payable to Medifarm I LLC (4)		$	4,200,000			$	4,200,000
Total short-term debt		$	8,001,509			$	5,458,847

 

	(1)	Note payable to Qualcan Canada bearing no interest. Repayment of the note may be in cash or the Company’s common stock at such time and place to be decided by our Board of Directors. The noteholder does not have any right to convert the debt to stock.
	(2)	Note payable to Medifarm LLC, issued in February 2021, due within 12 months from the date of issuance, bearing 5% interest per annum. As of August 31, 2021, this note has been paid in full.
	(3)	Note payable to CEG Capital, LLC issued in January 2021, with a variable interest rate between 8% and 15% per annum and maturity date of 24 months from the date of issuance.
	(4)	Note payable to Medifarm I LLC, issued in August 2021, due within 12 months from the date of issuance, bearing 5% interest per annum.

 

Long-term Debt

 

As of June 30, 2021 and December 31, 2020, our long-term debt consisted of the following:

 

		June 30, 2021				December 31, 2020
Note payable to a business (1)		$	300,000			$	300,000
Total long-term debt		$	300,000			$	300,000
Less: current maturities		$	(300,000	)		$	(300,000	)
Long-Term Debt		$	—			$	—

 

(1)

This note is in dispute, as terms of contract were not followed by lender, and is being presented as due on demand and bearing no interest until a future settlement is reached.

 

 

Related Party Transactions

 

As of June 30, 2021 and December 31, 2020, we had the following balances due from related parties:

 

		June 30, 2021				December 31, 2020
Dal Toro Holdings II, LLC (1)		$	38,887			$	-
Employees4Hire, LLC (2)		$	-			$	27,213
Green Wagon Holdings, LLC (3)		$	5,091,252			$	360,703
Panorama Crest, LLC (4)		$	100,000			$
Total		$	5,230,139			$	387,917

 

	(1)	Dal Toro Holdings II, LLC is one of the stockholders of the Company. The balances due from this related entity as of June 30, 2021 and December 31, 2020 are due on demand and bear no interest.
	(2)	Employees4Hire, LLC is controlled by one of the stockholders of the Company and is used to lease employees to the Company. The balances due from this entity as of June 30, 2021 and December 30, 2020 are due on demand and bear no interest.
	(3)	Green Wagon Holdings, LLC is an entity controlled by related parties of the Company that controls Green Wagon, LLC and Green Wagon Reno, LLC, entities that lease building space to the Company on a month to month basis. The balance due from this related entity includes balances paid for the Real Estate Purchase Options on the real estate located at 4145 Wagon Trail Avenue, Las Vegas, Nevada 89118, and 1085 S. Virginia Street, Reno, Nevada, which may be converted to loans from Mystic to Green Wagon, LLC and Green Wagon Reno, LLC. The balances due from this related entity as of June 30, 2021 and December 31, 2020 are due on demand and bear no interest.
	(4)	Panorama Crest, LLC is one of the stockholders of the Company. The balances due from this related entity as of June 30, 2021 and December 31, 2020 are due on demand and bear no interest.

 

8% Convertible Debentures

 

In July 2019, we completed an initial private placement (the “First 2019 Private Placement”) of approximately $1,800,000 in aggregate principal amount of 8% convertible debentures. The principal amount under the debentures is convertible into shares of our common stock at any time at the option of the holder. The conversion price of the debentures is $0.23 per share. The debentures bear interest at an annual cumulative rate of 8.0%, due and payable in cash on the maturity date. In the event of any liquidation, dissolution or winding up of our company, either voluntary or involuntary, the holders of the debentures (together with the holders of the debentures issued in the Second 2019 Private Placement (as defined below)) will receive, in preference to any distribution of any of our assets to the holders of any of our other debt securities or credit facilities, an amount equal to the unpaid and unconverted principal amount of their debentures and any accrued and unpaid interest on the debentures. In 2019, following the closing of the First 2019 Private Placement, we also completed a subsequent private placement (the “Second 2019 Private Placement” and, together with the First 2019 Private Placement, the “2019 Private Placements”) of approximately $6,000,000 in aggregate principal amount of 8% convertible debentures with substantially identical terms as the debentures sold in the First 2019 Private Placement, except that the conversion price of the debentures offered in the Second 2019 Private Placement is set at $0.60 per share.

 

In December 2020, $6,999,987 in aggregate principal amount of the convertible debentures was converted into 16,955,336 shares of common stock of the Company. As of August 31, 2021, $441,646 in aggregate principal amount of the debentures remain outstanding, which are convertible into approximately 600,000 shares of common stock.

 

  

Common Stock issued in payment of the cash portion of the purchase price for the Reno Dispensary

 

In October 2020, we entered into a Letter Agreement (the “Letter Agreement”) with MediFarm I, Terra Tech, and Picksy Reno, modifying certain terms of the Reno Dispensary Asset Purchase Agreement. Pursuant to the Letter Agreement, $8,332,096 of the cash portion of the purchase price to be paid for the dispensary assets was paid in 8,332,096 shares of Mystic common stock (the “Dispensary Shares”), upon approval of such issuance by the Cannabis Compliance Board. Under the Letter Agreement, Mystic is required to register the Dispensary Shares on Form S-1 by no later than the date the Dispensary Shares are listed or quoted for trading on a trading market. The Letter Agreement provides, among other things, that (i) Terra Tech has the right to require the Company to repurchase the Dispensary Shares at a price of $1.00 per share under certain circumstances, and (ii) during the first six (6) months Terra Tech is able to sell Dispensary Shares on a trading market, Terra Tech will not sell more than 1,500,000 Dispensary Shares during any thirty (30) calendar day period; provided such limitation will not apply to Dispensary Shares sold at a price equal to or greater than $2.00 per share.

 

Secured Convertible Promissory Note

 

In January 2021, the Company issued a Secured Convertible Promissory Note to CEG Capital, LLC (the “Convertible Note”), in exchange for a loan in the aggregate principal amount of $2,500,000 with a variable interest rate between 8% and 15% per annum and maturity date of 24 months from the date of issuance. The Convertible Note contains a voluntary prepayment provision allowing the Company the option to prepay the loan at any time via a conversion of the loan into shares of the Company’s common stock. If the Company elects to trigger the prepayment provision, (i) a prepayment fee applies in the amount of 50% of the original principal balance minus the interest payments paid as of the conversion date, and (ii) the loan amount and prepayment fee convert automatically into shares of the Company’s common stock at a conversion price equal to the lesser of (1) $1.00 and (2) if the Company’s common stock is listed on any exchange, the volume weighted average trading price during the 30-day period preceding the conversion date. As of August 31, 2021, if the Company elected to prepay the Convertible Note, the Convertible Note would convert into approximately 3,750,000 shares of the Company’s common stock.

 

Common Stock issued in payment of Advisory Services

 

In February 2021, the Company entered into an Advisory Agreement with an individual (the “Advisor”), pursuant to which the Advisor was engaged by the Company to provide advisory services in connection with the Company’s efforts to have its common stock listed for trading on the OTC Markets. Pursuant to the Advisory Agreement, as consideration for the performance of the Advisor’s services, the Company issued the Advisor 250,000 shares of common stock. Furthermore, under the Advisory Agreement, upon the market capitalization of the Company exceeding certain thresholds during the term of the Advisory Agreement, the Company will issue up to an additional $500,000 worth of common stock to the Advisor at the current market value at the time the applicable threshold is met.

 

  

Item 2. Other Information

 

None.

 

Item 3. Financial Statements

 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

Mystic Holdings, Inc. and Affiliates

 

		Page
Unaudited Consolidated Balance Sheet as of June 30, 2021 and December 31, 2020		8
Unaudited Consolidated Statement of Income for the Six Months Ended June 30, 2021 and 2020		9
Unaudited Consolidated Statement of Stockholders’ Equity for the Six Months Ended June 30, 2021 and 2020		10
Unaudited Consolidated Statement of Cash Flows as of June 30, 2021 and 2020		11
Notes to Unaudited Consolidated Financial Statements		12

 

  

MYSTIC HOLDINGS, INC. AND AFFILIATES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2021 (UNAUDITED) & DECEMBER 31, 2020 (AUDITED)

 

		As of June 30, 2021 (uaudited)				As of December 31, 2020 (audited)
ASSETS
Current Assets:
Cash			2,934,063				2,741,087
Accounts receivable, net			441,236				119,018
Receivable from Dealmakers			749,468				-
Inventory			2,890,561				2,527,478
Total Current Assets			7,015,328				5,387,583
Property, Equipment and Leasehold Improvements, Net			4,051,568				4,172,774
Due from related parties, net			5,730,139				387,917
Intangible Assets, net			14,650,240				15,239,247
Goodwill			4,824,104				4,824,104
Other Assets			1,302,244				1,112,590
TOTAL ASSETS			37,573,621				31,124,215
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable and Accrued Expenses			1,807,488				2,144,834
Other Current Liabilities			299,439				1,250,000
Income Tax Payable			868,495				-
Non-Convertible Notes Payable			8,001,510				7,501,509
Current Maturities of Long Tem Debt			300,000				300,000
Total Current Liabilities			11,276,931				11,196,343
Convertible Debentures			441,646				441,646
Total Liabilities			11,718,577				11,637,989
Stockholders’ Equity:
Common stock, $0.001 par value; 499,850,000 shares authorized Preferred Stock, $0.001 par value; 150,000 shares authorized Common Stock: 145,420,396 shares issued and 111,338,805 shares outstanding			145,421				137,321
Additional Paid in Capital			35,450,209				27,205,134
Less: Par Value of 34,081,583 shares of treasury stock			(34,082	)			(34,082	)
Accumulated Surplus (Deficit)			(9,706,504	)			(7,822,148	)
Total Stockholders’ Equity			25,855,044				19,486,225
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			37,573,621				31,124,215

 

  

MYSTIC HOLDINGS, INC. AND AFFILIATES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

SIX MONTHS ENDED JUNE 30, 2021 & 2020 (UNAUDITED)

 

		For the Six Months Ended
		June 30, 2021 (Unaudited)				June 30, 2020 (Unaudited)
REVENUE			7,679,766				5,617,447
COST OF GOODS SOLD			3,544,076				3,258,713
GROSS PROFIT			4,135,690				2,358,733
OPERATING EXPENSES
Advertising			419,047				70,635
Depreciation			67,934				289,893
Amortization			589,007				-
Selling, Office and Administration			4,153,609				1,998,478
TOTAL OPERATING EXPENSES			5,229,597				2,359,006
INCOME (LOSS) FROM OPERATIONS			(1,093,907	)		$	(273	)
OTHER INCOME (EXPENSES)
Interest Expense			(136,501	)			(437,740	)
Miscellaneous Income			214,547				4,108
TOTAL OTHER INCOME			78,046				(433,632	)
NET INCOME BEFORE PROVISION FOR INCOME TAXES			(1,015,861	)			(433,906	)
Provision for Income Taxes			(868,495	)			-
NET INCOME ATTRIBUTABLE TO SHAREHOLDERS		$	(1,884,356	)		$	(433,906	)

 

  

MYSTIC HOLDINGS, INC. AND AFFILIATES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

SIX MONTHS ENDED JUNE 30, 2021 & 2020 (UNAUDITED)

 

Six Months Ended 06/30/2021 (Unaudited)

 

										Additional
		Common Stock								Paid-in				Treasury Stock								Accumulated				Total
		Shares				Amount				Capital				Shares				Amount				Equity				Deficiency
Balance, January 1, 2021			137,320,690				137,321				27,205,134				(34,081,591	)			(34,082	)			(7,822,148	)			19,486,225
Issuance of Common Stock			8,099,706				8,100				8,245,075				-				-				-				8,253,175
Net Income							-				-				-				-				(1,884,356	)			(1,884,356	)
Balance, June 30, 2021			145,420,396				145,421				35,450,209				(34,081,591	)			(34,082	)			(9,706,504	)			25,855,044

  

Year Ended 06/30/2020 (Unaudited)

 

										Additional
		Common Stock								Paid-in				Treasury Stock								Accumulated				Total
		Shares				Amount				Capital				Shares				Amount				Equity				Deficiency
Balance, January 1, 2020			7,253				7,253				4,790,572				(2,375	)			(2,375	)			(6,505,487	)			(1,710,037	)
Net Income			-				-				-				-				-				(995,744	)			(995,744	)
Balance, June 30, 2020			7,253				7,253				4,790,572				(2,375	)			(2,375	)			(7,501,231	)			(2,705,781	)

 

  

MYSTIC HOLDINGS, INC. AND AFFILIATES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

SIX MONTHS ENDED JUNE 30, 2021 & 2020 (UNAUDITED)

 

		For the Six Months Ending
		June 30, 2021 (Unaudited)				June 30, 2020 (Unaudited)
Cash flows from Operating Activities
Net Profit/(Loss)			(1,884,356	)			(995,744	)
Adjustments to reconcile net loss to net cash provided by (used in) Operations:
Amortization and Depreciation			823,876				851,730
Change in Operating Assets and Liabilities:
Accounts Receivable			(322,218	)			173,595
Other Assets			(887,322	)			(3,111,359	)
Inventory			(363,083	)			(514,958	)
Employee Advance			(51,800	)			(1,800	)
Accounts payable and accrued expenses			(337,346	)			1,234,775
Other Current Liabilities			(950,561	)			-
Income Tax Payable			868,495				-
Net cash provided from (used in) Operating activities			(3,104,315	)			(2,363,761	)
Cash flows from Investing activities
Acquisition of PP&E			(113,663	)			(183,450	)
Acquisition of Intangible Asset			-				(12,860,842	)
Net cash provided from (used in) Investing activities			(113,663	)			(13,044,292	)
Cash flows from Financing activities
Due to Related Parties			(5,342,222	)			(145,749	)
Subscription of Shares			8,253,175				4,205,744
Conversion of Debenture			-				41,778
Issuance/Payment of Notes Payable			500,001				12,391,856
Net cash provided from (used in) Financing activities			3,410,954				16,493,629
Net Change in cash		$	192,976				1,085,576
Net Change in cash classified within current assets held for sale
Cash at beginning of period		$	2,741,087				247,926
Cash at end of period		$	2,934,063			$	1,333,501

 

  

MYSTIC HOLDINGS, INC. AND AFFILIATES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 1: DESCRIPTION OF BUSINESS ACTIVITIES

 

Mystic Holdings, Inc. is a holding company which, through its wholly-owned subsidiaries, is engaged in the cannabis industry in the State of Nevada. Since obtaining Nevada wholesale licenses for the cultivation and production of medical cannabis in 2014 and recreational cannabis in 2017, Qualcan, LLC, the wholly owned operating subsidiary (“Qualcan”), constructed and operates a highly efficient, state-of-the-art 24,000 square foot cannabis cultivation and production facility with the capacity to produce as much as 600 pounds of sellable cannabis per month utilizing the latest concepts in agronomic farming practices and sustainable technologies. Qualcan’s facility adheres to best practices in quality control standards and regulatory compliance that are believed to be as good as or better than those used throughout the cannabis industry. Qualcan currently wholesales its products, which include cannabis flowers, edibles and concentrates, under the trademark “Qualcan” to state-licensed dispensaries utilizing METRC, a state-mandated tracking system.

 

In 2019 the company acquired two retail dispensaries from Medifarm LLC dba Blum, one located just east of the Las Vegas strip on Desert Inn (Blum DI) and the other on Virginia street in Reno (Blum Reno). It was also awarded two additional retail dispensary licenses, one in the city of Las Vegas and the other in Carson City, as a result of a legal challenge to the 2018 State license application process. The company completed a re-branding of the Blum dispensaries to Jade Cannabis Co. in 2021.

 

Mystic is a vertically integrated retail and wholesale cannabis company. It operates under Qualcan, Picksy LLC and Picksy Reno LLC, dba Jade Cannabis Co. with sub-brands including Lush Cannabis and Cosmic Cannabis brands. The company has a strong presence in the Nevada cannabis industry with a large cultivation and production facility, two operating dispensaries and two more in the development and construction phase. Mystic is among only a few licensees in a closed State with limited licenses.

 

The consolidated accounts of the Company include the accounts of Mystic Holdings, Inc., Qualcan, LLC, Picksy LLC, Picksy Reno LLC, Baked Goods, Tinkbell LLC, and Wagon Trail 4145, LLC. Picksy LLC, Picksy Reno LLC, Baked Goods, Tinkbell LLC Qualcan, LLC and Wagon Trail 4145, LLC are owned 100% by Mystic Holdings, Inc. All significant intercompany accounts have been eliminated in consolidation.

 

NOTE 2: BASIS OF PRESENTATION

 

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), and include the accounts of Mystic Holdings, Inc. and affiliates (collectively “Mystic Holdings” or the “Company”). The basis used for the preparation and presentation of the financial statements is based on the needs of the financial statement users. Financial presentation under the accrual method (basis of presentation under accounting principle generally accepted in the United States) provides the best approach to present the financial statements with the appropriate revenues since accounts receivable, net of allowance for doubtful debts, can be recorded against appropriate expenses which are incurred in the same period to generate those revenues.

 

We conduct business through a variety of corporate structures, including subsidiaries, variable interest entity (VIE) and primary beneficiary. Subsidiaries are those where we exercise control through 100% ownership, VIE are those where we have controlling interest despite not having a majority of voting rights and primary beneficiary are those where we retain the authority to direct the activities. All of the assets, liabilities, revenues and expenses of our subsidiaries, VIE and primary beneficiary are included in our consolidated financial statements. All significant intercompany transactions and balances are eliminated.

 

  

MYSTIC HOLDINGS, INC. AND AFFILIATES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Revenue Recognition

 

Effective January 1, 2018, the Company adopted the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective transition method. Under this method, the Company recorded the cumulative effect of initially applying the new standard to all contracts as of the date of adoption.

 

Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of ASC 606, the Company performs the following five steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The adoption of this guidance did not have a material effect on the Company’s financial position, results of operations or cash flows. Under the new standard, the Company recognizes a sale as follows.

 

Cannabis Dispensary, Cultivation and Production

 

The Company recognizes revenue from manufacturing and distribution product sales when our customers obtain control of our products. Revenue from our retail dispensaries is recorded at the time customers take possession of the product. Revenue from our retail dispensaries is recognized net of discounts, promotional adjustments and returns. We collect taxes on certain revenue transactions to be remitted to governmental authorities, which may include sales, excise and local taxes. These taxes are not included in the transaction price and are, therefore, excluded from revenue. Upon purchase, the Company has no further performance obligations and collection is assured as sales are paid for at time of purchase.

 

Revenue related to distribution customers is recorded when the customer is determined to have taken control of the product. This determination is based on the customer specific terms of the arrangement and gives consideration to factors including, but not limited to, whether the customer has an unconditional obligation to pay, whether a time period or event is specified in the arrangement and whether the Company can mandate the return or transfer of the products. Revenue is recorded net of taxes collected from customers that are remitted to governmental authorities with collected taxes recorded as current liabilities until remitted to the relevant government authority.

 

Disaggregation of Revenue

 

The company generated revenue through its Cannabis Dispensary, Cultivation and Production line. The Company operates in one reportable segment, cultivation/operation.

 

Contract Balances

 

Due to the nature of the Company’s revenue from contracts with customers, the Company does not have material contract assets or liabilities that fall under the scope of ASC Topic 606.

 

Contract Estimates and Judgments

 

The Company’s revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue streams. The sales prices are generally fixed at the point of sale and all consideration from contracts is included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration.

 

Cash and Cash Equivalents

 

Cash and cash equivalents consist of cash in hand/bank and highly liquid investments that are readily convertible into cash. The Company considers securities when purchased with maturities of three months or less to be cash equivalents. The carrying amount of these securities approximate fair market value because of the short-term maturity of these instruments. Cash and cash equivalents held in these accounts are currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to a maximum of $250,000. On June 30, 2021 approximately $2,603,000 exceeded the FDIC limit.

 

Leases

 

The Company leases facilities, equipment and vehicles under capital and operating leases. The commencement date of all leases is the earlier of the date that the Company becomes legally obligated to remit rent payments or the date that the Company exercises control over the use of the property. In addition to minimum rental payments, certain leases provide for contingent rentals based upon equipment usage. Rent expense associated with contingent rentals are recorded as incurred. The related rent expense is recorded on a straight line basis over the lease term. The cumulative excess of rent payments over rent expense, if any, is accounted for as a deferred lease asset and recorded in “Other Assets”. The cumulative excess of rent expense over rent payments, if any, is accounted for as deferred lease obligation. Leasehold improvements associated with assets utilized under capital or operating leases are amortized over the shorter of the assets useful life or the lease term.

 

  

MYSTIC HOLDINGS, INC. AND AFFILIATES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Accounts Receivable and Allowance for Doubtful Accounts

 

Trade accounts receivable are carried at their estimated collectible amounts. Trade accounts receivable are periodically evaluated for collectability based on past credit histories with customers and their current financial conditions. Uncollectible trade accounts receivable are written off based on individual credit evaluation and specific circumstances of the customer. Trade accounts receivable are reported net of an allowance for doubtful accounts.

 

Credit is granted to the Company’s customers; consequently, its ability to collect the amounts due from their respective customers is affected by economic fluctuations in the respective industries.

 

The Company allows for estimated losses on accounts receivable based on prior bad debt experience and a review of existing receivables. Bad debt recoveries are charged against the allowance account as realized.

 

Prepaid Expenses and Other Current Assets

 

Prepaid expenses consist of various payments that the Company has made in advance for goods or services to be received in the future. These prepaid expenses include advertising, insurance, and service or other contracts requiring up-front payments.

 

Cost of Goods Sold

 

Cost of goods sold includes the costs indirectly attributable to product sales and includes amounts paid for finished goods, such as flower, edibles and concentrates, as well as packaging and other supplies, fees for services and processing, other expenses for services, and allocated overhead. Overhead expenses include allocations of rent, administrative salaries, utilities, and related costs.

 

Valuation of Inventory

 

Inventories are primarily comprised of raw materials, internally produced work in process, finished goods and packaging materials.

 

Costs incurred during the growing and production process are capitalized as incurred to the extent that cost is less than net realizable value. These costs include materials, labor and manufacturing overhead used in the growing and production processes. The Company capitalizes pre-harvest costs.

 

Inventories of purchased finished goods and packing materials are initially valued at cost and subsequently at the lower of cost and net realizable value.

 

Net realizable value is determined as the estimated selling price in the ordinary course of business less the estimated costs of completion, disposal and transportation for inventories in process. The Company periodically reviews its inventory and identifies that which is excess, slow moving and obsolete by considering factors such as inventory levels, expected product life and forecasted sales demand. Any identified excess, slow moving and obsolete inventory is written down to its net realizable value through a charge to cost of goods sold. The Company did not recognize any inventory reserves as of June 30, 2021 and December 31, 2020.

 

  

MYSTIC HOLDINGS, INC. AND AFFILIATES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Fair Values Measurements

 

The Company’s financial assets and liabilities that are measured at fair value on a recurring basis have been categorized based upon a fair value hierarchy. Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities. Level 2 inputs are based on other observable market data, such as quoted prices for similar assets and liabilities, and inputs other than quoted prices that are observable, such as interest rates and yield curves. Level 3 inputs are developed from unobservable data reflecting our own assumptions, and include situations where there is little or no market activity for the asset or liability.

 

Certain non-financial assets and liabilities are measured at fair value on a nonrecurring basis, including property, plant, and equipment, goodwill and intangible assets. These assets are not measured at fair value on a recurring basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of an impairment. A general description of the valuation methodologies used for assets and liabilities measured at fair value, including the general classification of such assets and liabilities pursuant to the valuation hierarchy, is included in each footnote with fair value measurements presented.

 

The Company’s financial instruments consist principally of cash and cash equivalents, short-term marketable securities, accounts receivable, notes receivable, accounts payable, notes payable and long-term debt. The recorded values of cash and cash equivalents, accounts receivable, notes receivable, accounts payable approximate their fair values based upon their short-term nature. The recorded values of notes payable and long-term debt approximate their fair values, as interest approximates market rates.

 

The fair value of a financial instrument is the amount that would be received in an asset sale or paid to transfer a liability in an orderly transaction between unaffiliated market participants. Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows:

 

Level 1: Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

 

Level 2: Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.

 

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.

 

The fair value of the Company’s, short-term marketable securities, were determined based on “Level 1” inputs. The Company does not have any financial instruments in the “Level 2” and “Level 3” category. The Company believes that the recorded values of all the other financial instruments approximate their current fair values because of their nature and relatively short maturity dates or durations.

 

There have been no changes in Level 1, Level 2, and Level 3 and no changes in valuation techniques for these assets or liabilities for the periods ended June 30, 2021 and December 31, 2020.

 

FASB ASC 825-10 requires disclosure of fair value information about financial instruments, whether or not recognized in the statement of financial condition. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. FASB ASC 825-10 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

 

The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:

 

Cash and cash equivalents - The carrying amounts reported in the statements of financial condition for cash and cash equivalents approximate those assets’ fair values. Investment securities which consist of marketable securities - Fair values for investment securities are based on quoted market prices, where available.

 

  

MYSTIC HOLDINGS, INC. AND AFFILIATES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Property, Equipment and Depreciation

 

Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets. The Company has a policy of capitalizing purchases over $5,000. Expenditures for routine maintenance and repairs on property and equipment are charged to expense.

 

The Company reviews long lived assets for impairment when circumstances indicate the carrying value of an asset may not be recoverable based upon the undiscounted future cash flows of the asset. If the carrying value of the asset is determined not to be recoverable, a write down to fair value is recorded. Fair values are determined based on quoted market values, discounted cash flows or external appraisals as appropriate. We review long lived assets for impairment at the individual asset or asset group level for which the lowest level of independent cash flows can be identified.

 

Depreciation is provided for financial reporting purposes utilizing both the accelerated and straight-line methods over the estimated useful lives of the assets, which are as follows:

 

Machinery and Equipment	3-5 years
Furniture and Fixtures	5-7 years
Software	3 years

 

Goodwill

 

Goodwill is the excess of the consideration transferred over the fair value of the acquired assets and assumed liabilities in a business combination. In accordance with ASC 350, “Intangibles—Goodwill and Other, “goodwill and other intangible assets with indefinite lives are no longer subject to amortization but are tested for impairment annually or whenever events or changes in circumstances indicate that the asset might be impaired.

 

The Company reviews the goodwill allocated to each of our reporting units for possible impairment annually as of last day of the third quarter each fiscal year and whenever events or changes in circumstances indicate carrying amount may not be recoverable. In the impairment test, the Company measures the recoverability of goodwill by comparing a reporting unit’s carrying amount, including goodwill, to the estimated fair value of the reporting unit.

 

The carrying amount of each reporting unit is determined based upon the assignment of our assets and liabilities, including existing goodwill and other intangible assets, to the identified reporting units. Where an acquisition benefits only one reporting unit, the Company allocates, as of the acquisition date, all goodwill for that acquisition to the reporting unit that will benefit. Where the Company has had an acquisition that benefited more than one reporting unit, The Company has assigned the goodwill to our reporting units as of the acquisition date such that the goodwill assigned to a reporting unit is the excess of the fair value of the acquired business, or portion thereof, to be included in that reporting unit over the fair value of the individual assets acquired and liabilities assumed that are assigned to the reporting unit.

 

If the carrying amount of a reporting unit is in excess or its fair value, the Company recognizes an impairment charge equal to the amount in excess.

 

 

MYSTIC HOLDINGS, INC. AND AFFILIATES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Intangible Assets

 

Intangible assets continue to be subject to amortization, and any impairment is determined in accordance with ASC 360, “Property, Plant, and Equipment, “intangible assets are stated at historical cost and amortized over their estimated useful lives. The Company uses a straight-line method of amortization, unless a method that better reflects the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up can be reliably determined. The approximate useful lives for amortization of our intangible assets are as follows:

 

Dispensary Licenses

14 years

 

The Company reviews intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. Conditions that may indicate impairment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset, a product recall, or an adverse action or assessment by a regulator. If an impairment indicator exists, we test the intangible asset for recoverability. For purposes of the recoverability test, we group our amortizable intangible assets with other assets and liabilities at the lowest level of identifiable cash flows if the intangible asset does not generate cash flows independent of other assets and liabilities. If the carrying value of the intangible asset (asset group) exceeds the undiscounted cash flows expected to result from the use and eventual disposition of the intangible asset (asset group), the Company will write the carrying value down to the fair value in the period identified.

 

The Company calculates fair value of our intangible assets as the present value of estimated future cash flows the Company expects to generate from the asset using a risk-adjusted discount rate. In determining our estimated future cash flows associated with our intangible assets, the Company uses estimates and assumptions about future revenue contributions, cost structures and remaining useful lives of the asset (asset group).

 

Intangible assets that have indefinite useful lives are tested annually for impairment and are tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount of the asset group exceeds its fair value.

 

Other Assets

 

Other assets comprise primarily of deposits for the purchase of real property and security deposits for leased properties in Nevada. The deposits for the purchase of real property are reclassified to Property and Equipment once the purchase is final.

 

 

MYSTIC HOLDINGS, INC. AND AFFILIATES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Income Taxes

 

Income taxes are accounted for on an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequence of events that have been recognized in the consolidated financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than proposed changes in the tax law or rates. Valuation allowances are provided if it is more likely than not that a deferred tax asset will not be realized.

 

The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. Once it is determined that the position meets the recognition threshold, the second step requires an estimate and measure the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement. The difference between the amount of recognizable tax benefit and the total amount of tax benefit from positions filed or to be filed with the tax authorities is recorded as a liability for uncertain tax benefits. It is inherently difficult and subjective to estimate such amounts due to the probability of various possible outcomes. The Company reevaluates uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax benefit or an additional charge to the tax provision.

 

The provision for income taxes consists of the following:

 

		For the Six Months Ended
			30-Jun-21				30-Jun-20
Net Revenue			7,679,766				5,617,447
280E Allocation			3,544,076				3,258,713
Net Income		$	4,135,690			$	2,358,734
Carry Forward Operating Loss			-				3,926,473
Net Taxable Income			4,135,690				-
Provision for Taxable Income		$	868,495			$	-

 

Advertising

 

The Company expenses all advertising costs as incurred. Advertising expense for the six months ended June 30, 2021 and 2020 were $419,047 and $70,635 respectively.

 

 

MYSTIC HOLDINGS, INC. AND AFFILIATES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 4: ACCOUNTS RECEIVABLE

 

As of June 30, 2021, and December 31, 2020, the company carried accounts receivable of $441,236 and $119,018 respectively. The industry in which the company operates does not have large amounts of accounts receivable at any given time. Company provides credit term to certain customers which usually are net 15 days. Company has not experienced any bad debts in previous years and it reasonably believes to collect all of its accounts receivable as of June 30, 2021 and December 31, 2020. As of June 30, 2021 and December 31, 2020, no allowance for doubtful accounts was deemed necessary.

 

NOTE 5: INVENTORY

 

As of June 30, 2021 and December 31, 2020, the Company carried the following inventory balances. Company did not recognize any obsolete in inventory due to impairment or damages in its inventory during the years 2021 and 2020.

 

		For the Six Months				For the Year
		Ended				Ended
		30-Jun-21				2020
Cultivation and Production
Raw Materials			312,397				255,383
Work in Progress			1,530,470				200,017
Finished Goods			654,129				1,664,688
Dispensaries
Finished Goods			393,565				407,390
Total		$	2,890,561			$	2,527,478

 

NOTE 6: OTHER ASSETS

 

Other assets consist of following:

 

		For the Six Months				For the Year
		Ended				Ended
		30-Jun-21				2020
Employee Loans			61,925				10,125
Dispensary Expansion			66,100				116,100
Security Deposit			50,000				-
Equipment Leasing Deposit			1,077,619				986,365
Closing Cost of New Dispensary Construction			46,600				-
		$	1,302,244			$	1,112,590

 

 

MYSTIC HOLDINGS, INC. AND AFFILIATES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 7: ACCOUNT PAYABLE AND ACCRUED EXPENSES

 

Accounts payable and accrued expenses consist of the following:

 

		For the Six Months				For the Year
		Ended				Ended
		30-Jun-2021				31-Dec-2020
Accounts Payable and Accrued Expenses			1,460,098				1,826,255
Interest Payable			347,390				318,579
		$	1,807,488			$	2,144,834

  

The accounts payable and accrued expenses consist of trade payables arising from company’s normal course of business.

 

NOTE 8: OTHER LIABILITIES

 

Other liabilities consist of following:

  

		For the Six Months				For the Year
		Ended				Ended
		30-Jun-2021				31-Dec-2020
Auto Loan			49,439				-
Legal Settlement Payable to Rauch Organics			250,000				1,250,000
		$	299,439			$	1,250,000

   

NOTE 9: PROPERTY AND EQUIPMENT

 

Property and equipment consists of the following:

  

		For the Six Months				For the Year
		Ended				Ended
		30-Jun-2021				31-Dec-2020
Furniture and Equipment			1,030,582				986,358
Leasehold Improvements			4,454,418				4,454,418
Vehicle			78,439				9,000
Computer Hardware and Software			101,812				101,812
Subtotal			5,665,251				5,551,588
Accumulated Depreciation			(1,613,682	)			(1,378,814	)
Net Total		$	4,051,568			$	4,172,774

  

Depreciation expense for the six months ended June 30, 2021 and year ended 2020 was $234,868 and $262,724 respectively. Out of $234,868 depreciation expense for the six months period of 2021, $166,934 is apportioned as indirect cost of cultivation of marijuana to Cost of Goods Sold in Consolidated Statements of Income.

 

 

MYSTIC HOLDINGS, INC. AND AFFILIATES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 10: RELATED PARTIES

 

From time to time the Company is involved in transactions with related parties. The Company had the following balances due from related parties as of:

 

		For the Six Months				For the Year
		Ended				Ended
		30-Jun-2021				31-Dec-2020
Dal Taro Holding II, LLC			38,887				-
Employees4Hire, LLC			-				27,213
Green Wagon Holdings, LLC			5,091,252				360,703
Panorama Crest, LLC			100,000				-
		$	5,230,139			$	387,916

 

Dal Toro Holdings II, LLC is one of the stockholders of the Company. The balances due from this related entity as of June 30, 2021 and December 31, 2020 are due on demand and bear no interest.

 

Employees4Hire, LLC are owned by related parties of the Company and are used to lease employees to the Company. The balances due to these related entities as of June 30, 2021 and December 31, 2020 are due on demand and bear no interest.

 

Green Wagon Holdings, LLC is an entity controlled by related parties of the Company that controls Green Wagon, LLC and Green Wagon Reno, LLC, entities that lease building space to the Company on a month-to-month basis as further explained in Note 17. The balance due from this related entity includes balances paid for the Real Estate Purchase Options on the real estate located at 4145 Wagon Trail Avenue, Las Vegas, Nevada 89118, and 1085 S. Virginia Street, Reno, Nevada, which may be converted to loans from Mystic to Green Wagon, LLC and Green Wagon Reno, LLC. The balances due from this related entity as of June 30, 2021 and December 31, 2020 are due on demand and bear no interest.

 

Panorama Crest, LLC is one of the stockholders of the Company. The balances due from this related entity as of June 30, 2021 and December 31, 2020 are due on demand and bear no interest.

 

Sky Hi, LLC, is a single member limited liability company whose managing member is Daniel V. Perla, one of our Directors. Mystic leases the space for the City of Las Vegas Dispensary located at 6050 Sky Pointe Dr. Las Vegas, NV 89130 from Sky Hi, LLC. In accordance with the terms of the lease, Mystic paid $500,000 to Sky Hi, LLC, in exchange for an option to purchase the real estate for the City of Las Vegas Dispensary. The amount paid to Sky Hi, LLC for the purchase of the option for the six-month period ended June 30, 2021 and June 30, 2020 was $500,000 and $0 respectively. Subsequent to June 30, 2021, Mystic made an additional payment to Sky Hi, LLC of $500,000 towards the purchase price of the option.

 

Stella Marina, LLC is an entity owned by related parties of the Company and is used to charter airplanes for business travel purposes. The travel expense paid to Stella Marina, LLC for the six-month period ended June 30, 2021 and June 30, 2020 was $77,433 and 91,000 respectively.

 

 

MYSTIC HOLDINGS, INC. AND AFFILIATES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 11: CREDIT RISK

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of accounts receivable. Concentrations of credit with respect to trade receivables are limited due to the large number of customers comprising the Company’s customer base. Also, the credit term determines the amount of receivables along with the concentration of customers determining single purchasers on credit.

 

As new legal enterprises, marijuana growers, distributors and dispensaries need financial services like those required by other businesses. But local banks and credit unions in many jurisdictions are still subject to laws prohibiting the offering of business accounts and services to organizations involved in cannabis production and distribution. At the federal level, U.S. law still forbids commerce in marijuana. While the U.S. Department of Justice has indicated that it will defer to the legislative intent of individual states regarding legalization, overlapping federal and state banking laws still present real risk management uncertainties for financial organizations.

 

Furthermore, only about one in 30 banks or credit unions in the U.S. currently accepts marijuana-related businesses as clients. Those providing services often require much higher servicing and transaction fees to offset complicated and strict reporting requirements.

 

NOTE 12: BUSINESS RISK

 

The Company’s primary business, cultivation and production of medical cannabis and recreational cannabis, is heavily regulated state levels although remains illegal at the federal level in the United States. While the Company is unable to predict what regulatory changes may occur or the impact on the Company of any particular change, the Company’s operations and financial results could be negatively affected. Further, the Company operates in a highly regulated industry, which may limit the Company’s ability to price its services at levels that the Company believes appropriate. These competitive factors may adversely affect the Company’s financial results.

 

NOTE 13: SHORT-TERM DEBT

 

Short-term debt consists of the following as of:

 

		For the Six Months				For the Year
		Ended				Ended
		30-Jun-2021				31-Dec-2020
Note Payable to Qualcan Canada, which shall be converted into Qualcan Canada common voting shares at $0.05 per share, for 14,000,000 common shares upon closing of acquisitions of Blum Dispensaries, and is being presented as due on demand and bearing no interest until the completion of closing, unsecured.			501,509				501,509
Note Payable to Medifarm LLC, on closing of purchase agreement entered, due within 12 months from issued date bearing interest at 5% per annum, secured.			800,000				2,800,000
Note Payable to Grass is Greener, LLC in exchange for a loan.			2,500,000				-
Balance Payable to Medifarm I LLC, on the closing of purchase agreement entered, is being presented as due on demand, bearing no interest.			4,200,000				4,200,000
Total Short-term Notes Payable		$	8,001,509			$	7,501,509

 

 

MYSTIC HOLDINGS, INC. AND AFFILIATES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 14: LONG-TERM DEBT

 

Long-term debt consists of the following as of:

 

		June 30, 2021				December 31, 2020
Note Payable to a business, which is in dispute, as terms of contract were not followed by lender and is being presented as due on demand and bearing no interest until a future settlement is reached, unsecured.		$	300,000			$	300,000
Total Long-term debt			300,000				300,000
Less: current maturities			(300,000	)			(300,000	)
Long-Term Debt		$	-			$	-

 

NOTE 15: DEBENTURES

 

The principal amount under the debentures is convertible into shares of our common stock at any time at the option of the holder; provided, that, if on or before the maturity date, the Canadian Public Offering is consummated, 100% of the outstanding principal amount of the debentures will be automatically converted into common shares of Qualcan Canada. The conversion price of the debentures issued in the First 2019 Private Placement is C$0.30 ($0.23) per share and the conversion price of the debentures issued in the Second 2019 Private Placement is C$0.80 ($0.60) per share. The conversion price is subject to adjustment in the event of specified dilutive or accretive events, such as stock splits and stock combinations. The principal amount and accrued interest under the debentures are payable by us upon the earlier to occur of the closing of the Canadian Public Offering or 12 months after the date of issuance. The debentures bear interest at an annual cumulative rate of 8.0%, due and payable in cash on the maturity date.

 

In the event of any liquidation, dissolution or winding up of our company, either voluntary or involuntary, the holders of the debentures will receive, in preference to any distribution of any of our assets to the holders of any of our other debt securities or credit facilities, an amount equal to the unpaid and unconverted principal amount of their debentures and any accrued and unpaid interest on the debentures. The holders will be paid in preference to any of our unsecured creditors and will be paid pro rata in proportion to the principal amount of debentures held by the holders (together with the holders of the debentures issued in the Second Mystic Financing) if the available assets are not sufficient to repay the debentures. The debentures are unsecured, general obligations of our company. The debentures are not be redeemable by us or subject to voluntary prepayment prior to maturity.

 

On December 11 2020, the Company settled principal amount of the debenture of $6,999,987 through the issuance of 16,955,336 common shares of the company and was convertible into common shares of the company at a conversion price of CA$0.30 and CA$0.80 per share. The accrued interest associated with debenture has been terminated upon conversion.

 

The carrying value of the Debentures, as of June 30, 2021 and December 31, 2020, are $441,646 and $441,646 respectively.

 

 

MYSTIC HOLDINGS, INC. AND AFFILIATES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 17: COMMITMENTS AND CONTINGENCIES

 

Uncertain Tax Position

 

The Company follows the FASB Accounting Standards Codification, which provides guidance on accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of June 30, 2020 and December 31, 2020, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the Company’s financial statements. The Company’s policy is to recognize interest and penalties on unrecognized tax benefits in income tax expense in the financial statements. No interest and penalties were recorded during the years ended June 30, 2021 and December 31, 2020. Generally, the tax years before 2017 are no longer subject to examination by federal, state or local taxing authorities.

 

Litigation

 

The Company is involved, from time to time, in disputes and claims incidental to the conduct of its business. The company reviews any such legal proceedings and claims on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions. Based upon present information, the company determined that there were no matters that required an accrual as of June 30, 2021 nor were there any asserted or unasserted material claims for which material losses are reasonably possible.

 

On December 8, 2016, Rauch Organics LLC (“Rauch”) filed a lawsuit in the Eighth Judicial District Court in and for Clark County, Nevada against the company, certain of its subsidiaries and affiliates, and certain related members alleging, among other things, that the company and its affiliates breached the various agreements under which Rauch has not received monies due and owing pursuant to those agreements. Furth more, Rauch alleged that members of the company induced Rauch to enter into various agreements through false or fraudulent misrepresentations. Rauch Plaintiffs, were seeking, among other things, issuance of up to 5% equity interest in the company based upon its loan of $600,000 to the company pursuant to an Agreement for Transfer of Membership Interests dated December 23, 2015. The company denied the allegations of Plaintiff and Qualcan has filed a Counterclaim against Plaintiff and certain companies affiliated with Plaintiff. Qualcan alleged that Plaintiff breached the various agreements, violated its fiduciary duties owed to Qualcan and converted Qualcan’s property by wrongfully destroying certain cannabis corps at or near the time the agreements were terminated. On April 26, 2021, the company and Rauch Organics LLC agreed to a settlement, which, among other terms, provides for a payment of $1,250,000 by company to Rauch. Out of the settlement amount, $1,000,000 was paid on June 29, 2021 and remaining settlement amount of $250,000 still due is reflected as other current liabilities on our Consolidated Balance Sheets as of June 30, 2021.

 

 

MYSTIC HOLDINGS, INC. AND AFFILIATES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 17: LEASE AGREEMENTS

 

The Company leases building space from Green Wagon Holdings, LLC, an entity controlled by related parties of the Company, on a month to month basis. The Company has elected to apply the alternative accounting and disclosures for certain variable interest entities provided to private companies pursuant to generally accepted accounting principles as it related to the lease with Green Wagon Holdings, LLC.

 

The scheduled rental payment as per the lease agreement as follows

 

Periods			Basic Monthly Rent
June 1, 2021 through May 31, 2022		$	36,000 per month
June 1, 2022 through May 31, 2023		$	39,000 per month
June 1, 2023 through May 31, 2024		$	42,000 per month
June 1, 2024 through May 31, 2025		$	43,260 per month

 

The rent increases 3% per year after year 2025.

 

On May 31, 2019, MediFarm LLC renewed lease agreement with Vegas Godspeed LLC for the operation of its division Blum- Desert Inn at the street address of 1130 Desert Inn Road, Las Vegas, NV 89109, in Las Vegas, Nevada. The lease term is of six years expiring in May 31, 2024.

 

The scheduled rental payment as per the lease agreement as follows

 

Periods			Basic Monthly Rent
June 1, 2019 through May 31, 2020		$	9,334.74 per month (First Floor)
		$	1,050.48 per month (Basement)
June 1, 2020 through May 31, 2021		$	9,614.78 per month (First Floor)
		$	1,081.99 per month (Basement)
June 1, 2021 through May 31, 2022		$	9,903.23 per month (First Floor)
		$	1,114.45 per month (Basement)
June 1, 2022 through May 31, 2023		$	10,200.32 per month (First Floor)
		$	1,147.89 per month (Basement)
June 1, 2023 through May 31, 2024		$	10,506.33 per month (First Floor)
		$	1,182.32 per month (Basement)

 

The company assumed the prior lease agreement between Green Wagon Reno, LLC and MediFarm I, LLC upon taking control over MediFarm I LLC for its Jade Reno (previously known as Blum Reno) facility as on January 1, 2020. The rent per lease agreement is $15,000 per month with adjustment upon renewal.

 

Total rent expense for the six months ended June 30, 2021 and 2020 were $449,745 and $407,061 respectively.

 

 

MYSTIC HOLDINGS, INC. AND AFFILIATES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 18 : INTANGIBLE ASSET AND GOODWILL

 

Goodwill

 

Goodwill arises from the purchase price for acquired businesses exceeding the fair value of tangible and intangible assets acquired less assumed liabilities.

 

Goodwill is reviewed annually for impairment or more frequently if impairment indicators arise. The Company conducts its annual goodwill impairment assessment as of the last day of the third quarter, or more frequently under certain circumstances. For the purpose of the goodwill impairment assessment,the Company has the option to perform a qualitative assessment (commonly referred to as “step zero”) to determine whether further quantitative analysis for impairment of goodwill or indefinite-lived intangible assets is necessary or a quantitative assessment (“step one”) where the Company estimates the fair value of each reporting unit using a discounted cash flow method (income approach). Goodwill is assigned to the reporting unit, which is the operating segment level or one level below the operating segment. The balance of goodwill at June 30, 2021 and December 31, 2020 was $4.8 million and $4.8 million, respectively and was attributed to the Cannabis reportable segment.

 

The table below summarizes the changes in the carrying amount of goodwill:

 

Balance,January 1, 2020			2,124,673
Goodwill acquired during 2020			2,699,431
Accumulated Impairment loss			-
Balance, December 31, 2020		$	4,824,104
Balance,January 1, 2021			4,824,104
Goodwill acquired during 2021			-
Accumulated Impairment loss			-
Balance,June 30, 2021		$	4,824,104

 

The Company completed a preliminary step one assessment as of January 1, 2021 and concluded no adjustment to the carrying value of goodwill was required. The results of the Company’s 2021 and 2020 goodwill impairment assessments indicated that no other goodwill impairment existed.

 

Intangible Assets, Net

 

Intangible assets consisted of the following as of June 30, 2021 and December 31, 2020.

 

		June 30, 2021
		Estimated Useful Life in Years				Gross Carrying Amount				Accumulated  Amortization				Net Carrying Amount
Dispensary Licenses			14				16,492,206				1,841,966				14,650,240
Subtotal							16,492,206				1,841,966				14,650,240
Total Intangible Assets, Net							16,492,206				1,841,966				14,650,240

 

		December 31, 2020
		Estimated Useful Life in Years				Gross  Carrying Amount				Accumulated  Amortization				Net Carrying Amount
Dispensary Licenses							16,492,206				1,252,959				15,239,247
Subtotal							16,492,206				1,252,959				15,239,247
Total Intangible Assets, Net							16,492,206				1,252,959				15,239,247

 

The Company recorded amortization expense of $589,008 and $589,008 for the six months ended June 30, 2021 and 2020, respectively.

 

 

MYSTIC HOLDINGS, INC. AND AFFILIATES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 19: STOCK OPTION

 

Performance Incentive Plan

 

In September 2019, the shareholders approved the Company’s 2019 Performance Stock Option (the “Stock Option”). Under the terms of the Incentive Plan, up to 13,000,000 shares of common stock may be granted. The Stock Option is administered by the Compensation Committee which is appointed by the Board of Directors. The Committee determines which key employee, officer or director on the regular payroll of the Company, or outside consultants shall receive stock options. Granted options are exercisable after two years from the date of grant in accordance with the terms of the grant up to five years after the date of the grant. The exercise price of any incentive stock option or nonqualified option granted under the Incentive Plan may not be less than 100% of the fair market value of the shares of common stock of the Company at the time of the grant.

 

Options:

 

The following options were issued to employees and non-employee Board of Directors and consultants in accordance with the Company’s Performance Incentive Plan.

 

Grant Date

Number of Options

Exercise Price

Expiration Term

30-Sep-19

4,000,000

0.30

5 years

30-Sep-19

8,863,500

0.80

5 years

30-Sep-19

70,000

1.00

5 years

 

At June 30, 2021, the Company has shares of common stock reserved for issuance of these options and for options granted previously.

 

Activity in stock options, including those outside the Performance Incentive Plan, for six months ended June 30, 2021, is summarized as follows:

 

		Shares Under Options				Average Exercise Price
Balance, January 1, 2021			12,933,500				0.65
Options Granted			-				-
Options Exercised			-				-
Options Cancelled/Expired			-				-
Balance, June 30, 2021			12,933,500				0.65

 

All of the options listed in the above table have no intrinsic value, as their exercise prices are all in excess of the market value of the Company’s common stock as of June 30, 2021.

 

 

MYSTIC HOLDINGS, INC. AND AFFILIATES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 20: REGULATION A SUBSCRIPTION

 

On June 30, 2021, Mystic Holdings, Inc. (the “Company”) completed final closing in the amount of its offering of the Company’s common stock pursuant to Regulation A (Regulation A+) of Section 3(6) of the Securities Act of 1933, as amended, for Tier 2 offerings (the “Offering”). The total of $14,415,858 were received as of June 30, 2021, the balance of $749,468 is booked as “Receivable from Dealmaker” in Consolidated Balance Sheets and the remaining balance of $236,047 is booked as Deal Maker Fee in Consolidated Statements of Income.

 

NOTE 21: RECENT ACCOUNTING GUIDANCE

 

In December 2019, the FASB issued an accounting standard updates that eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company is currently have adopted the accounting standard as of December 15, 2020 adoption date and have determined the adoption of ASU 2019- 12 has no material impact on our consolidated financial statements or disclosures.

 

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

NOTE 22: SUBSEQUENT EVENTS

 

In accordance with ASC 855, the Company evaluated subsequent events through August 4, 2021 the date these financial statements were issued.

 

On July 02, 2021, the Company paid off the remaining balance of $800,000 to MediFarm LLC pursuant to asset purchase agreement (Note 13 Short Term Debt).

 

On July 09, 2021, the Company paid off the remaining balance of $250,000 pursuant to settlement agreement with Rauch Organics LLC (Note 16 Commitment and Contingencies).

 

As of July 31, 2021, the Company received the $786,623 due from Dealmaker pursuant to Reg A subscription (Note 20 Regulation A Subscription).

 

 

Item 4. Exhibits

 

INDEX OF EXHIBITS

 

Exhibit No.		Exhibit Description
2.1		Articles of Incorporation of Mystic Holdings, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 10, 2019).
2.2		Amended and Restated By-laws of Mystic Holdings, Inc. (incorporated by reference to Exhibit 2.2 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 10, 2019).
2.3		Amended and Restated Articles of Incorporation of Mystic Holdings, Inc. dated June 14, 2021 (incorporated by reference to Exhibit 2.3 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 9, 2021).
2.4		Amended and Restated By-laws of Mystic Holdings, Inc. dated May 20, 2021 (incorporated by reference to Exhibit 2.4 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 9, 2021).
2.5		Certificate of Designation of Rights, Preferences and Privileges of Series A Preferred Stock of Mystic Holdings, Inc (incorporated by reference to Exhibit 2.5 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 9, 2021).
4.1		Form of Subscription Agreement for the Current Reg A+ Offering (incorporated by reference to Exhibit 4.1 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 9, 2021).
6.1		Share Exchange Agreement, effective September 4, 2019, between Qualcan (Canada) Holdings Inc. and Mystic Holdings, Inc. (incorporated by reference to Exhibit 6.1 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 10, 2019).
6.2		Amendment No. 1 to Share Exchange Agreement, effective February 7, 2020, between Qualcan (Canada) Holdings Inc. and Mystic Holdings, Inc. (incorporated by reference to Exhibit 6.11 to the Company’s Offering Statement on Form 1-A/A filed with the SEC on February 10, 2020).
6.3		Amendment No. 2 to Share Exchange Agreement, effective March 11, 2020, between Qualcan (Canada) Holdings Inc. and Mystic Holdings, Inc. (incorporated by reference to Exhibit 6.13 to the Company’s Offering Statement on Form 1-A filed with the SEC on March 12, 2020).
6.4		Form of C$0.30 8% Convertible Debenture from First 2019 Private Placement (incorporated by reference to Exhibit 6.2 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 10, 2019).
6.5		Form of C$0.80 8% Convertible Debenture from Second 2019 Private Placement (incorporated by reference to Exhibit 6.3 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 10, 2019).
6.6		Form of Letter Agreement re: Extension of Maturity of 8% Convertible Debentures (incorporated by reference to Exhibit 6.17 to the Company’s Post-Qualification Amendment No. 2 to Offering Statement on Form 1-A POS filed with the SEC on November 6, 2020).
6.7		Asset Purchase Agreement, dated as of May 8, 2019, between Picksy LLC and MediFarm LLC (incorporated by reference to Exhibit 6.4 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 10, 2019).
6.8		Asset Purchase Agreement, dated as of August 19, 2019, between Picksy Reno, LLC and MediFarm I LLC (incorporated by reference to Exhibit 6.5 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 10, 2019).
6.9		Letter Agreement, dated as of January 30, 2020, by and among Medifarm LLC, Picksy LLC, MediFarm I LLC and Picksy Reno LLC (incorporated by reference to Exhibit 6.12 to the Company’s Offering Statement on Form 1-A/A filed with the SEC on February 10, 2020).
6.10		Letter Agreement, dated as of August 3, 2020, by and among Medifarm I LLC and Picksy Reno LLC (incorporated by reference to Exhibit 6.14 to the Company’s Post-Qualification Amendment No. 1 to Offering Statement on Form 1-A POS filed with the SEC on September 15, 2020).
6.11		Letter Agreement, dated as of October 22, 2020 by and among Medifarm I LLC, Picksy Reno LLC, Mystic Holdings, Inc. and Terra Tech Corp. (incorporated by reference to Exhibit 6.15 to the Company’s Post-Qualification Amendment No. 2 to Offering Statement on Form 1-A POS filed with the SEC on November 6, 2020).

 

 

6.12		Letter Agreement, dated as of May 19, 2021 by and among Picksy LLC, Picksy Reno LLC, Mystic Holdings, Inc. and Terra Tech Corp (incorporated by reference to Exhibit 6.12 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 9, 2021).
6.13		Secured Promissory Note, dated as of February 23, 2021, by Picksy LLC in favor of Medifarm LLC (incorporated by reference to Exhibit 6.13 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 9, 2021).
6.14		Secured Promissory Note, dated as of August 12, 2021, by Picksy Reno LLC in favor of Medifarm I LLC (incorporated by reference to Exhibit 6.14 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 9, 2021).
6.15		Common Stock Purchase and Working Capital Loan Agreement, dated as of October 19, 2017, between Mystic Holdings, Inc. and Ketores Holdings, LLC (incorporated by reference to Exhibit 6.7 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 10, 2019).
6.16		Promissory Note, dated as of October 19, 2017, between Mystic Holdings, Inc. and Ketores Holdings, LLC (incorporated by reference to Exhibit 6.8 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 10, 2019).
6.17		Secured Convertible Promissory Note, dated as of January 20, 2021, by Mystic Holdings, Inc. in favor of CEG Capital, LLC (incorporated by reference to Exhibit 6.17 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 9, 2021).
6.18		Advisory Agreement, dated as of February 23, 2021, by and between Mystic Holdings, Inc. and Michael Nahass (incorporated by reference to Exhibit 6.18 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 9, 2021).
6.19		Amended Commercial Lease Agreement, dated as of June 30, 2016, between Qualcan, LLC and Green Wagon, LLC (incorporated by reference to Exhibit 6.6 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 10, 2019).
6.20		Lease Addendum to Amended Commercial Lease Agreement, dated as of January 1, 2021, between Qualcan LLC and Green Wagon LLC (incorporated by reference to Exhibit 6.20 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 9, 2021).
6.21		Office Lease, dated as of May 31, 2019, by and between MediFarm, LLC and Vegas Godspeed, LLC (incorporated by reference to Exhibit 6.21 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 9, 2021).
6.22		Commercial Lease Agreement, dated as of February 1, 2020, by and between Picksy Reno LLC and Green Wagon Reno, LLC (incorporated by reference to Exhibit 6.22 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 9, 2021).
6.23		Lease Addendum to Commercial Lease Agreement, dated as of January 1, 2021, by and between Picksy Reno LLC and Green Wagon Reno LLC (incorporated by reference to Exhibit 6.23 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 9, 2021).
6.24		Lease, dated as of August 2021, by and between Mystic Holdings, Inc. and Sky Hi LLC (incorporated by reference to Exhibit 6.24 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 9, 2021).
6.25		Form of Mystic Holdings, Inc. Incentive Stock Option Agreement (incorporated by reference to Exhibit 6.10 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 10, 2019).
6.26		Employment Agreement by and between Lorenzo Barracco and Mystic Holdings, Inc. (incorporated by reference to Exhibit 6.26 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 9, 2021).
6.27		Employment Agreement by and between Michael Cristalli and Mystic Holdings, Inc. (incorporated by reference to Exhibit 6.27 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 9, 2021).
6.28		Employment Agreement by and between Heather Cranny and Mystic Holdings, Inc. (incorporated by reference to Exhibit 6.28 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 9, 2021).
6.29		Employment Agreement by and between Joanna DeFilippis and Mystic Holdings, Inc. (incorporated by reference to Exhibit 6.29 to the Company’s Offering Statement on Form 1-A filed with the SEC on September 9, 2021).
6.30		Settlement Agreement, dated as of July 28, 2020, by and among Qualcan, LLC, LivFree Wellness, LLC, MM Development Company, Inc., ETW Management Group LLC, Global Harmony LLC, Just Quality, LLC, Libra Wellness Center, LLC, Rombough Real Estate, Inc., Zion Gardens LLC, Nevada Wellness Center, LLC, Lone Mountain Partners, LLC, Nevada Organic Remedies, LLC, Greenmart of Nevada NLV, LLC, Helping Hands Wellness Center, Inc., CPCM Holdings, LLC, Cheyenne Medical, LLC, Commerce Park Medical, LLC and the State of Nevada, Department of Taxation (incorporated by reference to Exhibit 6.16 to the Company’s Post-Qualification Amendment No. 2 to Offering Statement on Form 1-A POS filed with the SEC on November 6, 2020).
10.1*		Power of Attorney (set forth on signature page hereto).

 

Unless otherwise indicated, exhibit has been previously filed.

 

* Filed herewith.

 

 

SIGNATURES

 

Pursuant to the requirements of Regulation A, the issuer has duly caused this Semiannual Report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Las Vegas, State of Nevada, on September 27, 2021.

 

	MYSTIC HOLDINGS, INC.
	By:	/s/ Lorenzo Barracco
		Lorenzo Barracco
		Chairman and Chief Executive Officer

 

This Semiannual Report has been signed by the following persons in the capacities and on the dates indicated.

 

Signature		Title		Date
/s/ Lorenzo Barracco		Chief Executive Officer and Chairman		September 27, 2021
Lorenzo Barracco		(principal executive officer)
/s/ Michael Cristalli*		President and Director		September 27, 2021
Michael Cristalli
/s/ Heather Cranny*		Chief Financial Officer, Treasurer		September 27, 2021
Heather Cranny		Secretary (principal financial and accounting officer) and Director
/s/ Joanna DeFilippis*		Chief Operating Officer and Director		September 27, 2021
Joanna DeFilippis
/s/ Daniel V. Perla*		Director		September 27, 2021
Daniel V. Perla
/s/ Sigmund (Sig) Rogich*		Director		September 27, 2021
Sigmund (Sig) Rogich
/s/ Alexander Scharf*		Director		September 27, 2021
Alexander Scharf

 

*By:	/s/ Lorenzo Barracco
	Lorenzo Barracco
	Attorney-in-Fact

 

 

 

 

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