Item 5.02. Departure of Directors or Certain
Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On February 9, 2022, the Company’s Board of Directors (the “Board”)
appointed (i) Paul Montalbano as a Class A director and (ii) Pratap Mukharji as a Class B director, each to fill existing vacancies on
the Board. The Board has not yet determined which Board committees Messrs. Montalbano and Mukharji will be appointed to.
Mr. Montalbano will serve until his term expires at the Company’s
2022 annual meeting of stockholders and until a successor is elected and qualified, or until his earlier death, resignation or removal.
Mr. Mukharji will serve until his term expires at the Company’s 2023 annual meeting of stockholders and until a successor is elected
and qualified, or until his earlier death, resignation or removal.
The Company’s current policy is to award each director an annual
grant of shares of the Company’s common stock worth $50,000 and the Company expects to make such awards to Messrs. Montalbano and
Mukharji in the future.
Dr. Paul
Montalbano, age 55, is a private practicing neurosurgeon in Boise, Idaho. He is still actively practicing medicine specializing
in complex spinal reconstruction. Dr. Montalbano is a partner in the company Neuroscience Associates under which he practices medicine.
He became a partner there in 2000. Before joining Neuroscience Associates, Dr. Montalbano was finishing his residency at the University
of South Florida located in Tampa, Florida. His residency lasted from 1994-2000. Dr. Montalbano received a Bachelor of Science from
Loyola University of Chicago and his M.D. from Northwestern University. Since 2012, Dr. Montalbano has served on the board of Treasure
Valley Hospital in Boise, ID. Dr. Montalbano serves on the medical executive, governing and financial board of Treasure Valley. He is
also the director of neurosurgery of Treasure Valley where he also serves on the Neurosurgery Center of Excellence committee. The
Company and the Board believe that his significant experience with private healthcare companies qualifies him to serve on the Board.
Dr. Montalbano was designated for appointment to the Board by Dye Capital
Cann Holdings II, LLC (“Dye Cann II”) pursuant the terms of the letter agreement between the Company and Dye Cann II dated
December 16, 2020 (the “Cann II Agreement”), which provides that, for as long as Dye Cann II meets the Ownership Threshold
(as defined in the Cann II Agreement), the Company shall take all actions to ensure that two individuals designated by Dye Cann II shall
be appointed to the Board if the Board consist of more than five members. The Company previously reported the terms of the Cann II Agreement
in the Company’s Current Report on Form 8-K filed December 23, 2020 and attached a copy of the Cann II Agreement as Exhibit 10.3
thereto, and such disclosure and exhibit are incorporated by reference herein.
Pratap Mukharji, age 61, served as a director of the Company
between January and December 2021 (as previously reported, he resigned as a director on December 13, 2021). Prior to joining the Company,
Mr. Mukharji had a successful career as a senior partner and director at Bain & Company, a global management consulting company, from
2015 to 2020, where he led its Supply Chain and Service Operations practice. Mr. Mukharji retired in May 2020, and he currently serves
as an Executive in Residence at the Fuqua School of Business at Duke University. During his time at Bain, Mr. Mukharji gained robust experience
in the industrial and retail industries, and he also served in various leadership roles addressing corporate strategy and growth opportunities,
mergers and acquisitions, operational efficiencies and cost savings, corporate record review and management, omnichannel, and e-commerce
efforts across multiple industries. Prior to joining Bain & Company, Mr. Mukharji worked at Kearney and Booz-Allen & Hamilton
Mr. Mukharji received a BA in Economics from Haverford College and an MBA from the Fuqua School of Business at Duke University, where
he earned the distinction of Fuqua Scholar. During his career, Mr. Mukharji has also served as an advisor to a number of small and large
capitalized companies and advised them on identifying and executing growth opportunities. The Company and the Board believe that his significant
experience through consulting, analyzing company financial statements, as well as his experience conducting M&A transactions qualifies
him to serve on the Board.
Mr. Mukharji was designated for appointment to the Board by Brian
Ruden and Naser Joudeh pursuant to the terms of the Omnibus Amendment No. 2 to Asset Purchase Agreements, dated December 17, 2020, among
the Company and the sellers party thereto (the “StarBuds Agreement”), which provides that, for as long as the Sellers and
Members (each, as defined in the StarBuds Agreement) meet specified ownership thresholds, the Company is required to recommend to the
Board that Brian Ruden and Naser Joudeh jointly be permitted to designate three directors to the Board if the Board consistent of seven
or more members. The Company previously reported the terms of the StarBuds Agreement in the Company’s Current Report on Form 8-K
filed December 23, 2020 and attached a copy of the Omnibus Amendment No. 2 as Exhibit 2.1 thereto, and such disclosure and exhibit are
incorporated by reference herein.
On December 7, 2021, Mr. Mukharji purchased one of the
Company’s 13% senior secured convertible notes due December 7, 2026 with a principal amount of $200,000 for $196,000, reflecting
a 2% original issue discount, in the Company’s private placement of such notes, on the same terms as the other investors. The Company
previously reported the terms of the private placement and the notes in its Current Report on Form 8-K filed on December 9, 2021 and
attached copies of the form of note and relevant transaction documents, and such disclosures and copies are incorporated by reference
herein. Mr. Mukharji is a passive, minority part owner of each of Dye Capital Cann Holdings, LLC and Dye Cann II, entities controlled
by Justin Dye, the Company’s Chief Executive Officer, one of its directors and the largest beneficial owner of the Company’s
common stock, with which the Company previously has entered into various transactions. Mr. Mukharji does not control any of these entities
nor does he beneficially own any of the securities held by these entities.