Statehouse Holdings Inc STHZF

Going Concern (Continued)

[Flagshipzilla]

0. The Company's plan to ensure operational continuity includes the implementation of its cost savings plan, and various strategic actions, including the divesture of non-core assets including but not limited to the current assets held for sale, as well as its on-going revenue strategies to increase market share and retail, manufacturing and wholesale revenue. Subsequent to quarter-end, the Company announced that it had entered into an agreement to extend the repayment date of the Senior Secured Debt (as defined below) and to increase the amount of the Senior Secured Debt (Note 13 and 31).

   The Company's annual operating plan for fiscal year 2023 estimates that the Company will be able to sustain current operations. However, the Company's cash needs are significant and not achievable with current cash flow. Additionally, management expects to continue to manage the Company's operating expenses and reduce its projected cash requirements through permanently or temporarily closing retail dispensaries that are under performing, and/or implementing other restructuring activities. There are no assurances that the Company will be successful in achieving these goals.

   The accompanying unaudited condensed interim consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to the Company's ability to continue as a going concern. The application of the going-concern basis is dependent upon the Company achieving profitable operations to generate sufficient cash flows to fund continuing operations, or, in the absence of adequate cash flows from operations, obtaining additional financing to support operations for the foreseeable future. It is not possible to predict whether financing efforts will be successful in the future.