acan20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 000-54231

AMERICANN, INC

(Exact name of registrant as specified in its charter)

Colorado	27-4336843
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

1555 Blake Street, Unit 502 Denver, CO	80202
(Address of principal executive offices)	(Zip Code)

(303) 862-9000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered

None	N/A	N/A

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☑ No ☐

Indicate by a checkmark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☑	Smaller reporting company	☑
		Emerging growth company	☐

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of April 28, 2023, the registrant had 24,391,961 shares of common stock outstanding.

AMERICANN, INC.

FORM 10-Q

TABLE OF CONTENTS

		PAGE NO.
PART I FINANCIAL INFORMATION

Item 1.	Unaudited Financial Statements:
	Consolidated Balance Sheets as of March 31, 2023 and September 30, 2022	3
	Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2023 and 2022	4
	Consolidated Statements of Changes in Stockholders' Equity for the Six Months Ended March 31, 2023 and 2022	5
	Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2023 and 2022	6
	Notes to Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 4.	Controls and Procedures	17

PART II OTHER INFORMATION

Item 6.	Exhibits	18

SIGNATURES		19

	March 31, 2023			September 30, 2022

Assets
Current Assets:
Cash and cash equivalents	$	1,252,871		$	1,341,127
Restricted cash		9,967			9,967
Tenant receivable		267,655			251,462
Prepaid expenses and other current assets		33,333			62,766
Note receivable		21,468			43,185
Total current assets		1,585,294			1,708,507

Construction in progress		371,682			338,977
Property and Equipment, net		6,586,167			6,611,961
Operating lease - right-of-use asset		6,743,575			6,778,085
Total assets	$	15,286,718		$	15,437,530

Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued expenses	$	85,188		$	193,170
Accounts payable - related party		-			82,500
Interest payable (including $0 and $4,303 to related parties)		42,042			53,964
Other payables		8,957			8,612
Operating lease liability, short term		11,735			11,283
Notes payable (net of unamortized discounts of $69,491 and $162,353)		4,435,059			4,337,647
Notes payable		-			150,000
Total current liabilities		4,582,981			4,837,176

Note payable - related party		581,646			581,646
Operating lease liability, long term		4,210,612			4,216,596

Total liabilities		9,375,239			9,635,418

Commitments and contingencies - see Note 7

Stockholders' Equity:
Preferred stock, $0.0001 par value; 20,000,000 shares authorized; no shares issued and outstanding		-			-
Common stock, $0.0001 par value; 100,000,000 shares authorized; 24,391,961 shares issued and outstanding as of March 31, 2023 and September 30, 2022		2,439			2,439
Additional paid in capital		25,558,362			25,558,362
Accumulated deficit		(19,649,322	)		(19,758,689	)
Total stockholders' equity		5,911,479			5,802,112

Total liabilities and stockholders' equity	$	15,286,718		$	15,437,530

	Six months Ended March 31,						Three months Ended March 31,
	2023			2022			2023			2022

Rental income	$	1,483,172			911,047		$	748,406			667,366
Rental income - related party		-			407,264			-			-
Cost of revenues		13,615			21,950			-			10,500
Gross profit		1,469,557			1,296,361			748,406			656,866

Operating expenses:
Advertising and marketing		5,371			23,138			3,953			10,171
Professional fees		203,852			211,236			83,339			86,177
General and administrative expenses		783,263			1,245,489			391,957			375,401
Total operating expenses		992,486			1,479,863			479,249			471,749

Income (loss) from operations		477,071			(183,502	)		269,157			185,117

Other income (expense):
Interest income		2,796			6,680			1,133			3,119
Interest expense		(370,500	)		(305,864	)		(183,668	)		(151,089	)
Interest expense - related party		-			(26,102	)		-			(12,907	)
Total other income (expense)		(367,704	)		(325,286	)		(182,535	)	$	(160,877	)

Net income (loss)	$	109,367		$	(508,788	)	$	86,622		$	24,240

Basic and diluted income (loss) per common share	$	0.00		$	(0.02	)	$	0.00		$	0.00

Weighted average common shares outstanding		24,391,961			24,304,886			24,391,961			24,391,961

	Preferred Stock				Common Stock				Paid In		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit			Total

Balances, September 30, 2021		-	$	-		24,196,310	$	2,420	$	25,093,435	$	(19,585,445	)	$	5,510,410
Net loss		-		-		-		-		-		(533,028	)		(533,028	)
Stock issued for services		-		-		195,651		19		89,981		-			90,000
Extension of warrants		-		-		-		-		374,946		-			374,946
Balances, December 31, 2021		-	$	-		24,391,961	$	2,439	$	25,558,362	$	(20,118,473	)	$	5,442,328
Net loss											$	24,240			24,240
Balances, March 31, 2022		-	$	-		24,391,961	$	2,439	$	25,558,362	$	(20,094,233	)	$	5,466,568


Balances, September 30, 2022		-	$	-		24,391,961	$	2,439	$	25,558,362	$	(19,758,689	)	$	5,802,112
Net income		-		-		-		-		-		22,745			22,745
Balances, December 31, 2022		-	$	-		24,391,961	$	2,439	$	25,558,362	$	(19,735,944	)	$	5,824,857
Net income		-		-		-		-		-		86,622			86,622
Balances, March 31, 2023		-	$	-		24,391,961	$	2,439	$	25,558,362	$	(19,649,322	)	$	5,911,479

	Six Months Ended March 31,
	2023			2022
Cash flows from operating activities:
Net income (loss)	$	109,367		$	(508,788	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		225,794			224,961
Amortization of right of use assets		34,510			34,093
Stock based compensation and warrants revaluation expense		-			374,946
Stock issued for services		-			90,000
Amortization of debt discount		97,412			51,953
Changes in operating assets and liabilities:
Tenant receivable		(16,193	)		-
Tenant receivable - related party		-			18,689
Prepaid expenses		29,433			(20,363	)
Accounts payable and accrued expenses		(107,982	)		20,379
Operating lease liability		(5,532	)		(5,113	)
Accounts payable - related party		(82,500	)		(15,000	)
Interest payable		(11,922	)		(4,759	)
Interest payable - related party		-			143
Other payables		345			(6,042	)
Net cash flows provided byoperations		272,732			255,099

Cash flows from investing activities:
Additions to construction in progress		(32,705	)		(156,483	)
Additions to property and equipment		(200,000	)		-
Payments received on notes receivable		21,717			19,854
Net cash flows (used in) investing activities		(210,988	)		(136,629	)

Cash flows from financing activities:
Principal payments on notes payable		(150,000	)		-
Net cash flows (used in) financing activities		(150,000	)		-

Net change in cash, cash equivalents, and restricted cash		(88,256	)		118,470

Cash, cash equivalents, and restricted cash at beginning of period		1,351,094			706,369

Cash, cash equivalents, and restricted cash at end of period	$	1,262,838		$	824,839


Supplementary Disclosure of Cash Flow Information:

Cash paid for interest	$	285,010		$	284,628
Cash paid for income taxes	$	-		$	-

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto as of and for the year ended September 30, 2022 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K

The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, (“the Exchange Act”), which are subject to the “safe harbor” created by those sections. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “should,” “could,” “predicts,” “potential,” “continue,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements. All forward-looking statements in this Form 10-Q are made based on our current expectations, forecasts, estimates and assumptions, and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in the forward-looking statements. In evaluating these statements, you should specifically consider various factors, uncertainties and risks that could affect our future results or operations. These factors, uncertainties and risks may cause our actual results to differ materially from any forward-looking statement set forth in this Form 10-Q. You should carefully consider these risk and uncertainties described and other information contained in the reports we file with or furnish to the SEC before making any investment decision with respect to our securities. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.

AmeriCann designs, develops, leases and operates state-of-the-art cannabis cultivation, processing and manufacturing facilities. AmeriCann’s team includes board members, consultants, engineers and architects who specialize in real estate development, traditional horticulture, lean manufacturing, medical research, facility construction, regulatory compliance, security, marijuana cultivation and genetics, extraction processes, and infused product development.

AmeriCann’s flagship project is the Massachusetts Cannabis Center. The Massachusetts Cannabis Center (“MCC”) is being developed on a 52-acre parcel located in southeastern Massachusetts. AmeriCann’s MCC project is permitted for over 800,000 sq. ft. of cannabis cultivation and processing infrastructure which is being developed in phases to support both the existing medical cannabis and the newly emerging adult-use cannabis marketplace.

The first phase of the project, Building 1, a 30,000 square foot cultivation and processing facility, is fully-operational and is currently 100% leased by a vertically-integrated Massachusetts cannabis company. AmeriCann generates revenue through lease arrangements with the operators that includes base rent and royalty payments of 15% of gross revenue generated from products produced at the MCC.

The increase in Operating Revenue for the quarter ending March 31, 2023 is the result of increased cultivation yields and increases in the production and sale of manufactured goods from the Massachusetts Cannabis Center.

AmeriCann, through a 100% owned subsidiary, AmeriCann Brands, Inc., has received two licenses from the Massachusetts Cannabis Control Commission to cultivate cannabis and provide extraction and product manufacturing support to the entire MCC project, as well as to other licensed cannabis farmers throughout regulated markets. AmeriCann Brands plans to operate in Building 2 at the MCC which is in the final design process. In addition to large-scale extraction of cannabis plant material, AmeriCann Brands plans to produce branded consumer packaged goods including cannabis beverages, vaporizer products, edible products, non-edible products and concentrates at the state-of-the-art facility.

AmeriCann plans to replicate the brands, technology and innovations developed at its MCC project to additional markets.

The Company believes that the COVID- 19 pandemic has had certain impacts on its business, but management does not believe there has been a material long-term impact from the effects of the pandemic on the Company’s business and operations, results of operations, financial condition, cash flows, liquidity or capital and financial resources.

The Company has established policies to monitor the pandemic and has taken a number of actions to protect its employees, including restricting travel, encouraging quarantine and isolation when warranted, and directing most of its employees to work from home.

Effective October 1, 2019, we adopted ASC 842, Lease Accounting using the effective date method. We determine if an arrangement is a lease at inception.

Right-of-Use (ROU) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Variable lease payments are not included in the calculation of the right-of-use asset and lease liability due to uncertainty of the payment amount and are recorded as lease expense in the period incurred. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Under the available practical expedient, we account for the lease and non-lease components as a single lease component for all classes of underlying assets as both a lessee and lessor. Further, we elected a short-term lease exception policy on all classes of underlying assets, permitting us to not apply the recognition requirements of this standard to short-term leases (i.e. leases with terms of 12 months or less).

During the three months ended March 31, 2023 and 2022, we generated $748,406 and $667,366 in revenue, respectively. During the six months ended March 31, 2023 and 2022, we generated $1,483,172 and $1,318,311 in revenue, respectively. The increase in revenues is due to higher rental revenue and participation fee revenues as a result of increased cultivation yields and increases in the production and sale of manufactured goods from the Massachusetts Cannabis Center.

During the three months ended March 31, 2023 and 2022, we incurred $0 and $10,500 of costs of revenue, respectively. During the six months ended March 31, 2023 and 2022, we incurred $13,615 and $21,950 of cost of revenue, respectively. The decrease in cost is due to conclusion of a facilities maintenance agreement.

Advertising and marketing expenses were $3,953 and $10,171 for the three months ended March 31, 2023 and 2022, respectively. During the six months ended March 31, 2023 and 2022, the advertising and marketing expenses were $5,371 and $23,138, respectively. The decrease is due to lower social media and marketing expenses in 2023.

Professional fees were $83,339 and $86,177 for the three months ended March 31, 2023 and 2022, respectively. During the six months ended March 31, 2023 and 2022, the professional fees were $203,852 and $211,236, respectively. The decrease is primarily due to aa decrease in legal fees.

General and administrative expenses were $391,957 and $375,401 for the three months ended March 31, 2023 and 2022, respectively. The increase is primarily due to increased property taxes. During the six months ended March 31, 2023 and 2022, the general and administrative expenses were $783,263 and $1,245,489, respectively. The decrease is primarily due to stock option compensation expense in 2022.

Interest income was $1,133 and $3,119 for the three months ended March 31, 2023 and 2022, respectively. During the six months ended March 31, 2023 and 2022, the interest income was $2,796 and $6,680, respectively. The decrease is a result of a decline in the principal balance of the BASK note receivable.

Interest expense was $183,668 and $163,996 for the three months ended March 31, 2023 and 2022, respectively. The increase is primarily attributable to amortization of debt discounts. During the six months ended March 31, 2023 and 2022, the interest expense was $370,500 and $331,966, respectively.

We had a net income of $86,622 and $24,240 for the three months ended March 31, 2023 and 2022, respectively. We had a net income of $109,367 and a net loss of $ (508,788) for the six months ended March 31, 2023 and 2022, respectively. The increase in net income is attributed primarily to higher revenues and lower general and administrative expense.

The accompanying unaudited consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $19,649,322 and $19,758,689 at March 31, 2023 and September 30, 2022, respectively.

The Company is continuing to support the optimization of operations and generate additional revenues from its Massachusetts Cannabis Center (MCC). The Company's cash position and quarterly revenue is currently significant enough to support the Company's daily operations. The Company is not obligated to raise additional funds for the expansion of the MCC. When Management determines expansion opportunities exist the Company may finance construction with cash from operations, a sale-lease-back, refinancing and expand existing debt, issuance of new debt, or sales of equity.

Management believes that the actions presently being taken to further implement its business plan and generate additional revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate additional revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company's ability to further implement its business plan and generate additional revenues. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

See Notes 4 of the unaudited consolidated financial statements filed with this report for information concerning our notes payable.

During the six months ended March 31, 2023, our net cash flows provided by operations were $272,732 as compared to net cash flows provided by operations of $255,099 for the six months ended March 31, 2022. The increase is primarily due to timing of working capital payments, and stock-based compensation expense during the six months ended March 31, 2022.

Cash flows used by investing activities were $(210,988) and $(136,629) for the six months ended March 31, 2023 and 2022, respectively, consisting of payments received on notes receivable offset by additions to property and equipment and construction in progress.

Cash flows used by financing activities were $150,000 and $0 for the six months ended March 31, 2023 and 2022, respectively, consisting of principal payments on notes payable.

We do not have any firm commitments from any person to provide us with any additional capital.

Our management, with the participation of our President and Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were not effective for the same reasons that our internal control over financial reporting was not effective.

As indicated in our Form 10-K filed on December 29, 2022, our Principal Executive Officer and Principal Financial Officer concluded that our internal control over financial reporting was not effective as of September 30, 2022 at the reasonable assurance level, as a result of a material weaknesses primarily related to a lack of a sufficient number of personnel with appropriate training and experience in accounting principles generally accepted in the United States of America, or GAAP, limited or no segregation of duties, and lack of independent directors.

We are currently in the process of evaluating the steps necessary to remediate these material weaknesses.

There was no change in our internal control over financial reporting that occurred during the quarterly period ended March 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any company have been detected.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	March 31, 2023			September 30, 2022

Buildings and improvements	$	7,808,087		$	7,608,087
Computer equipment		349,576			349,576
Furniture and equipment		2,764			2,764
Total		8,160,427			7,960,427
Accumulated depreciation		(1,574,260	)		(1,348,466	)
Property and equipment, net	$	6,586,167		$	6,611,961

	As of March 31, 2023

Weighted average remaining lease term
Operating leases		43.50
Weighted average discount rate
Operating leases		7.9	%

2023		170,747
2024		341,500
2025		341,500
2026		341,500
2027		341,500
Thereafter		13,318,505

Total lease payments		14,855,252
Less: Interest		(10,632,905	)
	$	4,222,347

Less: operating lease liability, current portion		(11,735	)
Operating lease liability, long term	$	4,210,612

					Weighted
			Weighted		Average
			Average		Contractual		Aggregate
	Number of		Exercise		Term		Intrinsic
	Shares		Price		(Years)		Value
Exercisable at September 30, 2022		1,700,000	$	1.94		3.5	$	-
Outstanding as of March 31, 2023		1,700,000	$	1.94		3.9	$	-
Vested and expected to vest at March 31, 2023		1,700,000	$	1.94		3.9	$	-
Exercisable at March 31, 2023		1,700,000	$	1.94		3.9	$	-

						Weighted
				Weighted		Average
				Average		Contractual		Aggregate
	Number of			Exercise		Term		Intrinsic
	Shares			Price		(Years)		Value
Outstanding as of September 30, 2022		4,026,650			1.21		0.80	$	-
Expired		(1,815,000	)		1.50
Outstanding as of March 31, 2023		2,211,650			1.32		1.60	$	-
Exercisable at March 31, 2023		2,211,650			1.32		1.60	$	-

	March 31, 2023		September 30, 2022

Note receivable from BASK, interest rate of 18.0%; monthly principal and interest payments of $4,422, maturing in 2023.	$	21,468	$	43,185

Total	$	21,468	$	43,185

	Three months ended				Six months ended
	March 31,				March 31,
	2023		2022		2023		2022

Net income (loss) attributable to common stockholders	$	86,622	$	24,240	$	109,367	$	(508,788	)

Basic weighted average outstanding shares of common stock		24,391,961		24,391,961		24,391,961		24,304,886
Dilutive effects of common share equivalents		-		-		-		-
Dilutive weighted average outstanding shares of common stock		24,391,961		24,391,961		24,391,961		24,304,886

Basic and diluted net income (loss) per share of common stock	$	0.00	$	0.00	$	0.00	$	(0.02	)

Exhibit Number	Description of Document

31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, (filed herewith)

31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, (filed herewith)

32	Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

101.INS	Inline XBRL Instance Document.

101.SCH	Inline XBRL Taxonomy Extension Schema Document.

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

	AMERICANN, INC.

Dated: May 11, 2023	By:	/s/ Timothy Keogh
		Timothy Keogh
		Principal Executive Officer

	By:	/s/ Benjamin Barton
		Benjamin Barton
		Principal Financial and Accounting Officer