UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

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

For the quarter ended September 30, 2021

☐ 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: 001-39217

GREENROSE ACQUISITION CORP.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		84-2845696
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

111 Broadway

Amityville, NY 11701

(Address of principal executive offices)

(516) 346-5270

(Issuer’s telephone number)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Units, each consisting of one share of common stock and one redeemable warrant	GNRSU	OTC Pink
Common stock, par value $0.0001 per share	GNRS	OTCQX
Redeemable warrants, exercisable for shares of common stock at an exercise price of $11.50 per share	GNRSW	OTCQB

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 check mark whether the registrant has submitted electronically every Interactive Data 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, a smaller reporting company or an emerging growth company. See 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 check mark 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 November 22, 2021, 21,892,500 shares of common stock, par value $0.0001 per share, were issued and outstanding.

GREENROSE ACQUISITION CORP.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2021

TABLE OF CONTENTS

		Page

Part I. Financial Information		1
Item 1. Financial Statements		1
Condensed Consolidated Balance Sheets as of September 30, 2021 (Unaudited) and December 31, 2020 (Restated)		1
Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020 (Restated)		2
Unaudited Condensed Consolidated Statements of Changes in Permanent Deficit for the Three and Nine Months Ended September 30, 2021 and 2020 (Restated)		3
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 (Restated)		4
Notes to Unaudited Condensed Consolidated Financial Statements		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk		28
Item 4. Controls and Procedures		28
Part II. Other Information		29
Item 1. Legal Proceedings		29
Item 1A. Risk Factors		29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		29
Item 3. Defaults Upon Senior Securities		30
Item 4. Mine Safety Disclosures		30
Item 5. Other Information		30
Item 6. Exhibits		31
Part III. Signatures		32

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

GREENROSE ACQUISITION CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2021			December 31, 2020
	(Unaudited)			(Restated)
ASSETS
Current assets
Cash	$	102,081		$	309,849
Prepaid expenses		66,536			45,096
Total Current Assets		168,617			354,945

Marketable securities held in Trust Account		174,507,917			173,656,603
Other asset		50,000			—
TOTAL ASSETS	$	174,726,534		$	174,011,548

LIABILITIES, TEMPORARY EQUITY AND PERMANENT DEFICIT
Current liabilities
Accrued expenses	$	2,015,264		$	399,999
Promissory note – related party		1,095,000			—
Total Current Liabilities		3,110,264			399,999

Derivative Liability - Private Warrants		1,168,200			1,980,000
Convertible promissory note, net – related party		2,751,948			1,593,605
TOTAL LIABILITIES		7,030,412			3,973,604

Commitments

Common stock subject to possible redemption; 17,250,000 shares at redemption value at September 30, 2021 and December 31, 2020		174,457,917			173,439,148

Permanent Deficit
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding		—			—
Common stock, $0.0001 par value; 70,000,000 shares authorized; 4,642,500 shares issued and outstanding (excluding 17,250,000 shares subject to possible redemption) at September 30, 2021 and December 31, 2020		464			464
Additional paid-in capital		—			—
Accumulated deficit		(6,762,259	)		(3,401,668	)
Total Permanent Deficit		(6,761,795	)		(3,401,204	)
TOTAL LIABILITIES, TEMPORARY EQUITY AND PERMANENT DEFICIT	$	174,726,534		$	174,011,548

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

GREENROSE ACQUISITION CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended September 30,						Nine months Ended September 30,
	2021			2020			2021			2020
				(Restated)						(Restated)
Operating and formation costs	$	1,203,002		$	436,062		$	3,577,513		$	985,093
Loss from operations		(1,203,002	)		(436,062	)		(3,577,513	)		(985,093	)

Other (expenses) income:
Interest earned on marketable securities held in Trust Account		4,378			4,377			12,984			1,152,225
Interest Expense – Promissory Note		(78,319	)		(89,662	)		(1,117,630	)		(183,222	)
Change in fair value of private warrants liabilities		277,200			(59,400	)		811,800			930,600
Change in fair value of Convertible promissory note, net – related party		222,000			(22,676	)		959,287			299,794
Other (expenses) income, net		425,259			(167,361	)		666,441			2,199,397

(Loss) Income before income taxes		(777,743	)		(603,423	)		(2,911,072	)		1,214,304
Benefit from (Provision for) income taxes		—			90,338			—			(35,746	)
Net (loss) income	$	(777,743	)	$	(513,085	)	$	(2,911,072	)	$	1,178,558

Basic and diluted weighted average shares outstanding, Common stock		21,892,500			21,892,500			21,892,500			19,069,434

Basic and diluted net (loss) income per share, Common stock	$	(0.04	)	$	(0.02	)	$	(0.13	)	$	0.06

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

GREENROSE ACQUISITION CORP.

STATEMENTS OF CHANGES IN PERMANENT DEFICIT

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021

(UNAUDITED)

	Common Stock				Additional Paid-in			Accumulated			Total Permanent
	Shares		Amount		Capital			Deficit			Deficit
Balance – January 1, 2021 (restated)		4,642,500	$	464	$	—		$	(3,401,668	)	$	(3,401,204	)

Accretion of carrying value to redemption value		—		—		—			15,964			15,964
Net loss		—		—		—			(784,951	)		(784,951	)
Balance – March 31, 2021 (restated)		4,642,500	$	464	$	—		$	(4,170,655	)	$	(4,170,191	)

Accretion of carrying value to redemption value		—		—		—			70,655			70,655
Net loss		—		—		—			(1,348,378	)		(1,348,378	)
Balance – June 30, 2021 (restated)		4,642,500	$	464	$	—		$	(5,448,378	)	$	(5,447,914	)

Capital contribution to Trust Account		—		—		569,250			—			(569,250	)
Accretion of carrying value to redemption value		—		—		(569,250	)		(536,138	)		(1,105,388	)
Net loss		—		—		—			(777,743	)		(777,743	)
Balance – September 30, 2021		4,642,500	$	464	$	—		$	(6,762,259	)	$	(6,761,795	)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020

(Unaudited)

	Common Stock				Additional Paid-in			Accumulated			Total Permanent
	Shares		Amount		Capital			Deficit			Deficit
Balance – January 1, 2020		4,312,500	$	431	$	24,569		$	(2,199	)	$	22,801
Sale of 330,000 Private Units, net of warrant liability		330,000		33		3,065,667			—			3,065,700
Contribution in excess of fair value of sale of 1,650,000 Private Warrants		—		—		478,500			—			478,500
Accretion of carrying value to redemption value		—		—		(3,568,736	)		(1,739,853	)		(5,308,589	)
Net Income		—		—		—			1,130,254			1,130,254
Balance – March 31, 2020 (restated)		4,642,500	$	464	$	—		$	(611,798	)	$	(611,334	)

Accretion of carrying value to redemption value		—		—		—			(50,849	)		(50,849	)
Net Income		—		—		—			561,389			561,389
Balance – June 30, 2020 (restated)		4,642,500	$	464	$	—		$	(101,258	)	$	(100,794	)

Accretion of carrying value to redemption value		—		—		—			(26,315	)		(26,315	)
Net loss		—		—		—			(513,085	)		(513,085	)
Balance – September 30, 2020 (restated)		4,642,500	$	464	$	—		$	(640,658	)	$	(640,194	)

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

GREENROSE ACQUISITION CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine months Ended September 30,
	2021			2020
				(Restated)
Cash Flows from Operating Activities:
Net (loss) income	$	(2,911,072	)	$	1,178,558
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Interest earned on marketable securities held in Trust Account		(12,984	)		(1,152,225	)
Interest Expense – Promissory Note		1,117,630			183,222
Change in fair value of private warrants liability		(811,800	)		(930,600	)
Change in fair value of Convertible promissory note, net – related party		(959,287	)		(299,794	)
Changes in operating assets and liabilities:
Prepaid expenses		(21,440	)		(6,299	)
Other asset		(50,000	)		—
Accrued expenses		1,615,265			235,988
Income taxes payable		—			35,746
Net cash used in operating activities		(2,033,688	)		(755,404	)

Cash Flows from Investing Activities:
Investment of cash in Trust Account		(569,250	)		(172,500,000	)
Cash withdrawn from trust account for taxes		300,170			—
Net cash used in investing activities		(269,080	)		(172,500,000	)

Cash Flows from Financing Activities:
Proceeds from sale of Units, net of underwriting discounts paid		—			169,050,000
Proceeds from sale of Private Units		—			3,300,000
Proceeds from sale of Private Warrants		—			1,650,000
Advances from related party		—			164,753
Repayment of advances from related party		—			(796,119	)
Proceeds from promissory note – related party		1,095,000			—
Proceeds from Convertible promissory note – related party		1,000,000			1,000,000
Payment of offering costs		—			(368,949	)
Net cash provided by financing activities		2,095,000			173,999,685

Net Change in Cash		(207,768	)		744,281
Cash – Beginning of period		309,849			24,970
Cash – End of period	$	102,081		$	769,251

Non-Cash investing and financing activities:
Initial classification of common stock subject to possible redemption		—		$	172,500,000
Change in value of common stock subject to possible redemption	$	1,018,769		$	966,479
Initial classification of private warrants liability		—		$	1,405,800
Initial classification of Convertible promissory note, net – related party		1,087,401			492,165
Offering costs included in accrued offering costs	$	—		$	—

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

GREENROSE ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

Note 1 — Description of Organization and Business Operations

Greenrose Acquisition Corp. (the “Company”) was incorporated in Delaware on August 26, 2019. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”).

The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

On March 12, 2021, the Company entered into definitive agreements to acquire four cannabis companies. The companies are Shango Holdings Inc. (Shango), Futureworks LLC (d/b/a The Health Center), Theraplant, LLC, and True Harvest, LLC. As part of the acquisition, the company formed wholly owned subsidiaries to effect the business combinations: i) GNRS NV Merger Sub, Inc., a Nevada corporation on March 10, 2021, ii) GNRS CT Merger Sub, LLC, a Connecticut limited liability company on March 5, 2021, iii) Futureworks Holdings, Inc. a Delaware corporation on March 11, 2021, and iv) True Harvest Holdings, Inc., a Delaware corporation on March 10, 2021, (see Note 7).

As of September 30, 2021, the Company had not commenced any operations. All activity through September 30, 2021 relates to the Company’s formation, the initial public offering (“Initial Public Offering”), which is described below, identifying a target company or companies for a Business Combination and working towards the consummation of the Business Combination more fully described in Note 7. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from assets held in the Trust Account, interest expense from the amortization of the debt discount on our promissory note and recognizes changes in the fair value of derivative liabilities as other income (expense).

The registration statement for the Company’s Initial Public Offering was declared effective on February 10, 2020. On February 13, 2020, the Company consummated the Initial Public Offering of 15,000,000 units (the “Units” and, with respect to the shares of common stock included in the Units sold, the “Public Shares”), generating gross proceeds of $150,000,000, which is described in Note 4.

Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 300,000 units (the “Private Units”) and 1,500,000 warrants (the “Private Warrants” and, together with the Private Units, the “Private Securities”) at a price of $10.00 per Private Unit and $1.00 per Private Warrant in a private placement to Greenrose Associates, LLC (the “Sponsor”) and Imperial Capital, LLC (“Imperial”), generating gross proceeds of $4,500,000, which is described in Note 5.

Following the closing of the Initial Public Offering on February 13, 2020, an amount of $150,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Securities was placed in a trust account (the “Trust Account”) located in the United States, which will be only invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act of 1940, as amended (the “Investment Company Act”), as determined by the Company, until the earlier of: (i) the completion of a Business Combination or (ii) the distribution of the funds in the Trust Account to the Company’s stockholders, as described below.

On February 14, 2020, the underwriters notified the Company of their intention to exercise their over-allotment option in full. As such, on February 14, 2020, the Company consummated the sale of an additional 2,250,000 Units, at $10.00 per Unit, and the sale of an additional 30,000 Private Units, at $10.00 per Private Unit, and 150,000 Private Warrants, at $1.00 per Private Warrant, generating total gross proceeds of $22,950,000. A total of $22,500,000 of the net proceeds was deposited into the Trust Account, bringing the aggregate proceeds held in the Trust Account to $172,500,000.

Transaction costs amounted to $4,419,274 consisting of $3,450,000 of underwriting fees and $969,274 of other offering costs.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Securities, although substantially all of the net proceeds are intended to be applied generally toward completing a Business Combination. The Company must complete a Business Combination having an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding taxes payable on income earned on the Trust Account) at the time of the agreement to enter into an initial Business Combination. The Company will only complete a Business Combination if the post Business Combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully complete a Business Combination.

GREENROSE ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

The Company will provide its stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account ($10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its franchise and income tax obligations). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.

The Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor and Imperial have agreed to vote their Founder’s Shares (as defined in Note 6), Private Shares (as defined in Note 5), and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination and not to convert any shares in connection with a stockholder vote to approve a Business Combination or sell any shares to the Company in a tender offer in connection with a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares, without voting, and if they do vote, irrespective of whether they vote for or against the proposed Business Combination.

The Sponsor and Imperial have agreed (a) to waive their redemption rights with respect to their Founder’s Shares, Private Shares and Public Shares held by it in connection with the completion of a Business Combination, (b) to waive their rights to liquidating distributions from the Trust Account with respect to the Founder’s Shares and Private Shares if the Company fails to consummate a Business Combination, and (c) not to propose an amendment to the Amended and Restated Certificate of Incorporation that would affect a public stockholders’ ability to convert or sell their shares to the Company in connection with a Business Combination or affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.

The Company will have until August 13, 2021 (subject to its right to extend the period of time to consummate a Business Combination for up to an additional three months if the Sponsor agrees to deposit $569,250 in the Trust Account for each one month extension) to complete a Business Combination (the “Combination Period”). See note 11 for details regarding extension of the business combination and amendments to business combination agreements. If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay franchise and income taxes, divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject (in each case of (ii) and (iii) above) to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.

GREENROSE ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

Extension of Business Combination

On August 11, 2021, Greenrose notified Continental Stock Transfer & Trust Company that it was exercising its option to extend the time available to consummate a Business Combination with the target businesses by an additional month, thereby extending the de-SPAC deadline from August 13, 2021 to September 13, 2021. Furthermore, in accordance with Investment Management Trust Agreement between Greenrose Acquisition Corp and Continental Stock Transfer & Trust Company, February 11, 2020, Greenrose authorized the trustees to deposit $569,250 into the trust account. The Sponsor has the right to exercise its right to extend the time available to consummate a Business Combination for up to two additional months.

On September 8, 2021, Greenrose notified Continental Stock Transfer & Trust Company that it was exercising its option to extend the time available to consummate a Business Combination with the target businesses by an additional month, thereby extending the de-SPAC deadline from September 13, 2021 to October 13, 2021. Furthermore, in accordance with Investment Management Trust Agreement between Greenrose and Continental Stock Transfer & Trust Company, dated to February 11, 2020, Greenrose authorized the trustees to deposit $569,250 into the trust account.

On October 8, 2021 and October 27, 2021, the Company extended the dates by which the Company has to consummate a business combination from October 13, 2021 to November 13, 2021 and then to November 30, 2021 (see Note 11).

In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below $10.00 per Public Share, except as to any claims by a third party who executed a valid and enforceable agreement with the Company waiving any right, title, interest or claim of any kind they may have in or to any monies held in the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, none of the Company’s officers or directors, the Sponsor, Imperial or their respective officers, directors, shareholder or members (collectively, the “Insiders”) will be responsible to the extent of any liability for such third party claims. The Company will seek to reduce the possibility that the Insiders will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

Risks and Uncertainties

Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Liquidity and Going Concern

As of September 30, 2021, the Company had cash of $102,081 held outside of the Trust Account, total current liabilities of $3,110,264 which excludes franchise taxes payable of $50,000, of which such amount will be paid from interest earned on the Trust Account. For the nine months ended September 30, 2021, we incurred a net loss of $2,911,072 and used $2,033,688 cash from operating activities.

Until the consummation of a Business Combination, the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the Business Combination.

The Company will need to raise additional capital through loans or additional investments from its Sponsor, shareholders, officers, directors, or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern through November 30, 2021, the date that the Company will be required to cease all operations, except for the purpose of winding up, if a Business Combination is not consummated. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern. See note 11 for details regarding extension of the business combination and additional financing.

GREENROSE ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

Senior Secured Loan

On July 30, 2021, the Company entered into a commitment letter (the “Commitment Letter”) with SunStream Bancorp Inc. (“Sunstream”), pursuant to which Sunstream committed to provide, subject to the satisfaction of customary closing conditions stipulated in the Commitment Letter, a multi-tranche senior secured loan (the “Loan”) to the Company. The proceeds of the Loan are expected to be used (i) to consummate one or more of the Company’s previously announced Business Combinations and (ii) for general working capital purposes.

The Loan consists of $78.1 million of loan principal including an initial tranche of $52.1 million (“Tranche I”) on the closing date of the Loan and second tranche of $26.0 million (“Tranche II”) available prior to the 12-month anniversary of the closing date of the Loan, in each case.

The Loan will be collateralized by a senior secured first-priority lien over all of the assets of the Company and its subsidiaries, subject to to-be-agreed upon carve-outs and exceptions. The Loan matures 48 months following the closing date of the Loan and has an interest rate, payable monthly, of 11.9% per annum on the outstanding principal. The Loan amortizes at a rate of 15.0% of outstanding principal per annum, beginning on the 24-month anniversary of the closing date of the Loan.

Tranche I of the Loan is prepayable, at Greenrose’s option, prior to the 36-month anniversary of the closing of the loan, subject to certain fees. In addition, Tranche II of the Loan is prepayable, at the Company’s option, prior to the 36-month anniversary of the Tranche II drawdown date, subject to certain fees.

The Company has also agreed to pay to Sunstream certain additional fees customary to transactions of this type.

In connection with the Loan commitments, Sunstream will be issued warrants with a five-year term to acquire additional shares of common stock of Greenrose with terms substantially similar to the warrants issued to the Company’s sponsors in connection with the initial public offering of the Company.

In addition, the Loan will be subject to the Company’s compliance with certain on-going financial covenants customary to other senior secured loans of this type, as will be negotiated by Sunstream and the Company in the course of ongoing due diligence by Sunstream prior to funding of the Loan.

In connection with the Commitment Letter, the Company and Sunstream have agreed to deal exclusively with one another until the earlier of September 30, 2021 or the closing of one or more of the Company’s previously announced Business Combinations with respect to any financing proposals similar to the financings contemplated by the Loan commitments.

Tranche I of the Loan is anticipated to close substantially simultaneously with the consummation of one or more of the Company’s previously announced Business Combinations.

The accompanying condensed consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The accompanying condensed 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 the outcome of the uncertainty related to our ability to continue as a going concern.

Note 2 — Restatement of Previously Issued Financial Statements

In connection with the preparation of the Company’s financial statements as of September 30, 2021, management identified errors made in its historical financial statements where, at the closing of the Company’s Initial Public Offering, the Company improperly valued its common stock subject to possible redemption. The Company previously determined the common stock subject to possible redemption to be equal to the redemption value, while also taking into consideration a redemption cannot result in net tangible assets being less than $5,000,001. Management determined that the Public Shares underlying the Units issued during the Initial Public Offering can be redeemed or become redeemable subject to the occurrence of future events considered outside the Company’s control. Therefore, management concluded that the redemption value should include all shares of common stock subject to possible redemption, resulting in the common stock subject to possible redemption being equal to their redemption value. As a result, management has noted a reclassification error related to temporary equity and permanent equity. This resulted in a restatement to the initial carrying value of the common stock subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit and common stock. (see Note 8 for discussion of permanent equity).

GREENROSE ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

In connection with the change in presentation for the common stock subject to redemption, the Company also restated its income (loss) per common share calculation to allocate net income (loss) evenly to all common stock. This presentation contemplates a Business Combination as the most likely outcome, in which case, all common stock share pro rata in the income (loss) of the Company.

The impact of the revision on the Company’s financial statements is reflected in the following table.

(Unaudited)
Balance Sheet as of February 13, 2020 (restated)	As Previously Reported			Restatement Adjustment			As Restated
Common stock subject to possible redemption	$	144,147,194		$	5,852,806		$	150,000,000
Common stock	$	521		$	(59	)	$	462
Additional paid-in capital	$	5,002,212		$	(5,002,212	)	$	—
Accumulated deficit	$	(2,731	)	$	(850,535	)	$	(853,266	)
Total Permanent Equity (Deficit)	$	5,000,001		$	(5,852,806	)	$	(852,805	)
Number of shares subject to possible redemption		14,414,719			581,281			15,000,000

Balance Sheet as of March 31, 2020 (restated)
Common stock subject to possible redemption	$	167,777,974		$	5,611,341		$	173,389,315
Common stock	$	520		$	(56	)	$	464
Additional paid-in capital	$	3,871,432		$	(3,871,432	)	$	—
Accumulated deficit	$	1,128,055		$	(1,739,853	)	$	(611,798	)
Total Permanent Equity (Deficit)	$	5,000,007		$	(5,611,341	)	$	(611,334	)
Number of shares subject to possible redemption		16,691,744			558,256			17,250,000

Balance Sheet as of June 30, 2020 (restated)
Common stock subject to possible redemption	$	168,339,363		$	5,100,801		$	173,440,164
Common stock	$	514		$	(50	)	$	464
Additional paid-in capital	$	3,310,049		$	(3,310,049	)	$	—
Accumulated deficit	$	1,689,444		$	(1,790,702	)	$	(101,258	)
Total Permanent Equity (Deficit)	$	5,000,007		$	(5,100,801	)	$	(100,794	)
Number of shares subject to possible redemption		16,745,577			504,423			17,250,000

Balance Sheet as of September 31, 2020 (restated)
Common stock subject to possible redemption	$	167,826,278		$	5,640,201		$	173,466,479
Common stock	$	520		$	(56	)	$	464
Additional paid-in capital	$	3,823,128		$	(3,823,128	)	$	—
Accumulated deficit	$	1,176,359		$	(1,817,017	)	$	(640,658	)
Total Permanent Equity (Deficit)	$	5,000,007		$	(5,640,201	)	$	(640,194	)
Number of shares subject to possible redemption		16,692,005			557,995			17,250,000

Balance Sheet as of December 31, 2020 (restated)
Common stock subject to possible redemption	$	165,037,937		$	8,401,211		$	173,439,148
Common stock	$	548		$	(84	)	$	464
Additional paid-in capital	$	6,611,441		$	(6,611,441	)	$	—
Accumulated deficit	$	(1,611,982	)	$	(1,789,686	)	$	(3,401,668	)
Total Permanent Equity (Deficit)	$	5,000,007		$	(8,401,211	)	$	(3,401,204	)
Number of shares subject to possible redemption		16,414,428			835,572			17,250,000

Balance Sheet as of March 31, 2021 (restated)
Common stock subject to possible redemption	$	164,252,986		$	9,170,198		$	173,423,184
Common stock	$	556		$	(92	)	$	464
Additional paid-in capital	$	7,396,384		$	(7,396,384	)	$	—
Accumulated deficit	$	(2,396,933	)	$	(1,773,722	)	$	(4,170,655	)
Total Permanent Equity (Deficit)	$	5,000,007		$	(9,170,198	)	$	(4,170,191	)
Number of shares subject to possible redemption		16,333,556			916,444			17,250,000

Balance Sheet as of June 30, 2021 (restated)
Common stock subject to possible redemption	$	162,904,607		$	10,447,922		$	173,352,529
Common stock	$	568		$	(104	)	$	464
Additional paid-in capital	$	8,744,751		$	(8,744,751	)	$	—
Accumulated deficit	$	(3,745,311	)	$	(1,703,067	)	$	(5,448,378	)
Total Permanent Equity (Deficit)	$	5,000,008		$	(10,447,922	)	$	(5,447,914	)
Number of shares subject to possible redemption		16,210,346			1,039,654			17,250,000

GREENROSE ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

	As Previously Reported: Redeemable and Non-Redeemable			Restatement Adjustment			As Restated: Common Stock
Statement of Operations for the Three Month Period Ended March 31, 2020 (restated)
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption		16,664,719			(16,664,719	)		—
Basic and diluted net income per share, Common stock subject to possible redemption	$	0.05		$	(0.05	)	$	—
Basic and diluted weighted average shares outstanding, Non-redeemable common stock, Common Stock		4,785,228			8,607,052			13,392,280
Basic and diluted net loss per share, Non-redeemable common stock, Common Stock	$	0.06		$	0.02		$	0.08

Statement of Operations for the Three Month Period Ended June 30, 2020 (restated)
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption		16,694,628			(16,694,628	)		—
Basic and diluted net income per share, Common stock subject to possible redemption	$	—		$	—		$	—
Basic and diluted weighted average shares outstanding, Non-redeemable common stock, Common Stock		5,197,872			16,694,628			21,892,500
Basic and diluted net loss per share, Non-redeemable common stock, Common Stock	$	0.10		$	(0.07	)	$	0.03

Statement of Operations for the Six Month Period Ended June 30, 2020 (restated)
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption		16,684,442			(16,684,442	)		—
Basic and diluted net income per share, Common stock subject to possible redemption	$	0.05		$	(0.05	)	$	—
Basic and diluted weighted average shares outstanding, Non-redeemable common stock, Common Stock		4,991,550			12,650,840			17,642,390
Basic and diluted net loss per share, Non-redeemable common stock, Common Stock	$	0.16		$	(0.06	)	$	0.10

Statement of Operations for the Three Month Period Ended September 30, 2020 (restated)
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption		16,745,577			(16,745,577	)		—
Basic and diluted net income per share, Common stock subject to possible redemption	$	—		$	—		$	—
Basic and diluted weighted average shares outstanding, Non-redeemable common stock, Common Stock		5,146,923			16,745,577			21,892,500
Basic and diluted net loss per share, Non-redeemable common stock, Common Stock	$	(0.10	)	$	0.08		$	(0.02	)

Statement of Operations for the Nine Period Ended September 30, 2020 (restated)
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption		16,708,896			(16,708,896	)		—
Basic and diluted net income per share, Common stock subject to possible redemption	$	0.05		$	(0.05	)	$	—
Basic and diluted weighted average shares outstanding, Non-redeemable common stock, Common Stock		5,043,719			14,025,715			19,069,434
Basic and diluted net loss per share, Non-redeemable common stock, Common Stock	$	0.05		$	0.01		$	0.06

Statement of Operations for the Year Ended December 31, 2020 (restated)
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption		16,704,070			(16,704,070	)		—
Basic and diluted net income per share, Common stock subject to possible redemption	$	0.05		$	(0.05	)		—
Basic and diluted weighted average shares outstanding, Non-redeemable common stock, Common Stock		5,083,127			14,695,930			19,779,057
Basic and diluted net loss per share, Non-redeemable common stock, Common Stock	$	(0.49	)	$	0.41		$	(0.08	)

Statement of Operations for the Three Month Period Ended March 31, 2021 (restated)
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption		16,414,428			(16,414,428	)		—
Basic and diluted net income per share, Common stock subject to possible redemption	$	—		$	—		$	—
Basic and diluted weighted average shares outstanding, Non-redeemable common stock, Common Stock		5,478,072			16,414,428			21,892,500
Basic and diluted net loss per share, Non-redeemable common stock, Common Stock	$	(0.14	)	$	0.10		$	(0.04	)

Statement of Operations for the Three Month Period Ended June 30, 2021 (restated)
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption		16,337,862			(16,337,862	)		—
Basic and diluted net income per share, Common stock subject to possible redemption	$	—		$	—		$	—
Basic and diluted weighted average shares outstanding, Non-redeemable common stock, Common Stock		5,554,638			16,337,862			21,892,500
Basic and diluted net loss per share, Non-redeemable common stock, Common Stock	$	(0.24	)	$	0.18		$	(0.06	)

Statement of Operations for the Six Month Period Ended June 30, 2021 (restated)
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption		16,375,933			(16,375,933	)		—
Basic and diluted net income per share, Common stock subject to possible redemption	$	—		$	—		$	—
Basic and diluted weighted average shares outstanding, Non-redeemable common stock, Common Stock		5,516,567			16,375,933			21,892,500
Basic and diluted net loss per share, Non-redeemable common stock, Common Stock	$	(0.39	)	$	0.29		$	(0.10	)

Statement of Changes in Permanent Equity (Deficit) for the Three Months Ended March 31, 2020 (restated)
Sale of 17,250,000 Units, net of underwriting discounts, offering costs and warrant liability	$	168,080,726		$	(168,080,726	)	$	—
Common stock subject to possible redemption	$	(167,777,974	)	$	167,777,974		$	—
Change in value of common stock subject to redemption	$	302,752		$	(302,752	)	$	—
Accretion for common stock subject to redemption amount	$	—		$	(5,308,589	)	$	(5,308,589	)

Statement of Changes in Permanent Equity (Deficit) for the Three Months Ended June 30, 2020 (restated)
Change in value of common stock subject to redemption	$	(561,389	)	$	561,389		$	—
Accretion for common stock subject to redemption amount	$	—		$	(50,849	)	$	(50,849	)

Statement of Changes in Permanent Equity (Deficit) for the Three Months Ended September 30, 2020 (restated)
Change in value of common stock subject to redemption	$	513,085		$	(513,085	)	$	—
Accretion for common stock subject to redemption amount	$	—		$	(26,315	)	$	(26,315	)

Statement of Changes in Permanent Equity (Deficit) for the Three Months Ended December 31, 2020 (restated)
Change in value of common stock subject to redemption	$	2,788,341		$	(2,788,341	)	$	—
Accretion for common stock subject to redemption amount	$	—		$	27,331		$	27,331

Statement of Changes in Permanent Equity (Deficit) for the Three Months Ended March 30, 2021 (restated)
Change in value of common stock subject to redemption	$	784,950		$	(784,950	)	$	—
Accretion for common stock subject to redemption amount	$	—		$	15,964		$	15,964

Statement of Changes in Permanent Equity (Deficit) for the Three Months Ended June 30, 2021 (restated)
Change in value of common stock subject to redemption	$	1,348,380		$	(1,348,380	)	$	—
Accretion for common stock subject to redemption amount	$	—		$	70,655		$	70,655

Non-Cash investing and financing activities:	As Previously Reported			Restatement Adjustments			As Restated
Statement of Cash Flows for the Period Ended March 31, 2020 (restated)
Initial classification of common stock subject to possible redemption	$	166,647,190		$	5,852,810		$	172,500,000
Change in value of common stock subject to possible redemption	$	1,130,784		$	(241,469	)	$	889,315

Statement of Cash Flows for the Period Ended June 30, 2020 (restated)
Initial classification of common stock subject to possible redemption	$	166,647,190		$	5,852,810		$	172,500,000
Change in value of common stock subject to possible redemption	$	(1,609,253	)	$	2,549,417		$	940,164

Statement of Cash Flows for the Period Ended September 30, 2020 (restated)
Initial classification of common stock subject to possible redemption	$	166,647,190		$	5,852,810		$	172,500,000
Change in value of common stock subject to possible redemption	$	1,179,088		$	(212,609	)	$	966,479

Statement of Cash Flows for the Year Ended December 31, 2020 (restated)
Initial classification of common stock subject to possible redemption	$	166,647,190		$	5,852,810		$	172,500,000
Change in value of common stock subject to possible redemption	$	(1,609,253	)	$	2,548,401		$	939,148

Statement of Cash Flows for the Period Ended March 30, 2021 (restated)
Change in value of common stock subject to possible redemption	$	(784,951	)	$	784,951		$	—

Statement of Cash Flows for the Period Ended June 30, 2021 (restated)
Change in value of common stock subject to possible redemption	$	(2,133,329	)	$	2,133,329		$	—

GREENROSE ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

Note 3 — Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. We consolidate the financial statements of our wholly-owned subsidiaries and all intercompany transactions and account balances have been eliminated in consolidation. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed consolidated or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2020 as filed with the SEC on May 27, 2021, which contains the audited financial statements and notes thereto. The Company restated the condensed consolidated financial statements for the period ended September 30, 2020 and for the year ended December 31, 2020 in its previously filed Form 10-K. The interim results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any future interim periods.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(l) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires the Company’s 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 financial statements and the reported amounts of revenues and expenses during the reporting period.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these condensed financial statements is the determination of the fair value of the warrant liabilities. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates.

GREENROSE ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of September 30, 2021 and December 31, 2020.

Marketable Securities Held in Trust Account

At September 30, 2021 and December 31, 2020, substantially all of the assets held in the Trust Account were held in money market funds which are invested in U.S. Treasury securities. All of the Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in Trust Account are included in interest earned on marketable securities held in Trust Account in the accompanying condensed statements of operations. The estimated fair values of investments held in Trust Account are determined using available market information.

Derivative Liabilities

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own common shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the instruments are outstanding.

For issued or modified instruments that meet all of the criteria for equity classification, the instruments are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified instruments that do not meet all the criteria for equity classification, the instruments are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the instruments are recognized as a non-cash gain or loss on the statements of operations. The fair value of the instruments was estimated using a Black-Scholes model.

Common Stock Subject to Possible Redemption

The Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s condensed consolidated balance sheets.

The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit.

At September 30, 2021, the common stock reflected in the condensed consolidated balance sheet and at December 31, 2020, the common stock reflected in the consolidated balance sheet are reconciled in the following table:

Gross proceeds	$	172,500,000
Less:
Common stock issuance costs		(4,419,274	)
Plus:
Accretion of carrying value to redemption value		5,358,422

Common stock subject to possible redemption at December 31, 2020		173,439,148
Plus:
Accretion of carrying value to redemption value		1,018,769
Common stock subject to possible redemption at September 30, 2021	$	174,457,917

GREENROSE ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

Income Taxes

The Company accounts for income taxes under ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more -likely -than -not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

The Company’s currently taxable income primarily consists of interest income on the Trust Account. The Company’s general and administrative costs are generally considered start-up costs and are not currently deductible. During the three months and nine months ended September 30, 2021, the Company recorded no income tax expense.

Net Income (Loss) Per Common Share

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common share outstanding for the period. The Company applies the two-class method in calculating income (loss) per share. Accretion associated with the redeemable shares of common stock is excluded from income (loss) per share as the redemption value approximates fair value.

The calculation of diluted income (loss) per common share does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) the private placement since the exercise of the warrants is contingent upon the occurrence of future events. The warrants are exercisable to purchase 19,230,000 shares of common stock in the aggregate. As of September 30, 2021 and 2020, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. As a result, diluted net income (loss) per common share is the same as basic net income (loss) per common share for the periods presented.

The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts):

	Three Months Ended September 30, 2021			Three Months Ended September 30, 2020			Nine Months Ended September 30, 2021			Nine Months Ended September 30, 2020
	Common Stock			Common Stock			Common Stock			Common Stock
Basic and diluted net income (loss) per common share
Numerator:
Allocation of net income (loss), as adjusted	$	(777,743	)	$	(513,085	)	$	(2,911,072	)	$	1,178,558
Denominator:
Basic and diluted weighted average stock outstanding		21,892,500			21,892,500			21,892,500			19,069,434
Basic and diluted net income (loss) per common share	$	(0.04	)	$	(0.02	)	$	(0.13	)	$	0.06

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

GREENROSE ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

Recent Accounting Standards

In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.

Note 4 — Public Offering

Pursuant to the Initial Public Offering, the Company sold 17,250,000 Units, which includes a full exercise by the underwriters of their over-allotment option in the amount of 2,250,000 Units, at a price of $10.00 per Unit. Each Unit consists of one share of common stock and one warrant (“Public Warrant”). Each Public Warrant entitles the holder to purchase one share of common stock at a price of $11.50 per share, subject to adjustment (see Note 8).

Note 5 — Private Placement

Simultaneously with the closing of the Initial Public Offering, the Sponsor and Imperial purchased an aggregate of 300,000 Private Units at a price of $10.00 per Private Unit and 1,500,000 Private Warrants at a price of $1.00 per Private Warrant, for an aggregate purchase price of $4,500,000. The Sponsor purchased 200,000 Private Units and 1,000,000 Private Warrants and Imperial purchased 100,000 Private Units and 500,000 Private Warrants. As a result of the underwriters’ election to fully exercise their over-allotment option on February 14, 2020, the Sponsor and Imperial purchased an additional 30,000 Private Units, at a purchase price of $10.00 per Private Unit, and 150,000 Private Warrants, at a purchase price of $1.00 per Private Warrant, for an aggregate purchase price of $450,000. Each Private Unit consists of one share of common stock (“Private Share”) and one warrant. Each Private Warrant is exercisable to purchase one share of common stock at an exercise price of $11.50 per share, subject to adjustment (see Note 8). The proceeds from the Private Securities were added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Securities will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Shares will expire worthless.

Note 6 — Related Party Transactions

Founder’s Shares

In August 2019, the Sponsor purchased 4,312,500 shares (the “Founder’s Shares”) of the Company’s common stock for an aggregate price of $25,000. The Founder’s Shares included an aggregate of up to 562,500 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment was not exercised in full or in part, so that the Sponsor would collectively own 20% of the Company’s issued and outstanding shares after the Initial Public Offering (assuming the Sponsor did not purchase any Public Shares in the Initial Public Offering and excluding the Private Shares underlying the Private Securities). On February 14, 2020, as a result of the underwriters’ election to fully exercise their over-allotment option, 562,500 Founder’s Shares are no longer subject to forfeiture.

The Sponsor has agreed that, subject to certain limited exceptions, it will not transfer, assign or sell any of the Founder’s Shares until (i) with respect to 50% of the Founder’s Shares, for a period ending on the earlier of the one-year anniversary of the date of the consummation of the Business Combination and the date on which the closing price of the Company’s common stock equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within a 30-trading day period following the consummation of the Business Combination and (ii) with respect to the remaining 50% of the Founder’s Shares, for a period ending on the one-year anniversary of the date of the consummation of the Business Combination, or earlier if, subsequent to the Business Combination, the Company consummates a liquidation, merger, stock exchange or other similar transaction which results in all of its stockholders having the right to exchange their shares of common stock for cash, securities or other property. The limited exceptions include transfers, assignments or sales (i) to the Company’s or Sponsor’s officers, directors, consultants or their affiliates, (ii) to an entity’s members upon its liquidation, (iii) to relatives and trusts for estate planning purposes, (iv) by virtue of the laws of descent and distribution upon death, (v) pursuant to a qualified domestic relations order, (vi) to the Company for no value for cancellation in connection with the consummation of a Business Combination, or (vii) in connection with the consummation of a Business Combination at prices no greater than the price at which the shares were originally purchased, in each case (except for clause (vi) or with the Company’s prior consent) where the transferee agrees to the terms of the escrow agreement and to be bound by these transfer restrictions.

GREENROSE ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

In addition, the Sponsor has agreed not to sell, transfer, pledge, hypothecate or otherwise dispose of all or any part of the Founder’s Shares unless, prior to (a) a registration statement on the appropriate form under the Securities Act and applicable state securities laws with respect to the Founder’s Shares proposed to be transferred shall then be effective or (b) the Company has received an opinion from counsel reasonably satisfactory to the Company, that such registration is not required because such transaction is exempt from registration under the Securities Act and the rules promulgated by the SEC thereunder and with all applicable state securities laws.

Advances — Related Party

As of December 31, 2019, the Sponsor had advanced an aggregate of $631,366 on the Company’s behalf to cover certain expenses (the “Advances”). An additional $164,753 was advanced as of February 2020. The Advances were non-interest bearing and due on demand. Total advances of $796,119 were repaid on March 9, 2020.

Related Party Loans

In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor, or certain of the Company’s officers and directors or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $2,000,000 of the Working Capital Loans may be convertible into units at a price of $10.00 per unit and/or warrants at a price of $1.00 per warrant. The units would be identical to the Private Units and the warrants would be identical to the Private Warrants.

On March 26, 2020, the Company issued an unsecured promissory note (the “2020 Note”) in the principal amount of $1,000,000 to the Sponsor. The Note is non-interest bearing and payable upon the consummation of a Business Combination. Up to $1,000,000 of such loans may be convertible into units at a price of $10.00 per unit and/or warrants at a price of $1.00 per warrant. The units would be identical to the Private Units and the warrants would be identical to the Private Warrants.

On January 29, 2021, the Company issued an unsecured promissory note (the “2021 Note”) in the principal amount of $1,000,000 to the Sponsor. The Note is non-interest bearing and payable upon the consummation of a Business Combination. Up to $1,000,000 of such loans may be convertible into units at a price of $10.00 per unit and/or warrants at a price of $1.00 per warrant. The units would be identical to the Private Units and the warrants would be identical to the Private Warrants.

The Company assessed the provisions of the convertible promissory note under ASC 815-15. The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to a discount on the promissory note. The discount will be amortized over the life of the Note. For the three and nine months ended September 30, 2021, $267,372 and $1,306,683, respectively, were included within interest expense. To calculate the value of the embedded derivative we utilized a “with” and “without” approach. In the “with” scenario we valued the convertible promissory notes using a Black-Scholes model as it was determined that on a business combination, a holder would likely convert into private warrants, which were themselves valued using a Black-Scholes model and are considered to be a Level 3 fair value measurement (see Note 10). In the “without” scenario, we valued the repayment of the notional value of the convertible promissory note using a risk-adjusted discounted cash flow model. The primary unobservable inputs utilized in determining the fair value of the conversion option are volatility and credit spread.

GREENROSE ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

For the 2020 and 2021 Notes, the assumptions used to value the conversion option were consistent with those utilized in the Company’s Black-Scholes valuation for private warrants and are detailed below:

	January 29, 2021			September 30, 2021⁽²⁾
Expected volatility (%)		17.5	%		10.1	%
Risk-free interest rate (%)		0.54	%		1.00	%
Expected dividend yield (%)		0.0	%		0.0	%
Contractual term (years)		0.5			0.12
Conversion price⁽¹⁾		(⁽¹⁾	)		(⁽¹⁾	)
Underlying share price		10.28			10.08
Convertible notes amount	$	1,000,000		$	2,000,000
Fair value of the conversion feature ⁽³⁾	$	1,087,401		$	941,000

⁽¹⁾

The conversion price is $10.00 per unit and/or $1.00 per warrant

⁽²⁾

September 30, 2021 reflects the inputs for the fair value assumptions for the 2020 Note, 2021 Note, and private warrants

⁽³⁾

The fair value adjustments for both the 2020 Note and 2021 Note are included in the September 30, 2021 column

The following table presents the change in the fair value of conversion option:

	2020 Note			2021 Note
Fair value as of January 1, 2020	$	-		$	-
Initial measurement on March 26, 2020		492,165			-
Change in valuation inputs and other assumptions		320,721			-
Fair value as of December 31, 2020	$	812,886		$	-
Initial measurement on January 29, 2021					1,087,401
Change in valuation inputs and other assumptions		(342,385	)		(616,901	)
Fair value as of September 30, 2021	$	470,500		$	470,500

The assumptions used to value the conversion option were consistent with those utilized in the Company’s Black-Scholes valuation for stock options are detailed below:

	March 26, 2020			December 31, 2020
Expected volatility (%)		15.0	%		15.0	%
Risk-free interest rate (%)		0.60	%		0.43	%
Discount Rate (%)		25.0	%		25.0	%
Expected dividend yield (%)		0.0	%		0.0	%
Contractual term (years)		0.88			0.5
Conversion price		^(*)			^(*)
Underlying share price		8.97			10.13
Convertible notes amount	$	1,000,000		$	1,000,000
Fair value of the conversion feature	$	492,165		$	812,886

(*)	the conversion price is $10.00 per unit and/or $1.00 per warrant

The following table presents the change in the fair value of conversion option:

Fair value as of January 1, 2020	$	—
Initial measurement on March 26, 2020		492,165
Change in valuation inputs and other assumptions		320,721
Fair value as of December 31, 2020	$	812,886

On June 18, 2021, the Company issued an unsecured promissory note (the “Note”), in the principal amount of $300,000 to Greenrose Associates LLC (the “Sponsor”), the Company’s sponsor and owner of more than 10% of the Company’s issued and outstanding Common Stock, evidencing a loan in the amount of $300,000. The Note is non-interest bearing and payable upon the consummation of a business combination.

GREENROSE ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

On August 26, 2021, the Company issued an unsecured promissory note (the “Note”), in the principal amount of $450,000 to Greenrose Associates LLC (the “Sponsor”), the Company’s sponsor and owner of more than 10% of the Company’s issued and outstanding Common Stock, evidencing a loan in the amount of $450,000. The Note is non-interest bearing and payable upon the consummation of a business combination.

On September 9, 2021, Greenrose Acquisition Corp. (“Greenrose” or the “Company”) issued an unsecured promissory note (the “Note”), in the principal amount of $180,000 to Greenrose Associates LLC (the “Sponsor”), the Company’s sponsor and owner of more than 10% of the Company’s issued and outstanding Common Stock, evidencing a loan in the amount of $180,000. The Note is non-interest bearing and payable upon the consummation of a business combination.

On September 20, 2021, Greenrose Acquisition Corp. (“Greenrose” or the “Company”) issued an unsecured promissory note (the “Note”), in the principal amount of $65,000 to Greenrose Associates LLC (the “Sponsor”), the Company’s sponsor and owner of more than 10% of the Company’s issued and outstanding Common Stock, evidencing a loan in the amount of $65,000. The Note is non-interest bearing and payable upon the consummation of a business combination.

On October 1, 2021, Greenrose Acquisition Corp. (“Greenrose” or the “Company”) issued an unsecured promissory note (the “Note”) in the principal amount of $100,000 to Greenrose Associates LLC (the “Sponsor”), the Company’s sponsor and owner of more than 10% of the Company’s issued and outstanding Common Stock, evidencing a loan in the amount of $100,000. The Note is non-interest bearing and payable upon the consummation of a business combination.

Administrative Support Agreement

The Company entered into an agreement whereby, commencing on February 10, 2020, through the earlier of the Company’s consummation of a Business Combination and its liquidation, the Company will pay the Sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support. For the three months ended September 30, 2021 and 2020, the Company incurred and paid $30,000 and $30,000 in fees for these services, respectively. For the nine months ended September 30, 2021 and 2020, the Company incurred and paid $90,000 and $80,000 in fees for these services, respectively.

Note 7 — Commitments and Contingencies

Registration Rights

Pursuant to a registration rights agreement entered into on February 11, 2020, the holders of the Founder’s Shares, Private Units, Private Warrants, and any units or warrants that may be issued upon conversion of Working Capital Loans (and all underlying securities) are entitled to registration rights. The holders of the majority of these securities are entitled to make up to two demands that the Company register such securities. The holders of the majority of the Founder’s Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which the Founder’s Shares are to be released from escrow. The holders of a majority of the Private Units or units issued in payment of Working Capital Loans made to the Company (or underlying securities) can elect to exercise these registration rights at any time commencing after the Company consummates a Business Combination. Notwithstanding anything to the contrary, Imperial may only make a demand on one occasion and only during the five-year period beginning on the effective date of the Initial Public Offering. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination; provided, however, that Imperial may participate in a “piggy-back” registration only during the seven-year period beginning on the effective date of the Initial Public Offering. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Underwriting Agreement

The Initial Public Offering underwriting agreement provides that in the event the Company completes a financing transaction similar to the Initial Public Offering or Business Combination, or enters into a statement or letter of intent that results in such a transaction, within 18 months following its termination, Imperial shall be entitled to receive any expense reimbursement due to it along with payment in full of its applicable fee of either (i) 2% of the gross proceeds of the offering, of which 1% will be in cash and 1% will be in equity of the Company for a financing transaction, or (ii) an amount equal to 5% of the face amount of any equity securities and 3% of the face amount of any debt sold or arranged as part of the Business Combination (exclusive of any applicable finders’ fees which might become payable). Additionally, Imperial has the right to act as a book-runner and managing underwriter for all underwritten follow-on offerings for 18 months following completion of the Initial Public Offering and the right to approve any co-lead managing underwriter or co-book runner.

GREENROSE ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

Business Combination Marketing Agreement

The Company has engaged Imperial as an advisor in connection with a Business Combination to assist the Company in holding meetings with its shareholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities in connection with a Business Combination, assist the Company in obtaining shareholder approval for the Business Combination and assist the Company with its press releases and public filings in connection with the Business Combination. The Company will pay Imperial a cash fee for such services upon the consummation of a Business Combination in an amount equal to 4.5% of the gross proceeds of Initial Public Offering, or $7,762,500 (exclusive of any applicable finders’ fees which might become payable); provided that up to 20% of the fee may be allocated at the Company’s sole discretion to other FINRA members that assist the Company in identifying and consummating a Business Combination.

Additionally, the Company has agreed to pay Imperial a cash fee for assisting it in obtaining financing for the Business Combination in an amount equal to 5% of the face amount of any equity securities and 3% of the face amount of any debt sold or arranged as part of the Business Combination (exclusive of any applicable finders’ fees which might become payable).

Merger Agreement

True Harvest

On July 2, 2021, the Company entered into an amendment (the “True Harvest Amendment No.1”) to the True Harvest Holdings, Inc. Asset Purchase Agreement, dated as of March 12, 2021. Pursuant to True Harvest Amendment No. 1, the table in Section 1.05(c) of the Purchase Agreement was deleted and replaced with the following table:

36 Month Price Point
Percentage of Earnout		Flower Production - average price
0%		<$2,199
20%		$2,200-$2,199
50%		$2,200-$2,499
80%		$2,500-$2,799
100%		$2,800+

In addition, pursuant to the True Harvest Amendment No. 1, a new Section 1.05.1 Hurdle Amount is added to the Purchase Agreement, whereby the purchase price of True Harvest would be adjusted by the addition of (i) up to a maximum of four million seven hundred thousand dollars ($4,700,000) added to the principal amount of the secured note to be issued at closing and (ii) up to a maximum of one million four hundred thousand dollars ($1,400,000) of additional debt to be assumed by the Buyer at closing, in each case, subject to True Harvest achieving certain revenue targets, as well as True Harvest having constructed eight grow rooms in a condition ready to accept plants for grow prior to closing, in each case as set forth in the True Harvest Amendment No. 1. Also in addition, pursuant to the True Harvest Amendment No. 1, the “drop dead” date for closing was amended to be November 30, 2021.

Theraplant

On August 10, 2021, the Company entered into an amendment (the “Theraplant Amendment No.1”) to the Agreement and Plan of Merger dated as of March 12, 2021, by and among the Company, GNRS CT Merger Sub, LLC, Theraplant and Shareholder Representative Services LLC (the “Merger Agreement”).

Pursuant to the Theraplant Amendment No. 1, the purchase price of Theraplant would be adjusted by the addition of the issuance registered shares of the Company’s common stock, par value $10.00 per share, in the aggregate amount of Fifty Million Dollars ($50,000,000). Theraplant’s selling shareholders will receive customary registration rights in connection with the issuance of shares of the Company’s common stock as part of the merger consideration. Also in addition, pursuant to the Theraplant Amendment No. 1, the “drop dead” date for closing was amended to be November 30, 2021.

The Theraplant Amendment No.1 also provides that the Company shall bear (i) 50% of all documented accounting transaction expenses incurred by Theraplant in connection with the auditor review of the Theraplant’s 2021 first quarter financial statements and (ii) all documented legal, accounting and other transaction expenses of Theraplant incurred in connection with the Merger from and after the date of the Theraplant Amendment No. 1.

Vendor Agreements

On December 15, 2020, the Company entered into an agreement with a vendor to provide accounting advisory services. The agreement requires that the Company pay $10,000 per month based on an agreed hourly time and materials rate for work performed with any additional services to be only payable upon the consummation of a Business Combination. As of September 30, 2021, the Company had paid $60,000 pursuant to this agreement and has incurred an additional 441,790 of which an additional $30,000 is included in accrued expenses and would become due upon a successful Business Combination.

GREENROSE ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

On October 9, 2020, the Company entered into an agreement with a vendor to provide investor relations services related to the Company’s Business Combination. The agreement requires that the Company pay $15,000 upon commencement of the agreement plus reimbursement for any out-of-pocket expenses. In addition, the Company has agreed to pay a $100,000 fee only upon the consummation of a Business Combination. The agreement also requires the continuation of investor relations services for a minimum of six months subsequent to the consummation of a Business Combination at the rate of $15,000 per month.

On September 1, 2021, the Company entered into an agreement with a vendor to provide multimedia services related to the Company’s Business Combination and virtual investor event. This agreement requires that the Company pay $32,500 when the current financing closes-the consummation of a Business Combination. The agreement will terminate on August 31, 2022.

Note 8 — Common Stock Subject To Possible Redemption

Common Stock — On February 10, 2020, the Company amended its certificate of incorporation such that the Company is authorized to issue up to 70,000,000 shares of common stock with a par value of $0.0001 per share. Holders of the common stock are entitled to one vote for each share. At September 30, 2021 and December 31, 2020, there were 4,642,500 shares of Common stock issued and outstanding, excluding 17,250,000 shares of Common stock subject to possible redemption which are presented as temporary equity.

Note 9 — Stockholders’ Equity

Preferred Stock — On February 10, 2020, the Company amended its certificate of incorporation such that the Company is authorized to issue up to 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors. At September 30, 2021 and December 31, 2020, there were no shares of preferred stock issued or outstanding.

Warrants — The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering. No warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to such shares of common stock. Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the public warrants is not effective within a specified period following the consummation of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.

Once the warrants become exercisable, the Company may redeem the Public Warrants:

●

in whole and not in part;

●

at a price of $0.01 per warrant;

●

upon not less than 30 days’ prior written notice of redemption;

●

if, and only if, the reported last sale price of the Company’s common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third business day prior to the notice of redemption to the warrant holders; and

●

if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying the warrants.

If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.

The exercise price and number of shares of common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger, or consolidation. However, the warrants will not be adjusted for issuance of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.

GREENROSE ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

In addition, if (x) the Company issues additional shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of an initial Business Combination at an issue price or effective issue price of less than $9.50 per share of common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and in the case of any such issuance to the Sponsor, initial stockholders or their affiliates, without taking into account any Founder Shares held by them prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of an initial Business Combination on the date of the consummation of an initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the common stock during the 20-trading day period starting on the trading day prior to the day on which the Company consummates an initial Business Combination (such price, the “Market Value”) is below $9.50 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of (i) the Market Value or (ii) the price at which the Company issues the additional shares of common stock or equity-linked securities.

Note 10 — Fair Value Measurements

The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.

The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Level 1:

Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

SEC Form 10-Q filed by Greenrose Acquisition Corp.