confidential business review · 2018-02-28 · kine mine confidential business review – presented...

Kine Mine Confidential Business Review – Presented by Joel Davis

Confidential Business Review

Joel Davis has been appointed exclusive Consultant by Kine Mine (“the company” or “KM”) concerning

the transaction discussed herein. All questions and inquiries regarding this transaction should be

directed to Joel Davis. Employees of the company should not be contacted. By receiving you have been

registered as a (‘Recipient”) of this brochure and understand the terms outlined herein.

The Information in this brochure was provided by the Company or its agents and from other sources

believed to be reliable. No representation or warranty is made by Joel Davis as to the completeness or

accuracy of such information including financial information, financial pro forma or interpretation of

such information by Joel Davis or subsequent information which may be supplied.

This brochure is for confidential use of the recipient for the sole purpose assisting in its evaluation of the

potential acquisition of the company and or its assets. The recipient agrees that any information

contained in this brochure will not be used for any other purpose than to consider the acquisition of the

Company and or its Assets.

Forward looking statements

Such forward looking statements are subject to a number of risks, assumptions and uncertainties that

could cause the Company’s actual results to differ materially from those projected in such forward

looking statements. These risks, assumptions and uncertainties include: the ability to complete systems

within currently estimated time frames and budgets; the ability to compete effectively in a rapidly

evolving price competitive marketplace; changes in the nature of regulation in the United States and

other countries; changes in business strategy; the successful integration of newly acquired businesses;

the impact of technological change; other risks referenced from time-to-time.

Contact: Joel Davis * 720-608-6208 * [email protected]

mailto:[email protected]


Table of Contents

1. History …….……………………………………………………… Page 3 2. Company …. ……………………………………………………. Page 4

3. Sale, inclusions, and price justification.………………….... Page 5

4. Market Position & Competitive Advantage …………………. Page 6 5. Industry Analysis …………………………………………….…. Page 7 6. City of Idaho Springs Local Relations, Moratoriums……....... Page 7 7. Development Strategy………………………….. ……………... Page 8-9 8. Photos of facilities ……………………………………………… Page 10-12 9. Licenses and current status …………………………………… Page 13-14 10. Financial Summary …………………………………………….. Page 15 10. Income Statement Fiscal 2013-14 ……..…………………….. Page 16-20 11. Balance Sheet Fiscal 2015 …………….……………………... Page 21-23 12. Maps …………………………………………………………….. Page 24 13. 60 Minutes Report January 11, 2015 ………………………… Page 25-38 14. CNBC link – Marijuana in America – CO Pot Rush ………… Page 38


History

In 1999, the citizens of Colorado voted for Medical Marijuana, but it was Amendment 64 that changed it all, that truly created the infancy of a legal industry we have today. The vision of the Kine Mine was, as few believed at the time, in 2009, that eventually legal marijuana would occur here in Colorado. It was simply a question of when.

This Kine Mine dream and inception occurred late 2009. In order to adequately secure

the best interest of the Kine Mine, our offices began establishing strong working relationships with the City of Idaho Springs. This led to town moratoriums being passed shortly thereafter, to help protect the Kine Mine’s best interest from competition. We finally opened our doors to medical patients in February 2010.

The Kine Mine location was selected precisely on its location in proximity to the Interstate-70 corridor to the Mountains. Our knowledge of McDonalds and Starbucks success at this particular geographical location, allowed us to conclude a simple plan. To obtain 1% of the traffic that passed the I-70/Idaho Springs exit every day. The Kine Mine was a difficult start up with little capital investment from the financial institutions. So the owners invested their own money, blood, tears and sweat equity along with personal loans, which has since been paid in full. The first four years of business experienced many hardships. It maintained a breakeven point almost annually since its inception. The ownership was well aware of the circumstance, patiently waiting, for the RETAIL opportunity to take effect.

After four years of difficult endeavors, on January 1st, 2014, The Kine Mine was one of thirty-eight (38) dispensaries in the entire state and world, to be granted the legal licensing to cultivate and sell marijuana to the public over 21. By April 2014, The Kine Mine immediately purchased the existing “leased” cultivation property at 2056 County Road 314. With a newly installed well with grandfathered water rights and aquifer below the property, we have the perfect two + acres to develop, and have few limited restrictions on what we can do with the property.

Our unlimited growth potential, local legal protection, and water rights for years to

come; The Kine Mine’s profitability, expansion, and growth, are quite simply limitless and unique in Colorado. The expansion of the successful foundation we have built and its unlimited growth potential are only limited by the eagerness and desires of a new owner.


Company

Company LLC EIN #: 45-xxxxxxxx76 Established: November 2009 Ownership: 4 Members – 35%, 35%, 25%, 5% Description: Retail Marijuana Dispensary & Cultivation Centers Website: www.thekinemine.com Mail: PO BOX 1962, Idaho Springs, CO. 80452 Software: Bio-Track THC & QuickBooks Pro 2013 & M.I.T.S. Dispensary: 2818 Colorado Boulevard (KMI) Idaho Springs, CO. 80452 (Retail & Medical) 1900 SF 10-yr lease fixed w/ escalators + Option to Purchase O/P Cultivation #1: 2820 Colorado Boulevard (KMII) Idaho Springs, CO. 80452 (Retail & Medical Cultivation) C-2 Commercial Zoning – 1200 SF 10-yr lease fixed w/ escalators + Option to Purchase O/P Cultivation #2: 2056 County Road 314 (KMIII) Idaho Springs, CO. 80452 (Retail Only Cultivation) C-2 Industrial/Commercial Zoning 2.25 acres w/ Natural Well (installed 2011) Owned Mortgage w/ 20 year loan Employee Housing: 2058 County Rd 314 (2400 sq. ft. residential) Idaho Springs, CO. 80452 Mortgage, two-story Single Family Dwelling

+ Guest house

# Employees: 18 employees

http://www.thekinemine.com/


Sale, inclusions, and price justification

The Acquisition of this entity includes three (3) properties, One (1) Dispensary that offers both Medical and Retail Sales & Two (2) Production facility with annual production capacity currently exceeding 260+ pounds. These facilities are fully licensed, retaining over five (5) Marijuana Enforcement licenses for all facilities to include both Medical and recreational licenses. 2014 Annual revenue exceeded $2.2M representing a 400% increasing year-over-year and further expansions underway. Current expansion(s) includes an additional 4000 square feet of Retail Production facilities at the 2056 County Road 314, Idaho Springs, CO. All phases of the full development are outlined within. The phases of all build outs will result from capital reinvestment directly from the net income cash flow. This operation anticipates multiplying its production capacity seven (7) times within five (5) years of announcing the retail status on January 1st, 2014. One additional license is in process of approval (anticipated approval in October 2015) for a MIP (Marijuana Infused Products) license which allows “in house” production of extracts and reductions. In process, it will create an entirely new revenue stream for The Kine Mine.

Sale: Cash Inclusions: All Entities, names, agreements, associated proprietary rights & licensing, FF&E,

Inventory, and websites.

Price Justification: 2014 ODE X 4 $2,750,000 License values $750,000 FF&E $200,000 Inventory/Strains $200,000 Real Estate $1,200,000 TOTAL $5,050,000 USD


Market Position & Competitive Advantage

Established in late 2009, The Kine Mine opened its doors in February 2010. A location that is unparalleled in the State of Colorado. Approximately 30,000-50,000 + potential customers drive by the lucrative Interstate 70 exit every day. This exit is 30 minutes outside of Denver and at the gateway of the Rockies and every major ski area in Colorado. This is the first major exit in a thriving historic town for all consumers needs (IE) Gas, Food, Liquor, lodging, and of course, now marijuana. The Kine Mine is strategically located 200 yards from the interstate exit and directly across from McDonalds, Carl’s Jr., & Starbucks and shares a common wall with a liquor store. The Kine Mine was one (1) of thirty-eight (38) approved dispensaries in the entire state to open its door on January 1st, 2014 for Retail Sales of marijuana. The Kine Mine has secured all necessary M.E.D. Retail and Medical licensing. We are considered one of the pre-eminent pioneers of the industry. Our location is almost a “tourist attraction.” Currently, a large % of our daily customers purchase apparel items, simply to commemorate the experience at our store. One will find a different customer experience with the Kine Mine. Our unique business culture is simply one of a kind, and our location cannot be matched anywhere is the state. With only two other (2) MJ competitors within the city, the Kine Mine currently enjoys 75%+/- of the market share since it was granted the Recreational MMJ License in January of 2014. The other 2 stores are significantly disadvantaged by their locations and one has made a formal announcement that they will be closing in 2015. The other store is a small Mom and Pop store and we believe will not be able to sustain themselves in the long run, leaving The Kine Mine as the ONLY MMJ in Idaho Springs. With a moratorium on any further retail Marijuana licenses; we anticipate having a full monopoly on the City of Idaho Springs with 2 years. With the amount of traffic passing by our location each day, we anticipate our sales potential to match our expansion projections over the next 3-5 years. The Kine Mine has significant growth capacity and plans. We have established the foundation and base for a solid and well established business. What we have done to date only represents a small portion of the potential in the coming years. A new owner could potentially quadruple the business if they so desired.


Industry Analysis

This New Marijuana Retail Industry is projected to reach $1.4B in Colorado Sales by 2016. Approximately 600 licenses are in operation, of which approximately 250 entities are retail with only 38 of those being recreational, 200 are medical, and the remainder consist of MIP licenses. Although not federally approved, the US Government has indicated that it is allowing each State to pass their own legislation and make their own decisions about Marijuana in their State. We, along with many others believe this industry is in its infancy and the early pioneers in the State will have long established themselves as the dominant leaders with the majority of market share as the industry continues to grow. The demand for marijuana by Colorado adult residents is estimated to be 121.4 metric tons in 2014. In addition, the demand by visitors to the state is estimated to be 8.9 metric tons for a total estimated

demand of 130.3 metric tons. This reflects a point estimate for the adult (21+) population only. There are an estimated 485 thousand adult regular Marijuana users in the state representing 9% of the total population of the state. Other estimates by the CFC and CCLP have the state usage at 15.5% to 17.5% it is estimated that purchases by out-of-state visitors currently represent about 44 percent of metro area retail sales and about 90 percent of retail sales in heavily visited mountain communities. Visitor demand is most prevalent in the state’s mountain counties, where combined medical and retail marijuana sales more than doubled after retail sales were legalized in January, 2014. In comparison, Front Range metropolitan combined sales only increased between 15 and 19 percent over the same period. Visitor prevalence is reflected in retail sales (versus medical) because visitors do not have medical marijuana patient registry ID cards. Point-of-sale data confirm that out-of-state ID cards represented almost one-half of all new retail sales, whereas ongoing medical sales were exclusively to in-state residents. Other concerns in the State of Colorado are over the absorbent water consumption in the marijuana industry. We believe this will lead to massive regulation and additional taxation on water usage to our industry. The Kine Mine has secured Grandfathered water rights from a natural spring at our facilities which gives us another significant competitive advantage. (Reference: “Market size and demand for Marijuana in Colorado”: Prepared for the CDR by The Marijuana Policy Group 2014)

City of Idaho Springs

For over five years, The Kine Mine has worked directly with the City of Idaho Springs on all levels of the industry’s growth and expansion. A collective and collaborative relationship allows the Kine Mine to provide much needed guidance for the city to help ensure the organizations best interest, and further securing strong relationship ties with the local community and municipality. One of our LLC Members is the President of the Idaho Springs Chamber of Commerce, and has recently been asked to take a seat on the City Council.


The Kine Mine has achieved legal city moratoriums that essentially block any new entrants into the market. This secures the best interests of our organization; essentially, allowing The Kine mine, LLC to monopolize our industry in the city of Idaho Springs. (Reference: City of Idaho Springs, City Municipal Codes: Local Moratorium Ordinances)

Development Strategy

Phase I Building #4 Target Completion Date: 1/1/16 Two (2) Story Grow Facility: 8,000 sq ft Production Forecast: 55 Flower Lights = 385 LBS/Cycle

Phase II Building #4a Target Completion Date: 1/1/17 Two (2) Story Grow Facility: 8000 sq ft Production Forecast: 110 Flower Lights = 760 LBS/Cycle

Phase III Building #4b Target Completion Date: 11/1/18 Two (2) Story Grow Facility: 20,000 sq ft Forecast: 240 Flower Lights = 1672 LBS/Cycle

PHASE IV Control Command Center (existing KMIII Building renovated)

Computer Automation Systems (FINAL PHASE OF GROW CENTERS)

PHASE V Wellness Health Food Court & Museum & Drive Thru

Year 2020: 2820 Colorado Blvd. http://thekinemine.com/recreational-medical-marijuana-colorado- dispensaries/future- development

http://thekinemine.com/recreational-medical-marijuana-colorado-%20%20%20%20dispensaries/future-%20%20%20%20%20%20%20%20development

http://thekinemine.com/recreational-medical-marijuana-colorado-%20%20%20%20dispensaries/future-%20%20%20%20%20%20%20%20development


SUPPLEMENTAL

Production Yield Forecasts $20.66/Gram Mixed AVG Retail Price (current as of 8.1.14)

Perpetual Inventory Growth Cycle Yields:

(BREAKDOWN CALCULATIONS)

Existing Facility

45 LIGHTS

1.5 #LBS/LT

67.5 TOTAL Weight/cycle

4 # Cycles / YR

270 # LBS/YR

$ 9,260.00 RATE/LB Current Average Sale Price

$ 2,500,200.00 Total Revenue/YR

Phase II: Building #4

55 LIGHTS

1.75 #LBS/LT (NEW LIGHT SYSTEM)


4 # Cycles / YR

385 # LBS/YR



Phase III: Building #4a-b

350 LIGHTS

1.75 #LBS/LT


4 # Cycles / YR

2450 # LBS/YR




Section M:

Dispensary (above left) KMII (above right) Retail Interior Dispensary

Dispensary and common area


2056 County Rd 314, Idaho Springs, CO. “The Kine Mine Compound” C-2 Industrial Agricultural Zone KM III: Existing Retail Cultivation

Driveway Gated Entry-lower parcel Residential Home (from below)


Company Registry & Licensing Outline

Kine Mine LLC

PO BOX 1962 Idaho Springs, CO. 80452

EIN #271426773

Federal IRS Tax Classification: #621399: Retail Horticulture

Occupies:

2818 Colorado Blvd, IS, CO. 80452

2820 Colorado Blvd, IS, CO. 80452

2056/2058 Colorado Blvd, IS, CO. 80452

Annual

Name: (KM I) Location: License #: Renewed: EXPIRES:

COST:

Retail Sales License 2818 Colorado Blvd 402R-00115 1/1/2015 1/25/2016

$ 3,300

BOND RETAIL 2818 Colorado Blvd 10005530K/#41221756 Co. MJ Retail 10/21/2015

$ 500

Retail Sales Tax ID 2818 Colorado Blvd 42-77416-0003-SLS Monthly Retail Sales Tax (6.9%) 2818 Colorado Blvd 301-61332-009-SLS Monthly MJ Retail Special Sales

Tax (10%) 2818 Colorado Blvd 04277416-0002 Monthly CO Withholdings

04277416-005-WTH Quarterly

EXCISE TAX (15%)

30161332-0011-RME

EXCISE-MONTHLY

Partner Inc. (defined by DOR)

04277416-006-PAR Annual

Bond: 2818 Colorado Blvd : $10K Bond

10010380 Annual 3/24/2014

KMII: RETAIL GROW OPC-

2820 2820 Colorado Blvd. 403R-00256 3/17/2015 3/17/2016

$ 2,500

BOND RETAIL 2820 Colorado Blvd.

$ 700

KMIII: RETAIL GROW OPC-

2056/2058 2058 County Rd 314 403R-00151 1/1/2015 1/1/2016

$ 2,750

BOND RETAIL

10016363 $7K 8/28/2015

$ 500

City: IS City Medical License IS City Retail License

$ 5,000

2818 Colorado Blvd

MEDICAL

2/28/2014

$ 1,000

2818 Colorado Blvd

CITY: 5637

12/31/2014

$ 75.00

2056 CR 314


Additional Fees:

Pinnacle Work-Comp

2/1/2014

$ 13,500

General Liability

$ 2,900

OTHER ENTITY/Transparent Ownership:

2056 Property Ventures LLC 2056/2058 County Rd 314 PO BOX 1745, IS, CO.

Bank of West xxx2047

EIN #46-5043961 Scott A. Pennell (MBR)

G/L Insurance

TOTAL ANNUAL:

$ 32,725

EXPIRED: Medical Sales License 2818 Colorado Blvd 402-00189 1/28/2014 1/25/2015

$ 3,300

BOND MEDICAL 2818 Colorado Blvd 10005530 MEDICAL

$ 500 Medical: GROW OPC: 2820 2820 Colorado Blvd. 403-00280 1/28/2014 1/25/2015

$ 2,500

BOND MEDICAL 2820 Colorado Blvd.

$ 700

Medical Sales Tax ID 2818 Colorado Blvd 42-77416-0000 Monthly 12/31/2014

Surety #866-430-3322


Financial Summary

Financial Summary 2011 2012 2013 2014

Income $412,854.55 $565,550.80 $601,221.70 $2,267,259.27

GOGS ($72,627.30) ($114,430.66) ($152,710.00) ($448,016.27)

Gross Profit $340,227.25 $451,120.14 $448,511.70 $1,819,243.00

Gross Margin 82.41% 79.77% 74.60% 80.24%

Expenses ($345,574.78) ($472,153.36) ($439,275.72) ($1,410,755.60)

Other $0.00 $0.00 $0.00 $0.00

EBITDA ($5,347.53) ($21,033.22) $9,235.98 $408,487.40

-1.2953% -3.7191% 1.5362% 18.0168%

Add backs & onetime expenses

Owner Salaries $0.00 $0.00 $140,000.00

One Time Construction Work $0.00 $0.00 $41,497.51

One Time Building Mtrls $0.00 $0.00 $20,047.79

One Time Sub contract svcs $0.00 $0.00 $11,062.62

One Time Rent $38,000.00

Charity $8,956.00

One Time Sub contract Expense $13,192.56

Employee Meals $8,009.50

Total $0.00 $0.00 $0.00 $280,765.98

Owners Discretionary Income ($5,347.53) ($21,033.22) $9,235.98 $689,253.38


Income Statement 2013-2014

Jan - Dec 13 Jan - Dec 14

Ordinary Income/Expense

Income

BiotrackTHC Discounts Given

(3,387.45) 0.00

BiotrackTHC Income

Biotrack THC Medical Income 5,642.52 115,666.02

Biotrack THC Retail Income 0.00 2,151,593.25

BiotrackTHC Income - Other 108,446.91 0.00

Total BiotrackTHC Income

114,089.43 2,267,259.27

Interest Earned

0.02 0.08

4010 · EIS Rental Income

1,000.00 2,671.00

4015 · Merchandise Sales

449,715.92 0.00

4050 · Wholesale

37,790.74 19,457.00

4100 · Service Sales

221.54 309.50

4999 · Sales Discounts

54.50 0.00

8999 · Gain/Loss on Asset Sales

1,737.00 0.00

Total Income

601,221.70 2,289,696.85

COGS

BiotrackTHC COGS (12,373.08) 0.00

5005 · General NON-MJ Merchandise 0.00 72,572.46

5050 · Cost of Goods Sold 53,098.66 0.00

5110 · Edibles

43,086.04 153,894.76

5130 · Freight and Shipping Costs 0.00 306.96

5150 · Grow Equipment/Supplies 20,852.58 57,034.14

5290 · MJ Topicals

0.00 1,710.40

5300 · Medicated Beverages 0.00 16,069.00

5320 · MJ Concentrates 0.00 47,053.00

5335 · Merchant Account Fees 0.00 (4.00)

5345 · Meds Purchased 27,537.00 99,375.55

5430 · Nutrients/Grow Supplies 10,099.80 0.00

Total COGS

(142,301.00) (448,012.27)

Gross Profit

458,920.70 1,841,684.58


Expenses

2 · EIS/KMIII East Idaho Springs

56245 · EIS Rent

29,100.00 76,930.00

56299 · EIS/KMIII Depr Exp COGS 13,939.00 0.00

Total 2 · EIS/KMIII East Idaho Springs 43,039.00 76,930.00

3 · Kine Mine II Farm

56605 · 2820 Rent

14,100.00 35,300.00

56699 · KMII Farm-Depr Exp COGS 6,206.00 0.00

Total 3 · Kine Mine II Farm

20,306.00 35,300.00

5000 · Packaging Product Expense

1,430.94 51,181.13

5120 · Employment prescreen Exp

172.50 0.00

5140 · Janitorial Expenses

1,126.88 4,015.15

5190 · Interest Expense.

14,249.19 0.00

5990 · Money Order Fees

0.00 416.15

5010 · Building Materials

15.31 20,047.79

5030 · Cannabis Testing

2,100.00 4,190.00

5070 · Construction Work

1,313.44 41,497.51

5170 · Harvest Expense

141.16 0.00

5210 · Licenses

16,100.00 32,662.44

5215 · Payroll Taxes

9,840.95 0.00

5225 · POS Inventory Adjustments

1,469.81 0.00

5250 · Propane Heat

4,946.46 3,840.51

5270 · Purchase Discounts

(1,963.62) 0.00

5855 · Repairs and Maintenance

1,236.97 11,627.36

5865 · Security and Surveillance

549.87 19,228.36

5885 · Subcontracted Services

26.22 11,062.62

5970 · Utilities

39,076.07 47,401.41

5985 · Wages

100,323.33 0.00

BIO-TRACK MED SALES TAX 6.9%

0.00 6,796.00

BIO-TRACK REC SALES TAX 6.9%

0.00 126,486.00

BIO-TRACK RME TAX 15% - EIS

0.00 32,945.00

BIO-TRACK RMS TAX 10%

0.00 175,096.19

BIO-TRAK RME TAX 15% - KM2

0.00 4,084.00


5986 · 10% cash payment IRS penalty 0.00 1,065.37

EIS Development

9,387.31 0.00

Employee Incentive Gift Cards

0.00 1,314.90

Equipment Repair

12.27 0.00

Holiday Bonus

350.00 1,000.00

6000 · Accounting Consultant

9,509.97 22,785.83

6005 · Advertising-Internet/Text

Advertising & Marketing 1,981.06 12,474.56

6005 · Advertising-Internet/Text - Other 6,760.40 17,012.75

Total 6005 · Advertising-Internet/Text 8,741.46 29,487.31

6015 · City of Idaho Springs FEES

25.00 0.00

6025 · Automobile Expense

6020 · Automobile Repairs 1,417.58 130.17

6021 · Fuel

2,239.40 6,846.19

6025 · Automobile Expense - Other 265.59 840.92

Total 6025 · Automobile Expense

3,922.57 7,817.28

6040 · Bank Service Charges

844.09 0.00

6055 · Business Licenses and Permits 1,679.00 0.00

6125 · Cash Drawer Payouts

0.00 0.00

6140 · Charitable Contributions

500.00 8,956.00

6145 · Comp & Internet Exp-POS Inv 3,006.45 1,187.95

6156 · Credit Card Processing Fees

6154 · CC Cash Back to Customer 0.00 0.00

6155 · CC Processor Lease 340.00 0.00

Total 6156 · Credit Card Processing Fees 340.00 0.00

6175 · Dues and Subscriptions

1,063.26 3,590.18

6310 · Employee Meals

2,095.23 8,009.50

6311 · Employment Prescreen Expense 402.50 386.35

6315 · Employee Relations

1,816.91 1,966.84

6325 · Entertainment Expense

696.00 90.00

6335 · Equipment Rental

0.00 165.00

6355 · Government Registration Fees 6,157.30 0.00

6376 · Insurance Expense

6374 · General Liability Insurance 2,123.03 3,105.00

6375 · Worker's Compensation 0.00 11,854.00

6376 · Insurance Expense - Other 64.77 0.00

Total 6376 · Insurance Expense

2,187.80 14,959.00

6400 · Interest Expense

1,740.06 711.53

6420 · Internet Expense

592.58 0.00

6430 · Internet Website

1,000.00 0.00


6555 · Kine Mine I Wellness Center

6512 · Front Dispensary Construction 0.00 0.00

6520 · Dispensary Rent Expense 11,900.00 2,500.00

6530 · Retail POS Software/Hardware 396.96 0.00

6540 · Utilities

3,221.61 3,222.29

Total 6555 · Kine Mine I Wellness Center 15,518.57 5,722.29

6700 · Legal Fees

2,300.00 30,131.98

6725 · Licenses Fees and permits

Medical License Fees

0.00 7,000.00

Retail Incensing Fees

8,770.00 3,675.00

6725 · Licenses Fees and permits - Other 460.48 4,269.65

Total 6725 · Licenses Fees and permits 9,230.48 14,944.65

6730 · Meals and Entertainment

46.49 0.00

6740 · Membership Dues

825.00 55.00

6773 · Office Maintenance Service

588.71 0.00

6774 · Office Services

63.71 0.00

6775 · Office Supplies

2,586.06 16,316.69

6825 · Payroll Expenses

6826 · FICA/MC Expense 13,360.41 36,566.35

6827 · FUTA Expense

506.69 1,122.18

6828 · SUTA Expense

3,264.31 18,259.79

6830 · Wages

74,322.36 475,701.25

6825 · Payroll Expenses - Other 0.00 2,290.00

Total 6825 · Payroll Expenses

91,453.77 533,939.57

6829 · PR Exp-Payroll Taxes

(9,840.95) 0.00

6840 · Postage and Delivery

406.99 0.00

6858 · Real Estate Property Tax

221.60 49.56

6860 · Reconciliation Discrepancies 1,187.71 0.00

6867 · Reimbursement

0.00 0.00

6870 · Repairs and Maintenance

700.00 0.00

6875 · Safety Equipment

1,204.22 0.00

6885 · Snowplow Service

75.00 0.00

6900 · Subcontractor Expense

2,076.50 13,192.56

6940 · Tax penalties

4,974.27 1,907.89


6950 · Telephone Expense

6951 · Telephone Cell

84.97 0.00

6950 · Telephone Expense - Other 3,079.15 0.00

Total 6950 · Telephone Expense

3,164.12 0.00

7025 · Travel Expenses

446.96 1,078.74

7855 · Utilities

7850 · EIS Xcel Energy-House 2,183.77 0.00

7855 · Utilities - Other

(1,326.54) 7,486.62

Total 7855 · Utilities

857.23 7,486.62

7915 · Vehicle Registration

0.00 70.97

7950 · MMED Penalty & Fines

175.00 0.00

9995 · Depreciation Expense

6,690.00 0.00

Total Expense

(466,168.71) (1,433,197.18)

Net Ordinary Income

(7,248.01) 408,487.40

Other Income/Expense Other Expense

9997 · Balancing Adjustments

0.00 0.00

9999 · Clearing

3,163.04 0.00

Total Other Expense

3,163.04 0.00

Net Other Income

(3,163.04) 0.00

Net Income

(10,411.05) 408,487.40

*2014 notes - Owners were paid $140,000 in salaries - Bldg materials $41,497 onetime expense - Construction work $ 41,497 onetime expense - Security and surveillance $19,228 onetime expense - Construction Equipment $57,034 onetime expense


2015 Balance Sheet

Jun 3, 15

ASSETS

Current Assets

Checking/Savings

AMEX-Bluebird Acct 5959 1,130.01

CHANGE BAG 614.95

Genie Virtual Checking Account 1,000.00

SAFE #1 SP 1.54

T-Mobile 2887 5,165.21

Way To Grow 1,112.62

1000 · Cash in Drawer 22,125.90

Total Checking/Savings 31,150.23

Other Current Assets

1205 · Inventory MMJ ready to sell 3,264.24

1207 · Inventory MM Food, Pipes, T's 5,299.48

Total Other Current Assets 8,563.72

Total Current Assets 39,713.95

Fixed Assets

Kine Mine Sign 12,889.09

Railroad Cart 900.00

Wood Chipper 495.00

1300 · Furniture and Equipment 4,875.30

1301 · KMI Leasehold Improvement 83,553.81

1302 · KMI Security System 5,868.63

1303 · Self Sustaining Cooler 1,000.00

1305 · Ford Windstar Van 1,500.00

1306 · GMC Water Truck 3,400.00

1350 · Accumulated Depreciation -19,740.00

1360 · EIS/KMIII Assets Security Equip 6,452.00

1362 · EIS/KMIII Assets-Electrical 6,271.00

1366 · EIS/KMIII Assets Grow Equipment 18,395.97

1367 · EIS/KMIII F/A EZ Trim Satellite 12,250.00

1368 · EIS/KMIII Leasehold Improvement 73,070.34

1369 · EIS/KMIII Assets-Accum Depr -52,541.00


COGS

1381 · KMII Assets Grow Equipment 10,917.16

1382 · KMII Assets Leasehold Improvement 52,643.24

1383 · KMII Assets-Security Equipment 2,811.85

1389 · KMII Assets-Aksum Depr COGS -26,135.00

Total Fixed Assets 198,877.39

Other Assets

1403 · Security Dep Asset-Prepaid rent 3,450.00

Total Other Assets 3,450.00

TOTAL ASSETS

242,041.34

LIABILITIES & EQUITY

Liabilities

Current Liabilities

Accounts Payable

2000 · Accounts Payable 20,227.68

Total Accounts Payable 20,227.68

Other Current Liabilities

2400 · Payroll Liabilities

2401 · CWT Liability 2,246.00

2402 · FWT Liability 2,375.00

2403 · SUTA Liab 3,981.56

2404 · FICA/MC Liability 4,353.52

2405 · FUTA Liability 742.13

2400 · Payroll Liabilities - Other 200.00

Total 2400 · Payroll Liabilities 13,898.21

Total Other Current Liabilities 13,898.21

Total Current Liabilities 34,125.89

Long Term Liabilities

Chris Bookidis Loan 37,600.00

Total Long Term Liabilities 37,600.00

Total Liabilities 71,725.89


Equity

3000 · Chris Bookidis 1065 Capital

3001 · Chris Bookidis Capital 41,828.00

3002 · Chris Bookidis Equity In(CY) -40,000.00

3003 · Chris Bookidis Draws -122,954.73

Total 3000 · Chris Bookidis 1065 Capital -121,126.73

3100 · Scott Pennell 1065 Capital

3101 · Scott Pennell Capital 23,650.00

3103 · Scott Pennell Draws -82,976.13

Total 3100 · Scott Pennell 1065 Capital -59,326.13

3200 · Theran Snyder 1065 Capital

3201 · Theran Snyder Capital -14,258.00

3203 · Theran Snyder Draws -119,840.60

Total 3200 · Theran Snyder 1065 Capital -134,098.60

3300 · Sean Caffrey Draws -15,638.42

3999 · Retained Earnings 417,723.38

Net Income 82,781.95

Total Equity

170,315.45

TOTAL LIABILITIES & EQUITY 242,041.34

2015 Notes - Inventory is misrepresented as there constant grows in progress, and harvested product in the

curing stage which are not calculated in the current inventory. Estimated value at between $100k and $200k at any given time.


Local and regional Maps


Colorado Pot

60 Minutes Report

Bill Whitaker checks in on Colorado after becoming the first state to legalize recreational pot.

The following script is from "Colorado Pot" which aired on Jan. 11, 2015,

and was rebroadcast on June 7, 2015. Bill Whitaker is the correspondent.

Visit Colorado these days and you can smell change in the air. It's the

scent of legal marijuana for recreational use. If you're a resident 21 or

older, you can walk in to a state-licensed store and buy up to an ounce of

pot. Tourists are limited to a quarter ounce. Colorado has allowed medical

marijuana since 2001. But in 2012, voters amended the state constitution to

allow recreational pot -- and gave the government one year to make it

work. Colorado's governor calls it the most ambitious social experiment of

the 21st century. Three other states also have approved recreational sales.

But, as we first reported in January, none has gone further or faster into the

legal retail weed business than Colorado. We wanted to know how the

experiment is going. So we headed to Denver, the epicenter of a marijuana

industry that's now in full bloom.


Welcome to the Mile High City where marijuana, long a symbol of the

counterculture, now is just a part of everyday culture. It's a Thursday night

in downtown Denver and we were invited to a marijuana food and wine-

pairing catering to young professionals. You might expect to see the band

toking up, but here everybody is.

Denver skyline

CBS NEWS

http://www.cbsnews.com/videos/colorado-welcomes-cannabis-curious-tourists

http://www.cbsnews.com/videos/colorado-welcomes-cannabis-curious-tourists


The food is sprinkled with marijuana, the wine infused with a strain called

Killer Queen. Budtender Leo Dunaev selected it for the evening.

Leo Dunaev: Because of the mellowness of the strain there isn't any kind of

anxiety attached to it so that's why we have such a crowd of happy and

fantastic people. And what we're doing there, with that machine, is it

creates smoke that is cooled to 10 degrees. And that smoke is then blown

into this glass. And that allows the wine to open up and really bring in the

fruit forward qualities of it.

Those who might remember pot from the 70s - the marijuana grown and

sold in Colorado today is up to 10 times stronger. There's a healthy

appetite for The Rocky Mountain high and no shortage of stores to supply

the demand. There's the corner store in Denver...a high-end boutique in

Aspen right around the corner from Prada and Gucci. Colorado has

licensed more than 300


recreational dispensaries, ringing up $303 million in sales last year -- $52

million in tax revenue.

Bill Whitaker and Meg Sanders

CBS NEWS Bill Whitaker: This is a lot of pot. This is industrial scale.

Meg Sanders: It is.

Bill Whitaker: How many rooms like this do you have?

Meg Sanders: When we're fully finished with our construction, we'll have 12

like this.

Meg Sanders is a new breed of cannabis CEO, driven to push marijuana

into the mainstream. A suburban mother of two, she left a private equity

firm to run Mindful, a chain of four retail stores that sells recreational and

medicinal pot.

Bill Whitaker: All of this is legal. That's just mind-blowing.

Meg Sanders: It is.

Bill Whitaker: Meg, did you ever think you would be here doing this?

Meg Sanders: No, never in a million years. I was working in a small

financial office, and there just wasn't a lot of upward growth. And what

better opportunity than to jump into a fledgling industry--something that

we'll never see again in our lifetime.


Her 44,000 square-foot marijuana factory is cutting edge. Automated water and nutrient systems feed the plants. Lighting mimics the seasons so plants can be harvested year round - all this in a warehouse right across the street from a Denver police station. Sixty Mindful employees cultivate, trim, and package up to 500 pounds of marijuana every month.

Bill Whitaker: This is not somebody's back yard. This is not some stoner's

basement. This is a big business.

Meg Sanders: This is industrial agriculture. Absolutely. Commercial grow

right here.

All of this still is illegal at the federal level. The Justice Department is

watching closely. The feds say they won't intervene as long as Colorado's

recreational pot doesn't fall into the hands of kids or criminals or cross state

lines. With marijuana's growing acceptance in Colorado, Sanders says

she's comfortable as a cannabis capitalist.

Meg Sanders: I have a massive engineering feat for you.

http://www.cbsnews.com/videos/inside-the-trim-room-of-a-marijuana-factory




Alijah Smith: All right.

Her 24-year-old son Alijah works with her at Mindful. She says parents at

her daughter's middle school seem more curious than critical of her

business.

Bill Whitaker: Do you have any concerns that your job is sending the wrong

signal to your 13-year-old daughter?

Meg Sanders: I'm not concerned about that.

Bill Whitaker: At all?

Meg Sanders: I'm not. This isn't carte blanche, "Oh, because I work here,

everybody should have access to it. And that includes her." We have very

good conversations about it. She knows. She knows.

Bill Whitaker: I mean, you say you're a business person. I think some

parents would look at this and say, "She's just peddling drugs."

Meg Sanders: I can tell you that the drug dealer, illegal drug dealer on the

corner in any state in this nation isn't carding, isn't checking your ID, isn't

making sure you have a medical marijuana card or you're over 21. This

industry does it every day, the stats show it. We've done a phenomenal job.

Mindful expects to rake in $18 million this year, but it's not easy money.

Colorado requires every plant grown by a licensed operator to be tracked

from seed to sale. Each one has a bar-coded radio frequency ID tag and is

logged into a statewide database. Cameras watch it all. The goal is to keep

every bud and bit off the black market.


Greenwood Village Police Chief John Jackson isn't sold.

John Jackson: Law enforcement is really trying to do the right thing here.

It's different. And it's requiring a mind change or shift on our part.

Jackson is president of the Colorado Association of Chiefs of Police. He

says there's still illegal pot on the streets from underground dealers who

don't have to levy 28 percent in state taxes.

John Jackson: There's a common belief that by legalizing it, you will get rid

of the black market. I can resoundly say that the black market is alive and

doing well.

Bill Whitaker: It's still cheaper to buy it from the dealer on the street than to

buy it in the store?

John Jackson: Certainly. You know, we've created an entire industry here.

And I'm gonna be honest with you. There are some very responsible

people that are involved. And it's like anything else in society. You've got a

few people that are really making it hard for the others, and maybe use

Colorado as a platform to simply provide their marijuana to the rest of the

country.


"There's a common belief that by

legalizing it, you will get rid of the

black market. I can resoundly say

that the black market is alive and

doing well."

This is what he's talking about. In October, Denver police and the DEA

raided several warehouse operations that were allegedly growing

marijuana destined for out-of-state. Neighbors Nebraska and Oklahoma are

suing to have the U.S. Supreme Court declare Colorado's recreational pot

market unconstitutional, claiming marijuana is crossing their borders. It's

too early to say if other problems are taking root. Colorado is just now

starting to collect and analyze data on pot's impact on the state.

Andrew Freedman: I do worry about if we are irreparably harming

Colorado. And it's something that will take years to suss out.

This baby-faced 31-year-old, Andrew Freedman, is Colorado's marijuana

czar. He's a Harvard Law grad - handpicked by Colorado Gov.John

Hickenlooper to oversee the rollout of legalized, recreational pot.

Bill Whitaker: There is no roadmap. I mean you guys are racing ahead at,

you know, 1,000 miles an hour. And you're trying to work this out on-the-fly.

How do you do that?


Andrew Freedman: It's an unbelievable challenge. Within one year, we

wanted to get our culture up to speed. What is the right amount to imbibe or

to smoke and drive? What's appropriate around kids? What's appropriate in

public? And society had never weighed in on these things before.

[Andrew Freedman: OK, anything else on caregivers? Black market, gray

market, where we're going on it?]

"I do worry about if we are

irreparably harming Colorado.

And it's something that will take

years to suss out."

He regularly calls together the department heads of revenue; health;

education; all the state agencies involved with marijuana - trying to balance

the demands of the people with public safety and the law.

http://www.cbsnews.com/videos/is-colorado-creating-new-marijuana-users




Bill Whitaker: It's legal here, but outside of Colorado, it's still illegal. It's a

federally illegal drug. How do you square those two?

Andrew Freedman: Well, it is a round peg in a square hole. It takes

everybody being creative in ways they haven't been creative before, and

knowing that at any time the federal government could come and shut us

down, tell us that what we're doing is illegal in their eyes.

Bill Whitaker: You still think that's possible?

Andrew Freedman: Sure. It's completely possible that in a few years,

somebody comes around and says - a new president says, "We're not OK

with you doing this."

They know they're under a microscope. That's why Colorado was quick to

act when it bit into trouble with edibles -- marijuana candies, cookies and

other infused foods. Just three months into legalization, a 19-year-old

college student visiting Denver leapt to his death from a hotel balcony after

eating a pot-laced cookie. The coroner's reported noted "marijuana

intoxication" as "a significant contributing factor."

Andrew Freedman: I think one of the things we didn't see coming was that--

people were gonna overdose on edibles. And we're not gonna try to hide

that problem. New rules and regulations came out faster than I think you

ever see state government do something.

New rules placed immediate limits on the amount of THC, marijuana's

major psychoactive ingredient, allowed in edibles and required new labeling

detailing the potency of each serving.


But the biggest cloud over the industry is banking. As long as the federal

government continues to count pot proceeds as illegal drug money, most

banks won't touch it. So Colorado's billion dollar marijuana industry is

conducted almost entirely in cash: that's why Meg Sanders keeps a two-ton

safe.

Bill Whitaker: So your payroll was in cash?

Meg Sanders: Payroll, rent.

Bill Whitaker: Taxes?

Meg Sanders: Taxes, licensing fees, Home Depot, vendors, you name it,

our electrician, absolutely.

Bill Whitaker: All in cash?

Meg Sanders: Absolutely. From a public safety standpoint, it's definitely the

number one issue that this industry faces.

Gov. John Hickenlooper: If you want to guarantee that a fledgling industry

becomes corrupt and, you know, becomes populated with gang activity

make it all cash, right. That's as old as Al Capone, right. Cash creates

corruption.


Colorado Governor John Hickenlooper says a partial solution might be a new state-chartered cannabis credit union. He's urging the federal government to approve it. Still, despite the problems, Governor Hickenlooper says he's encouraged by the rollout of this green experiment Colorado voters wanted.

Bill Whitaker: In the beginning you didn't think it was a good idea?

Gov. John Hickenlooper: No. I opposed it. You know, and I opposed it and I

think even after the election if I'd had a magic wand and I could wave the

wand I probably would've reversed it and had the initiative fail. But now, I

look at it and I'm not so sure I'd do that even if I had such a wand. I mean, I

think we've made a lot of progress. And, you know, still a lot of work to be

done. But I think we might actually create a system that can work.

Meg Sanders says marijuana is good for business...

And good for Colorado.

Bill Whitaker: Are you seeing a marijuana effect on the economy here?

http://www.cbsnews.com/videos/colorado-gov-on-the-future-of-legal-weed




Meg Sanders: Absolutely. You can't find an empty warehouse in the city of

Denver (laugh) really. I mean, you just can't. And then think of the ripple

effect. I mean we affect a ton of businesses. Security, marketing-- you

know-- web hosting. You name it-- we're a business just like anybody else.

We have the same needs.

Mindful store

CBS NEWS

Today, you can walk into a Mindful dispensary and buy a joint like this for only $10. Business is good. Sanders is planning to expand.

Meg Sanders: We're creating. We're saying, "Please, trust us. We know

that we can do this right."

Bill Whitaker: I do I remember when this was rolled out everyone thought

that the sky was going to fall.

Meg Sanders: It's still there. (laugh) It didn't fall. And business is thriving.

And the customers are still coming through the door. So clearly, if I'm


looking at my business and I'm looking at those around me, the consumer

is saying, "Yeah, this works."

Since our story first aired, at least three more lawsuits have been filed in

federal court to stop Colorado's recreational sales. But the market

continues to grow. The latest figures show consumers bought $43 million

worth of recreational pot in March, a new monthly high.

Link to video: http://www.cbsnews.com/news/colorado-pot-marijuana-60-

minutes-bill-whitaker/

CNBC Report – Marijuana in America – Colorado Pot Rush

Link: http://www.cnbc.com/id/101412302

http://www.cbsnews.com/news/colorado-pot-marijuana-60-minutes-bill-whitaker/

http://www.cbsnews.com/news/colorado-pot-marijuana-60-minutes-bill-whitaker/

confidential business review · 2018-02-28 · kine mine confidential business review – presented...

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