DESCRIPTION OF THE BUSINESS OF LFTD PARTNERS INC

9 Months Ended

Sep. 30, 2024

DESCRIPTION OF THE BUSINESS OF LFTD PARTNERS INC

DESCRIPTION OF THE BUSINESS OF LFTD PARTNERS INC.

NOTE 1 – DESCRIPTION OF THE BUSINESS OF LFTD PARTNERS INC.

LFTD Partners Inc. (hereinafter sometimes referred to as “LFTD Partners”, the “Company”, “LIFD”, the “Company”, “we”, “us”, “our”, etc.) was organized under the laws of the State of Nevada on January 2, 1986. Shares of the Company’s common stock are traded on the OTCQB Venture Market under the trading symbol LIFD.

On May 18, 2021, the Company changed its name to LFTD Partners Inc. from Acquired Sales Corp. On March 15, 2022, the Company changed its stock trading symbol to LIFD.

After acquiring, operating and then selling businesses involved in the defense sector, our business is currently directly or indirectly involved in the development, manufacture and/or sale or re-sale of a wide variety of branded, hemp-derived and psychoactive products, health and wellness products, energy gummies, and nicotine products.

We are primarily interested in acquiring rapidly growing, profitable companies that are also involved in the manufacture and sale of branded, hemp-derived and psychoactive products (a “Canna-Infused Products Company”). Management of the Company is open-minded to the concept of also acquiring operating businesses and/or assets directly or indirectly involving products containing nicotine, tobacco, marijuana, distilled spirits, beer, wine, and/or real estate. In addition, management of the Company is open-minded to the concept of diversifying, by acquiring all or a portion of one or more operating businesses and/or assets that are considered to be “essential” businesses that are outside our industry and that are unlikely to be shut down by the government during pandemics such as COVID-19, or that have less regulatory risk than a Canna-Infused Products Company.

Lifted Made

On February 24, 2020, we acquired 100% of the ownership interests in one Canna-Infused Products Company called Lifted Liquids, Inc. d/b/a Lifted Made and d/b/a Urb Finest Flowers (www.urb.shop), Kenosha, Wisconsin (“Lifted Made” or “Lifted”). Lifted primarily manufactures and sells hemp-derived and psychoactive products under its award-winning Urb Finest Flowers (“Urb”) brand. Products currently sold by Lifted under its Urb brand include, for example: vapes and cartridges, gummies, joints and blunts.

In the latter half of the second quarter of 2024, Lifted launched Mielos, a new brand of health and wellness products that do not contain hemp derivatives. 

In the third quarter of 2024, Lifted launched a new brand called Rebel Energy Gummy, which does not contain hemp-derivatives.

Lifted is the worldwide, exclusive manufacturer and seller of Diamond Supply Co. (www.DiamondSupplyCo.com) and Cali Sweets hemp-derived products. Lifted is also the exclusive manufacturer and seller in the USA of hemp-derived products for a subsidiary of a large, publicly traded US marijuana company.

Ablis, Bendistillery and Bend Spirits

On April 30, 2019, we also closed on the acquisition of 4.99% of the common stock of each of CBD-infused beverages maker Ablis Holding Company (“Ablis”) (www.Ablis.shop), and of distilled spirits manufacturers Bendistillery Inc. d/b/a Crater Lake Spirits (“Bendistillery”) (www.CraterLakeSpirits.com) and Bend Spirits, Inc. (“Bend Spirits”), all located in Bend, Oregon.

Ablis manufactures and sells flavored, lightly carbonated canned beverages, including “functails” – a term coined by Ablis which means a beverage crafted with hemp-derived THC and/or CBD, and other high-quality functional ingredients such as caffeine from guarana, L-theanine and ashwagandha. Ablis also sells CBD-infused muscle rub, among other products.

Bendistillery manufactures and sells straight and flavored vodka and gin and various types of whiskey under its brand Crater Lake Spirits.

Bank Financing and Purchase of Headquarters Building

On December 14, 2023, LFTD Partners and Lifted (together the “Borrower”), jointly borrowed a total of $3,910,000 from Surety Bank, of DeLand, Florida (“Lender”).

The Lender made two five-year loans to the Borrower, as joint borrowers: (1) a working capital loan of $3,000,000 at 9.5% fixed annual interest, and (2) a $910,000 loan at 10% fixed annual interest, the net proceeds of which were used by Lifted to pay a portion of the $1,375,000 purchase price of Lifted’s main operations building located at 5511 95th Avenue, Kenosha, Wisconsin (“5511 Building”). The two loans are cross collateralized by a first lien mortgage on the 5511 Building, and by a first lien security interest in all of the other assets owned by LIFD and Lifted, in favor of Surety Bank.

Purchase of the 5511 Building

Toward the end of 2020, our Vice Chairman and Chief Operating Officer Nicholas S. Warrender (“NWarrender”), through his assigned entity 95th Holdings, LLC (“Holdings”), purchased the 5511 Building, which was immediately leased to us to conduct our expanded operations. The 5511 Building includes office, laboratory and warehouse space. As part of the lease agreement with Holdings, the parties agreed that our wholly owned subsidiary Lifted would eventually purchase the 5511 Building. The purchase price for the 5511 Building was originally subject to valuation based on a formula agreed upon by the parties. Pursuant to an agreement with NWarrender on December 30, 2021, the parties agreed to set the purchase price for the 5511 Building at $1,375,000. Prior to the Acceleration Agreement, which was entered into by the Company with NWarrender on July 5, 2022, Lifted had an obligation to complete the purchase of the 5511 Building on or before December 31, 2022. Pursuant to the Acceleration Agreement, the deadline to purchase the 5511 Building was extended by one year to December 31, 2023. Lifted purchased the 5511 Building from Holdings on December 14, 2023 for the agreed upon purchase price of $1,375,000 in cash.

Improvements to and Potential Expansion of the 5511 Building

Due to an extreme need for additional employee parking at the 5511 Building, the Company in the fourth quarter of 2022 built a parking lot at the 5511 Building for $193,216, which is accounted for as a building improvement (a capitalized fixed asset). The investment in this necessary parking lot had no impact on the $1,375,000 purchase price that Lifted had committed to pay for, and did pay for, the 5511 Building on December 14, 2023.

The Company desires to have all of its operations under one roof at the 5511 Building in order to become more efficient. The Company has hired and paid an architectural and construction company (the “Construction Company”) which has created a preliminary design for expanding the 5511 Building by approximately 30,000 square feet. The Construction Company has provided a preliminary estimate that the potential expansion could cost the Company approximately $3,500,000. Neither the management nor the Board of Directors of the Company has committed to such potential expansion, but it is under consideration.

$3,000,000 Working Capital Loan

Credit Agreement

Pursuant to the Credit Agreement dated as of December 14, 2023 (the “Credit Agreement”), among the Borrower and the Lender, the Lender agreed to loan to the Borrower $3,000,000 (“Working Capital Loan”). The interest rate for the Working Capital Loan is a fixed annual interest rate of 9.5%. The Credit Agreement requires a Promissory Note and Security Agreement. The Credit Agreement requires a prepayment fee if the Working Capital Loan is repaid to the Lender in less than three years, in the amount of 3% of the Working Capital Loan if the loan is repaid in Year-1, 2% of the Working Capital Loan if the Working Capital Loan is repaid in Year-2, and 1% if the Working Capital Loan is repaid in Year-3.

The Credit Agreement is also subject to certain negative covenants in which the Borrower agreed (subject to certain exceptions) not to, among other things:

· Become subject to other liens or encumbrances;

· Change ownership of Lifted without the consent of the Lender;

· Enter into a merger, acquisition or divestiture;

· Conduct stock buybacks;

· Serve as a guarantor;

· Wind up, liquidate or dissolve;

· Enter into the purchase, sale, exchange or transfer of property;

· Permit the outstanding principal balance of the Working Capital Loan to exceed 40% of the fair market value of the collateral securing the Working Capital Loan; or

· Directly or indirectly issue, assume or create any additional indebtedness on the collateral.

Promissory Note

Pursuant to the Promissory Note dated as of December 14, 2023 (the “WC Note”), among the Borrower and the Lender, the Lender agreed to loan to the Borrower the Working Capital Loan at a fixed annual interest rate of 9.5%. The WC Note also requires a 5% late fee on outstanding unpaid payments due under the WC Note where payments are not made within 10 days of the due date. The WC Note has cross-default cross-collateralized provisions with the $910,000 Business Loan described below.

Security Agreement

Pursuant to a Security Agreement dated as of December 14, 2023 (“Security Agreement”), the Borrower granted to the Lender a security interest in all the Borrower’s personal property relating to its business to secure the obligations of the Borrower under the Credit Agreement. The collateral that is secured by the Security Agreement includes all the Borrower’s accounts, general intangibles, inventory, equipment, goods, deposit accounts, contractual rights, fixtures, money, insurance and commercial tort claims.

If an event of default under the Credit Agreement occurs, then the Lender may exercise the Borrower’s rights in the collateral. In that event, the Lender will have all the rights of a secured party with respect to the collateral under the Uniform Commercial Code, including, among other things, the right to sell the collateral at public or private sale.

Collateral Assignment Agreement

Under the Collateral Assignment Agreement dated as of December 14, 2023, between the Borrower and the Lender, the Borrower assigned to the Lender, in connection with the terms of the Credit Agreement, all of Borrower’s “intellectual property”, including but not limited to, all patents, patent rights, trademarks and service marks, works, inventions, copyrights, trade names, software and computer programs, trade secrets, methods, processes, know how, drawings, and specifications. In the event of default under the Credit Agreement or WC Note, or other cross collateralized obligations, the Lender would be entitled to the foregoing intellectual property collateral to the detriment of the Borrower.

Pledge Agreement

Under the Pledge Agreement dated as of December 14, 2023, between the Borrower and the Lender, the Borrower, in connection with the terms of the Credit Agreement, pledges all equity holdings in Lifted, Bendistillery Inc., Bend Spirits, Inc., and Ablis Holding Company. In the event of default under the Credit Agreement or WC Note, or other cross collateralized obligations, the Lender would be entitled to the foregoing equity collateral to the detriment of the Borrower. 

$910,000 Loan

Business Loan Agreement

Pursuant to the Business Loan Agreement dated as of December 14, 2023 (the “Loan Agreement”), among the Borrower and the Lender, the Lender agreed to loan $910,000 (the “Business Loan”) to the Borrower. The Business Loan requires that Borrower shall maintain a minimum 1.50x Debt Service Coverage Ratio (“DSCR”) based on Borrower tax returns. The DSCR shall be tested annually, beginning with the 2023 return. The DSCR shall be calculated as EBIDA (earnings before interest, depreciation, and amortization) divided by contractual annual debt service payments. The Business Loan also requires Borrower to maintain its primary operating accounts with a $1,000,000 minimum deposit account balance with the Lender for the life of the Business Loan. The Business Loan also requires a Promissory Note, Mortgage and Assignment of Rents, Leases, and Security Deposits described below.

Promissory Note

Pursuant to the Promissory Note dated as of December 14, 2023 (the “BL Note”), among the Borrower and the Lender, the Lender agreed to loan to the Borrower the Business Loan at a fixed annual interest rate of 10%. The BL Note also requires a 5% late fee on outstanding unpaid payments due under the BL Note. The BL Note requires a mortgage on the 5511 Building, along with a first priority security interest on: all furniture, equipment, inventory, and general intangibles (including but not limited to all software and all payment intangibles); all fixtures; and all attachments, accessions, accessories, fittings, increases, tools, parts, repairs, supplies, and commingled goods.

Mortgage

Pursuant to the Mortgage dated as of December 14, 2023 (the “Mortgage”), among Lifted in favor of the Lender, in connection with the terms of the Loan Agreement and BL Note, Lifted agreed to a first priority mortgage on the 5511 Building (Parcel Number 08-222-32-410-104). In the event of default under the Loan Agreement or BL Note, or other cross collateralized obligations, the Lender would be entitled to the foregoing equity collateral to the detriment of the Borrower.

Assignment of Rents, Leases, and Security Deposits

Pursuant to the Assignment of Rents, Leases, and Security Deposits dated as of December 14, 2023 (the “Lease Assignment”), among Lifted in favor of the Lender, in connection with the terms of the Loan Agreement and BL Note, Lifted agreed to assign its rights to leases and income from the 5511 Building to Lender. In the event of default under the Loan Agreement or BL Note, or other cross collateralized obligations, the Lender would be entitled to the foregoing equity collateral to the detriment of the Borrower.

Default under any of the agreements described above could have a highly detrimental, if not catastrophic impact on our company.

Consolidated Balance Sheet Presentation of the Working Capital and Business Loans and Maturity Analysis

The following presents the Working Capital and Business Loans in the Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023:

	September 30, 2024			December 31, 2023
Working Capital Loan	$	2,637,175		$	3,000,000
Real Estate Loan		890,093			910,000
Total principal amount		3,527,268			3,910,000
Less: Unamortized debt financing costs		(46,801	)		(55,149	)
Less: Current portion of Surety Bank notes		(545,897	)		(506,061	)
Non-Current portion of Surety Bank notes	$	2,934,570		$	3,348,790

The following represents aggregate payments due on the Working Capital and Business Loans subsequent to September 30, 2024:

Maturity Analysis as of September 30, 2024
2024	$	219,235
2025		876,939
2026		876,939
2027		876,939
2028		1,618,429
Thereafter		-
Total		4,468,481
Less: Interest portion		(941,213	)
Total principal amount	$	3,527,268

Manufacturing, Sales and Marketing Agreements

During the year ended December 31, 2023, Lifted entered into Manufacturing, Sales and Marketing Agreements with Cali Sweets, LLC (“Cali”), Diamond Supply Co. (“Diamond”), and DreamFields Brands Inc. d/b/a Jeeter (“Jeeter”); and, on or about January 23, 2024, Lifted entered into a Manufacturing, Sales and Marketing Agreement effective as of January 20, 2024 with a wholly owned subsidiary of a large, publicly traded US marijuana company (collectively, “Agreements”). The terms of these Agreements are described below. As of September 30, 2024, all of the Agreements were in effect, except for the Jeeter Agreement, which had been terminated on January 1, 2024. The aggregate net revenue related to these Agreements for the nine months ended September 30, 2024 was $1,849,666.

Cali Sweets Agreement

On January 11, 2023, Lifted entered into a Manufacturing, Sales and Marketing Agreement (“Cali Agreement”) with Cali Sweets, LLC (“Cali”). Cali is headquartered in North Hollywood, California, and currently sells products under the brand name Koko Nuggz. The Cali Agreement entitles Lifted to be the exclusive worldwide manufacturer and distributor of Cali’s disposable vape products (under the brand name Koko Puffz) and gummy products (under the brand name Koko Yummiez) (“Cali Products”).

Pursuant to the Cali Agreement, Lifted manufactures, markets, and distributes certain Cali Products and brands worldwide. Lifted and Cali equally share certain production and marketing costs associated with such Cali Products on a dollar-for-dollar basis. Revenue from the sale of such Cali Products are divided on a 60/40 basis, net of any returns, discounts, or replacements, with 60% allocated to Lifted, and the remaining 40% to Cali.

Under the terms of the Cali Agreement, Lifted has the right, in its discretion, to add new Cali brands and Cali Products as they are developed. Lifted can also set prices for Cali Products it supplies or unilaterally discontinue the supply of any Cali product if it no longer makes business sense to Lifted. The parties also agreed that Cali will provide social media marketing services for both Cali Products and brands, and for Lifted’s Urb branded products.

The term of the Cali Agreement is five years and may be extended with the mutual consent of the parties. However, after the initial 24 months, the Cali Agreement may be terminated by either party, for any or no reason, upon providing the other party with 180 days written notice. Cali may become subject to early exit payments to Lifted if it early terminates. The exit fee formula is based on estimated profits that Lifted may have enjoyed had Cali not early terminated the relationship.

Accounting for the Cali Agreement

Regarding the accounting for the Cali Agreement: the Company has evaluated the principal versus agent considerations in Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. The Company has considered the following facts to assess whether Lifted has control of the Cali Products that are manufactured and distributed pursuant to the Cali Agreement:

· Lifted is the exclusive worldwide manufacturer and distributor of the Cali Products. To fulfill its obligations pursuant to the Cali Agreement, Lifted sources raw goods, labor, and other resources to manufacture the Cali Products at Lifted’s facilities and holds these raw goods and Cali Products in its facilities until the Cali Products are sold and shipped to customers.

· Customers’ orders of Cali Products are received through Lifted’s website www.urb.shop. Lifted processes these orders, prepares the Cali Products for shipment from Lifted’s inventories, and ships the Cali Products directly to the customers. Lifted is responsible for collecting payments from customers but does not guarantee collection.

· Lifted has the right, in its discretion, to add new Cali brands and Cali Products as they are developed.

· Lifted can set prices for Cali Products it supplies or unilaterally discontinue the supply of any Cali product if it no longer makes business sense to Lifted.

Based on these considerations, the Company concludes that Lifted is the principal relative to Cali in the Cali Agreement.

Therefore, sales of Cali Products are recognized and reported by the Company on a gross basis on the Consolidated Statements of Operations, and once payment is collected from a customer from the sale of Cali Products, the Commission Payable to Cali is reported as a current liability on the Company’s Consolidated Balance Sheets, and Commission Expense is reported in the Operating Expenses section of the Consolidated Statements of Operations.  

Manufacturing, Sales and Marketing Agreement With Diamond Supply Co.

On April 23, 2023, Lifted entered into a Manufacturing, Sales and Marketing Agreement (“Diamond Agreement”) with Diamond Supply Co. (“Diamond”), Calabasas, California. Founded in 1998, Diamond develops and sells a full range of skateboard hard and soft goods including bolts, bearings, t-shirts, hoodies, and other skateboarding and streetwear accessories. The Diamond Agreement entitles Lifted to be the exclusive worldwide manufacturer and distributor of Diamond’s disposable vapes, gummies, pre-rolled joints, and hard candies (“Diamond Products”). These Diamond Products may contain CBD, hemp, delta-8-THC, delta-10-THC, cannabis and/or cannabinoid derivatives and are to be branded under one or more of Diamond’s brands or marks.

Lifted shall pay Diamond a royalty of twenty percent (20%) of Adjusted Gross Revenue (defined below) on the initial manufacturing run of each Diamond Product manufactured and sold by Lifted under the Diamond Agreement. The Diamond Agreement defines Adjusted Gross Revenue as revenue on the Diamond Product “less any sales taxes, actual returns, pre-approved discounts, replacements, refunds and credits for returns.”

After the initial manufacturing run of a Diamond Product, Lifted shall pay Diamond a royalty of forty five percent (45%) of Adjusted Gross Revenue on subsequent manufacturing runs for that Diamond Product; however, under the terms of the Diamond Agreement, the parties will split manufacturing costs 50/50 for Diamond Products sold after each Diamond Product’s first manufacturing run. Alternatively, under the terms of the Diamond Agreement, Diamond is entitled to notify Lifted that it elects to be paid a flat 7% of Adjusted Gross Revenue on specific subsequent manufacturing runs without sharing in the manufacturing costs for that run. Diamond is also entitled to purchase Diamond Products produced under the Diamond Agreement from Lifted for direct sale on Diamond’s website and via certain other channels used by Diamond. Under the terms of the Diamond Agreement, Diamond’s cost for these Diamond Products acquired for direct sale is 30% below wholesale. 

Under the terms of the Diamond Agreement, the parties will work together to set prices for Diamond Products. The term of the Agreement is three years and may be extended with the mutual consent of the parties. However, the Diamond Agreement may be extended for one-year with notice by Diamond at least three months prior to the end of the 3-year term, or by mutual consent of the parties. If Lifted pays to Diamond aggregate annual royalty payments of at least $1,000,000 per year, then the Diamond Agreement shall automatically renew for an additional one-year term.

Accounting for the Diamond Agreement

Regarding the accounting for the Diamond Agreement: the Company has evaluated the principal versus agent considerations in ASC 606, Revenue from Contracts with Customers. The Company has considered the following facts to assess whether Lifted has control of the Diamond products that are manufactured and distributed pursuant to the Diamond Agreement:

· Lifted is the exclusive worldwide manufacturer and distributor of the Diamond Products. To fulfill its obligations pursuant to the agreement, Lifted sources raw goods, labor, and other resources to manufacture the Diamond Products at its own facilities and holds these raw goods and Diamond Products in its facilities until the Diamond Products are sold and shipped to customers.

· Customers’ orders of Diamond Products are received through Lifted’s website www.urb.shop. Customers that attempt to purchase the Diamond Products from www.diamondsupplyco.com are redirected to www.urb.shop. Lifted processes these orders, prepares the Diamond Products for shipment from Lifted’s inventories, and ships the Diamond Products directly to customers.

· Lifted and Diamond agree upon the retail sales prices for the Diamond Products, and both Lifted and Diamond are to make good faith efforts to collect all payments in connection with each party’s sales of Diamond Products to all of its customers.

Based on these considerations, the Company concludes that Lifted is the principal relative to Diamond in the Diamond Agreement.

Therefore, sales of Diamond Products are recognized and reported by the Company on a gross basis on the Consolidated Statements of Operations, and once payment is collected from a customer from the sale of Diamond Products, the Royalty Payable to Diamond is reported as a current liability on the Company’s Consolidated Balance Sheets, and Royalty Expense is reported in the Operating Expenses section of the Consolidated Statements of Operations.

Jeeter Agreement

On July 17, 2023, Lifted and DreamFields Brands Inc. d/b/a Jeeter (“Jeeter”) entered a Manufacturing, Sales and Marketing Agreement dated as of July 14, 2023 (the “Jeeter Agreement”). Pursuant to the Jeeter Agreement: (1) Jeeter appointed Lifted as its exclusive manufacturer, seller and distributor within the United States of vape, gummies and pre-rolled products containing hemp-derived cannabinoids sold under the Jeeter brand (“Jeeter Products”); (2) Jeeter and Lifted agreed upon the devices, formulation, design, packaging, run costs, and marketing of each of the Jeeter Products; (3) Jeeter and Lifted shared equally the costs of manufacturing, marketing, distributing and insuring the Jeeter Products (“Product Costs”); and (4) the revenue from all Product sales, minus applicable Product offsets and sales commissions (“Aggregate Product Revenue”), were allocated 60% to Jeeter and 40% to Lifted.

The Jeeter Agreement was for an Initial Term of two years, provided that if the completed Product sales during the first year of the Initial Term were a minimum of $48 million (the “Minimum Sales”), then the Initial Term was to automatically continue until the end of the second year of the Initial Term. Jeeter and Lifted could mutually agree in writing to extend the Jeeter Agreement for Renewal Terms of at least one year each, but if not so extended then the Jeeter Agreement was to automatically terminate.

Jeeter could terminate the Jeeter Agreement at any time upon written notice to Lifted upon any of the following: (1) if Lifted failed to achieve the Minimum Sales during any 12 month period; (2) if there was any material change in federal legislation regarding the manufacturing, sale, use or consumption of hemp-derived delta-8-THC that in Jeeter’s sole and absolute determination had an adverse impact upon the Jeeter Agreement; or (3) if Jeeter determined in its sole and absolute discretion that the sale of Jeeter Products under the Jeeter Agreement had or was reasonably likely to have an adverse impact on Jeeter’s delta-9-THC product business.

The Jeeter Agreement provided that if Aggregate Product Revenue achieves $1.5 million or more in a single month, then thereafter so long as Aggregate Product Revenue achieves $9 million or more in each six month period, Lifted was prohibited from directly or indirectly manufacturing, marketing, distributing, promoting or selling pre-rolled joints made from hemp or cannabis in the United States (except under the Jeeter Agreement) during the remaining term of the Jeeter Agreement.

Accounting for the Jeeter Agreement

Regarding the accounting for the Jeeter Agreement: the Company evaluated the principal versus agent considerations in ASC 606, Revenue from Contracts with Customers. The Company considered the following facts to assess whether Lifted had control of the Jeeter Products that are manufactured and distributed pursuant to the Jeeter Agreement:

· Lifted was the exclusive manufacturer, seller, and distributor of the applicable Jeeter branded products in the USA. To fulfill its obligations pursuant to the agreement, Lifted sourced raw goods, labor, and other resources to manufacture the Jeeter Products at its own facilities and held these raw goods and Jeeter Products in its facilities until the Jeeter Products were sold and shipped to customers. Initially, Lifted was manufacturing all of the Jeeter Products, but in the middle of Q3 2023 Jeeter also began manufacturing joints at its facility after being authorized by Lifted to do so. Nonetheless, Jeeter produced joints during Monday through Friday, and then shipped the finished joints to Lifted’s headquarters in Kenosha on Saturday. Lifted controlled the Jeeter Products until they were then sold and shipped to the customers.

· Customers’ orders of Jeeter Products were received through Lifted’s website www.urb.shop. Lifted processed these orders, prepared the Jeeter Products for shipment from Lifted’s inventories, and shipped the Jeeter Products directly to the customers. Lifted was responsible for collecting payments from customers but did not guarantee collection, nor the timetable of such collection.

Based on these considerations, the Company concluded that Lifted was the principal relative to Jeeter in the Jeeter Agreement.

Therefore, sales of Jeeter Products were recognized and reported by the Company on a gross basis on the Consolidated Statements of Operations, and once payment was collected from a customer from the sale of Jeeter Products, the Commission Payable to Jeeter was reported as a current liability on the Company’s Consolidated Balance Sheets, and Commission Expense was reported in the Operating Expenses section of the Consolidated Statements of Operations.  

Termination of the Jeeter Agreement

The Jeeter Agreement was terminated effective January 1, 2024 pursuant to a Termination Agreement dated as of March 22, 2024 between Jeeter and Lifted. Pursuant to such Termination Agreement, among other things: Jeeter is obligated to pay Lifted $150,000 upon the signing of such Termination Agreement, and an additional $150,000 within 15 days following the signing of such Termination Agreement; and Jeeter shall arrange and pay for the shipment from Lifted to Jeeter of certain raw goods and finished goods associated with Jeeter branded products that are in Lifted's possession on the date of the signing of such Termination Agreement. As a result of the termination, Lifted transferred raw goods and finished goods inventories totaling $1,859,780 to Jeeter and recorded a loss on Jeeter collab in the Consolidated Statement of Operations of $1,349,467 for the three months ended March 31, 2024.

Mirsky Agreement

On July 11, 2023, Lifted and Florence Mirsky (“Mirsky”) entered into an Agreement (the “Mirsky Agreement”). Pursuant to the Mirsky Agreement, in consideration of Mirsky’s introduction of Jeeter to Lifted, Lifted shall pay to Mirsky finder’s fees equal to 6.5% of the amount, if any, by which Lifted’s share of the Aggregate Product Revenue under the Jeeter Agreement exceeds Lifted’s share of the Product Costs under the Jeeter Agreement.

Lifted Purchase of Assets of Oculus CRS, LLC, and Merger With Oculus CHS Management Corp.

Asset Purchase Agreement

On April 28, 2023, Lifted purchased nearly all of the assets (the “Purchased Assets”) of its hemp flower products supplier Oculus CRS, LLC, Aztec, New Mexico (“Oculus”) for $342,068, net of $26,420 cash acquired. The Purchased Assets included, but were not limited to, Oculus’ operational equipment, office equipment, raw materials, inventory, cash on hand, accounts receivable, and a contract (the “Machine Purchase Contract”) to purchase, for a total of $309,213 (the “Machine Purchase Price”), a new machine that was ready for delivery, and that when delivered and installed was expected to be used to automate a substantial portion of the manufacturing of the hemp flower products. $99,910 of the Machine Purchase Price had already been paid by Oculus, leaving $209,303 as the remaining portion of the Machine Purchase Price (the “Machine Purchase Final Payment”).

The gross Purchase Price of $368,488 purchase was paid by Lifted using cash on hand. At the closing, Oculus applied the entire Purchase Price to pay off all of Oculus’ liabilities as of the closing date (the “Oculus Liabilities”), including the Machine Purchase Final Payment. The only asset of Oculus that was not included in the Purchased Assets was Oculus’ rights as the plaintiff in a pending lawsuit filed by Oculus against a particular customer for an alleged breach of contract.

Agreement and Plan of Merger

Simultaneously with Lifted’s purchase of the Purchased Assets, Lifted executed an Agreement and Plan of Merger (“Oculus Merger Agreement”) with Oculus CHS Management Corp. (the “Management Corp.”), pursuant to which the Management Corp. was merged with and into Lifted, with Lifted being the surviving corporation in the merger (the “Merger”). The only assets of the Management Corp. were multi-year employment contracts with the owners/managers of Oculus, Chase and Hagan Sanchez (the “Employment Agreements”).

The Merger consideration (the “Merger Consideration”) was paid by Lifted to Chase and Hagan Sanchez in two installments.

The first installment of the Merger Consideration was paid by Lifted to Chase and Hagan Sanchez at the closing of the Merger, and consisted of 100 shares of unregistered common stock of LIFD.

The second installment of the Merger Consideration was paid by Lifted to Chase and Hagan Sanchez following the first anniversary of the closing of the Merger, which was April 28, 2024. The second installment of the Oculus Merger Consideration was calculated and paid out as follows:

(1)

Lifted’s CEO NWarrender, in consultation with LIFD’s President and CFO WJacobs, analyzed and made a written determination (the “Determination”) of the incremental pre-tax cash flow that NWarrender estimated that the hemp flower products division had generated for Lifted above and beyond the annual profits that previously had been generated for Lifted due to Lifted’s former business relationship with Oculus (the “Incremental Pre-Tax Profits”), after taking into account all relevant financial factors including but not limited to the purchase price of the Purchased Assets, the Merger Consideration, and all items of income, expense and investment directly and indirectly associated with Lifted’s hemp flower products division, which Determination will be final and legally binding on all of the parties; and

(2)

Within five days following delivery of the Determination, Lifted paid Chase and Hagan Sanchez a second installment of Merger Consideration equal to five times the Incremental Pre-Tax Profits, provided that (a) 20% of such second installment of Merger Consideration was to be paid in the form of cash, (b) 80% of such second installment of Merger Consideration was to be paid in the form of unregistered shares of common stock of LIFD, which unregistered shares of common stock of LIFD was to be valued at $5 per share regardless of whether LIFD’s common stock is then trading at a price that is lower or higher than $5 per share, and (c) such second installment of Merger Consideration was subject to a minimum value of $1 million dollars (“Minimum Earnout Consideration”) and a maximum value of $6 million dollars (with the stock portion of the second installment of Merger Consideration having been valued at $5 per share under all circumstances).

On May 8, 2024, NWarrender, in consultation with WJacobs, made the Determination that the Incremental Pre-Tax Profits were zero dollars ($0). Consequently, the second installment of Merger Consideration consists of:

(1)	Two Hundred Thousand Dollars ($200,000) in cash; and
(2)	One Hundred Sixty Thousand (160,000) newly issued shares of unregistered LIFD Common Stock.

On May 13, 2024, the cash component of the second installment of Merger Consideration was paid, and the stock component of the second installment of Merger Consideration was issued. 

Accounting for Lifted’s Purchase of Assets of Oculus CRS, LLC, and Merger With Oculus CHS Management Corp.

Consideration Paid Pursuant to the Asset Purchase Agreement
Cash used to pay off Oculus' liabilities at the closing	$	368,488
Consideration Paid Pursuant to the Oculus Merger Agreement
First Installment of Merger Consideration
100 shares of common stock of LIFD issued at the closing of the Merger to Chase and Hagan Sanchez	$	209
Second Installment of Merger Consideration
Value of Minimum Earnout Consideration to be paid in cash	$	200,000
Value of Minimum Earnout Consideration to be paid in shares of common stock of LIFD (160,000 shares of common stock valued at $5.00 per share)	$	800,000
Total Consideration	$	1,368,697
Assets Acquired:
Cash	$	26,420
Accounts receivable	$	60,528
Inventory	$	147,431
Fixed Assets	$	329,559
Security and Utility Deposits	$	4,732
Goodwill	$	800,027
Total Assets Acquired	$	1,368,697
Total Liabilities Assumed	$	-
Net Assets Acquired	$	1,368,697

Employment Agreements

Pursuant to the terms of the Oculus Merger Agreement, upon the closing of the Merger, all of the Management Corp.’s rights and obligations under the Employment Agreements have been assumed by Lifted. Chase and Hagan Sanchez are the Vice President of Flower and General Manager of Flower of Lifted, respectively, and continue to manage the hemp flower products division within Lifted in Durango, CO, reporting to NWarrender. Pursuant to Chase Sanchez’s employment agreement, his salary is $150,000 per year. Hagan Sanchez’s salary is $100,000 per year. Both agreements are subject to termination with or without cause, non-solicitation, non-competition and non-disclosure clauses. 

At the time of the Merger, in addition to Chase and Hagan Sanchez, a total of 20 other people who had previously worked at Oculus became full-time employees of Lifted. Lifted agreed to, and did, pay employment bonuses to certain of these new people, in an aggregate amount totaling $50,000, pursuant to written instructions to Lifted from Chase and Hagan Sanchez.

Lease of Space Located at 16178 US Hwy 550, Aztec, New Mexico

Pursuant to the terms of the Oculus Merger Agreement, upon the closing of the Merger, Lifted assumed Oculus’ lease of office and operational space at 16178 US Hwy 550, Aztec, New Mexico (the “Aztec Lease”). The Aztec Lease included a shop building of approximately 4,800 square feet and adjacent fenced parking area. The term of the Aztec Lease was one year, commencing on December 1, 2022 and ending on November 30, 2023, continuing month-to-month thereafter until terminated. The base lease payment was $3,850 per month. All monthly payments were due and payable in advance on the first day of each month. Lifted was also required to pay taxes, insurance and certain maintenance costs of the Aztec Lease. The Aztec Lease was accounted for as an operating lease. The Aztec Lease was terminated on May 7, 2024.

Lease of Space Located at 789 Tech Center Drive, Unit C, Durango, Colorado 81301

On February 27, 2024, Lifted entered into a lease agreement with CR Properties, LLC, (“CR”) for office, manufacturing and warehouse space located at 789 Tech Center Drive, Unit C, Durango, Colorado 81301 (the “789 Tech Lease”).

The initial term of the 789 Tech Lease commenced on March 1, 2024, and will end on February 28, 2025 (“Initial Term”). After the Initial Term, Lifted and CR may renegotiate the lease.

Under the terms of the 789 Tech Lease, Lifted leases a total of approximately 2,205 square feet of space. During the Initial Term, Lifted shall pay CR base annual rent of $30,000, payable in equal monthly installments of $2,500. In addition, as part of the 789 Tech Lease, Lifted paid CR a $5,000 security deposit.

In addition to the base monthly rent, Lifted is also responsible for paying its proportionate share of real estate taxes and other operating costs.

Since the Initial Term is twelve months, this lease is not recorded on the Consolidated Balance Sheet, and lease expense is recognized on a straight-line basis over the lease term. 

Extrax NM Agreement

On June 1, 2023, Lifted and Extrax NM, LLC (“ENM”) entered into an Agreement (the “ENM Agreement”). Pursuant to the ENM Agreement, (1) Lifted will sell certain devices/objects to ENM, and Lifted will loan certain amounts to ENM, and (2) ENM will manufacture and exclusively sell Urb-branded marijuana products to licensed marijuana dispensaries located in New Mexico. ENM shall pay over to Lifted one-half of the gross sales proceeds, excluding only governmentally-imposed taxes, received by ENM from product sales, which payments shall be allocated and applied as follows: firstly, to repay Lifted for its loans to ENM; secondly, to pay to Lifted mutually agreed upon amounts for said devices/objects sold by Lifted to ENM; and thirdly, to pay to Lifted a license fee.

The ENM Agreement is for an Initial Term of 60 months, provided that if the aggregate product sales during the Initial Term are $10,000,000 or more, then the term of the ENM agreement will automatically renew for a Renewal Term of 60 months (and similarly in regard to Renewal Terms).

Lifted and ENM each shall have the right to terminate the ENM Agreement in specified circumstances, including in the event that its CEO determines in good faith, and provides evidence to other party proving, that the business being conducted pursuant to the terms and conditions of the ENM Agreement is no longer profitable for such company.

Regarding the accounting for the ENM Agreement: the Company has evaluated the principal versus agent considerations in ASC 606, Revenue from Contracts with Customers. Management has considered the following facts to assess Lifted’s position relative to ENM under the ENM Agreement:

· ENM has the right to use the Urb brand name on marijuana products sold within New Mexico in accordance with ENM’s license to manufacture marijuana products that can be sold to marijuana dispensaries in New Mexico. ENM sources raw goods, labor, and other resources to manufacture the Urb-branded products at its own facilities and holds these raw goods and Urb-branded products in its facilities until the Urb-branded products are sold and shipped to customers. ENM controls the Urb-branded products until they are then sold and shipped to the customers.

· Customers’ orders of Urb-branded products are received by ENM. ENM processes these orders, prepares the Urb-branded products for shipment from ENM’s inventories, and ships the Urb-branded products directly to the customers. ENM is responsible for collecting payments from the customers, referred to in the ENM Agreement as the “Unit Sale Proceeds”.

· ENM will source some of the raw goods, fixed assets and supplies from Lifted for manufacture of the Urb-branded products. The raw goods sourced from Lifted are referred to in the ENM Agreement as “Unit Components”. These Unit Components are maintained in Lifted’s inventories and shipped to ENM based on agreement between the CEOs of both Lifted and ENM. Lifted receives an agreed upon price, referred to in the ENM Agreement as the “Unit Component Price”, for each Unit Component shipped to ENM.

· ENM shall pay over to Lifted one-half of the Unit Sale Proceeds, which payments shall be allocated and applied as follows: firstly, to repay Lifted for its loans to ENM; secondly, to pay to Lifted mutually agreed upon amounts for the Unit Components; and thirdly, to pay to Lifted a License Fee.

Based on these considerations, the Company concludes that Lifted is a principal relative to ENM in the ENM Agreement in regards to Lifted’s sale of Unit Components to ENM. Therefore, Lifted recognizes sales of Unit Components to ENM on a gross basis on Lifted’s Consolidated Statements of Operations.

The Company concludes that Lifted is an agent relative to ENM in the ENM Agreement in regards to ENM’s sale of Urb-branded products to dispensary customers. When ENM pays over to Lifted one-half of the Unit Sale Proceeds, Lifted will first apply this money to the loans receivable from ENM, and then the money will be applied to the receivable(s) related Lifted’s sale of the Unit Components to ENM. Then, any of the excess/remaining money will be recognized and reported by Lifted as License Fee revenue on Lifted’s Consolidated Statements of Operations.

Manufacturing, Sales and Marketing Agreement With Subsidiary of a Large, Publicly Traded US Marijuana Company

On or about January 23, 2024, Lifted entered into a Manufacturing, Sales and Marketing Agreement effective as of January 20, 2024 (“Agreement”) with a wholly owned subsidiary of a large, publicly traded US marijuana company that designs and sells hemp-derived vape and gummy products. The Agreement is similar in many respects to the other manufacturing, sales and marketing agreements entered into by Lifted in 2023. Our management does not believe that any of the relationships with the other collaborating companies have had a significant impact on our revenues as no sales under any of the agreements have increased Lifted’s revenues by more than 5%. There is no assurance that this new Agreement, with this new counterparty, will have a greater impact on our revenues than the relationships with the others; however, it may.

Services to be Provided by Lifted Made

Under the terms of the new Agreement with this new counterparty, the parties (“Parties”) have agreed that Lifted will serve as the exclusive manufacturer and distributor of certain 2018 Farm Bill compliant hemp-derived vape products and gummy products in the formulations and to the specifications mutually agreed upon by the Parties (the “Products”). The territory for the sale of the Products is limited to the United States of America (“Territory”). In addition to serving as exclusive manufacturer and distributor of the Products, Lifted will be responsible to sell the Products to customers (“Customers”), and to collect all payments from such Customers for the Products in the Territory during the Term (the “Services”).

Lifted, in its capacity as the exclusive manufacturer and distributor of the Products in the Territory during the Term, shall be an independent contractor and not an agent, representative or employee of the other party. As part of the Services, Lifted shall create a distribution and sub-distribution network for the sale of Products to Customers within the Territory. Neither Party shall have any right or power to represent or bind the other Party with respect to any third party.

Term

The term of the Agreement is eighteen (18) months from the effective date, renewable upon mutual written agreement of the Parties.

Marketing

Under the terms of the Agreement, the other party shall be primarily responsible for marketing the Products and shall pay the costs of such marketing. Lifted shall reasonably cooperate in advertising and marketing programs for the Products and shall reasonably cooperate in implementing sales, promotional and merchandising programs for the Products. All promotional discounts shall be subject to the mutual agreement of the Parties.

Quality

Under the terms of the Agreement, Lifted is required to use its best efforts to source materials for production of the Products at the lowest cost, provided such Products shall conform to quality standards consistent with industry standards for such products. Lifted is required to ensure the Products fall within certain predefined limits of heavy metals, microbial impurities, mycotoxins, residual pesticides, residual solvents and processing chemicals, as well as additional quality standards communicated to Lifted. Any Products failing such quality standards may be rejected. Lifted is also required to manufacture the Products and be responsible for all safety testing and approvals in conformity with the standards and legal requirements applicable to the manufacturing, distribution and sale of any Products and ensuring that all governmentally required reporting (including but not limited to PACT Act reporting) is accurately and timely made, and that all applicable excise taxes and sales taxes (collectively, “Excise and Sales Taxes”) are paid. In the event of any defects in the Products, Lifted shall, at its sole cost and expense, either (i) refund the cost of such Product or (ii) replace the Product, such election to be at the other party’s sole discretion.

Under the terms of the Agreement, all elements of the design, manufacturing, quality, advertising and promotion of the Products shall be mutually agreed upon and approved by the Parties, and Lifted shall submit to the other for approval: (i) any relevant schematic designs, (ii) pre-production samples, (iii) production samples, and (iv) such other specific items as are requested by the other party in its reasonable discretion from time to time for approval, and at all times prior to production and prior to being offered for sale. Products not approved by both Parties to the Agreement shall not go on to the next stage of production and shall not be offered for sale or sold by Lifted.

Prices

Under the terms of the Agreement, the Parties have agreed to work together in good faith to determine the sales prices to Customers for the Products and such prices shall be subject to the Parties’ mutual agreement. The Parties have agreed to work together to enact lawful and appropriate pricing strategies, including MSRP and maximum sale prices. Lifted shall make good faith efforts to collect all payments in connection with sales of all Products.

Customers

Under the terms of the Agreement, the Parties have agreed to work together in good faith to determine the Customers to which Lifted is selling the Products, subject to Lifted’s reasonable discretion, provided that the Parties shall regularly evaluate sales targets, accounts receivable, bad debt, and other reasonable factors to determine which Customers to direct Product to, and the other party shall have the right, in its reasonable discretion, to reject and direct Lifted to stop selling to a Customer in the event it deems necessary upon advanced notice to Lifted.

Forecasting

Under the terms of the Agreement, the Parties have agreed to meet monthly to review Products, discuss predicted order volumes, review pricing to Customers, plan marketing and sales efforts, discuss expansion into other states within the Territory, and evaluate additional potential Customers. The Parties shall also use such meetings to agree upon the quantities of raw materials, ingredients and supplies to produce the Products.

Purchase Orders

Under the terms of the Agreement, the other party shall initiate all Purchase Orders. Lifted has the right, in its sole discretion, to accept or reject any Purchase Order. Lifted may accept any Purchase Order by confirming the order via written confirmation and written invoice sent by an authorized agent of Lifted, including estimated completion date of the Products contemplated by such Purchase Order.

Excess Demand

Under the terms of the Agreement, in the event the Parties reasonably determine, after good faith discussions, that Lifted cannot accept the volume of Purchase Orders and anticipated demand for the future production of Products at any point during the Term of this Agreement (or in the event Lifted rejects a Purchase Order), the Agreement’s exclusivity shall be automatically waived by Lifted, but only to the extent of such excess demand as reasonably determined by the Parties after good faith discussions. In such a case, the other party shall have the right to work with any manufacturer, in its sole discretion, to meet such excess demand expectations.

Costs of Purchase Order

Under the terms of the Agreement, upon Lifted’s acceptance of a Purchase Order, Lifted is entitled to invoice the other party for 50% of the costs of the Purchase Orders with net 15-day terms. Lifted may only use the 50% down payment for placing orders for materials and production costs, including lab testing, associated with the accepted Purchase Order and for no other purpose. Once the Products are completed and are ready for shipment to Customers, Lifted is entitled to invoice the other party for the remaining 50% of the costs of the Purchase Orders with net 15-day terms.

Cost Recovery and Royalty

Under the terms of the Agreement, once sales of the Products begin, Lifted is required to use all revenue from the sale of the Products (less returns, discounts, refunds, etc.) (“Adjusted Gross Revenue”) until the other party has been repaid the cost of the Purchase Order. Thereafter, the Parties shall divide the remaining Adjusted Gross Revenue 60/40, with 40% of that Adjusted Gross Revenue going to Lifted (the “Royalty”).

Warranty

Under the terms of the Agreement, Lifted represents and warrants (i) that the Products, packaging and labels to be used in the Territory shall comply with all applicable laws, rules and regulations in those US states where sales of such Products are legal; (ii) that the Products shall comply with all federal, state or local laws and regulations relating to the Products’ quality, dosage, labeling, identity, quantity, or packaging; (iii) that the Products will not be adulterated or misbranded within the meaning of any applicable federal or state law or regulation, and will contain all necessary warnings, disclosures or instructions, in each case, pursuant to all applicable laws, rules and regulations; (iv) all third parties Lifted engages in connection with the manufacturing, distribution and sale of the Product (e.g., sub-distributors) adhere to all applicable laws, rules and regulations, including without limitation those regarding the importation, child and/or oppressive labor, and the regulation of controlled substances and 2018 Farm Bill; and (v) all Products shall be free from defects in material and workmanship and fit for their intended purpose.

Indemnification

Under the terms of the Agreement, Lifted agreed to indemnify the other party for (i) harm, injury, damage or loss arising out of or in connection with the Services, production and manufacture, distribution and/or sale of the Products (including by any third parties engaged by Lifted (e.g., sub-distributors)); (ii) harm, injury, damage or loss arising out of or in connection with the use of the Products by any Customer or end-user, to the extent such harm, injury, damage or loss results from a defect in the Products; (iii) any uncured material breach by Lifted of any provision hereof; (iv) any violation of any applicable law or government regulation by Lifted or any third party engaged by Lifted in connection with the Products; and (v) any recall or withdrawal of a Product in accordance with this Agreement. Notwithstanding the foregoing, Lifted shall have no indemnification obligation hereunder pursuant to clauses (i), (ii) or (iii) above if such recall, withdrawal or defect arises out of or relates to any misuse, mishandling, or improper storage of, or damage caused to, the Products by anyone other than Lifted or its manufacturers/producers, Customers, or any third party engaged by Lifted in connection with the Products.

Insurance

During the Term of the Agreement, each Party, at its own expense, is required to procure and maintain in full force and effect its own insurance policy or policies against any loss, liability, product liability, personal injury, death, or property damage, and shall provide certificates of insurance evidencing such coverage to the other Party promptly upon request. Such coverage shall include (1) Comprehensive Commercial General Liability (“GL”) Insurance with limits of $1,000,000 per occurrence and $2,000,000 in aggregate; (2) Worker’s Compensation Insurance in limits required by applicable law; and (3) Product Liability Insurance with minimum limits of $1,000,000 per occurrence and $2,000,000 in aggregate. GL and Product Liability policies shall name the other Party as an additionally insured party.

Termination

At any time during the Term of the Agreement, either party has the option, but not the obligation, to terminate this Agreement at any time, effective upon written notice, in the event the other Party has defaulted on any of its obligations under this Agreement and such default is not cured within thirty (30) days after receipt of written notice specifying the default.

Accounting for the Agreement

Regarding the accounting for the Agreement: the Company has evaluated the principal versus agent considerations in ASC 606, Revenue from Contracts with Customers. Management has considered the following facts to assess Lifted’s position relative to the other party under the Agreement:

An entity is a principal and therefore records revenue on a gross basis if it controls a promised good or service before transferring that good or service to the customer.  

An entity is an agent and records as revenue the net amount it retains for its agency services if its role is to arrange for another entity to provide the goods or services.   

Management has considered the following facts to assess whether Lifted has control of the Products that are manufactured and distributed pursuant to the Agreement: 

· Lifted is the exclusive nationwide manufacturer and distributor of the Products. To fulfill its obligations pursuant to the Agreement, Lifted sources raw goods, labor, and other resources to manufacture the Products at Lifted’s facilities and holds the Products in its facilities until the Products are sold and shipped to customers.

· Customers’ orders of Products are received through Lifted’s website www.urb.shop. Lifted processes these orders, prepares the Products for shipment from Lifted’s warehouse, and ships the Products directly to the customers. Lifted is responsible for the collection of payments from customers, and is responsible for paying the other party 10% of any accounts receivable that are past due by more than 90 days.

Lifted does not include in its inventory the value of the Products, because the other party pays for 100% of the costs of the Products.  

The Company concludes that Lifted is the principal relative to the other party in the Agreement.  

Sales of Products are recognized and reported by the Company on a gross basis on the Consolidated Statements of Operations, and until such time that the other party has received, in each instance with respect to an applicable Purchase Order, one-hundred percent (100%) of the Purchase Order Amount from Lifted, Lifted will report all of the money received from the other party as a current liability on the Company’s Consolidated Balance Sheets. This current liability account will become smaller as Lifted remits payments to the other party. 

After the other party has received 100% of the Purchase Order Amount from Lifted, any Adjusted Gross Revenue will be appropriately allocated and paid 60% to the other party and 40% to Lifted as royalty payments.

Capital Raise

We may deem it necessary or desirable in the future to raise additional capital in order to build our available working capital, to close future acquisitions, to potentially expand the 5511 Building, or to pay other corporate obligations. No guarantee or assurance can be made that such capital can be raised on acceptable terms, if at all.

If we were ever to proceed forward with an equity raise, it may be in conjunction with a potential listing of our common stock on a stock exchange. However, there can be no guarantee or assurance that any such debt and/or equity capital raise or listing will be completed on acceptable terms, if at all.