An offering statement pursuant to Regulation A relating to these securities has been filed with the United States Securities and Exchange Commission. Information contained in this Preliminary Offering Circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the offering statement filed with the United States Securities and Exchange Commission is qualified. This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Final Offering Circular or the offering statement in which such Final Offering Circular was filed may be obtained.

This is a public offering of shares of our common stock, par value $0.001 per share. We are offering on a best efforts basis up to a maximum of 33,333,333 shares of our common stock. The public offering price is $1.50 per share.

We expect to commence the offer and sale of our common stock as of the date on which the offering statement of which this offering circular is a part is qualified by the U.S. Securities and Exchange Commission (the “SEC”). This offering is being conducted pursuant to Regulation A (Regulation A+) of Section 3(6) of the Securities Act of 1933, as amended (the “Securities Act”), for Tier 2 offerings, where the offered securities will not be listed on a registered national securities exchange upon qualification.

Investing in our common stock may be considered speculative and involves a high degree of risk, including the risk of losing your entire investment. See “Risk Factors” beginning on page 9 to read about the risks you should consider before buying shares of our common stock.

We intend to sell our shares directly to investors and not through a placement agent or other registered broker-dealer who is paid sales commissions. Technology fees are expected to be paid to a third party firm for the use of its software platform for the purpose of processing credit card subscriptions from investors. Such firm will be compensated by us based on a nominal fixed upfront and per investor fee.

This offering will terminate on June 30, 2022 (subject to extension by us for up to an additional 60-day period), unless we sell the maximum number of shares of common stock set forth above before that date or we decide to terminate this offering prior to that date. The gross proceeds of this offering will be deposited in the Company’s account at a bank or other financial institution. See “Offering Circular Summary – The Offering” on page 1.

Generally, no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or your net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

This offering circular contains all of the representations by us concerning this offering, and no person shall make different or broader statements than those contained herein. Investors are cautioned not to rely upon any information not expressly set forth in this offering circular.

The securities underlying this offering circular may not be sold until qualified by the SEC. This offering circular is not an offer to sell, nor soliciting an offer to buy, any of our securities in any state or other jurisdiction in which such sale is prohibited. This offering circular follows the disclosure format prescribed by Part I of Form S-1 pursuant to the general instructions of Part II(a)(1)(ii) of Form 1-A.

THE SEC DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE SEC; HOWEVER, THE SEC HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.

We are offering to sell, and seeking offers to buy, the securities only in jurisdictions where such offers and sales are permitted. You should rely only on the information contained in this offering circular. We have not authorized anyone to provide you with any information other than the information contained in this offering circular. The information contained in this offering circular is accurate only as of its date, regardless of the time of its delivery or of any sale or delivery of our securities. Neither the delivery of this offering circular nor any sale or delivery of our securities shall, under any circumstances, imply that there has been no change in our affairs since the date of this offering circular. This offering circular will be updated and made available for delivery to the extent required by U.S. federal securities laws.

Unless otherwise indicated, data contained in this offering circular concerning the cannabis market and the other markets relevant to our operations are based on information from various public sources. Although we believe that these data are generally reliable, such information is inherently imprecise, and our estimates and expectations based on these data involve a number of assumptions and limitations. As a result, you are cautioned not to give undue weight to such data, estimates or expectations.

In this offering circular, unless otherwise noted or unless the context otherwise requires, references to “we,” “us,” “our,” the “Company,” and “Mystic” refer to the activities of and the assets and liabilities of the business and operations of Mystic Holdings, Inc., together with its wholly-owned operating subsidiaries.

OFFERING CIRCULAR SUMMARY

This summary highlights selected information contained elsewhere in this offering circular. This summary is not complete and does not contain all the information that you should consider before deciding whether to invest in our securities. You should carefully read the entire offering circular, including the risks associated with an investment in our company discussed in the “Risk Factors” section of this offering circular, before making an investment decision. Some of the statements in this offering circular are forward-looking statements. See the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

Our Company

Mystic Holdings, Inc. 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, the capital of Nevada), 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 in the State of Nevada and in other states utilizing the proceeds of this offering.

Our Operations and Strategic Plan

The sale and use of cannabis for medical purposes has been legal in the State of Nevada since 2014 and for recreational purposes since 2016 (though federal law in the United States continues to prohibit the use of cannabis). Mystic has dedicated the years since legalization to honing its operations, sourcing top-tier cannabis industry management and establishing a highly sophisticated and experienced board of directors. The time invested in building this organization has created a strong foundation for pursuing an aggressive growth and expansion strategy via acquisitions and using our proven growth, sales and marketing formulas. We believe these formulas are responsible for rapidly building Qualcan and Jade into one of the top brands in Nevada. As noted above, Mystic through its Jade Cannabis subsidiaries has six dispensary licenses – two medical and four recreational, establishing itself as a vertically integrated cannabis organization, resulting in enhanced economies of scale and competitive positioning. Qualcan currently operates a highly efficient, state-of-the-art 24,000 square foot cultivation and production facility with the capacity to produce as much as 600 pounds of sellable cannabis per month.

These facilities were established utilizing the latest concepts in agronomic and sustainable technologies ensuring that patients and consumers are provided with a clean product for which lab results exceed established Nevada regulatory department guidelines. The State of Nevada requires certain cutoff thresholds with regard to any impurities found within lab results, however we take it upon ourselves to establish even more aggressive cutoffs to ensure our products are known as a safe choice for consumers. We hold ourselves accountable for testing our products with laboratories known for their core sense of ethics and ability to provide accurate results. Another benefit provided by these outside laboratories is the ability for us to continue growing strains known to produce a high average tetrahydrocannabinol (“THC”), cannabidiol (“CBD”), and terpene concentration, which we believe translates into a more attractive product for the consumer and ultimately a cost benefit for us. We employ a process of “milestone testing” in which we test our products at various stages in production and analyze this data to determine which products will prove to be the most robust, allowing us to optimize our garden and production techniques.

Having presently established its capacity in mass producing clean wholesale cannabis products, our infrastructure has been created for facilitating multiple large-scale retail operations. Qualcan will remain relevant in terms of industry best practice and market trends with our primary focus being maximization of retail market share using the cost benefits provided by using our internal brands to support the retail supply chain. In addition to exploiting the benefits of vertical integration, Qualcan will continue producing the brands that consumers have remained loyal to and ensure these products are offered in dispensaries throughout Nevada. We operate with an adaptive mentality and consider our ability to rapidly adjust daily operations and the utilization of forecasting a competitive advantage. By ensuring rapid acclimation to market conditions, Qualcan also utilizes “time to market” as a competitive tool and cost control mechanism. The constant assessment of market conditions and trends has allowed us to anticipate and execute new products with minimal turnaround. This process is valued as an essential competitive advantage in an industry known to be fast paced and constantly evolving.

Our strategic plan contemplates achieving operational autonomy and target growth expectations via aggressive growth and market saturation. Nevada is generally known to be one of the most desired cannabis markets in the United States, where Qualcan aims to become among the best known brands. This will require proportional scaling of our cultivation and production facilities to accommodate increases in demand from the rapid expansion of our retail channel market share. Mystic will protect its position within the marketplace using acquisitions of complementary businesses, technologies and products, and ensuring diversification of the Qualcan brands, while further cultivating a sense of self sustenance. Mystic will hold itself accountable to a set of established business principles that encourage specific operational development. The four most important principles are:

	●	controlling costs via supply chain optimization, frequent assessment of manufacturing processes and the application of our unique perspective on retail facility management and inventory optimization;

	●	continued acquisition of retail licenses necessary to increase market share and establish a visible presence of branding;

	●	facilitation of access to quality cannabis products to as many patients and consumers as possible; and

	●	careful analysis of all industry variables by our team of industry experts to mathematically dictate our highest return on investment as it pertains to any significant business decision.

Our Cannabis Products and Brands

Qualcan is positioning itself to become a known provider of reliable cannabis and cannabis products manufactured in accordance with exacting precision and high-quality standards. Products and branding are carefully determined through a process of market analysis, ensuring that every detail is catered to what consumers are buying. Marketing and branding experts have crafted a campaign for each product with appeal to the broadest consumer demographic. Each channel of business has been designed to be fully scalable as Qualcan expands and challenges new markets. A summary of Qualcan brands can be found in the next section and includes products in active production.

Qualcan Cultivation

Our Qualcan Cultivation brand offers a variety of unique genetics chosen through a process of “pheno-hunting,” in which the cultivation expert determines the ideal traits in genetics to be grown. Our master grower will dictate which strains are the most accommodating to consumer expectations, which in the Nevada market primarily concern strains’ THC percentage, terpene profile/concentration and aesthetics. The grow process is considered a core competitive advantage for Qualcan and all standard operating procedures related to cultivation are kept strictly confidential. Cosmic Cannabis is our newest brand and was introduced into the market in early 2021. This brand utilizes our highest quality strains to provide consumers with a “top-shelf” experience in terms of product quality and aesthetic. In addition to developing and branding our own strains such as the Cosmic line, we have been engaged from time to time to provide branding consulting services for third party cannabis products by outside parties, such as the rock band 311.

In addition to the standard cannabis flower, we offer pre-rolls and small bud batches (known as popcorn). Qualcan also services the lower end of the market and protects the prestige of our primary brand by white labeling lower testing flower and the smaller buds that are more difficult to sell. Every month the cultivation team produces approximately 600 pounds of cannabis. With every harvest, a certain amount of trim, waste, stems and other useable waste is created. This product can be used to either create a supplemental stream of revenue by wholesaling for production, or it can be used as input material for oil at our own production facility, lowering our costs. Expansion efforts for the cultivation facility will be dictated by demand created from the addition of our retail dispensary locations. However, based on the growth trends of our external wholesale channel, expansion efforts are expected to take place following the initial phase of retail expansion.

Qualcan Production

Our Qualcan Production brands offer a diverse line of edibles and concentrates, with research and product development underway for new products that will appeal to the average consumer. Qualcan’s edibles offerings include gummies, brownie bites, cookies, caramels, rice crispies and chocolate chip bars and more. In terms of concentrates, Qualcan is known for providing vape pens bearing exceptional functionality offered in various popular strains with a unique blend of terpene and flavor profiles. Qualcan concentrates and oils can be purchased in either a disposable format or as a cartridge conveniently compatible with most standard vape pen batteries. With the standard Qualcan brand currently serving the middle market, our Lush brand (released in 2020) offers consumers quality cannabis vape products. Lush is anticipated to become a line of various strains, flavors and hardware types, all designed to provide a smooth and luxurious experience.

Edibles Success in Nevada

To date, the success of our production facility can be largely attributed to the quality of our edible line. The Las Vegas market lacks a significant offering of homogeneously dosed edibles, which has created supply issues for consumers that commonly micro-dose and medicate with edible products. When micro-dosing or using cannabis edibles for medicinal purposes, it is extremely important that the product has been precisely dosed with an even distribution of THC and CBD throughout. We believe that Qualcan is best known for its precise dosing homogenization of each edible. In our constant efforts to ensure the accuracy in dosing each unit, we employ a specific cadence in testing at multiple stages within the process of producing our edibles. This guarantees that the starting dose remains consistent throughout processing and remains unaffected by any other changes we make throughout production, allowing for precise dosing and accurate homogenization. In order to guarantee homogeneity and even dosage from serving to serving within each product, we utilize homogeneity testing provided by outside laboratories. In addition to dosing consistency, we are also known for using unique recipes developed by our team of master chefs which are designed to tastefully mask any residual bitterness or cannabis aftertaste. Qualcan has acquired experience from the local restaurant industry (another industry known for its high quality in Las Vegas), and built a team of chefs and cannabis experts capable of producing the high quality edibles.

Unapproved CBD products, including unapproved drugs, cosmetics, foods and products marketed as dietary supplements:

	●	have not been subject to FDA evaluation regarding whether they are effective to treat a particular disease or have other effects that may be claimed, and

	●	have not been evaluated by the FDA to determine what the proper dosage is, how they could interact with other drugs or foods, or whether they have dangerous side effects or other safety concerns.

Our Proposed Expansion of a Retail Channel and Planned Dispensaries

We currently operate two recreational/medical retail dispensaries, one in Clark County, Las Vegas and one in Reno. In 2020, we were awarded two additional retail licenses (one in the City of Las Vegas and one in Carson City), which we plan to operate under at two new dispensaries that we are in the process of establishing. These existing and future dispensaries will serve as the vehicle necessary for bringing the Qualcan brand to market and will function as the foundation on which our future operations will be based, furthering our long-term business plan of creating a vertically-integrated company capable of cultivation, production and retail sales of cannabis products.

Las Vegas (Clark County) and Reno Dispensaries

In May 2019, we entered into an Asset Purchase Agreement (the “Las Vegas (Clark County) Dispensary Asset Purchase Agreement”) with Medifarm LLC (“Medifarm”), a wholly owned subsidiary of Terra Tech Corp. (“Terra Tech”), via our wholly owned subsidiary Picksy LLC (“Picksy”) to acquire 100% of the assets of Medifarm’s existing cannabis dispensary located at 1130 East Desert Inn Road, Las Vegas, Nevada (the “Las Vegas (Clark County) Dispensary”). In August 2019, we entered into an Asset Purchase Agreement (the “Reno Dispensary Asset Purchase Agreement”) with MediFarm I LLC, a wholly owned subsidiary of Terra Tech (“Medifarm I”), via our wholly owned subsidiary Picksy Reno LLC (“Picksy Reno”) to acquire 100% of the assets of Medifarm I’s existing cannabis dispensary located at 1085 S. Virginia Street, Reno, Nevada (the “Reno Dispensary”).

On November 1, 2019, Picksy entered into an agreement with MediFarm to assume all management responsibilities over the operations of the Las Vegas (Clark County) Dispensary. Pursuant to the agreement, Picksy assumed managerial authority and became the primary beneficiary of any profits arising from the operations of the Las Vegas (Clark County) Dispensary. On January 1, 2020, Picksy Reno entered into an agreement with MediFarm I, to assume all management responsibilities over the operations of the Reno Dispensary. In consideration of the services performed, Picksy Reno will be entitled to 85% of the future net profits of the Reno Dispensary. MediFarm I’s 15% interest in the future net income of the Reno Dispensary will be applied to satisfy the purchase price under the Reno Dispensary Asset Purchase Agreement.

On January 30, 2020, the Las Vegas (Clark County) Dispensary Asset Purchase Agreement was amended to extend the closing deadline and to accelerate a portion of the payment terms. On August 3, 2020, the Reno Dispensary Asset Purchase Agreement was amended to also extend the closing deadline and to accelerate a portion of the payment terms. On October 22, 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 common stock (the “Dispensary Shares”), upon approval of such issuance by the Cannabis Compliance Board (the “CCB”). 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 Mystic to repurchase the Dispensary Shares at a price of $1.00 per share under certain circumstances, and (ii) during the first 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 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.

In 2021, the CCB and the applicable county and city regulatory authorities approved the transfer of the licenses to Mystic for the Las Vegas (Clark County) Dispensary and Reno Dispensary. Upon receipt of the requisite approvals, (i) in February 2021, Mystic issued a secured promissory note in the principal amount of $2.8 million to MediFarm LLC with a maturity date of 12 months from the date of issuance bearing interest at an annual rate of 5%, for the remainder of the purchase price for the Las Vegas (Clark County) Dispensary (the “Las Vegas Dispensary Note”), (ii) in August 2021, Mystic issued a secured promissory note in the principal amount of $4.2 million to MediFarm I LLC with a maturity date of 12 months from the date of issuance bearing interest at an annual rate of 5%, for the remainder of the purchase price for the Reno Dispensary (the “Reno Dispensary Note”) and (iii) Mystic issued the Dispensary Shares to Terra Tech in accordance with the terms of the Letter Agreement. As of August 31, 2021, Mystic has repaid the Las Vegas Dispensary Note in full and Mystic’s acquisition of the Las Vegas (Clark County) Dispensary has been completed. As of August 31, 2021, the Reno Dispensary Note remains outstanding. We anticipate using a portion of the net proceeds from this offering to repay the Reno Dispensary Note and complete the acquisition of the Reno Dispensary.

Cannabis Lounge

We are planning to build a cannabis lounge adjacent to the Las Vegas (Clark County) Dispensary (the “Cannabis Lounge”). We believe that this will be a favorable location that will attract individuals to our dispensary. Our ability to proceed with the construction of this facility is subject to receipt of applicable government approvals. We anticipate using a portion of the net proceeds from this offering to finance the costs of construction for the buildout of the Cannabis Lounge.

Planned City of Las Vegas and Carson City Dispensaries

In 2020, we were awarded two additional retail licenses (one in the City of Las Vegas and one in Carson City), which we plan to operate under at two new dispensaries that we are in the process of establishing. Our ability to proceed with the construction of these facilities is subject to receipt of applicable government approvals. We received the approval of the City of Las Vegas for our City of Las Vegas location at 6050 Sky Pointe Drive, Las Vegas, NV 89130 (the “City of Las Vegas Dispensary”) and intend to begin construction of the City of Las Vegas Dispensary in late 2021. We are still in the process of obtaining the requisite government approvals for our Carson City location (the “Carson City Dispensary”), and upon receipt of such approvals we will proceed with our plans for the buildout of the Carson City Dispensary. We anticipate using a portion of the net proceeds from this offering to finance the costs of construction for the buildout of these facilities.

Real Estate Purchase Options

Part of Mystic’s strategy is to reduce overhead costs and increase its profit margins by acquiring the real estate used for its office, cultivation, and dispensary facilities, which it currently leases.

In January 1, 2021, Mystic entered into a Lease Addendum to the lease for the Reno Dispensary property located at located at 1085 S. Virginia Street, Reno, Nevada. Under the Lease Addendum, Mystic paid $611,794.15 (the “Reno Option Price”) to Green Wagon, LLC, the lessor under the lease (“Green Wagon”), in exchange for an option to purchase the property (the “Reno Purchase Option”). Mystic may exercise the Reno Purchase Option by paying the purchase price for the property in an amount equal to the lesser of fair market value as determined by an appraisal or $2.5 million, with the Reno Option Price being applied towards the balance of the purchase price. Assuming the purchase price is $2.5 million, Mystic would need to pay approximately $1.9 million in order to exercise the Reno Purchase Option. If Mystic elects not to exercise the Reno Purchase Option, any amounts advanced to Green Wagon will convert into a loan from Mystic to Green Wagon, which Green Wagon will be obligated to repay within 24 months, including 6% annual interest.

In January 1, 2021, Mystic entered into a Lease Addendum to the lease for its facilities located at 4145 Wagon Trail Avenue, Las Vegas, Nevada 89118. Under the Lease Addendum, Mystic has the right to purchase an option to purchase the property from Green Wagon Reno, LLC (“Green Wagon Reno”), the lessor under the lease (the “Wagon Trail Purchase Option”). The price of the option is $5 million (the “Wagon Trail Option Price”). To date, Mystic has paid $4.5 million towards the Wagon Trail Option Price. Once Mystic has paid the Wagon Trail Option Price, Mystic may exercise the Wagon Trail Purchase Option by paying the purchase price for the property in an amount equal to the lesser of fair market value as determined by an appraisal or $6 million, with the Wagon Trail Option Price being applied towards the balance of the purchase price. Assuming the purchase price is $6 million, Mystic would need to pay $1.5 million in order to purchase and exercise the Wagon Trail Purchase Option. If Mystic elects not to purchase or exercise the Wagon Trail Option, any amounts advanced to Green Wagon Reno will convert into a loan from Mystic to Green Wagon Reno, which Green Wagon Reno will be obligated to repay within 24 months, including 6% annual interest.

In August 2021, Mystic entered into a Lease for its planned City of Las Vegas Dispensary located at Sky 6050 Sky Pointe Drive, Las Vegas, NV 89130. Under the Lease, Mystic paid $1 million (the “Sky Pointe Option Price”) to Sky Hi, LLC, the lessor under the Lease (“Sky Hi”), in exchange for an option to purchase the property (the “Sky Pointe Purchase Option”, and together with the Wagon Trail Purchase Option and the Reno Purchase Option, the “Real Estate Purchase Options”). Mystic may exercise the Sky Pointe Purchase Option by paying the purchase price for the property in an amount equal to the lesser of fair market value as determined by an appraisal or $6 million, with the Sky Pointe Option Price being applied towards the balance of the purchase price. Assuming the purchase price is $6 million, Mystic would need to pay $5 million in order to exercise the Sky Pointe Purchase Option. Unlike the Reno Purchase Option and Wagon Trail Purchase Option, the Sky Pointe Purchase Option does not convert into a loan if Mystic elects not to exercise it.

Our Leadership Team

We are led by executive officers who together have been involved in the regulated cannabis industry since the passage of medical cannabis legislation in the State of Nevada in 2013. Lorenzo Barracco, our Chairman and Chief Executive Officer, co-founded our company in June 2014. Mr. Barracco has a history of developing projects in quickly-evolving markets including restaurant chains. Michael Cristalli, our President, co-founder and a Director, has substantial knowledge and years of working experience with Nevada’s cannabis laws and regulations and has been instrumental in our obtaining licenses for medical and recreational cannabis. Heather Cranny, our Chief Financial Officer, Treasurer, Secretary and a Director, has been with our company since its formation and has significant experience in the cannabis industry, and Joanna DeFilippis, our Chief Operating Officer and a Director, has in-depth knowledge of our product selection methodologies.

Our officers are assisted with guidance from outside members of our Board of Directors. Daniel V. Perla and Alexander Scharf each brings a deep background in early-stage and growth companies, operational, marketing and financial experience, and Sigmund (Sig) Rogich provides expertise to us in the areas of media and advertising, and government relations.

The Nevada Cannabis Industry

The Nevada cannabis industry is known for its comprehensive and exacting system of regulatory compliance and high standards of excellence for the governance of cannabis license holders. Currently, the acting regulatory authority is held by the CCB. The CCB establishes and maintains strict enforcement of cannabis related activities through the issuance of various regulations, including Title 56 of Nevada Revised Statutes and the Adopted Regulation of the CCB. These regulations provide an industry specific elaboration of the local NRS and NAC codes regarding the operation of a licensed cannabis organization. These regulations ensure that license holders operate their facilities with the highest degree of moral and ethical integrity, health and safety. The CCB is known for being highly active in their roles through the execution of frequent on-site inspections and their efforts in being available to industry workers as a resource of information and guidance. The Nevada cannabis industry may be heavily regulated; however, these high expectations have set an example for other new and developing markets in terms of best practices and product quality.

High expectations for product integrity and quality and a complicated regulatory environment can create significant barriers to entry for new companies in the market. The Nevada cannabis industry requires seasoned compliance professionals who are accustomed to fast-paced regulatory changes. This creates potential risk for companies with inadequate attention to compliance administration and can easily become the catalyst to failure. Mystic considers compliance a priority and has committed to the careful management of all related duties. The ability of our compliance team can be considered a competitive advantage by the positive effects it has on operations, organizational image and perception, and the quality of our cannabis and cannabis products.

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.

Share Exchange Transaction with Qualcan Canada

In September 2019, the Company entered into a Share Exchange Agreement, pursuant to which it was contemplated that Qualcan (Canada) Holdings Inc., a newly-formed British Columbia corporation (“Qualcan Canada”), would acquire all of the outstanding shares of our company (the “Share Exchange”). Under the terms of the Share Exchange Agreement, our company would become a wholly-owned subsidiary of Qualcan Canada and the former stockholders of our company would become shareholders of Qualcan Canada. Further, if the Share Exchange were to be completed, Qualcan Canada would pursue an initial public offering of its common shares in Canada and seek to list the shares for trading on the Canadian Securities Exchange (the “Canadian Public Offering”). However, after careful consideration, the Company’s board of directors determined not to pursue the consummation of the Share Exchange. As of August 31, 2021, the Company has a note payable in the amount of $501,509 to Qualcan Canada on its balance sheet which bears 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 into stock.

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.

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.

Stock Listing

In July 2021, our 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 our common stock for quotation on the OTCQX tier of the OTC Markets. We expect that our common stock will be quoted on the OTCQX in September 2021, however no assurance can be given that the OTC Markets will approve our application.

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 closes on September 20, 2021. See “Description of Securities – Preferred Stock” for a summary of the rights and preferences of the series A preferred stock.

Selected Risks Associated with Our Business

Despite our growth and expansion strategies and the competitive advantages we describe above, our business and prospects may be limited by a number of risks and uncertainties that we currently face, including:

	●	We have a history of annual net losses which may continue and which may negatively impact our ability to achieve our business objectives, and we received a going concern qualification in our 2020 audit. We had net losses of $1,316,661 and $2,004,642 for the years ended December 31, 2020 and 2019, respectively, and $1,648,310 for the six months ended June 30, 2021, and we will have a net loss for the year ending December 31, 2021. There can be no assurance we will have significant levels of total revenue or net income in future periods.

	●	We operate in an intensely competitive market for the cultivation, production and sale of medical and recreational cannabis against a number of already established and better-known production companies and retail store chains.

	●	Cannabis continues to be categorized as a Schedule I controlled substance under the federal Controlled Substances Act of 1970 (“CSA”) in the United States and, as such, remains illegal under United States federal law. Our business activities are currently illegal under United States federal law. Our business plan is based on the premise that cannabis legalization will continue to expand, that consumer demand for cannabis will continue to exceed supply for the foreseeable future and that consumer demand for cannabis for medical and recreational use will grow as legalization expands. If cannabis legalization is scaled back or reversed at the state level, or if the United States federal government increases regulation and prosecution of cannabis-related activities, it could have a material adverse effect on our business, financial condition and results of operations.

	●	As part of our strategic plan following this offering, we intend to acquire or invest in other cannabis-related businesses; however, there is no assurance that we will be able to identify appropriate acquisition targets, successfully acquire identified targets or successfully integrate the businesses of acquired companies to realize their full benefits.

	●	Our business depends on the availability to us of Lorenzo Barracco, our Chairman and Chief Executive Officer, who has substantial knowledge regarding the cannabis industry and business contacts that would be extremely difficult to replace, and our business would be materially and adversely affected if his services were to become unavailable to us.

	●	Our business has been adversely impacted by the effects of the novel coronavirus (COVID-19). The COVID-19 outbreak caused disruption to our operations and sales activities, and may continue to do so in the future.

	●	The concentration of common stock and series A preferred stock held by our Chairman and Chief Executive Officer and our other directors and executive officers limits the ability of shareholders to influence corporate matters.

Corporate Information

Our principal executive offices are located at 4145 Wagon Trail Avenue, Las Vegas, Nevada 89118, and our telephone number is (702) 960-7778. We maintain a corporate website at http://www.qualcan.com.

We do not incorporate the information on or accessible through our website into this offering circular, and you should not consider any information on, or that can be accessed through, our website a part of this offering circular.

We own various U.S. federal trademark applications and unregistered trademarks, including the trademark “Qualcan.” All other trademarks or trade names referred to in this offering circular are the property of their respective owners. Solely for convenience, the trademarks and trade names in this offering circular are referred to without the symbol ™, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent possible under applicable law, their rights thereto.

Channels for Disclosure of Information

Investors and others should note that we use social media to communicate with all of our viewers and the public about our company, our services, new product developments and other matters. Any information that we consider to be material to an evaluation of our company will be included in filings on the SEC website, http://www.sec.gov, and may also be disseminated using our investor relations website, which can be found at http://www.qualcan.com, and press releases. However, we encourage investors, the media and others interested in our company to also review our social media channels. We do not incorporate the information on or accessible through our website into this offering circular, and you should not consider any information on, or that can be accessed through, our website a part of this offering circular.

THE OFFERING

Common stock offered by us		33,333,333 shares

Common stock outstanding prior to this offering		111,338,805 shares

Best efforts offering		We are selling the shares of our common stock offered in this offering circular on a “best efforts” basis and are not required to sell any specific number or dollar amount of the shares being offered, but we will use our best efforts to sell such shares.

Common stock to be outstanding after this offering		144,338,805 shares, assuming the maximum number of shares is sold.

Use of proceeds after expenses		Based on an initial public offering price of $1.50 per share, we estimate that the net proceeds to us from this offering, assuming we sell all 33,333,333 shares, will be $49,750,000, after payment of our estimated offering expenses. However, this is a best efforts offering, and there is no assurance that we will sell any shares or receive any proceeds. We intend to utilize a substantial portion of the net proceeds of this offering to finance the remaining payments related to the acquisition of our Reno dispensary, to build our City of Las Vegas dispensary and Carson City dispensary, and to build a cannabis lounge adjacent to our Las Vegas (Clark County) dispensary. We intend to use the remaining net proceeds of this offering to finance the costs of acquiring or investing in other cannabis-related businesses, products and technologies, and real estate related to our cannabis business, and for working capital and general corporate purposes. See “Use of Proceeds” for more information.

Plan of distribution		The gross proceeds of this offering will be deposited in the Company’s account at a bank or other financial institution.

Ownership and control after this offering and Exchange Offer		Lorenzo Barracco, our Chief Executive Officer and Chairman, Michael Cristalli, our President and director, and Daniel V. Perla and Alexander Scharf, directors of our company, will collectively own 65,105,683 shares of common stock and 65,168 shares of series A preferred stock, representing 51.3% of our total outstanding voting stock if the maximum number of shares is sold in this offering. ⁽¹⁾

Risk factors		Investing in our common stock involves a high degree of risk. You should read the “Risk Factors” section of this offering circular beginning on page 9 for a discussion of factors to consider carefully before deciding to invest in shares of our common stock.

(1)

The number of shares of common stock to be outstanding after this offering excludes (a) 600,000 shares issuable upon the conversion of our 8% convertible debentures, of which approximately $441,646 in aggregate principal amount remains outstanding as of August 31, 2021, (b) 3,750,000 shares issuable upon the conversion of the Secured Convertible Promissory Note, of which $2,500,000 in aggregate principal amount remains outstanding as of August 31, 2021, and (c) 13,000,000 shares issuable upon exercise of outstanding stock options.

An investment in our common stock involves a high degree of risk. You should carefully consider the following risk factors, together with the other information contained in this offering circular, before purchasing our common stock. Any of the following factors could harm our business, financial condition, results of operations or prospects, and could result in a partial or complete loss of your investment. Some statements in this offering circular, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

We have a history of annual net losses which may negatively impact our ability to achieve our business objectives, and we received a going concern qualification in our 2020 audit.

For the year ended December 31, 2020, we had revenues of $13,379,709 and a net loss of $1,316,661. At December 31, 2020, we had stockholders’ equity of $31,124,214, an increase of $21,196,262 from December 31, 2019. Our stockholders’ equity was $25,892,209, as of June 30, 2021. For the six months ended June 30, 2021, we had revenues of $7,679,766. We had a net loss of $1,648,310 for the six months ended June 30, 2021. Our independent auditors, in their report dated April 28, 2021, expressed doubt about our ability to continue as a going concern. There can be no assurance that our future operations will result in net income. Our failure to increase our revenues or improve our gross profit margins will harm our business. We may not be able to sustain or increase profitability on a quarterly or annual basis in the future. If our revenues grow more slowly than we anticipate, our gross profit margins fail to improve or our operating expenses exceed our expectations, our operating results will suffer. The prices we charge for our cannabis products may decrease, which would reduce our revenues and harm our business. If we are unable to sell our cannabis products at acceptable prices relative to our costs, if federal cannabis laws and regulations become enforced to negatively impact the sale of some or all of such products, or if we fail to develop and introduce on a timely basis new cannabis products from which we can derive additional revenues, our financial results will suffer.

Our company is in a very new and highly regulated industry. Significant and unforeseen changes in policy may have material impacts on our business.

Continued development in the cannabis industry is dependent upon continued state legislative authorization of cannabis, as well as legislation and regulatory policy at the federal level. The CSA currently makes cannabis use and possession illegal on a national level. While there may be ample public support for legislative authorization, numerous factors impact the legislative process. Any one of these factors could slow or halt use and handling of cannabis in the United States or in other countries, which would negatively impact our cultivation and production activities and our ability to distribute and sell our products.

Many U.S. state laws are in conflict with the CSA. It is unclear whether regulatory authorities in the United States would object to the registration or public offering of securities in the United States by our company, to the status of our company as a reporting company, or even to investors investing in our company as we engage in legal cannabis production and supply pursuant to the laws and authorization of the jurisdiction where the activity takes place. In addition, the status of cannabis under the CSA may have an adverse effect on federal agency approval of medical use of cannabis products. Any such objection or interference could delay indefinitely or increase substantially the costs to access the equity capital markets and harvest and distribute cannabis products.

Our cannabis strategy makes it difficult to find, retain and attract management.

The environment we work in is heavily regulated and while we have experience in regulated industries, it is also heavily scrutinized. This regulatory scrutiny takes a toll on management and makes it very difficult to attract and retain talent. Management spends a great deal of time and money explaining and justifying actions, strategy and business plans to regulators. A myriad of complex factors including regulations regarding money laundering, inter-state commerce and conflicting federal and state laws, among others, affect every decision. Navigating this complex set of regulatory hurdles and staying focused on generating shareholder value is an arduous task and there can be no assurance that we will be successful in steering clear of all the potential issues, any of which could adversely impact our stock price.

Our cannabis strategy makes it difficult to raise money and for our common stock to become listed on a U.S. registered national securities exchange.

We are considered a “cannabis company” with all the nuances that accompany that label, including being scrutinized by commercial banks, investment banking firms and by the largest clearing services company. Due to the nature of some of these institutions, this makes it very difficult for cannabis companies to raise money, deposit share certificates or even have investment banking relationships. While we believe that we will be able to raise the capital that we need to continue our operations, there can be no assurance that we will be successful in these efforts or will be able to raise enough capital for planned expansion. Further, our being a “cannabis company” presents a significant barrier to our stock becoming eligible for trading on a U.S. registered national securities exchange, such as the New York Stock Exchange and Nasdaq.

The success of our business depends on obtaining and maintaining various state and local licenses for our cannabis business.

Currently, we hold and are in the process of obtaining cannabis licenses in Nevada that allow us to cultivate, manufacture, process, distribute wholesale, deliver and sell cannabis products to medical and recreational cannabis users and resellers. Regulatory compliance and the process of obtaining regulatory approvals can be costly and time-consuming, and no assurance can be given that we will receive the requisite licenses from state and local governments to operate our cannabis business.

We are currently engaged in, and expect in the future to engage in, strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our management, and which ultimately may not be successful.

We are in the process of acquiring dispensaries in Reno, Nevada, together with the recreational and medical retail dispensary licenses, issued by the State of Nevada, and are in the process of establishing additional dispensaries in the City of Las Vegas and Carson City, Nevada as described in the section “Our Business – Our Proposed Expansion of a Retail Channel and Dispensaries.” While these acquired dispensaries and new planned dispensaries may provide a substantial return on investment and serve as an important platform for growing our Qualcan brand, there can be no assurance that these proposed acquisitions will be completed or, if completed, will prove to be beneficial to our company.

In the future, we may consider additional strategic transactions, such as acquisitions of companies, asset purchases and out-licensing or in-licensing of products or technologies, particularly those arrangements that seek to leverage other organizations’ internal platforms or competencies for the benefit of our products or potential products. Additional potential transactions that we may consider include a variety of different business arrangements, including spin-offs, strategic partnerships, joint ventures, restructurings, divestitures, business combinations and investments. Any such transaction may require us to incur non-recurring or other charges, may increase our near and long-term expenditures and may pose significant integration challenges or disrupt our management or business, which could adversely affect our operations and financial results.

Our Nevada acquisitions and future strategic transactions may entail numerous operational and financial risks, including:

Accordingly, although there can be no assurance that we will undertake or successfully complete any transactions of the nature described above, any transactions that we do complete could have a material adverse effect on our business, results of operations, financial condition and prospects if we are unable to execute on the planned objectives or capitalize on the relationship in the manner that was originally contemplated.

We expect to acquire companies and we are subject to evolving and often expensive corporate governance regulations and requirements. Our failure to adequately adhere to these requirements, and comply with them with regard to acquired companies, some of which may be non-reporting entities, or the failure or circumvention of our controls and procedures could seriously harm our business.

We are subject to various regulations, and compliance with these evolving regulations is costly and requires a significant diversion of management time and attention, particularly with regard to our disclosure on controls and procedures and our internal control over financial reporting. As we make acquisitions, our internal controls and procedures may not be able to prevent errors or fraud in the future. We cannot guarantee that we can establish internal controls over financial reporting immediately on companies that we acquire. Thus, faulty judgments, simple errors or mistakes, or the failure of our personnel to enforce controls over acquired companies or to adhere to established controls and procedures, may make it difficult for us to ensure that the objectives of our control systems are met. A failure of our controls and procedures to detect other than inconsequential errors or fraud could seriously harm our company.

We have a limited senior management team size that may hamper our ability to effectively manage a fast-growing company and manage acquisitions and that may harm our business.

We use consultants, including lawyers and accountants, to help us comply with regulatory requirements on a timely basis. As we expand, we expect to increase the size of our senior management. However, we cannot guarantee that in the interim period our senior management can adequately manage the requirements of a fast-growing company and the integration of acquisitions, and any failure to do so could harm our business.

Our expansion is dependent on laws pertaining to the legal cannabis industry.

We expect to acquire companies and hire management in specific niches of the cannabis industry. Entry into any of these areas requires special knowledge of the industry and products. By entering the legal cannabis sector, even indirectly or remotely, we could be subject to increased scrutiny by regulators because, among other things, cannabis is a Schedule-1 controlled substance and is illegal under federal law. Our failure to adequately manage the risk associated with these businesses and adequately manage the requirements of the regulators can adversely affect our business and potentially our status ultimately as a public company. Further, any adverse pronouncements from regulators about businesses related to the legal cannabis sector could adversely affect our stock price.

We face risks related to the novel coronavirus (COVID-19) which could significantly disrupt our research and development, operations, sales, and financial results.

Our business has been adversely impacted by the effects of the novel coronavirus (COVID-19). In addition to global macroeconomic effects, the COVID-19 outbreak caused disruption to our operations and sales activities, and may continue to do so in the future. The COVID 19 outbreak caused the popular Las Vegas and Reno entertainment areas to virtually shut down for almost a year, which negatively impacted our sales and operating results. Our third-party vendors, third-party distributors, and our customers have been and will be disrupted by worker absenteeism, quarantines and restrictions on employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, or other travel or health-related restrictions. Depending on the magnitude of such effects on our activities or the operations of our third-party vendors and third-party distributors, the supply of our products will be delayed, which could adversely affect our business, operations and customer relationships. In addition, COVID-19 or other disease outbreaks will in the short-run and may over the longer term adversely affect the economies and financial markets of many countries, resulting in an economic downturn that will affect demand for our products and services and impact our operating results. There can be no assurance that any decrease in sales resulting from COVID-19 will be offset by increased sales in subsequent periods. Although the magnitude of the impact of COVID-19 on our business and operations remains uncertain, the continued spread of COVID-19 or the occurrence of other epidemics and the imposition of related public health measures and travel and business restrictions will adversely impact our business, financial condition, operating results and cash flows. In addition, we have experienced and will experience disruptions to our business operations resulting from quarantines, self-isolations, or other movement and restrictions on the ability of our employees to perform their jobs that may impact our ability to develop and design our products and services in a timely manner or meet required milestones or customer commitments.

Our products may be unable to achieve expected market acceptance and, consequently, limit our ability to generate revenue from new products.

Even when product development is successful and regulatory approval has been obtained, our ability to generate sufficient revenue depends on the acceptance of our products by customers. We cannot assure you that our products will achieve the expected level of market acceptance and revenue. The market acceptance of any product depends on a number of factors such as the price of the product, the effect of the product, the taste of the product, reputation of the distributor or retailer, competition, and marketing and distribution support.

The success and acceptance of a product in one state may not be replicated in other states or may be negatively affected by our activities in another state. Any factors preventing or limiting the market acceptance of our products could have a material adverse effect on our business, results of operations and financial condition.

Business interruptions could delay us in the process of developing our product candidates and could disrupt our product sales.

Loss of our manufacturing facilities, our growing plants, stored inventory or laboratory facilities through fire, theft or other causes, or loss of our botanical raw material due to pathogenic infection or other causes, could have an adverse effect on our ability to meet demand for cannabis products or to continue product development activities and to conduct our business. Failure to supply our partners with commercial product may lead to adverse consequences.

Counterfeiting activities and the presence of counterfeit products in market and over the internet continue to be a challenge for maintaining a safe product supply. Counterfeit products are frequently unsafe, and can be life-threatening. To distributors and users, counterfeit products may be visually indistinguishable from the authentic version. Reports of adverse reactions to counterfeit drugs along with increased levels of counterfeiting could be mistakenly attributed to the authentic product, affect consumer confidence in the authentic product and harm the business of companies such as ours. If our products were to be the subject of counterfeits, we could incur reputational and financial harm.

We face intense competition, including from generic products. If our competitors market or develop alternative products that are approved more quickly or marketed better than our products or are demonstrated to be safer or more potent than our products, our commercial opportunities will be reduced or eliminated.

The cannabis products industry is characterized by advancing technology, competition and a strong emphasis on developing proprietary products. We face competition from a number of sources, some of which may target the same indications as our products, such as pharmaceutical companies, including generic drug companies, biotechnology companies, drug delivery companies and academic and research institutions, many of which have greater financial resources, marketing capabilities, including well-established sales forces, manufacturing capabilities, research and development capabilities, experience in obtaining regulatory approvals for product candidates and other resources than us.

We may not be able to differentiate any products that we may market from those of our competitors, successfully develop or introduce new products that are less costly or offer better performance than those of our competitors, or offer purchasers of our products payment and other commercial terms as favorable as those offered by our competitors. In addition, there are a number of established products already commercially available and under development by other companies that treat the indications that our product candidates are intended to treat.

The loss of the services of key officers, including Lorenzo Barracco, our Chief Executive Officer, and largest shareholder, or failure to timely identify and retain competent personnel, could negatively impact our ability to develop our business and sell our services.

We are highly dependent on Lorenzo Barracco, who is our Chief Executive Officer, and largest stockholder. The development of our business will continue to place a significant strain on our limited personnel, management, and other resources. Our future success depends upon the continued services of our executive officers who are developing our business, and on our ability to identify and retain competent consultants and employees with the skills required to execute our business objectives. The loss of the services of Mr. Barracco or our failure to timely identify and retain competent personnel would negatively impact our ability to develop our business and license our brand, which could adversely affect our financial results and impair our growth.

Factors that may contribute to the variability of quarterly revenue, operating results or profitability include:

We may be unable to protect our intellectual property rights and/or intellectual property rights licensed to us, and may be subject to intellectual property litigation and infringement claims by third parties.

We intend to protect our intellectual property through limited trademarks, service marks and copyrights and our formulas, recipes and other trade secrets and know-how through confidentiality or license agreements with third parties, employees and consultants, and by controlling access to and distribution of our proprietary information. However, this method may not afford complete protection, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States and unauthorized parties may copy or otherwise obtain and use our products, processes or technology. Additionally, there can be no assurance that others will not independently develop similar know-how and trade secrets. We are also dependent upon the owners of intellectual property rights licensed to us under various wholesale license agreements to protect and defend those rights against third party claims. If third parties take actions that affect our rights, the value of our intellectual property, similar proprietary rights or reputation or the licensors who have granted us certain rights under wholesale license agreements, or we are unable to protect the intellectual property from infringement or misappropriation, other companies may be able to offer competitive products at lower prices, and we may not be able to effectively compete against these companies. We also face the risk of claims that we have infringed third parties’ intellectual property rights. Any claims of intellectual property infringement, even those without merit, may require us to:

In the event of claims by third parties for infringement of intellectual property rights we license from third parties under wholesale license agreements, we could be liable for costs of defending allegations of infringement and there are no assurances the licensors will either adequately defend the licensed intellectual property rights or that they would prevail in the related litigation. In that event, we would incur additional costs and may deprived from generating royalties from these agreements.

We are dependent on numerous third parties in our supply chain for the commercialization of products, and if we fail to maintain our supply and manufacturing relationships with these third parties or fail to develop new relationships with other third parties, we may be unable to continue to commercialize these products or to develop other product candidates.

We rely on a number of third parties for the commercial supply of certain of our products. Our ability to commercially supply our products depends, in part, on our ability to successfully obtain the materials for our products and outsource most, if not all of the aspects of their manufacturing, at competitive costs, in accordance with regulatory requirements and in sufficient quantities for commercialization and testing. If we fail to develop and maintain supply relationships with these third parties, we may be unable to continue to commercialize our products.

General economic conditions may adversely affect our financial performance. In the United States, changes in interest rates, changes in fuel and other energy costs, weakness in the housing market, inflation or deflation or expectations of either inflation or deflation, higher levels of unemployment, decreases in discretionary consumer spending or consumer demand, unavailability or limitations of consumer credit, higher consumer debt levels or efforts by consumers to reduce debt levels, higher tax rates and other changes in tax laws, overall economic slowdown, changes in consumer desires affecting demand for the products we sell and other economic factors could adversely affect consumer demand for the products we sell, change the mix of products we sell to a mix with a lower average gross margin and result in slower inventory turnover. Higher interest rates, transportation costs, inflation, higher costs of labor, insurance and healthcare, foreign exchange rates fluctuations, higher tax rates and other changes in tax laws, changes in other laws and regulations and other economic factors in the United States or internationally can increase our cost of sales and operating, selling, general and administrative expenses, decrease sales, and otherwise adversely affect our operations and operating results. These factors affect not only our operations, but also the operations of suppliers from whom we purchase goods and services, a condition that can result in an increase in the cost to us of the goods we sell to customers.

If we do not begin to generate significant revenues, we will need to raise additional capital to meet our business requirements. Any such capital raising may be costly or difficult to obtain and could dilute current stockholders’ ownership interests. If we are unable to secure additional financing we will not be able to continue as a going concern.

We need additional capital, which may not be available on reasonable terms or at all. The raising of additional capital will dilute current stockholders’ ownership interests. We may need to raise additional funds through public or private debt or equity financings to meet various objectives including, but not limited to:

Any additional capital raised through the sale of equity or equity backed securities may dilute current stockholders’ ownership percentages and could also result in a decrease in the fair market value of our equity securities because our assets would be owned by a larger pool of outstanding equity. The terms of those securities issued by us in future capital transactions may be more favorable to new investors, and may include preferences, superior voting rights and the issuance of warrants or other derivative securities, which may have a further dilutive effect that is different from or in addition to that reflected in the capitalization described in this offering circular.

Further, any additional debt or equity financing that we may need may not be available on terms favorable to us, or at all. If we are unable to obtain required additional capital, we may have to curtail our growth plans or cut back on existing business and, further, we may not be able to continue operating if we do not generate sufficient revenues from operations needed to stay in business.

We may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees, securities law compliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we issue, such as convertible debentures and warrants, which may adversely impact our financial condition.

Even if we consummate this offering, if we do not begin to generate meaningful revenues, we will need to seek additional financing which we may be unable to obtain on favorable terms when required, or at all, and we may therefore be unable to continue funding our operations.

We currently anticipate that the net proceeds of this offering, if we sell the full amount and together with our available funds, will be sufficient to meet our anticipated needs for working capital and capital expenditures in the short term. However, this offering is on a “best efforts” basis and we may not sell the full $50,000,000 of shares. We cannot be certain that additional financing will be available to us on favorable terms when required, or at all, and we may therefore be unable to continue funding our operations.

Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results.

Generally accepted accounting principles and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business, including but not limited to, revenue recognition, estimating valuation allowances and accrued liabilities (specifically, the allowances for returns, credit card chargebacks, doubtful accounts and obsolete and damaged inventory), internal use software and website development (acquired and developed internally), accounting for income taxes, valuation of long-lived and intangible assets and goodwill, stock-based compensation, and loss contingencies are highly complex and involve many subjective assumptions, estimates and judgments by our management. Changes in these rules or their interpretation or changes in underlying assumptions, estimates or judgments by our management could significantly change our reported or expected financial performance.

Changes in accounting principles or guidance, or in their interpretations, could result in unfavorable accounting charges or effects, including changes to our previously filed consolidated financial statements, which could cause our stock price to decline.

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. These principles are subject to interpretation by the SEC and various bodies formed to interpret and create appropriate accounting principles and guidance. A change in these principles or guidance, or in their interpretations, may have a significant negative effect on our reported results and retroactively affect previously reported results, which, in turn, could cause our stock price to decline.

The shares of our common stock will have limited transferability and liquidity, and there can be no assurance that there will be an active market for shares of our common stock either now or in the future.

Although our common stock is quoted on the OTC Markets under the symbol “MSTH”, shares of our common stock trade sporadically, and the price of our common stock, if traded, may not reflect our value. There can be no assurance that there will be an active market for our shares of common stock either now or in the future. Market liquidity will depend on the perception of our operating business and any steps that our management might take to bring us to the awareness of investors. There can be no assurance given that there will be any awareness generated.

Consequently, investors may not be able to liquidate their investment or liquidate it at a price that reflects the value of the business. As a result, holders of our securities may not find purchasers for our securities should they to sell securities held by them. Consequently, our securities should be purchased only by investors having no need for liquidity in their investment and who can hold our securities for an indefinite period of time.

If a more active market should develop, the price of our common stock may be highly volatile. Because there may be a low price for our common stock, many brokerage firms may not be willing to effect transactions in our securities. Even if an investor finds a broker willing to effect a transaction in the shares of our common stock, the combination of brokerage commissions, transfer fees, taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of such shares of common stock as collateral for any loans.

We expect to experience volatility in our stock price, which could negatively affect stockholders’ investments.

Our stock price may be impacted by factors that are unrelated or disproportionate to our operating performance. These market fluctuations, as well as general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations may adversely affect the market price and liquidity of our common stock.

In the past, securities class action litigation has often been brought against a company following periods of volatility in the market price of its securities. Due to the volatility of our common stock price, we may be the target of securities litigation in the future. Securities litigation could result in substantial costs and divert management’s attention and resources.

Stockholders should also be aware that, according to SEC Release No. 34-29093, the market for “penny stock”, such as our common stock, has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the future volatility of our share price.

Our common stock is subject to the “penny stock” rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

Under U.S. federal securities legislation, our common stock will constitute “penny stock”. Penny stock is any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require that a broker or dealer approve a potential investor’s account for transactions in penny stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve an investor’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of the person, and make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination. Brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

The concentration of common stock and series A preferred stock held by our Chairman and Chief Executive Officer and our other directors and executive officers will limit your ability to influence corporate matters.

Following this offering, Lorenzo Barracco, our Chief Executive Officer and Chairman, Michael Cristalli, our President and director, and Daniel V. Perla and Alexander Scharf, directors of our company, will collectively beneficially own and will be able to vote in the aggregate 51.3% of our outstanding voting stock (if the maximum number of shares is sold in this offering).

As such, Messrs. Barracco, Cristalli, Perla and Scharf, if they work together, will continue to have the ability to exert significant influence over all corporate activities, including the election or removal of directors and the outcome of tender offers, mergers, proxy contests or other purchases of common stock that could give our stockholders the opportunity to realize a premium over the then-prevailing market price for their shares of common stock. This concentrated control will limit your ability to influence corporate matters and, as a result, we may take actions that our stockholders do not view as beneficial. In addition, such concentrated control could discourage others from initiating changes of control. In such cases, the perception of our prospects in the market may be adversely affected and the market price of our common stock may decline.

This offering is being conducted on a “best efforts” basis. As a result, we may not be able to raise enough funds to fully implement our business plan and our investors may lose their entire investment.

The offering is on a “best efforts” basis. If we are not able to raise sufficient funds, we may not be able to fund our operations as planned, and our growth opportunities may be materially adversely affected. This could increase the likelihood that investors may lose their entire investment.

We will have broad discretion over how we use the proceeds of this offering, and we may use them for corporate purposes that do not immediately enhance our profitability or market share.

Our management will have considerable discretion in the application of the net proceeds of this offering, and you will not have the opportunity, as part of your investment decision, to assess whether we are using the proceeds appropriately. We may use the net proceeds from this offering for corporate purposes that do not immediately enhance our profitability or increase our market value.

You will experience immediate and substantial dilution in the value of the shares of common stock you purchase.

The public offering price is substantially higher than the net tangible book value of each outstanding share of our common stock. Purchasers of common stock in this offering will experience immediate and substantial dilution on a book value basis. The dilution per share in the net tangible book value per share of common stock will be $1.11 per share based on an assumed $1.50 public offering price. If stock options and warrants to purchase shares of common stock are exercised in the future, there would be further dilution. See “Dilution.”

We do not intend to become a public reporting company under the Exchange Act, but instead we will be required to publicly report on an ongoing basis under the reporting rules set forth in Regulation A for Tier 2 issuers. We will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules and our stockholders could receive less information than they might expect to receive from more mature public companies.

We do not intend to become a public reporting company under the Exchange Act and will not be required to publicly report on an ongoing basis as an “emerging growth company” (as defined in the JOBS Act) under the reporting rules set forth under the Exchange Act.

Because we do not intend to become a public reporting company under the Exchange Act, we will be required to publicly report on an ongoing basis under the reporting rules set forth in Regulation A for Tier 2 issuers. The ongoing reporting requirements under Regulation A are more relaxed than for emerging growth companies under the Exchange Act. The differences include, but are not limited to, being required to file only annual and semiannual reports, rather than annual and quarterly reports. Annual reports are due within 120 calendar days after the end of the issuer’s fiscal year, and semiannual reports are due within 90 calendar days after the end of the first six months of the issuer’s fiscal year. If we elect not to become a public reporting company our common stock will not be permitted to trade on a national securities exchange such as Nasdaq.

We will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are “emerging growth companies,” and our stockholders could receive less information than they might expect to receive from more mature public companies.

If securities industry analysts do not publish research reports on us, or publish unfavorable reports on us, then the market price and market trading volume of our common stock could be negatively affected.

Any trading market for our common stock will be influenced in part by any research reports that securities industry analysts publish about us. We do not currently have and may never obtain research coverage by securities industry analysts. If no securities industry analysts commence coverage of us, the market price and market trading volume of our common stock could be negatively affected. In the event we are covered by analysts, and one or more of such analysts downgrade our securities, or otherwise reports on us unfavorably, or discontinues coverage or us, the market price and market trading volume of our common stock could be negatively affected.

Because we do not intend to pay dividends on our common stock, you must rely on stock appreciation for any return on your investment.

We presently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future. As a result, you must rely on stock appreciation and a liquid trading market for any return on your investment. If an active and liquid trading market does not develop, you may be unable to sell your shares of common stock at or above the public offering price or at the time you would like to sell.

The protection provided by the federal securities laws relating to forward-looking statements does not apply to us. The lack of this protection could harm us in the event of an adverse outcome in a legal proceeding relating to forward-looking statements made by us.

Although federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to certain issuers, including issuers that do not have their equity traded on a registered national securities exchange. Our common stock currently does not trade on any registered national securities exchange. As a result, we will not have the benefit of this safe harbor protection in the event of any legal action based upon a claim that the material provided by us contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading. The lack of this protection in a contested proceeding could harm our financial condition.

Provisions in our charter documents and under Nevada corporate law could discourage a takeover that stockholders may consider favorable.

Nevada corporate law could make it more difficult for a third party to acquire us. Specifically, provisions of the Nevada Revised Statutes may have an anti-takeover effect with respect to transactions not approved in advance by our board of directors, including discouraging attempts that might result in a premium over the market price for the shares of common stock held by our stockholders.

We are selling our shares of common stock in this offering on a “best efforts” basis. There is no minimum number of shares of common stock which we must sell before we receive, and have the right to expend, the net proceeds from the sale of any shares. The proceeds from the sale of the common stock will not be held in escrow, and we, upon accepting an investor’s subscription, at our discretion may immediately expend the subscription proceeds.

The purchase price for the common stock is arbitrary and there is no placement agent.

In the absence of a market for the shares of common stock, the public offering price of our shares was arbitrarily determined by us and was not determined by reference to any traditional criteria of value, such as book value, earnings or assets. The offering price does not necessarily represent the current value of our common stock and should not be regarded as an indication of any future price for our common stock. We intend to sell the shares directly to investors and not through a placement agent or other registered broker-dealer who is paid sales commissions. As such, purchases of the shares will not have the benefit of an independent party negotiating the offering price.

Some of the statements under “Offering Circular Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Our Business” and elsewhere in this offering circular constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will” and “would” or the negatives of these terms or other comparable terminology.

You should not place undue reliance on forward looking statements. The cautionary statements set forth in this offering circular, including in “Risk Factors” and elsewhere, identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things:

Although the forward-looking statements in this offering circular are based on our beliefs, assumptions and expectations, taking into account all information currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes. No assurance can be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations from them will not be material and adverse. We undertake no obligation, other than as maybe be required by law, to re-issue this offering circular or otherwise make public statements updating our forward-looking statements.

If we sell shares for aggregate gross proceeds of $50,000,000, our net proceeds (after our estimated offering expenses of $250,000) will be $49,750,000. We intend to utilize a substantial portion of the net proceeds of this offering to finance the remaining payments related to the acquisition of our Reno dispensary, to build our City of Las Vegas dispensary and Carson City dispensary, and to build a cannabis lounge adjacent to our Las Vegas (Clark County) dispensary. We intend to use the remaining net proceeds of this offering to finance the costs of acquiring or investing in other cannabis-related businesses, products and technologies and for working capital and general corporate purposes.

The precise amounts that we will devote to each of the foregoing items, and the timing of expenditures, will vary depending on numerous factors.

The following table sets forth a breakdown of our estimated use of our net proceeds as we currently expect to use them, assuming the sale of, respectively, 100%, 75%, 50% and 25% of the shares (based on the maximum offering amount of $50,000,000).

We intend to utilize a substantial portion of the net proceeds of this offering to finance the repayment of the $4.2 million Reno Dispensary Note which bears interest at an annual rate of 5% and is due within 12 months of August 2021. If the proceeds of this offering are less than $4.2 million, we will need to seek additional financing (together with any internally generated funds) in order to complete the acquisition of the Reno Dispensary. See “Our Business – Our Proposed Expansion of a Retail Channel and Dispensaries.”

In addition, we intend to utilize a substantial portion of the net proceeds of this offering, after paying the Reno Dispensary Note, to finance the costs of construction for the buildout of (i) the City of Las Vegas Dispensary, (ii) Carson City Dispensary and (iii) the planned Cannabis Lounge adjacent to the Las Vegas (Clark County) Dispensary. As of August 31, 2021, the anticipated cost to complete the buildout of these facilities is approximately $3 million, subject to adjustment in the discretion of management. Our ability to proceed with the construction of these facilities is subject to receipt of all applicable government approvals. If the proceeds of this offering are less than $7.2 million, we will need to seek additional financing (together with any internally generated funds) in order to complete construction of these facilities. See “Our Business – Our Proposed Expansion of a Retail Channel and Dispensaries.”

In addition, we intend to utilize a substantial portion of the net proceeds of this offering, after paying the Reno Dispensary Note and the costs of construction for the buildout of our facilities, to finance the acquisition of the real property for (i) our facilities located at 4145 Wagon Trail Avenue, Las Vegas, Nevada 89118, (ii) the Reno Dispensary located at 1085 S. Virginia Street, Reno, Nevada, and (iii) the City of Las Vegas Dispensary to be located at Sky 6050 Sky Pointe Drive, Las Vegas, NV 89130. Under the Real Estate Purchase Options that Mystic has acquired or has a right to acquire, the maximum cost to acquire the real property for these facilities would be approximately $8.4 million. If the proceeds of this offering are less than $15.6 million, we will need to seek additional financing (together with any internally generated funds) in order to complete the acquisition of all of these real properties. See “Our Business – Real Estate Purchase Options.”

If and to the extent available, additional net proceeds may be used for other acquisitions of, or investments in, cannabis-related businesses, products and technologies, and real estate related to our cannabis business. We currently have no commitments or agreements with respect to any such acquisitions or investments, other than with respect to the Reno Dispensary Asset Purchase Agreement and the Real Estate Purchase Options. See “Our Business – Our Proposed Expansion of a Retail Channel and Dispensaries” and “Our Business – Real Estate Purchase Options.”

Net proceeds will also be used for working capital and general corporate purposes, which include amounts required to pay officers’ salaries, consulting fees, professional fees, ongoing public reporting costs, computer equipment costs, data streaming transmission costs, office-related expenses and other corporate expenses.

The expected use of net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve and change. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering.

Pending use of the proceeds of this offering, we will invest the net proceeds of this offering in short-term, investment grade, interest-bearing instruments. We currently anticipate that the net proceeds of this offering, assuming maximum offering amount is raised, together with our available funds, will be sufficient to meet our anticipated needs for working capital and capital expenditures through at least nine and 24 months following the closing of this offering, respectively.

In the event we do not sell all of the shares, we may seek additional financing from other sources, in order to support the intended use of proceeds indicated above. If we secure additional equity funding, investors in this offering would be diluted with respect to their percentage ownership in our company. In all events, there can be no assurance that additional financing would be available to us when desired or needed and, if available, on terms acceptable to us.

The following table sets forth our short-term debt and capitalization as of June 30, 2021:

You should read this table together with our financial statements as of and for the years ended December 31, 2020 and 2019 and our unaudited financial statements as of and for the six months ended June 30, 2021 and 2020, and the related notes thereto, included elsewhere in this offering circular. Our use of proceeds from this offering is discussed under “Use of Proceeds.”

The table above excludes (a) 600,000 shares issuable upon the conversion of our 8% convertible debentures, of which approximately $441,646 in aggregate principal amount remains outstanding as of August 31, 2021, (b) 3,750,000 shares issuable upon the conversion of the Secured Convertible Promissory Note, of which $2,500,000 in aggregate principal amount remains outstanding as of August 31, 2021, and (c) 13,000,000 shares issuable upon exercise of outstanding stock options. To the extent our 8% convertible debentures or Secured Convertible Promissory Note are converted, or stock options or other equity awards made under our plan result in the issuance of additional shares of our common stock, there will be further dilution to our investors in this offering.

Dilution in net tangible book value per share to new investors is the amount by which the offering price paid by the purchasers of the shares of common stock sold in this offering exceeds the pro forma net tangible book value per share of common stock after the offering. Net tangible book value per share is determined at any date by subtracting our total liabilities from the total book value of our tangible assets and dividing the difference by the number of shares of common stock deemed to be outstanding at that date.

The pro forma net tangible book value of our common stock as of June 30, 2021 was approximately $6,380,710, or $0.06 per share.

After giving the effect to the sale of 33,333,333 shares of our common stock in this offering at the price to the public of $1.50 per share, and after deducting our estimated offering expenses of $250,000, the pro forma net tangible book value would be approximately $56,130,709.50, or $0.39 per share. This represents an immediate increase in net tangible book value of $0.33 per share to existing stockholders and an immediate dilution of $1.11 per share to new investors purchasing shares of common stock in the offering. The following table illustrates this substantial and immediate per share dilution to new investors.

The following table sets forth, assuming the sale of 33,333,333 shares of our common stock offered for sale in this offering, as of June 30, 2021, the total number of shares previously issued and sold to existing investors, the total consideration paid for the foregoing and the average price per share. As the table shows, new investors purchasing shares of common stock may in certain circumstances pay an average price per share substantially higher than the average price per share paid by our existing stockholders.

We are offering on a best efforts basis up to a maximum of 33,333,333 shares of our common stock. The public offering price is $1.50 per share.

As a “best efforts” offering, there can be no assurance that the offering contemplated hereby will ultimately be consummated. The gross proceeds of this offering will be deposited in the Company’s account at a bank or other financial institution. There is no minimum number of shares of common stock which we must sell before we receive, and have the right to expend, the net proceeds from the sale of any shares. The proceeds from the sale of the common stock will not be held in escrow, and we, upon accepting an investor’s subscription, at our discretion may immediately expend the subscription proceeds.

We intend to sell our shares directly to investors and not through a placement agent or other registered broker-dealer who is paid sales commissions.

Generally speaking, Rule 3a4-1 provides an exemption from the broker-dealer registration requirements of the Exchange Act for persons associated with an issuer that participate in an offering of the issuer’s securities. None of our officers or directors are subject to any statutory disqualification, as that term is defined in Section 3(a)(39) of the Exchange Act. None of our officers or directors will be compensated in connection with his participation in the offering by the payment of commissions or other remuneration based either directly or indirectly on transactions in our securities. None of our officers or directors are, or have been within the past 12 months, a broker or dealer, and none of them are, or have been within the past 12 months, an associated person of a broker or dealer. At the end of the offering, our officers or directors will continue to primarily perform substantial duties for us or on our behalf otherwise than in connection with transactions in securities. Our officers or directors will not participate in selling an offering of securities for any issuer more than once every 12 months other than in reliance on Exchange Act Rule 3a4-1(a)(4)(i) or (iii) except that for securities issued pursuant to Rule 415 under the Securities Act, the 12 months shall begin with the last sale of any security included within one Rule 415 registration.

While our common stock recently became quoted on the Pink Open Market operated by the OTC Markets, there is no active public market for our common stock. We are currently in the process of obtaining DTC eligibility so that shares of our common stock can be deposited with the Depository Trust Company in order to trade on the OTC Markets. We recently submitted an application to list our shares of common stock for quotation on the OTCQX; however, no assurance can be given that the OTC Markets will approve our listing application.

We do not intend to list our shares of common stock on a U.S. registered national securities exchange upon qualification. However, even if we later determine that the public trading markets are appropriate given the structure of our company and our growth and expansion strategies, and the shares of our common stock are listed or quoted, no assurance can be given as to (i) the likelihood that an active market for the common stock will develop, (ii) the liquidity of any such market, (iii) the ability of stockholders to sell the shares of common stock or (iv) the prices that stockholders may obtain for any of the shares.

Prior to this offering, there has been no active public market for our common stock. The principal factors considered in determining the public offering price include:

Generally, no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth (please see under “How to Calculate Net Worth”). Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

Because this is a Tier 2 Regulation A offering, most investors in the case of trading on an over-the-counter market must comply with the 10% limitation on investment in the offering. The only investors in this offering exempt from this limitation is an “accredited investor” as defined under Rule 501(a) of Regulation D under the Securities Act (an “Accredited Investor”). If you meet one of the following tests you should qualify as an Accredited Investor:

This offering will start on or after the date that this offering is qualified by the SEC and will terminate on June 30, 2022 (subject to extension by us for up to an additional 60-day period), unless we sell the maximum number of shares of common stock set forth above before that date or we decide to terminate this offering prior to that date.

To purchase shares of our common stock in this offering, investors must complete and sign a subscription agreement. Investors will be required to pay for their shares of common stock by wire, ACH, credit card or certified check for the full purchase price of the shares.

Subscriptions will be effective only upon our acceptance of the subscriptions, and we reserve the right to reject any subscriptions in whole or in part. All subscription funds which are accepted will be deposited into the Company’s account. Unless investors instruct us otherwise, we will deliver the shares of common stock being issued to the investors electronically.

If you decide to subscribe for shares of our common stock in this offering, you should:

Any potential investor will have ample time to review the subscription agreement, along with their counsel, prior to making any final investment decision. We shall only deliver such subscription agreement upon request after a potential investor has had ample opportunity to review this offering circular.

Right to Reject Subscriptions. After we receive your complete, executed subscription agreement and the funds required under the subscription agreement have been transferred to our account, we have the right to review and accept or reject your subscription in whole or in part, for any reason or for no reason. We will return all monies from rejected subscriptions immediately to you, without interest or deduction.

Acceptance of Subscriptions. Upon our acceptance of a subscription agreement, we will countersign the subscription agreement and issue the shares subscribed at closing. Once you submit the subscription agreement, you may not revoke or change your subscription or request your subscription funds. All accepted subscription agreements are irrevocable.

Under Rule 251 of Regulation A+, if our common stock will not trade on a national securities exchange, non-accredited, non-natural investors are subject to the investment limitation and may only invest funds which do not exceed 10% of the greater of the purchaser’s revenue or net assets (as of the purchaser’s most recent fiscal year end). If our common stock will not trade on a national securities exchange, a non-accredited, natural person may only invest funds which do not exceed 10% of the greater of the purchaser’s annual income or net worth (please see below on how to calculate your net worth).

How to Calculate Net Worth. For the purposes of calculating your net worth, it is defined as the difference between total assets and total liabilities. This calculation must exclude the value of your primary residence and may exclude any indebtedness secured by your primary residence (up to an amount equal to the value of your primary residence). In the case of fiduciary accounts, net worth and/or income suitability requirements may be satisfied by the beneficiary of the account or by the fiduciary, if the fiduciary directly or indirectly provides funds for the purchase of the shares.

In order to purchase shares of our common stock and prior to the acceptance of any funds from an investor, an investor will be required to represent, to our satisfaction, that the investor is either an accredited investor or is in compliance with the 10% of net worth or annual income limitation on investment in this offering.

Technology fees are expected to be paid to a third party firm for the use of its software platform for the purpose of processing credit card subscriptions from investors. Such firm will be compensated by us based on a nominal fixed upfront and per investor fee.

You should read the following discussion and analysis of our financial condition and results of our operations together with our financial statements and the notes thereto appearing elsewhere in this offering circular. This discussion contains forward-looking statements reflecting our current expectations, whose actual outcomes involve risks and uncertainties. Actual results and the timing of events may differ materially from those stated in or implied by these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors,” “Cautionary Statement regarding Forward-Looking Statements” and elsewhere in this offering circular.

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.

Currently, we sell our cannabis and cannabis-related products, which include flowers, edibles and concentrates, to state licensed dispensaries, and recognize revenues at the time of delivery.

The primary challenges and trends that could affect or are affecting our financial results include:

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.

We believe that, of the significant accounting policies discussed in Note 1 of Notes to the Consolidated Financial Statements, the following accounting policies require our most difficult, subjective or complex judgments in the preparation of our consolidated financial statements.

Cash and Cash Equivalents. For the purpose of the statement of cash flows, the Company considers all highly liquid investments available for current use with original maturity of three months or less to be cash equivalents.

Accounts Receivable. Accounts receivable are recorded at the amount the Company expects to collect on outstanding balances. Management closely monitors outstanding balances and determines whether certain accounts should be written off during the year. As of December 31, 2020 and 2019, and June 30, 2021, no allowance for doubtful accounts was deemed necessary.

Inventory. The Company’s raw, semi-finished, and finished inventory is valued at the lower of cost (first in, first out) or market value.

Property and Equipment. 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 capitalization policy of $5,000. Expenditures for routine maintenance and repairs on property and equipment are charged to expense.

Income Taxes. Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements. Deferred tax assets and liabilities are included in the consolidated financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future income. A valuation allowance is recorded for deferred tax assets when it is more likely than not that such deferred tax assets will not be realized. Due to the business being considered illegal by the federal government, the Company has opted to take a conservative approach with respect to deferred tax assets related primarily to its net operating losses and has set a valuation allowance equal to those losses. Therefore, no deferred tax assets or tax benefit are presented in these consolidated financial statements. If it is probable that an uncertain tax position will result in a material liability and the amount of the liability can be estimated, then the estimated liability is accrued. If the Company were to incur any income tax liability in the future, interest on any income tax liability would be reported as interest expense, and penalties on any income tax would be reported as income taxes. As of December 31, 2020 and June 30, 2021, there were no uncertain tax positions. The Company is no longer subject to potential income tax examinations by tax authorities in in accordance with the federal statute of limitations.

Advertising. The Company expenses all advertising costs as incurred. Advertising expense for the years ended December 31, 2020 and 2019, and for the six months ended June 30, 2021, were $343,123, $63,859 and $419,047, respectively.

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.

Revenue for the year ended December 31, 2020 was $13,379,709, compared to $4,462,624 for the year ended December 31, 2019, an increase of $6,461,455, or 199% year over year. This increase in revenue from 2019 to 2020. Meanwhile, gross profit and gross margin were $6,461,455 and 48%, respectively for the year ended December 31, 2020, compared to 150,518 and 3%, respectively for the year ended December 31, 2019. The increases in revenues and gross was primarily due to increased sales resulting from our assumption of operational control over the Las Vegas Dispensary and the Reno Dispensary.

These numbers reflect an improvement to overall efficiency of production. Moving forward, we will continue to employ several mechanisms designed to sustain our aggressive trend in the increase of overall efficiency and improved margins, including (1) a more efficient cultivation program (increasing our yield per plant/square foot), (2) automation of some aspects of the production chain and supply chain optimization, (3) economies of scale, and (4) the effective operation of our planned dispensary outlets which will increase revenues while also reducing our cost of labor.

Operating expenses for the year ended December 31, 2020 were $6,807,151, compared to $1,957,719 for the year ended December 31, 2019, an increase of $4,849,433, or 247% year over year. This was primarily due to increased selling, office and administration expense and depreciation and amortization expense resulting from our assumption of operational control over the Las Vegas (Clark County) Dispensary and the Reno Dispensary. The selling, office and administration expenses for the year ended December 31, 2020 were $5,150,686, which equates to 76% of the total operating expenses. The depreciation and amortization expenses for the year ended December 31, 2020 were $1,1313,442, which equates to 19% of the total operating expenses.

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 December 31, 2020, we had cash and cash equivalents of $2,741,087, compared to $247,926 as of December 31, 2019, an increase of $2,493,161. 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.

Net cash provided from (used in) operating activities was $794,763 for the twelve months ended December 31, 2020, compared to ($2,010,390) for the twelve months ended December 31, 2019, an increase of $2,805,153.

Net cash provided from (used in) investing activities was ($13,051,821) for the twelve months ended December 31, 2020, compared to ($9,612,710) for the twelve months ended December 31, 2019, an increase of ($3,341,111) of cash used. In 2020, this primarily consisted in the acquisition of dispensary assets.

Net cash provided from financing activities was $14,750,219 for the twelve months ended December 31, 2020, compared to $11,853,910 for the twelve months ended December 31, 2019, an increase of $2,896,309. In 2019, this primarily consisted of proceeds from debt borrowings. In 2020, this primarily consisted of proceeds from issuance of notes payable and proceeds from the First Reg A+ Offering.

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

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

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.

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.

We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results of operations, liquidity or capital expenditures.

Our revenues and results of operations have fluctuated in the past, and will likely continue to fluctuate, on a quarterly basis. Such fluctuations are the result of a seasonal pattern that reflects variations in customer theater attendance. Our audience attendance is generally greatest during the summer months and slowest in the winter.

We believe that inflation has not had a material impact on our results of operations for the years ended December 31, 2020 and 2019, or for the six months ended June 30, 2021. We cannot assure you that future inflation will not have an adverse impact on our operating results and financial condition.

In connection with the audits of our financial statements for the years ended December 31, 2018 and 2017, our independent public accounting firm identified material weaknesses in our internal control over financial reporting. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses relate to the absence of internal accounting personnel with the ability to properly account for complex transactions and a lack of separation of duties between accounting and other functions.

We hired a consulting firm to advise us on technical issues related to U.S. generally accepted accounting principles as related to the maintenance of our accounting books and records and the preparation of our financial statements. Although we are aware of the risks associated with not having dedicated accounting personnel, we are also at an early stage in the development of our business. We anticipate expanding our accounting functions with dedicated staff and improving our internal accounting procedures and separation of duties when we can absorb the costs of such expansion and improvement with additional capital resources. In the meantime, management will continue to observe and assess our internal accounting function and make necessary improvements whenever they may be required.

Regulation A+ provides that a filer can take advantage of an extended transition period for complying with new or revised accounting standards. We have elected to avail ourselves of this exemption and, therefore, we will not be subject to the same adoption period for new or revised accounting standards as public companies.

We have elected not to become a public reporting company under the Exchange Act. We will be required to publicly report on an ongoing basis under the reporting rules set forth in Regulation A+ for Tier 2 issuers. The ongoing reporting requirements under Regulation A+ are more relaxed than for “emerging growth companies” under the Exchange Act. The differences include, but are not limited to, being required to file only annual and semi-annual reports, rather than annual and quarterly reports. Annual reports are due within 120 calendar days after the end of the issuer’s fiscal year, and semi-annual reports are due within 90 calendar days after the end of the first six months of the issuer’s fiscal year.

We conduct our operations in the United States dollar. We are not materially exposed to foreign exchange rate fluctuations.

We currently have no material exposure to interest rate risk. In the future, we intend to invest our excess cash primarily in money market funds, debt instruments of the United States government and its agencies and in high quality corporate bonds and commercial paper. Due to the short-term nature of these investments, we do not believe that there will be material exposure to interest rate risk arising from our investments.

Unapproved CBD products, including unapproved drugs, cosmetics, foods and products marketed as dietary supplements:

In 2021, the CCB and the applicable county and city regulatory authorities approved the transfer of the licenses to Mystic for the Las Vegas (Clark County) Dispensary and Reno Dispensary. Upon receipt of the requisite approvals, (i) in February 2021, Mystic issued a secured promissory note in the principal amount of $2.8 million to MediFarm LLC with a maturity date of 12 months from the date of issuance bearing interest at an annual rate of 5%, for the remainder of the purchase price for the Las Vegas (Clark County) Dispensary (the “Las Vegas Dispensary Note”), (ii) in August 2021, Mystic issued a secured promissory in the principal amount of $4.2 million note to MediFarm I LLC with a maturity date of 12 months from the date of issuance bearing interest at an annual rate of 5%, for the remainder of the purchase price for the Reno Dispensary (the “Reno Dispensary Note”) and (iii) Mystic issued the Dispensary Shares to Terra Tech in accordance with the terms of the Letter Agreement. As of August 31, 2021, Mystic has repaid the Las Vegas Dispensary Note in full and Mystic’s acquisition of the Las Vegas (Clark County) Dispensary has been completed. As of August 31, 2021, the Reno Dispensary Note remains outstanding. We anticipate using a portion of the net proceeds from this offering to repay the Reno Dispensary Note and complete the acquisition of the Reno Dispensary.

A challenge to consider, as the number of active retail licenses increases, is the density of competition and the effect it can have on the success of a new dispensary operation. The Nevada market is known as home to many organizations that control multiple retail dispensary licenses which can be an obstacle when considering their increased purchasing power, lower retail prices to consumers, vast brand recognition and, in some cases, favorable treatment by governing entities.

We regard our various processes, techniques and other intellectual property associated with the cultivation and production of cannabis and cannabis-related products as proprietary and rely primarily on a combination of trademark and trade secret laws of general applicability, employee confidentiality and invention assignment agreements, and other intellectual property protection methods to safeguard these business assets. We also rely upon our efforts to design and produce new cannabis products, and upon improvements to existing cannabis products, to maintain a competitive position in the market.

We have not applied for patents or copyrights on any of our intellectual property. We have submitted trademark applications for the names and logos of our company and subsidiaries, and for the names of certain of our products. These trademark applications are currently pending approval.

Government authorities in the United States, at the federal, state and local level, and in other countries, extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of products such as those we plan to develop. In the United States, the cultivation, manufacturing, distribution, sale and use of cannabis is subject to regulation at the state and local level, while the current policy and regulations of the federal government and its agencies, including the Drug Enforcement Administration (the “DEA”) and the Food and Drug Administration (the “FDA”), make cannabis illegal under federal law.

In Nevada, the Adopted Regulation of the Cannabis Compliance Board (the “CCB”) provides the general framework for the regulation of commercial medical and recreational cannabis. Nevada’s state cannabis licensing authority is the CCB. Currently, we hold and are in the process of obtaining additional cannabis licenses in Nevada that allow us to cultivate, manufacture, process, distribute wholesale, sell, and deliver cannabis products to medical and recreational cannabis users. See “Our Operations and Strategic Plan” for a description of licenses we have obtained or are in the process of obtaining.

Our Nevada licenses must be renewed every year. Each year, licensees are required to submit a renewal application per state cannabis regulatory guidelines. Provided renewal applications are submitted in a timely manner, we can expect the renewals to be granted in the ordinary course of business.

Following is an overview of laws and regulations in the United States which pertain to our company and planned operations.

Investors are cautioned that in the United States, cannabis is largely regulated at the state level and remains illegal under United States federal law. To date, a total of 36 states, and the District of Columbia, have legalized cannabis in some form. The recreational use of cannabis has been legalized in the District of Columbia and 19 states, including Alaska, Arizona, California, Colorado, Connecticut, Illinois, Maine, Massachusetts, Michigan, Montana, Nevada, New Jersey, New Mexico, New York, Oregon, South Dakota, Vermont, Virginia, and Washington.

Notwithstanding the permissive regulatory environment of cannabis at the state level, cannabis continues to be categorized as a Schedule I controlled substance under the CSA in the United States and, as such, remains illegal under United States federal law. Accordingly, the Company’s business activities, while believed to be compliant with applicable state and local laws, are currently illegal under United States federal law. Unless and until the United States Congress amends the CSA with respect to cannabis, there is a risk that federal authorities may enforce current federal law. The risk of strict enforcement of the CSA in light of congressional activity, judicial holdings, and stated federal policy remains uncertain. Since federal law criminalizing the use of cannabis may preempt state laws legalizing its use, strict enforcement of federal law regarding cannabis would harm our business, prospects, results of operation, and financial condition. There is no guarantee that the Biden administration or future administrations will maintain the low-priority enforcement of federal laws in the cannabis industry that was adopted by the Obama administration. Any change in the federal government’s policy on enforcement of the CSA implementing stricter enforcement could have a material adverse effect on our business, financial condition and results of operations and cause significant financial damage to our business and our stockholders.

Violations of any United States federal laws and regulations could result in significant fines, penalties, administrative sanctions, convictions or settlements, arising from either civil or criminal proceedings brought by either the United States federal government or private citizens, including, but not limited to, property or product seizures, disgorgement of profits, cessation of business activities or divestiture. Such fines, penalties, administrative sanctions, convictions or settlements could have a material adverse effect on us, including, but not limited to, our reputation, our ability to conduct business, our ability to obtain and/or maintain cannabis licenses, whether directly or indirectly, in the United States, the listing of our securities on various stock exchanges, our financial position, operating results, profitability or liquidity, and the eventual market price of our shares.

State and local cannabis laws and regulations in the United States are complex, broad in scope, and subject to evolving interpretations and changes. Compliance with such laws and regulations could require us to incur substantial costs or alter certain aspects of our business. A compliance program is essential to manage regulatory risk. All operating policies and procedures implemented in the operation will be compliance-based and derived from the state regulatory structure governing ancillary cannabis businesses and their relationships to state-licensed or permitted cannabis operators, if any. Notwithstanding our efforts, regulatory compliance and the process of obtaining regulatory approvals can be costly and time-consuming, and no assurance can be given that we will receive the requisite licenses to operate our planned businesses.

Violations of applicable state and local cannabis laws and regulations, or allegations of such violations, could disrupt certain aspects of our business plan and result in a material adverse effect on certain aspects of our planned operations. Additional regulations may be enacted in the future that will be directly applicable to certain aspects of our cultivation, production and dispensary businesses, and our ability to sell cannabis. We cannot predict the nature of any future laws, regulations, interpretations or applications, especially in the United States, nor can it be determined what effect additional governmental regulations or administrative policies and procedures, if and when promulgated, could have on our business.

We will be required to obtain and maintain certain licenses and approvals in the jurisdictions where our operations are based and where our products are sold. There can be no assurance that we will be able to obtain or maintain the necessary licenses or approvals to operate our planned medical and recreational cannabis businesses. Failure to comply with or to obtain the necessary licenses and approvals, or any material delay in obtaining these items, is likely to delay and/or inhibit our ability to conduct our business.

While our management believes that legalization trends are favorable and create a compelling business opportunity for early movers, there is no assurance that those trends will continue and be realized, that existing limited markets will continue to be available, or that any new markets for cannabis will emerge. Our business plan is based on the premise that cannabis legalization will continue to expand, that consumer demand for cannabis will continue to exceed supply for the foreseeable future, and that consumer demand for cannabis for medical and recreational use will grow as legalization expands. If cannabis legalization is scaled back or reversed at the state level, or if the United States federal government increases regulation and prosecution of cannabis-related activities, it could have a material adverse effect on our business, financial condition and results of operations.

Because cannabis is federally illegal to produce and sell in the United States, and because it currently has no federally recognized medical uses, the FDA has historically deferred enforcement related to cannabis to the DEA; however, the FDA has enforced the FDCA (as defined below) with regard to hemp-derived products, especially CBD, sold outside of state-regulated cannabis businesses. If cannabis were to be rescheduled to a federally controlled, yet legal, substance, the FDA would likely play a more active regulatory role with respect to cannabis and cannabis products. In the event that cannabis or any other cannabis products that we develop becomes subject to FDA regulation, our future products may become subject to FDA approval processes for drugs marketed in the United States.

In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act of 1938 (the “FDCA”) and implementing regulations. Drugs are also subject to other federal, state and local statutes and regulations. Biological products are subject to regulation by the FDA under the FDCA, the Public Health Service Act (the “PHSA”), and related regulations, and other federal, state and local statutes and regulations. Biological products include, among other things, viruses, therapeutic serums, vaccines and most protein products. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure to comply with the applicable United States requirements at any time during the product development process, approval process or after approval, may subject an applicant to administrative or judicial sanctions. FDA sanctions could include refusal to approve pending applications, withdrawal of an approval, a clinical hold, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on our business, financial condition and results of operations.

The process required by the FDA before a drug or biological product may be marketed in the United States generally involves the following:

The lengthy process of seeking required approvals and the continuing need for compliance with applicable statutes and regulations require the expenditure of substantial resources. There can be no certainty that approvals will be granted. If a product receives regulatory approval, the approval may be limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product. Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling.

Any drug or biological products that receive FDA approval are subject to continuing regulation by the FDA, including, among other things, record-keeping requirements, reporting of adverse experiences with the product, providing the FDA with updated safety and efficacy information on an annual basis or as required more frequently for specific events, product sampling and distribution requirements, complying with certain electronic records and signature requirements and complying with FDA promotion and advertising requirements, which include, among others, standards for direct-to-consumer advertising, prohibitions against promoting drugs and biologics for uses or in patient populations that are not described in the drug’s or biologic’s approved labeling (known as “off-label use”), rules for conducting industry-sponsored scientific and educational activities, and promotional activities involving the internet. Failure to comply with FDA requirements can have negative consequences, including the immediate discontinuation of noncomplying materials, adverse publicity, enforcement letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties. The FDA also may require post-marketing testing, known as Phase 4 testing, risk minimization action plans and surveillance to monitor the effects of an approved product or place conditions on an approval that could otherwise restrict the distribution or use of the product.

We are subject to environmental, health and safety laws and regulations in each jurisdiction in which we operate. Such regulations govern, among other things, emissions of pollutants into the air, wastewater discharges, waste disposal, the investigation and remediation of soil and groundwater contamination, and the health and safety of our employees. We may be required to obtain environmental permits from governmental authorities for certain of its current or proposed operations. If we violate or fail to comply with these laws, regulations or permits, we could be fined or otherwise sanctioned by regulators. As with other companies engaged in similar activities or that own or operate real property, we face inherent risks of environmental liability at our current and historical production sites. Certain environmental laws impose strict and, in certain circumstances, joint and several liability on current or previous owners or operators of real property for the cost of the investigation, removal or remediation of hazardous substances as well as liability for related damages to natural resources. The costs of complying with current and future environmental and health and safety laws, and any liabilities arising from past or future releases of, or exposure to, regulated materials, may have a material adverse effect on our business, financial condition and results of operations.

As of June 30, 2021, we employed approximately 113 individuals, of which 79 were full-time employees. As of that date, none of our employees were governed by collective bargaining agreements or were members of a union. We consider our relations with our employees to be very good.

All employees of a cannabis business in Nevada must apply for and receive a registered agent card. The agent card is issued by the State of Nevada, and a background check must be completed as part of the application process.

We intend to establish an Advisory Board comprised of investment professionals, scientific researchers and former politicians with experience in the cannabis industry. The Advisory Board is expected to meet periodically with our board of directors and management to discuss matters relating to trends in the cannabis market, efficacy surrounding medical applications of cannabis and our strategic direction. Members of the Advisory board will be reimbursed by us for out-of-pocket expenses incurred in serving on the Advisory Board. We do not expect any Advisory Board members will have a conflict of interest between their obligation to us and their obligations to other companies or organizations.

We manage our business operations from our principal executive offices, which are housed at the same location as our 24,000 square foot cultivation and production facility, at 4145 Wagon Trail Avenue, Las Vegas, Nevada 89118. The lease for our cultivation and production facility/office extends through 2029, under which we currently pay $36,000 per month. We lease our executive office and cultivation and production facility from Green Wagon, LLC, a subsidiary of Green Wagon Holdings, LLC, an entity owned by Lorenzo Barracco, our Chairman and Chief Executive Officer, Daniel V. Perla, a Director, and Alexander Scharf, a Director.

Upon our assumption of operational control over the Las Vegas (Clark County) Dispensary, we assumed the lease agreement for the Las Vegas (Clark County) Dispensary at 1130 Desert Inn Road, Las Vegas, NV 89109, from MediFarm LLC. The lease term expires in May 2024. The scheduled rental payments under the lease agreement are as follows:

Upon our assumption of operational control over the Reno Dispensary, we assumed the lease agreement with Green Wagon Reno, LLC for the Reno Dispensary at 1085 S Virginia Street, Reno, NV 89509, from MediFarm I LLC. We lease the space for the Reno Dispensary from Green Wagon Reno, LLC, a subsidiary of Green Wagon Holdings, LLC, an entity owned by Lorenzo Barracco, our Chairman and Chief Executive Officer, Daniel V. Perla, a Director, and Alexander Scharf, a Director. For 2020, the rent under the lease agreement was $7,500 per month with adjustment upon renewal. Upon renewal in January 1, 2021 the rent increased to $15,000 per month.

In August 2021, we entered into a lease for the building designated for the City of Las Vegas Dispensary located at 6050 Sky Pointe Dr. Las Vegas, NV 89130. We lease the space for the City of Las Vegas Dispensary from Sky Hi, LLC, a single member limited liability company whose managing member is Daniel V. Perla, one of our Directors. The rent under the lease is $15,000 per month.

Total rent expense for the years ended December 31, 2020 and 2019, and for the six months ended June 30, 2021, were $605,061, $214,119, and $449,745, respectively.

On or about September 5, 2019, our subsidiary Qualcan filed an action (the “Action”) against the Nevada Department of Taxation (the “DoT”), which prior to 2020 had been charged with administration of the Nevada Cannabis industry, in the Eighth Judicial District Court, Clark County, Nevada concerning the DoT’s denial of our application for five licenses to own and operate recreational marijuana retail stores in Clark County (Henderson), Clark County (Las Vegas), Clark County (North Las Vegas), Clark County (unincorporated), and Washoe County (Reno). The Action sought, among other things, to (i) find that the DoT improperly denied our applications, (ii) compel the DoT to revoke the conditional licenses previously issued in those jurisdictions to several other companies with whom we compete, and (iii) direct the DoT to issue Qualcan, LLC five conditional licenses for the operation of recreational marijuana establishments in those jurisdictions. Our Action was joined and consolidated with separate lawsuits brought by other plaintiffs challenging the DoT’s issuance of licenses into case No. A-19-787004-B, filed in the Eight District Court, Clark County, Nevada (the “Consolidated Lawsuit”).

On July 27, 2020, Qualcan entered into a Settlement Agreement (the “Settlement Agreement”) with the DoT and other parties to the Consolidated Lawsuit. Under the terms of the Settlement Agreement, Qualcan received two (2) conditional Nevada cannabis dispensary licenses - one for the City of Las Vegas, and one for Carson City. The award of these licenses has been approved by the CCB.

Other than as set forth above, we are not a party to any pending legal proceeding nor is our property the subject of a pending legal proceeding that is not in the ordinary course of business or otherwise material to the financial condition of our business.

Set forth below is information regarding our executive officers, directors and key employees as of the date of this offering circular.

The principal occupations for the past five years of each of our executive officers, directors, nominees and key employees are as follows:

Lorenzo Barracco, our Chairman of the Board and Chief Executive Officer, co-founded our company in June 2014. Mr. Barracco is a businessman, real estate developer and entrepreneur with a strong legal and financial background. Mr. Barracco secured a position on Wall Street as special counsel Lawrence Auriana, co-founder of the Kaufman fund and one of the most respected fund managers in the United States, in 2001. He served as a full-time personal consultant for Mr. Auriana from October 2001 to December 2006, and then moved to Las Vegas and Macau in January 2007 to develop his concept for Dal Toro Ristorante, Car Gallery & Event Center, inside the Palazzo Hotel and Casino and Le Grand Club in the Galaxy Star World Casino Macau. Since 2005, Mr. Barracco has been the majority holder of Barracco Realty/Barbizon 30L LLC, a real estate company with assets in New York, Miami and Las Vegas, and owner of Stella Marina, a company that charters luxury yachts in the Bahamas. Mr. Barracco earned an L.L.M. degree from Northwestern University and is a member of the New York Bar.

As the Chairman, Chief Executive Officer and one of our largest stockholders (through an entity controlled by him), Mr. Barracco leads the Board and guides our company. Mr. Barracco’s history of developing projects in quickly-evolving markets is of significant value to our company’s growing operations. His service as Chairman and Chief Executive Officer creates a critical link between management and the Board.

Michael Cristalli, a member of our board of directors and our President, co-founded our company in June 2014. Mr. Cristalli, who is a founding partner of the Las Vegas law firm Gentile Cristalli Miller Armeni Savarese (GCMAS) in March 2015, is an accomplished trial attorney and has successfully litigated some of the most high-profile cases in the State of Nevada. He is currently a member at Clark Hill Law Firm after a merger with GCMAS in 2019. He has represented clients nationwide and internationally and is regarded as one of the premier litigators in Nevada. His practice currently focuses on cannabis law which includes a constitutional challenge to Nevada’s 2018 retail marijuana application process and conditional licensing. From 2007 to 2009, Mr. Cristalli collaborated in the creation and production and starred in a documentary called The Defenders, which highlighted his practice. The documentary was developed into a CBS network drama also titled The Defenders. From 2009 to 2011, Mr. Cristalli served as an executive consultant on the show and consulted extensively on scripts in collaboration with the writers. Mr. Cristalli has been a legal analyst for MSNBC, has been interviewed on Larry King Live, Greta Van Susteren and Good Morning America, as well as Fox and Friends in the Morning. His cases have been featured on Dateline NBC, CBS 48 Hours, Lifetime and Snapped. Mr. Cristalli currently serves as honorary consul to the Republic of Italy for the State of Nevada. Mr. Cristalli obtained a B.S. degree from the University of Rochester and a J.D. from Syracuse University College of Law.

Mr. Cristalli is well qualified to serve as a director of our company due to his substantial knowledge and years of working experience with Nevada’s cannabis laws and regulations and he has been instrumental in our obtaining licenses for medical and recreational cannabis.

Heather Cranny, a member of our board of directors, and our Chief Financial Officer, Treasurer and Secretary, joined our company in 2014. In 2007, Ms. Cranny joined Dal Toro Ristorante, Car Gallery & Event Center, inside the Palazzo Hotel and Casino, as Director of Finance, where she soon became the Chief Financial Officer, overseeing multiple properties within the restaurant group, throughout the United States and the Caribbean. Ms. Cranny is currently the Chief Financial Officer for Dal Toro Holdings, LLC, a real estate company with properties in New York, Miami and Las Vegas. In 2014, Ms. Cranny’s expertise was instrumental in the application and approval process for both the cultivation and production licenses Qualcan holds today. Ms. Cranny received a B.A. in business from the University of Nevada Las Vegas.

Ms. Cranny has been with the company since its formation and has significant experience in the cannabis industry, making her well qualified to serve as a member of the Board.

Joanna DeFilippis, a member of our board of directors and our Chief Operating Officer, joined our company in July 2019. In 2004, Ms. DeFilippis was part of the opening Food and Beverage team at Wynn Las Vegas, which led her in 2006 to becoming the General Manager at Dal Toro Ristorante, Car Gallery & Event Center, inside the Palazzo Hotel and Casino. From 2014 to 2019, Ms. DeFilippis was the Director of Restaurant Operations at the House of Blues Restaurant and Bar inside Mandalay Bay Hotel and Casino. Ms. DeFilippis earned a B.A. in hospitality management from University of Nevada Las Vegas.

Ms. DeFilippis has in-depth knowledge of our product selection methodologies, making her well qualified to serve as a member of the Board.

Daniel V. Perla became a member of our board of directors in July 2017. Mr. Perla is a certified public accountant and, since 1990, has owned and operated his own accounting practice. Since 1982, Mr. Perla has been a real estate executive. His company, Northern Pamdam, LLC, has built several buildings in New York, New York, including a 100-family dwelling on East 23rd Street, two buildings in SoHo, a new building on East 75th Street, renovated and expanded two buildings on East 34th Street and a medical building on East 71st Street whose prime tenant is Cornell Medical School. In 2006, Mr. Perla expanded Northern Pamdam’s operations into Las Vegas. Mr. Perla also held one of the first mortgage banking licenses in New York State and continues to be a principal business loan and mortgage lender in New York and Las Vegas, through his company, Daniel Perla Associates, L.P. Mr. Perla served in U.S. Naval Air Reserve where he earned the rank of Airline Captain. Mr. Perla earned a B.S. degree in accounting from Brooklyn College and a M.A. degree in finance from Pace University.

Mr. Perla demonstrates extensive knowledge of financial, accounting and operational issues highly relevant to our company’s business. He also brings transactional expertise in real estate development and acquisitions.

Sigmund (Sig) Aronson Rogich became a member of our board of directors in July 2017. He is the former U.S. Ambassador to his native country of Iceland (from 1992 to 1993) and is currently the President of The Rogich Communications Group, a business facilitator, public relations and crisis management firm (which he founded in 1995). Mr. Rogich is widely known for his efforts as the senior media consultant to Republican candidates for office, including Presidents Ronald Reagan and George H.W. Bush, and senior campaign consultant for several former Nevada governors. For the past 40 years, Mr. Rogich has served as an advisor to presidents and leaders in numerous levels of government and industry in Nevada and throughout the United States. As a life-long advocate of public education, Mr. Rogich’s company, R&R Partners, the largest advertising agency in Nevada that he founded in 1973, worked pro bono for successful passage of every school bond initiative to help build new schools and facilities in Clark County, Nevada. He has served as a Regent for the Nevada System of Higher Education and was named an Emeritus Trustee for the University of Nevada at Reno. Mr. Rogich also assisted in the early stages of establishing the William S. Boyd School of Law at the University of Nevada at Reno, the School of Medicine at the University of Nevada at Reno and the Nathan Adelson Hospice. In 2011, he was honored with the Education Hero Award from the Public Education Foundation, an organization that optimizes community and global resources to support and augment public education in Clark County.

Mr. Rogich has in-depth knowledge in the areas of media and advertising, and government relations in particular, making his input invaluable to the Board’s discussions of the company’s branding and public perception.

Alexander Scharf became a member of our board of directors in November 2017. Mr. Scharf is an investor and real estate professional. Since 1997, Mr. Scharf has owned a chain of Esplanade Senior Residences in New York, New York and in upstate New York. Mr. Scharf has invested, built and managed over 3,000 residential units that have sold or converted into condominium ownership, and one of his most noteworthy endeavors was the gut renovation of the landmark Staten Island Hotel into Staten Island’s finest Independent Senior Living Residence. He has built a strong network of partners and investors and launched a fund to invest in NNN (net-net-net leased properties nationwide) and is the owner and operator of many properties throughout the United States, two affordable extended stay hotels in New York, New York, and the Westminster, a luxury triple-A rated four diamond hotel in Livingston, New Jersey. Mr. Scharf earned a B.A. degree in Business from Baruch College, City University of New York.

Mr. Scharf’s extensive experience in leading and managing an expanding multi-location and highly regulated operation makes him well qualified as a member of the Board.

Our board of directors is currently set at seven (7) directors. Upon the completion of this offering, our board of directors will be expanded to nine (9) directors. All directors will hold office until the next annual meeting of our stockholders following their election, and until their successors have been elected and qualified. Executive officers serve at the discretion of our board of directors. There are no family relationships among any of our executive officers, directors or key employees.

When considering whether directors have the experience, qualifications, attributes and skills to enable the board of directors to satisfy its oversight responsibilities effectively in light of our business and structure, the board of directors focuses primarily on the information discussed in each of the directors’ individual biographies as set forth above. With regard to Lorenzo Barracco, Michael Cristalli, Heather Cranny and Joanna DeFilippis, the board considered his or her leadership of our company and in-depth knowledge of the cannabis industry.

The board of directors periodically reviews relationships that directors have with our company to determine whether the directors are independent. Directors are considered “independent” as long as (i) they do not accept any consulting, advisory or other compensatory fee (other than director fees) from us, (ii) are not an affiliated person of our company or our subsidiaries (e.g., an officer or a greater than 10% stockholder) and (iii) are independent within the meaning of applicable United States laws, regulations and the Nasdaq Capital Market listing rules. In this latter regard, the board of directors uses the Nasdaq Marketplace Rules (specifically, Section 5605(a)(2) of such rules) as a benchmark for determining which, if any, of our directors are independent, solely in order to comply with applicable SEC disclosure rules.

The board of directors has determined that, as of August 31, 2021, Messrs. Rogich, Scharf and Perla are independent within the meaning of the Nasdaq Marketplace Rule cited above.

Upon the closing of this offering, our board of directors intends to establish an audit committee, compensation committee, and nomination and corporate governance committee.

Our audit committee, compensation committee, and nomination and corporate governance committee would each comply with the listing requirements of the Nasdaq Marketplace Rules. At least one member of the audit committee will be an “audit committee financial expert,” as that term is defined in Item 407(d)(5)(ii) of Regulation S-K, and each member will be “independent” as that term is defined in Rule 5605(a) of the Nasdaq Marketplace Rules.

We comply with applicable state law with respect to transactions (including business opportunities) involving potential conflicts. Applicable state corporate law requires that all transactions involving our company and any director or executive officer (or other entities with which they are affiliated) are subject to full disclosure and approval of the majority of the disinterested independent members of our board of directors, approval of the majority of our stockholders or the determination that the contract or transaction is intrinsically fair to us. More particularly, our policy is to have any related party transactions (i.e., transactions involving a director, an officer or an affiliate of our company) be approved solely by a majority of the disinterested independent directors serving on the board of directors. Upon the closing of this offering, we will have four (4) independent directors serving on the board of directors.

Nevada Revised Statutes provides for, under certain circumstances, the indemnification of our officers, directors, employees and agents against liabilities that they may incur in such capacities. Below is a summary of the circumstances in which such indemnification is provided.

In general, the statute provides that any director, officer, employee or agent of a corporation may be indemnified against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement, actually and reasonably incurred in a proceeding (including any civil, criminal, administrative or investigative proceeding) to which the individual was a party by reason of such status. Such indemnity may be provided if the indemnified person’s actions resulting in the liabilities: (i) were taken in good faith; (ii) were reasonably believed to have been in or not opposed to our best interests; and (iii) with respect to any criminal action, such person had no reasonable cause to believe the actions were unlawful. Unless ordered by a court, indemnification generally may be awarded only after a determination of independent members of the board of directors or a committee thereof, by independent legal counsel or by vote of the stockholders that the applicable standard of conduct was met by the individual to be indemnified.

The statutory provisions further provide that to the extent a director, officer, employee or agent is wholly successful on the merits or otherwise in defense of any proceeding to which he or she was a party, he or she is entitled to receive indemnification against expenses, including attorneys’ fees, actually and reasonably incurred in connection with the proceeding.

Indemnification in connection with a proceeding by us or in our right in which the director, officer, employee or agent is successful is permitted only with respect to expenses, including attorneys’ fees actually and reasonably incurred in connection with the defense. In such actions, the person to be indemnified must have acted in good faith, in a manner believed to have been in our best interests and must not have been adjudged liable to us, unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expense which such court shall deem proper. Indemnification is otherwise prohibited in connection with a proceeding brought on our behalf in which a director is adjudged liable to us, or in connection with any proceeding charging improper personal benefit to the director in which the director is adjudged liable for receipt of an improper personal benefit.

Nevada corporate law authorizes us to reimburse or pay reasonable expenses incurred by a director, officer, employee or agent in connection with a proceeding in advance of a final disposition of the matter. Such advances of expenses are permitted if the person furnishes to us a written agreement to repay such advances if it is determined that he or she is not entitled to be indemnified by us.

The statutory section cited above further specifies that any provisions for indemnification of or advances for expenses does not exclude other rights under our articles of incorporation, bylaws, resolutions of our stockholders or disinterested directors, or otherwise. These indemnification provisions continue for a person who has ceased to be a director, officer, employee or agent of the corporation and inure to the benefit of the heirs, executors and administrators of such persons.

The statutory provision cited above also grants us the power to purchase and maintain insurance policies that protect any director, officer, employee or agent against any liability asserted against or incurred by him or her in such capacity arising out of his or her status as such. Such policies may provide for indemnification whether or not the corporation would otherwise have the power to provide for it.

At present, we do not maintain directors’ and officers’ liability insurance in order to limit the exposure to liability for indemnification of directors and officers, including liabilities under the Securities Act; however, we are in the process of obtaining such insurance.

The following table sets forth the cash and non-cash compensation awarded to or earned by: (i) each individual who served as the principal executive officer and principal financial officer of our company during the years ended December 31, 2020 and 2019; and (ii) each other individual that served as an executive officer of our company at the conclusion of the years ended December 31, 2020 and 2019 and who received more than $100,000 in the form of salary and bonus during such year. For purposes of this document, these individuals are the “named executive officers” of the Company.

In September 2019, we entered into an employment agreement with Lorenzo Barracco providing for his continued service as our Chief Executive Officer. Under the agreement, Mr. Barracco is entitled to an annual base salary of $250,000 beginning in 2019, rising annually to $500,000 in 2024. The base salary is subject to annual review by our board of directors and could be increased from time to time at the sole discretion of the board. No increases have been awarded to date under the agreement. Under the agreement, Mr. Barracco is eligible to receive an annual performance bonus at the discretion of the board of directors or the compensation committee of the board of directors. No performance bonuses have been awarded to date under the agreement. The agreement also provides that Mr. Barracco is eligible to participate in the company’s incentive stock option plan, and grants Mr. Barracco 5.2 million stock options to purchase common stock. In the event that the company terminates the employment of Mr. Barracco without “Cause” and upon the occurrence of certain other events as described in the agreement, Mr. Barracco is entitled to receive from the company a lump sum severance payment in the amount of $10 million, payable within 30 days after such termination, and his pro-rata portion of any performance bonus accrued on or prior to such termination, among other benefits.

In September 2019, we entered into an employment agreement with Michael Cristalli providing for his continued service as our President. Under the agreement, Mr. Cristalli is entitled to an annual base salary of $150,000 beginning in 2020, rising annually to $350,000 in 2024. The base salary is subject to annual review by our board of directors and could be increased from time to time at the sole discretion of the board. No increases have been awarded to date under the agreement. Under the agreement, Mr. Cristalli is eligible to receive an annual performance bonus at the discretion of the board of directors or the compensation committee of the board of directors. No performance bonuses have been awarded to date under the agreement. The agreement also provides that Mr. Cristalli is eligible to participate in the company’s incentive stock option plan, and grants Mr. Cristalli 4 million stock options to purchase common stock. In the event that the company terminates the employment of Mr. Cristalli without “Cause” and upon the occurrence of certain other events as described in the agreement, Mr. Cristalli is entitled to receive from the company a lump sum severance payment in the amount of $2 million, payable within 30 days after such termination, and his pro-rata portion of any performance bonus accrued on or prior to such termination, among other benefits.

In September 2019, we entered into an employment agreement with Heather Cranny providing for her continued service as our Chief Financial Officer. Under the agreement, Ms. Cranny is entitled to an annual base salary of $100,000 beginning in 2019, rising annually to $200,000 in 2024. The base salary is subject to annual review by our board of directors and could be increased from time to time at the sole discretion of the board. No increases have been awarded to date under the agreement. Under the agreement, Ms. Cranny is eligible to receive an annual performance bonus at the discretion of the board of directors or the compensation committee of the board of directors. No performance bonuses have been awarded to date under the agreement. The agreement also provides that Ms. Cranny is eligible to participate in the company’s incentive stock option plan, and grants Ms. Cranny 510,000 stock options to purchase common stock. In the event that the company terminates the employment of Ms. Cranny without “Cause” and upon the occurrence of certain other events as described in the agreement, Ms. Cranny is entitled to receive from the company a lump sum severance payment in the amount of $2 million, payable within 30 days after such termination, and her pro-rata portion of any performance bonus accrued on or prior to such termination, among other benefits.

In September 2019, we entered into an employment agreement with Joanna DeFilippis providing for her continued service as our Chief Operating Officer. Under the agreement, Ms. DeFilippis is entitled to an annual base salary of $150,000 beginning in 2020, rising annually to $200,000 in 2024. The base salary is subject to annual review by our board of directors and could be increased from time to time at the sole discretion of the board. No increases have been awarded to date under the agreement. Under the agreement, Ms. DeFilippis is eligible to receive an annual performance bonus at the discretion of the board of directors or the compensation committee of the board of directors. No performance bonuses have been awarded to date under the agreement. The agreement also provides that Ms. DeFilippis is eligible to participate in the company’s incentive stock option plan, and grants Ms. DeFilippis 310,000 stock options to purchase common stock. In the event that the company terminates the employment of Ms. DeFilippis without “Cause” and upon the occurrence of certain other events as described in the agreement, Ms. DeFilippis is entitled to receive from the company a lump sum severance payment in the amount of $2 million, payable within 30 days after such termination, and her pro-rata portion of any performance bonus accrued on or prior to such termination, among other benefits.

In September 2019, Mystic adopted its Employee Incentive Stock Option Plan (the “Plan”). Under the terms of the Plan, up to 13,000,000 shares of common stock may be granted. The Plan is administered by the compensation committee, or the board of directors in the absence of the compensation committee. 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 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.

As of December 31, 2020, we had granted stock options to purchase 13,000,000 shares of common stock to our executives and other employees under the Plan. As of August 31, we had granted stock options to purchase 13,000,000 shares of common stock to our executives and other employees.

No other cash or non-cash compensation was awarded to or earned by any individual who served as a member of our board of directors during the year ended December 31, 2020.

We do not currently compensate our non-management directors. Following the completion of this offering, we intend to compensate each non-management director through annual stock option grants and by paying a cash fee for each board of directors and committee meeting attended. Our board of directors will review director compensation annually and adjust it according to then current market conditions and good business practices.

Other than described below, there have been no transactions during the last two years, or proposed transactions, to which we were or will be a party, in which any director, executive officer, beneficial owner of more than 5% of our common stock or any member of the immediate family (including spouse, parents, children, siblings and in-laws) of any of these persons, had or is to have a direct or indirect material interest.

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

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 $1 million to Sky Hi, LLC, in exchange for an option to purchase the real estate for the City of Las Vegas Dispensary. See “Our Business – Real Estate Purchase Options” for a description of the Real Estate Purchase Options transactions.

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 expenses paid to Stella Marina, LLC for the six-month period ended June 30, 2021 and June 30, 2020 were $77,433 and 91,000, respectively.

In all cases, we abide by applicable state corporate law when approving all transactions, including transactions involving officers, directors and affiliates. More particularly, our policy is to have any related party transactions (i.e., transactions involving a director, an officer or an affiliate of our company) be approved solely by a majority of the disinterested independent directors serving on the board of directors.

The following table sets forth the number and percentage of our outstanding shares of common stock beneficially owned as of August 31, by:

Shares beneficially owned and percentage ownership before this offering is based on 111,338,805 shares of common stock outstanding as of August 31, 2021. Percentage ownership after this offering is based on 144,338,805 shares of common stock outstanding immediately after the closing of this offering (assuming the maximum number of shares is sold), and assumes that none of the beneficial owners named below purchases shares in this offering.

Beneficial ownership is determined in accordance with the rules of the SEC, and includes general voting power and/or dispositive power with respect to securities. Shares of common stock issuable upon exercise of stock options or warrants that are currently exercisable or exercisable within 60 days of the record rate, and shares of common stock issuable upon conversion of other securities currently convertible or convertible within 60 days, are deemed outstanding for computing the beneficial ownership percentage of the person holding such securities but are not deemed outstanding for computing the beneficial ownership percentage of any other person. Under applicable SEC rules, each person’s beneficial ownership is calculated by dividing the total number of shares with respect to which they possess beneficial ownership by the total number of our outstanding shares. In any case where an individual has beneficial ownership over securities that are not outstanding, but are issuable upon the exercise or conversion of options, warrants or convertible securities within the next 60 days, the same number of shares is added to the denominator in the calculation described above. Because the calculation of each person’s beneficial ownership set forth in the “Percentage Beneficially Owned” columns of the table may include shares that are not presently outstanding, the sum total of the percentages set forth in such columns may exceed 100%. Unless otherwise indicated, the address of each of the following persons is 4145 Wagon Trail Avenue, Las Vegas, Nevada 89118, and each such person has sole voting and dispositive power with respect to the shares set forth opposite his, her or its name.

The following table sets forth the number and percentage of our outstanding shares of common stock beneficially owned as of August 31, as adjusted assuming maximum participation in the Exchange Offer:

The following is a description of our capital stock and the material provisions of our articles of incorporation, bylaws and other agreements to which we and our stockholders are parties, in each case upon the initial closing of this offering.

Our authorized capital stock consists of 499,850,000 shares of common stock, par value $0.001 per share, and 150,000 shares of preferred stock, par value $0.001 per share, which preferred stock shares have been designated as series A preferred stock. As of August 31, 2021, there were 111,338,805 shares of our common stock outstanding and held of record by approximately 4,606 stockholders. After giving effect to the closing of this offering, if the maximum number of shares is sold, 144,338,805 shares of common stock will be outstanding. Each such outstanding share of our common stock will be validly issued, fully paid and non-assessable.

A description of the material terms and provisions of our articles of incorporation that will be in effect at the closing of this offering and affecting the rights of holders of our capital stock is set forth below. The description is intended as a summary only.

The holders of our common stock are entitled to one vote for each outstanding share of common stock owned by that stockholder on every matter properly submitted to the stockholders for their vote. Stockholders are not entitled to vote cumulatively for the election of directors. Except for the election of directors, which are elected by a plurality vote, a majority vote of common stockholders is generally required to take action under our articles of incorporation and bylaws.

Holders of our common stock have no conversion, redemption, preemptive, subscription or similar rights.

On July 8, 2021, the Company designated a series of preferred stock as series A preferred stock, par value of $0.001 per share, consisting of 150,000 shares. A summary of the rights and preferences of the series A preferred stock is as follows:

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. Each share of series A preferred stock is convertible at the option of the holder, into one share of our common stock.

Three of the directors of the Company will be designated by the holders of the series A preferred stock (the “Series A Directors”). Each Series A Director will serve as a Series A Director until the holders of at least a majority of the then outstanding shares of series A preferred stock, voting as a separate class, name a replacement for each Series A Director.

Additionally, the Certificate of Designation of Rights, Preferences and Privileges of Series A Preferred Stock contains protective provisions, which precludes the Company from taking certain actions without the approval of the majority of the holders of series A preferred stock. So long as any shares of series A preferred stock are outstanding, the Company will not, without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least a majority of the then outstanding shares of series A preferred stock, voting as a separate class:

The important terms of the debentures issued in our 2019 Private Placements are set forth below. The debentures are identical for each investor except for the principal amount and issuance and maturity dates.

Conversion. 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 $0.23 per share and the conversion price of the debentures issued in the Second 2019 Private Placement is $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.

Maturity. Under the terms of the debentures as originally issued, 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. In July 2020, we extended the maturity of our $0.23 8% convertible debentures until January 2021, having received the consent of the holders of a majority of the $0.23 8% convertible debentures. In September 2020, we extended the maturity of our $0.60 8% convertible debentures until March 2021, having received the consent of the holders of a majority of the $0.60 8% convertible debentures. Accordingly, as of August 31, 2021, the debentures have matured and the Company has an obligation to repay the debentures with interest, of which $441,646 in aggregate principal amount remains outstanding.

Interest. The debentures bear interest at an annual cumulative rate of 8.0%, due and payable in cash on the maturity date.

Redemption. The debentures are not be redeemable by us or subject to voluntary prepayment prior to maturity.

Purchasers of debentures issued in our 2019 Private Placements may be entitled to receive a two-year warrant to purchase a number of shares of Mystic common stock equal to 25% of the number of shares into which the purchased debentures are convertible, subject to certain conditions.

On January 20, 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 the date hereof, 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.

Limitations on Directors’ Liability; Indemnification of Directors and Officers

As permitted by Nevada corporate law, our articles of incorporation provide that no director will be liable to us or our stockholders for monetary damages for breach of certain fiduciary duties as a director. The effect of this provision is to restrict our rights and the rights of our stockholders in derivative suits to recover monetary damages against a director for breach of certain fiduciary duties as a director, except that a director will be personally liable for:

This provision does not affect a director’s liability under the federal securities laws.

Our articles of incorporation do not contain any provisions that may be deemed to have an anti-takeover effect or may delay, deter or prevent a tender offer or takeover attempt that a stockholder might consider to be in its best interests.

Several provisions of our bylaws could discourage potential acquisition proposals and could delay or prevent a change in control of our company even if that change in control would be beneficial to our stockholders. Mystic’s bylaws provide (i) for supermajority voting in some circumstances, including mergers and consolidations, and (ii) that the power to determine the number of directors and to fill vacancies be vested solely in the Board, so that the incumbent board, not a raider, would control vacant board positions.

Additionally, the Certificate of Designation of our series A preferred stock contains protective provisions that could discourage potential acquisitions and could delay or prevent a change in control of our company. See “Description of Securities – Preferred Stock” for a summary of the rights and preferences of the series A preferred stock.

In general, the Nevada Revised Statutes prohibit a Nevada corporation that is a public company from engaging in any “business combination” (as defined below) with any “interested stockholder” (defined generally as an entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with such entity or person) for a period of three years following the date that such stockholder became an interested stockholder, unless: (1) prior to such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; (2) on consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned (x) by persons who are directors and also officers and (y) by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or (3) on or subsequent to such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.

Nevada Revised Statutes define “business combination” to include: (1) any merger or consolidation involving the corporation and the interested stockholder; (2) any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder; (3) subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; (4) any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or (5) the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

While certain provisions of Nevada corporate law may have an anti-takeover effect, these provisions are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and in the policies formulated by the board, and to discourage certain types of transactions that may involve an actual or threatened change of control. In that regard, these provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions also are intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our common stock that could result from actual or rumored takeover attempts. Such provisions also may have the effect of preventing changes in our management.

The transfer agent and registrar for our shares of common stock is Equiniti Trust Company, located in Mendota Heights, MN.

To date, we have never paid or declared any cash dividends on our common stock. We currently intend to retain any future earnings to finance the operation and development of our business and we do not expect to pay any cash dividends on our common stock in the foreseeable future. Payment of future dividends, if any, will be at the discretion of our board of directors and will depend on a number of factors, including, but not limited to, our financial condition, results of operations, capital requirements, restrictions contained in future financing instruments, general business conditions, and other factors our board of directors deems relevant.

Olshan Frome Wolosky LLP, New York, New York, will pass upon the validity of the issuance of the shares of our common stock being offered by this offering circular as our counsel.

The consolidated financial statements of Mystic Holdings, Inc. as of December 31, 2020 and 2019 and for each of the two years in the period ended December 31, 2020 included in this offering circular have been so included in reliance on the report of K.K. Mehta CPA Associates PLLC, an independent certified public accounting firm, appearing elsewhere herein, given on the authority of said firm as experts in auditing and accounting.

We have filed with the SEC a Regulation A Offering Statement on Form 1-A under the Securities Act with respect to the shares of common stock offered hereby. This offering circular, which constitutes a part of the offering statement, does not contain all of the information set forth in the offering statement or the exhibits and schedules filed therewith. For further information about us and the common stock offered hereby, we refer you to the offering statement and the exhibits and schedules filed therewith. Statements contained in this offering circular regarding the contents of any contract or other document that is filed as an exhibit to the offering statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the offering statement. Upon the initial closing of this offering, we will be required to file periodic reports, proxy statements, and other information with the SEC pursuant to the Exchange Act. You may read and copy this information at the SEC’s Public Reference Room, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers, including us, that file electronically with the SEC. The address of this site is www.sec.gov.

We have audited the accompanying consolidated financial statements of Mystic Holdings Inc. and Affiliates, which comprise the consolidated balance sheets as of December 31, 2020 and 2019 and the related consolidated statements of income, stockholders’ equity, and cash flows for the years then ended, and the related notes to the financial statements.

In our opinion, the 2020 and 2019 financial statements referred to above present fairly, in all material respects, the financial position of Mystic Holdings Inc. and Affiliates, as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Mystic Holdings Inc. and Affiliates and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Mystic Holdings Inc. and Affiliates’ ability to continue as a going concern within one year after the date that the financial statements are available to be issued.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements, including omissions, are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with generally accepted auditing standards, we:

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

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.

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.

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.

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.

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

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.

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 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. At December 31, 2020, approximately $1,190,922 exceeded the FDIC limit.

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.

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 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 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.

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 December 31, 2020 and 2019.

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 December 31, 2020 and 2019.

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.

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:

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.

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:

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 comprises primarily of security deposits for purchase of cannabis related equipment to be used in cultivation facility. The deposits will be classified to Property and Equipment once the purchase is final.

The Company accounts for its business acquisitions in accordance with ASC 805-10, “Business Combinations.” The Company allocates the total cost of the acquisition to the underlying net assets based on their respective estimated fair values. As part of this allocation process, the Company identifies and attributes values and estimated lives to the intangible assets acquired. These determinations involve significant estimates and assumptions regarding multiple, highly subjective variables, including those with respect to future cash flows, discount rates, asset lives, and the use of different valuation models, and therefore require considerable judgment. The Company’s estimates and assumptions are based, in part, on the availability of listed market prices or other transparent market data. These determinations affect the amount of amortization expense recognized in future periods. The Company bases its fair value estimates on assumptions it believes to be reasonable but are inherently uncertain.

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 Company expenses all advertising costs as incurred. Advertising expense for the years ended December 31, 2020 and 2019 were $343,123 and $63,859, respectively.

On March 2020, the company received qualification from the US Securities and Exchange commission to proceed with the offering. The company continued a securities offering started in 2020 where company will be offering up to 50 million shares of common stock in a securities offering exempt from SEC registration under Regulation A, tier 2. On December 31, 2020, the Company completed a partial closing in the amount of $7,551,667 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”).

As of December 31, 2020, and 2019, the company carried accounts receivable of $119,018 and $261,425 respectively. The industry in which the company operates does not have large amount 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 December 31, 2020 and 2019. As of December 31, 2020, and 2019, no allowance for doubtful accounts was deemed necessary.

Inventories are valued at the lower of cost and net realizable value. Cost is determined using the average cost method, which approximates cost determined by the first-in, first-out method. At December 31, 2020 and 2019, Company did not recognize any obsolete in inventory due to impairment or damages in its inventory. As of the date of this report, the COVID-19 pandemic has not adversely affected the valuation of the Company’s finished products, work in process or raw material inventories.

On May 8, 2019, Picksy LLC (“Purchaser”), a wholly owned subsidiary of Mystic Holdings Inc., entered into Asset Purchase Agreement with MediFarm LLC (“Seller”), for the purchase of MediFarm LLC’s Blum-Desert Inn distribution facility at the purchase price of $10 million. The closing of the purchase agreement was contingent upon obtainment of approval from state of Nevada for the sale and transfer of seller’s existing Cannabis Dispensary license to Purchaser, as well as all associated state or county business licenses or permits. The company received approval of the transfer of interest (TOI) from the Cannabis Compliance Board (CCB), the State regulatory agency in December 2020.

On November 1, 2019, the company entered into an agreement to assume all management responsibilities over the operations of Blum Desert Inn distribution facility. As per the agreement, Picksy LLC would realize all the benefits and bear risks arising from the operations of Desert Inn distribution facility, as well as complete managerial authority over the operations making the Picksy LLC the primary beneficiary of Blum Desert Inn upon execution of the agreement. As per ASC 810-10 “Consolidation”, the company consolidated the financial position and result of operations as of November 1, 2019. Picksy LLC recorded its business combinations as per ASC 805-10 on November 1, 2019 when operational control was transferred from MediFarm LLC. The purchase price was adjusted downward to $9.8M to give an adjustment to inventory acquired as of November 1, 2019. $1.4M of the purchase price was allocated to tangible assets including inventory, $6.2 million of the purchase price was allocated to intangible assets, and the balance of $2.1 million was attributed to goodwill. (See Note 19- “Intangible Asset and Goodwill”).

On August 19, 2019, Picksy Reno LLC, (“Purchaser”), a wholly owned subsidiary of Mystic Holdings entered into Asset Purchase Agreement with the MediFarm I LLC (“Seller”), for the purchase of distribution facility located at Reno at the purchase price of $13.5 million. As per the agreement, the payments will consist of $9.3 million in cash and $4.2 million in a 12-month promissory note bearing 5% interest. The closing of this purchase agreement is contingent upon obtainment of approval from state and local governmental authorities for the sale and transfer of Seller’s existing State licenses to Purchaser, as well as all associated State or County business licenses and permits. The operational control of the Reno distribution facility was not transferred until January 1, 2020. The company received approval of the transfer of interest (TOI) from the Cannabis Compliance Board (CCB), the State regulatory agency in December 2020.

On January 1, 2020, Picksy Reno, LLC (‘Picksy”), a wholly owned subsidiary of Mystic Holdings Inc., entered into a Management Services Agreement with MediFarm I LLC, an unaffiliated third party, to take all management responsibilities of the MediFarm I LLC’s dispensary located at 1085 S Virginia Street, Reno, NV. In consideration of the services performed, the company will be entitled to 85% of the future net profits of the Reno Dispensary. In the event of a loss, the company will be responsible for all future shortfalls. MediFarm’ s 15% interest in the future net income of the Reno Dispensary will be applied to the selling price of related asset sale.

On October 22, 2020, in reference to Asset Purchase agreement dated on August 19, 2019 between MediFarm I LLC (the “Seller”) and Picksy Reno LLC (the “Purchaser”), the parties entered into an agreement pursuant to which Terra Tech Corp. (“Terra Tech”), Seller’s parent corporation elected to substitute the cash portion of adjusted Purchase Price of $8,332,096 for 8,332,096 shares of Mystic (Purchaser parent corporation) common stock. Mystic issued certificate representing the shares to Terra Tech within two business days after the approval of Nevada Cannabis Compliance Board (the “CCB”).

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

Depreciation expense for the years ended December 31, 2020 and 2019 was $465,606 and $361,944, respectively.

From time to time the Company is involved in transactions with related parties. The Company had the following balances due from (to) related parties as of December 31:

Dal Toro Holdings II, LLC is one of the stockholders of the Company. The balances due to this related entity as of December 31, 2020 and 2019 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 December 31, 2020 and 2019 are due on demand and bear no interest. During the year 2020, Employees4Hire, LLC were paid $1.1 million, of which $313,533 as a final reconciliation settlement.

Green Wagon Holdings, LLC is an entity controlled by related parties of the Company and leases building space to the Company on a month to month basis as further explained in Note 18. The balances due (to) from this related entity as of December 31, 2020 and 2019 are due on demand and bear no interest.

Ketores Holdings, LLC is one of the stockholders of the Company. The balances due to this related entity as of December 31, 2020 and 2019 are due on demand and bear no interest.

Panorama Crest, LLC is one of the stockholders of the Company. The balances due to this related entity as of December 31, 2020 and 2019 are due on demand and bear no interest.

Related individual is a family member of one of the stockholders of the Company. The balances due to the related individual as of December 31, 2019 began bearing interest in September 2018 at 10% per annum, with a maturity date of December 31, 2019. The balance due is fully paid off as of December 31^st, 2020.

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.

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.

As presented in Note 21, the company effected a stock split which was approved by Board of Directors on September 8, 2019 and initially filed with the Secretary of State of Nevada on September 10, 2020 (the “Stock Split”). The number of common voting shares of Qualcan Canada into which the Note Payable to Qualcan Canada (the “Note”) is convertible already accounted for the effect of the Stock Split. There is no further adjustment to the number of shares into which the Note may be converted as a result of the Stock Split.

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 December 31, 2020 and 2019, are $441,646 and $7,392,240 respectively. The company accrued interest of $687,343 and $167,577 for year 2020 and 2019 respectively. Upon conversion of debentures, the accrued interest till conversion date amounted $854,920 was terminated. The accrued interest booked for year 2019 is reported as “Other Income”.

In October 2017, the Company entered into a consultation agreement with Western Desert Holdings, LLC, and a former stockholder. Under the terms of this agreement, the Company incurred consulting expenses of $360,000 and $270,000 for the years ended December 31, 2020 and 2019, respectively, which is included on the accompanying statements of income under the caption “Professional fees”. Future consulting expenses to be incurred by the Company in accordance with this agreement are estimated to be $60,000 for the year ended December 31, 2021.

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 December 31, 2020 and 2019, 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 December 31, 2020 and 2019. Generally, the tax years before 2017 are no longer subject to examination by federal, state or local taxing authorities.

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 was no matters that required an accrual as of December 31, 2020 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 parties executed a settlement agreement, which, among other terms, provides for a payment of $1,250,000 by us. The settlement is subject to final court approval. The settlement amount is reflected in other current liabilities on our consolidated balance sheets as of December 31, 2020.

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.

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 company assumed the prior lease agreement between Green Wagon Reno, LLC and MediFarm I, LLC upon taking control over MediFarm I LLC for it Blum Reno facility as on January 1, 2020. The rent per lease agreement is $7,500 with adjustment upon renewal.

Total rent expense for the years ended December 31, 2020 and 2019 were $605,061 and $214,119, respectively.

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 December 31, 2020 and 2019 was $4.8 million and $2.1 million, respectively and was attributed to the Cannabis reportable segment.

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

The Company recorded amortization expense of $1,178,015 and $74,944 for the years ended December 31, 2020 and 2019, respectively. Based solely on the amortizable intangible assets recorded at December 31, 2020, the Company estimates amortization expense for the next five years to be as follows:

Actual amortization expense to be reported in future periods could differ from these estimates as a result of new intangible asset acquisitions, changes in useful lives or other relevant factors or changes.

On July 27, 2020, the company reached a settlement with the State of Nevada, Department of Taxation where the Company was assigned two Cannabis Dispensary licenses in City of Las Vegas and Carson City.

On September 8, 2019, the Company’s Board of Directors authorized a 14,350.143-for-1 split of Mystic common stock, increasing the outstanding shares of company common stock from 4,878 to 70,000,000. The Stock Split was effective subsequent to filing of amendment to Certificate of Article of Incorporation to the Secretary of State of Nevada dated on September 10, 2020. However, the amended certificate filed on September 10, 2020 did not indicate par value, the Secretary of State of Nevada required the company to re-submit the certificate of amendment to article of incorporation. On December 3, 2020 the company filed revised Certificate of Amendment to the Articles of Incorporation effective from the date of filing with an indicated par value for the shares of $0.001 (the “December Certificate”). Fractional shares resulting from the Stock Split were rounded up to the next whole number. All share and earnings per share information have been retroactively adjusted to reflect the stock split.

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.

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

At December 31, 2020, 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 year-end December 31, 2020, is summarized as follows:

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 December 31, 2020.

In March 2020, the World Health Organization categorized the novel Coronavirus (“COVID-19”) as a pandemic, and the President of the United States of America (“U.S.”) declared the COVID-19 outbreak a national emergency. The spread of the outbreak has caused significant disruptions in the U.S. and global economies, and economists expect the impact will potentially be significant beyond 2020. The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The Company continues to evaluate the global risks and the slowdown in business activity related to COVID-19, including the potential impacts on its employees, customers, suppliers and financial results. As the situation surrounding COVID-19 remains fluid, it is expected to continue having a negative impact to the Company; however, it is difficult to predict the duration of the pandemic and its continued impact on the Company’s business, operations, financial condition and cash flows. There is no certainty that federal, state or local regulations regarding safety measures to address the spread of COVID-19 will not adversely impact the Company’s operations. As of this report, all of the Company’s facilities were open and able to operate at normal capacities. Additionally, as the COVID-19 pandemic progressed, the Company initiated cost reduction actions, including the hiring freezes, employee furloughs, staffing and force reductions, salary reductions, and rent reduction to help mitigate the financial impact of the COVID-19 pandemic. The Company also froze all discretionary spend, implemented strict approvals for capital expenditures and aggressively managed working capital. The Company continues to evaluate further or continued actions as circumstances warrant

In December 2019, the FASB issued an accounting standard update 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 evaluating the adoption date and impact, if any, adoption will have on its financial position and results of operations.

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842).” ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. This amendment will be effective for private companies and emerging growth companies for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The FASB issued ASU No. 2018-10 “Codification Improvements to Topic 842, Leases” and ASU No. 2018-11 “Leases (Topic 842) Targeted Improvements” in July 2018, and ASU No. 2018-20 “Leases (Topic 842) - Narrow Scope Improvements for Lessors” in December 2018. ASU 2018-10 and ASU 2018-20 provide certain amendments that affect narrow aspects of the guidance issued in ASU 2016-02. ASU 2018-11 allows all entities adopting ASU 2016-02 to choose an additional (and optional) transition method of adoption, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The company currently evaluating the impact that this guidance will have on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments - Credit Losses (Topic 326)” and also issued subsequent amendments to the initial guidance under ASU 2018-19, ASU 2019-04 and ASU 2019-05 (collectively Topic 326). Topic 326 requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. This replaces the existing incurred loss model with an expected loss model and requires the use of forward-looking information to calculate credit loss estimates. We will be required to adopt the provisions of this ASU on January 1, 2023, with early adoption permitted for certain amendments. Topic 326 must be adopted by applying a cumulative effect adjustment to retained earnings. The adoption of Topic 326 is not expected to have a material impact on our consolidated financial statements or disclosures.

In accordance with ASC 855, the Company evaluated subsequent events through April 28, 2021, the date these financial statements were issued.

On January 20, 2021, Mystic Holdings, Inc. (the “Company”) issued a Secured Convertible Promissory Note (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. 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 the date hereof, 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.

On March 26, 2021, Mystic Holdings, Inc. (the “Company”) completed an additional partial closing in the amount of $3,520,175 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”), bringing the total proceeds from closed sales of the Company’s common stock pursuant to the Offering to $11,071,842.

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. The settlement is subject to final court approval. The settlement amount is reflected in other current liabilities on our consolidated balance sheets as of December 31, 2020. (See Note 16- “Commitments and Contingencies”).

We have audited the financial statements of Mystic Holdings, Inc. and Affiliates, as of and for the period ended December 31, 2020 and 2019, and our report thereon dated April 28, 2021, which expressed an unmodified opinion on those financial statements, appears on page 2. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The supplemental information is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

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.

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

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.

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.

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.

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

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

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

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.

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

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:

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.

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.

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.

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.

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.

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

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.

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:

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.

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

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.

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.

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.

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

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

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

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:

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.

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.

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.

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).

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Las Vegas, State of Nevada, on September 9, 2021.

This offering statement has been signed by the following persons in the capacities and on the dates indicated.

OFFERING CIRCULAR SUMMARY	1
THE OFFERING	8
RISK FACTORS	9
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS	19
USE OF PROCEEDS	20
CAPITALIZATION	21
DILUTION	22
PLAN OF DISTRIBUTION	23
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	26
OUR BUSINESS	33
MANAGEMENT	43
EXECUTIVE COMPENSATION	48
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	50
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS	51
DESCRIPTION OF SECURITIES	53
DIVIDEND POLICY	58
LEGAL MATTERS	58
EXPERTS	58
WHERE YOU CAN FIND MORE INFORMATION	58
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS	F-1

Assumed Percentage of Shares Sold		100%		75%		50%		25%
Price to public	$	50,000,000	$	37,500,000	$	25,000,000	$	12,500,000
Offering expenses	$	250,000	$	225,000	$	212,500	$	200,000
Net proceeds	$	49,750,000	$	37,275,000	$	24,787,500	$	12,300,000

Repayment of Reno Dispensary Note	$	4,200,000	$	4,200,000	$	4,200,000	$	4,200,000
Anticipated construction costs for City of Las Vegas Dispensary, Carson City Dispensary, and Cannabis Lounge	$	3,000,000	$	3,000,000	$	3,000,000	$	3,000,000
Cost to exercise Real Estate Purchase Options	$	8,400,000	$	8,400,000	$	8,400,000	$	3,100,000
Potential additional acquisitions and investments	$	21,600,000	$	13,600,000	$	3,600,000	$	1,000,000
Working capital and general corporate purposes	$	12,550,000	$	8,075,000	$	5,587,000	$	1,000,000
Total use of proceeds	$	49,750,000	$	37,275,000	$	24,787,500	$	12,300,000

	●	on an actual basis;

		pro forma to give effect to the Exchange Offer, assuming maximum participation; and

	●	on an as adjusted basis after giving the effect to the sale of 33,333,333 shares of our common stock in this offering at the price to the public of $1.50 per share, resulting in net proceeds to us of $49,750,000 (after deducting our estimated offering expenses of $250,000).

	Actual			Pro Forma to give effect to the Exchange Offer Assuming Maximum Participation			As Adjusted for this Offering Assuming Maximum Amount
	(unaudited)			(unaudited)			(unaudited)
Short-term debt	$	8,001,509		$	8,001,509		$	8,001,509

Long-term debt, net of current portion	$	0		$	0		$	0

Stockholders’ (deficit) equity:
Series A preferred stock	$	-		$	111		$	-
Common stock	$	145,421		$	145,310		$	178,754
Additional paid-in capital	$	35,487,734		$	35,487,734		$	85,454,040
Treasury stock	$	(34,082	)	$	(34,082	)	$	(34,082	)
Accumulated deficit	$	(9,706,504	)	$	(9,706,504	)	$	(9,956,504	)
Total stockholders’ (deficit) equity	$	25,892,209		$	25,892,209		$	75,642,208

Total capitalization	$	33,893,718		$	33,893,718		$	83,893,717

	Number of		Purchased			Total		Consideration
	Shares		Percent			Amount		Percent

Existing stockholders		111,338,305		77.0	%	$	35,666,877		41.6	%
New investors		33,333,333		23.0	%	$	50,000,000		58.4	%
Total		144,672,138		100.0	%	$	85,666,877		100.0	%

(1)	This offering is being conducted on a “best efforts” basis by our officers and directors and not through a placement agent or other registered broker-dealer who is paid sales commissions.

(2)	We estimate the total expenses of this offering, including fees and expenses for marketing and advertising of the offering, media expenses, promotional expenses, fees for administrative, accounting, audit and legal services, fees for EDGAR document conversion and filing, website posting fees and transfer agent and registrar fees, will be $250,000 if the maximum number of shares is sold in this offering. Because this is a best efforts offering, the actual public offering amount and proceeds to us are not presently determinable and may be substantially less than the total maximum offering set forth above. See “Plan of Distribution” beginning on page 23 of this offering circular for more information on this offering.

	●	exposure to unknown or unanticipated liabilities, including foreign laws we are unfamiliar with;

	●	disruption of our business and diversion of our management’s time and attention in order to develop acquired products or technologies;

	●	incurrence of substantial debt or dilutive issuances of equity securities to pay for acquisitions, which we may not be able to obtain on favorable terms, if at all;

	●	higher than expected acquisition and integration costs;

	●	write-downs of assets or goodwill or impairment charges;

	●	increased amortization expenses;

	●	difficulty and cost in combining the operations and personnel of any acquired businesses with our operations and personnel;

	●	entering into a long-term relationship with a partner that proves to be unreliable or counterproductive;

	●	impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and

	●	inability to retain key employees of any acquired businesses.

	●	fluctuations in revenue due to seasonality of the market place, which results in uneven revenue and operating results over the year;
	●	addition and departure of key personnel; and
	●	strategic decisions made by us and our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments and changes in business strategy.

	●	defend against infringement claims which are expensive and time consuming;

	●	cease making, licensing or using products that incorporate the challenged intellectual property;

	●	re-design, re-engineer or re-brand our products or packaging; or

	●	enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property.

	●	maintaining enough working capital to run our business;

	●	pursuing growth opportunities, including more rapid expansion;

	●	acquiring complementary businesses;

	●	making capital improvements to improve our infrastructure;

	●	responding to competitive pressures;

	●	complying with regulatory requirements such as licensing and registration; and

	●	maintaining compliance with applicable laws.

	●	our dependence upon external sources for the financing of our operations;

	●	our ability to effectively execute our growth and expansion strategies;

	●	changes in the cannabis industry;

	●	our limited operating history;

	●	disruptions caused by the recent coronavirus outbreak and its economic impact;

	●	the valuation of assets reflected on our financial statements;

	●	our reliance on continued access to financing;

	●	our reliance on information provided and obtained by third parties;

	●	U.S. federal and state regulatory matters;

	●	additional expenses, not reflected in our operating history, related to being a public reporting company; and

	●	competition in the cannabis market.

Assumed public offering price per share of common stock	$		$	1.50
Pro forma net tangible book value per share before giving effect to the offering	$	0.06
Increase in net tangible book value per share attributable to the sale of common stock in the offering ⁽¹⁾	$	0.33
Pro forma net tangible book value per share after giving effect to the offering			$	0.39
Dilution in net tangible book value per share to new investors ⁽²⁾			$	1.11

(1)	After deducting estimated expenses payable by us in this offering.

(2)	Dilution is determined by subtracting pro forma net tangible book value per share after giving effect to the offering from the public offering price per share paid by a new investor.

	●	the information set forth in this offering circular;

	●	our history and prospects and the history of and prospects for the cannabis industry in which we compete;

	●	our past and present financial performance;

	●	our prospects for future earnings and the present state of our development;

	●	the general condition of the securities markets at the time of this offering;

	●	the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and

	●	other factors deemed relevant by us.

	(i)	You are a natural person who has had individual income in excess of $200,000 in each of the two most recent years, or joint income with your spouse in excess of $300,000 in each of these years, and have a reasonable expectation of reaching the same income level in the current year;

	(ii)	You are a natural person and your individual net worth, or joint net worth with your spouse, exceeds $1,000,000 at the time you purchase shares (please see below under “How to calculate your net worth”);

	(iii)	You are an executive officer or general partner of the issuer or a manager or executive officer of the general partner of the issuer;

	(iv)	You are an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or the Code, a corporation, a Massachusetts or similar business trust or a partnership, not formed for the specific purpose of acquiring the shares, with total assets in excess of $5,000,000;

	(v)	You are a bank or a savings and loan association or other institution as defined in the Securities Act, a broker or dealer registered pursuant to Section 15 of the Exchange Act, an insurance company as defined by the Securities Act, an investment company registered under the Investment Company Act of 1940 (the “Investment Company Act”), or a business development company as defined in that act, any Small Business Investment Company licensed by the Small Business Investment Act of 1958 or a private business development company as defined in the Investment Advisers Act of 1940;

	(vi)	You are an entity (including an Individual Retirement Account trust) in which each equity owner is an accredited investor;

	(vii)	You are a trust with total assets in excess of $5,000,000, your purchase of Shares is directed by a person who either alone or with his purchaser representative(s) (as defined in Regulation D promulgated under the Securities Act) has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment, and you were not formed for the specific purpose of investing in the Shares; or

	(viii)	You are a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has assets in excess of $5,000,000.

	(i)	Electronically receive, review, execute and deliver to us a subscription agreement (the form of which is attached to the offering statement as Exhibit 4.1); and

	(ii)	Deliver funds to the bank or other financial institution account via wire transfer or ACH (pursuant to the wire transfer instructions provided to subscribers), via certified check mailed to such bank or other financial institution, or via credit card.

	●	Our ability to identify, contract with, install equipment and operate a large number of growing fields;

	●	Our need to hire additional employees in order to operate a number of retail locations we intend to open;

	●	Our ability to complete the acquisition of one dispensary in Reno, Nevada;

	●	Our ability to obtain additional financing for the projected costs associated with the acquisition, management and distribution of new cannabis-related products, and the personnel involved, if and when needed;

	●	Our ability to attract competent, skilled technical and sales personnel for our operations at acceptable prices to manage our overhead; and

	●	Our ability to control our operating expenses as we expand our organization and product offerings.

	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.

	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.

	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.

	●	completion of preclinical laboratory tests, animal studies and formulation studies according to Good Laboratory Practices or other applicable regulations;
	●	submission to the FDA of an Investigational New Drug Application (an “IND”), which must become effective before human clinical trials may begin;
	●	performance of adequate and well-controlled human clinical trials according to the FDA’s current good clinical practices (“GCPs”) to establish the safety and efficacy of the proposed drug or biologic for its intended use;
	●	submission to the FDA of a New Drug Application (an “NDA”) for a new drug product, or a Biologics License Application (a “BLA”) for a new biological product;
	●	satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the drug or biologic is to be produced to assess compliance with the FDA’s current good manufacturing practice standards, or cGMP, to assure that the facilities, methods and controls are adequate to preserve the drug’s or biologic’s identity, strength, quality and purity;
	●	potential FDA audit of the nonclinical and clinical investigation sites that generated the data in support of the NDA or BLA; and
	●	FDA review and approval of the NDA or BLA.

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)

Name	Age	Position
Lorenzo Barracco	49	Chief Executive Officer and Chairman of the Board

Michael Cristalli	51	President and Director

Heather Cranny	36	Chief Financial Officer, Treasurer, Secretary and Director

Joanna DeFilippis	39	Chief Operating Officer and Director

Daniel V. Perla	78	Director

Sigmund (Sig) Aronson Rogich	77	Director

Alexander Scharf	67	Director

Name and Position	Years		Salary		Total
Lorenzo Barracco		2020	$	300,000	$	300,000
Chief Executive Officer		2019	$	250,000	$	250,000

Michael Cristalli		2020	$	150,000	$	-
President		2019	$	-	$	-

Heather Cranny		2020	$	120,000	$	120,000
Chief Financial Officer,		2019	$	100,000	$	100,000
Treasurer, and Secretary

Joanna DeFilippis		2020	$	150,000	$	-
Chief Operating Officer		2019	$	-	$	-

	●	each person known by us to be the beneficial owner of more than 5% of our outstanding common stock;

	●	each of our current directors;

	●	each of our current executive officers; and

	●	all our current directors and executive officers as a group.

Name of Beneficial Owner	Common Shares Beneficially Owned Before Offering		Series A Preferred Shares Beneficially Owned Before Offering⁽¹⁾		Percentage Beneficially Owned Before Offering			Percentage Beneficially Owned After Offering (Maximum)
Lorenzo Barracco⁽²⁾		32,998,680		-		29.6	%		22.9	%
Michael Cristalli⁽³⁾		5,370,658		-		4.8	%		3.7	%
Heather Cranny		-		-		-	%		-	%
Joanna DeFilippis		-		-		-	%		-	%
Daniel V. Perla⁽⁴⁾		17,937,679		-		16.1	%		12.4	%
Sigmund (Sig) Aronson Rogich		500,000		-		0.4	%		0.3	%
Alexander Scharf⁽⁵⁾		8,863,834		-		8.0	%		6.1	%
All directors and executive officers as a group (7 persons)		65,670,851		-		58.9	%		45.4	%
Terra Tech Corp. ⁽⁶⁾		8,332,096		-		7.5	%		5.8	%
Ori Tal ⁽⁷⁾		6,104,634		-		5.5	%		4.2	%

(1)	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.

(2)	Includes (a) 31,371,064 shares of common stock owned of record by Dal Toro Holdings II, LLC, a company in which Mr. Barracco holds voting and dispositive power with respect to such shares, (b) 964,617 shares of common stock owned of record by MCLB, LLC, a company in which Mr. Barracco shares voting and dispositive power with Mr. Cristalli with respect to such shares.

(3)	Includes (a) 964,617 shares of common stock owned of record by MCLB, LLC, a company in which Mr. Cristalli shares voting and dispositive power with Mr. Barracco with respect to such shares, and (b) 2,812,083 shares of common stock owned of record by MH, LLC, a company in which Mr. Cristalli holds voting and dispositive power with respect to such shares.

(4)	Includes 17,937,679 shares of common stock owned of record by Panorama Crest, LLC, a company in which Mr. Perla holds voting and dispositive power with respect to such shares.

(5)	Includes 8,747,167 shares of common stock owned of record by Ketores Holdings, LLC, a company in which Mr. Scharf holds voting and dispositive power with respect to such shares.

(6)	The address for Terra Tech Corp. is 3242 S. Halladay Street, Suite 203, Santa Ana, CA 92705.

(7)	The address for Ori Tal is 150 Cocoa Isles Blvd, Ste 202, Cocoa Beach, FL 32931. Includes (a) 4,244,733 shares of common stock owned of record by Desert Funding, LLC, a company in which Mr. Tal holds voting and dispositive power with respect to such shares, (b) 1,359,901 shares of common stock owned of record by Grass is Greener, LLC, a company in which Mr. Tal holds voting and dispositive power with respect to such shares, and (c) 500,000 shares of common stock owned of record by A-Z Investment Group, a company in which Mr. Tal holds voting and dispositive power with respect to such shares.

(1)	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.

(2)	Includes (a) 31,339,693 shares of common stock and 31,371 shares of series A preferred stock owned of record by Dal Toro Holdings II, LLC, a company in which Mr. Barracco holds voting and dispositive power with respect to such shares, (b) 963,652 shares of common stock and 964 shares of Series A Preferred Stock owned of record by MCLB, LLC, a company in which Mr. Barracco shares voting and dispositive power with Mr. Cristalli with respect to such shares.

(3)	Includes (a) 963,652 shares of common stock and 964 shares of series A preferred stock owned of record by MCLB, LLC, a company in which Mr. Cristalli shares voting and dispositive power with Mr. Barracco with respect to such shares, and (b) 1,404,636 shares of common stock and 1,406 shares of Series A Preferred Stock owned of record by MH, LLC, a company in which Mr. Cristalli holds voting and dispositive power with respect to such shares.

(4)	Includes 17,919,742 shares of common stock and 17,937 shares of series A preferred stock owned of record by Panorama Crest, LLC, a company in which Mr. Perla holds voting and dispositive power with respect to such shares.

(5)	Includes 8,738,420 shares of common stock and 8,747 shares of series A preferred stock owned of record by Ketores Holdings, LLC, a company in which Mr. Scharf holds voting and dispositive power with respect to such shares.

(6)	The address for Terra Tech Corp. is 3242 S. Halladay Street, Suite 203, Santa Ana, CA 92705.

(7)	The address for Ori Tal is 150 Cocoa Isles Blvd, Ste 202, Cocoa Beach, FL 32931. Includes (a) 4,240,489 shares of common stock and 4,244 shares of series A preferred stock owned of record by Desert Funding, LLC, a company in which Mr. Tal holds voting and dispositive power with respect to such shares, (b) 1,358,542 shares of common stock and 1,359 shares of series A preferred stock owned of record by Grass is Greener, LLC, a company in which Mr. Tal holds voting and dispositive power with respect to such shares, and (c) 499,500 shares of common stock and 500 shares of series A preferred stock owned of record by A-Z Investment Group, a company in which Mr. Tal holds voting and dispositive power with respect to such shares.

	(a)	amend the articles of incorporation or, unless approved by the board of directors, including by the Series A Directors, amend the Company’s bylaws;

	(b)	change or modify the rights, preferences or other terms of the series A preferred stock, or increase or decrease the number of authorized shares of series A preferred stock;

	(c)	reclassify or recapitalize any outstanding equity securities, or, unless approved by the board of directors, including by the Series A Directors, authorize or issue, or undertake an obligation to authorize or issue, any equity securities or any debt securities convertible into or exercisable for any equity securities (other than the issuance of stock-options or securities under any employee option or benefit plan);

	(d)	authorize or effect any transaction constituting a “Deemed Liquidation,” or any other merger or consolidation of the Company. A “Deemed Liquidation” shall mean: (A) the closing of the sale, transfer or other disposition of all or substantially all of the Company’s assets (including an irrevocable or exclusive license with respect to all or substantially all of the Company’s intellectual property); (B) the consummation of a merger, share exchange or consolidation with or into any other corporation, limited liability company or other entity (except one in which the holders of capital stock of the Company as constituted immediately prior to such merger, share exchange or consolidation continue to hold at least 50% of the voting power of the capital stock of the Company or the surviving or acquiring entity (or its parent entity)), (C) authorize or effect any transaction liquidation, dissolution or winding up of the Company, either voluntary or involuntary, provided, however, that none of the following shall be considered a Deemed Liquidation: (i) a merger effected exclusively for the purpose of changing the domicile of the Company, or (ii) a transaction or other event deemed to be exempt from the definition of a Deemed Liquidation by the holders of at least a majority of the then outstanding series A preferred stock;

	(e)	increase or decrease the size of the board of directors as provided in the bylaws of the Company or remove the Series A Director (unless approved by the board of directors, including the Series A Directors);

	(f)	declare or pay any dividends or make any other distribution with respect to any class or series of capital stock (unless approved by the board of directors, including the Series A Directors);

	(g)	redeem, repurchase or otherwise acquire (or pay into or set aside for a sinking fund for such purpose) any outstanding shares of capital stock (other than the repurchase of shares of Common Stock from employees, consultants or other service providers pursuant to agreements approved by the board of directors under which the Company has the option to repurchase such shares at no greater than original cost upon the occurrence of certain events, such as the termination of employment) (unless approved by the board of directors, including the Series A Directors);

	(h)	create or amend any stock option plan of the Company, if any (other than amendments that do not require approval of the stockholders under the terms of the plan or applicable law) or approve any new equity incentive plan;

	(i)	replace the President and/or Chief Executive Officer of the Company (unless approved by the board of directors, including the Series A Directors);

	(j)	transfer assets to any subsidiary or other affiliated entity (unless approved by the board of directors, including the Series A Directors);

	(k)	issue, or cause any subsidiary of the Company to issue, any indebtedness or debt security, other than trade accounts payable and/or letters of credit, performance bonds or other similar credit support incurred in the ordinary course of business, or amend, renew, increase or otherwise alter in any material respect the terms of any indebtedness previously approved or required to be approved by the holders of the series A preferred stock (unless approved by the board of directors, including the Series A Directors);

	(l)	modify or change the nature of the Company’s business;

	(m)	acquire, or cause a Subsidiary of the Company to acquire, in any transaction or series of related transactions, the stock or any material assets of another person, or enter into any joint venture with any other person (unless approved by the board of directors, including the Series A Directors); or

	(n)	sell, transfer, license, lease or otherwise dispose of, in any transaction or series of related transactions, any material assets of the Company or any Subsidiary outside the ordinary course of business (unless approved by the board of directors, including the Series A Directors).

	●	any breach of his or her duty of loyalty to us or our stockholders;

	●	acts or omissions not in good faith which involve intentional misconduct or a knowing violation of law;

	●	the payment of dividends or the redemption or purchase of stock in violation of Nevada corporate law; or

	●	any transaction from which the director derived an improper personal benefit.

	Page
AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF MYSTIC HOLDINGS, INC. FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
Independent Auditor’s Report	F-2
Consolidated Balance Sheets as of December 31, 2020 and 2019	F-3
Consolidated Statements of Income for the Years Ended December 31, 2020 and 2019	F-4
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2020 and 2019	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020 and 2019	F-6
Notes to Restated Consolidated Financial Statements	F-7
Independent Auditor’s Report on Supplemental Information	F-25
Supplemental Information - Consolidated Operating Expenses for the Years Ended December 31, 2020 and 2019	F-26

UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF MYSTIC HOLDINGS, INC. FOR THE SIX MONTHS ENDED JUNE 30, 2021 and 2020

Unaudited Consolidated Balance Sheet as of June 30, 2021 and December 31, 2020	F-27
Unaudited Consolidated Statement of Income for the Six Months Ended June 30, 2021 and 2020	F-28
Unaudited Consolidated Statement of Stockholders’ Equity for the Six Months Ended June 30, 2021 and 2020	F-29
Unaudited Consolidated Statement of Cash Flows as of June 30, 2021 and 2020	F-30
Notes to Unaudited Consolidated Financial Statements	F-31