NOTE 18 – BAD DEBTS

The Company maintains two types of reserves to address uncertain collections of amounts due—an allowance against trade accounts receivable (the “AR Allowance”), and a reserve against cash advanced by the Company to its cannabis-licensed clients for working capital purposes (the WC Reserve”).

During the nine months ended September 30, 2021, the Company increased the AR Allowance by $1,400,000, and the WC Reserve by approximately $455,000. The aggregate of these two amounts of approximately $1,855,000 was charged to Bad Debts on the statement of operations during this period. During the nine months ended September 30, 2020, the Company increased the AR Allowance by $1,000,000 and the WC Reserve by approximately $342,000.