The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in our Annual Report on Form 10-K ("Annual Report") for the year ended December 31, 2021 filed with the Securities and Exchange Commission ("SEC"), as well as the financial statements and related notes appearing therein and elsewhere in this Quarterly Report. The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. We caution you that our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences are discussed elsewhere in this Quarterly Report, particularly in the "Cautionary Note Regarding Forward-Looking Statements" and in our Annual Report under the heading "Item 1A. Risk Factors," all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.

We are a holding company active within the "hemp" space. We were incorporated on August 21, 2021 in the State of Delaware. The Company was originally incorporated on July 28, 2008 in the State of Colorado. On November 27, 2019, we purchased approximately 94% of the common stock of Energy Hunter Resources, Inc. ("EHR") in a series of transactions accounted for as a reverse merger. Upon closing, we changed our name to Generation Hemp, Inc.

There is limited historical financial information about our Company upon which to base an evaluation of our future performance. We cannot guarantee that we will be successful in the hemp business. We are subject to the risks associated with the regulatory environment in the industry in which we operate. In addition, we are subject to risks inherent in a small company, including limited capital resources, delays and cost overruns due to price and cost increases. There is no assurance that future financing will be available to our Company on acceptable terms. Additional equity financing could result in dilution to existing shareholders.

We provide post-harvest and midstream services to growers by drying, processing, cleaning and stripping harvested hemp directly from the field and wetbaled at our 48,000 square foot facility located in Hopkinsville, Kentucky. Additionally, we offer safe storage services for processed hemp, which enables farmers to maximize strategic market timing. In August 2021, the Company launched its animal bedding consumer goods product line made from the hemp hurd byproduct that is produced from its hemp processing operations.

We also generate revenue from rental of our "Cannabis Zoned" (Hemp) warehouse property located in Denver, Colorado currently leased to a hemp seed company.

As of June 30, 2022, EHR held an approximate 8% working interest in an oil & gas property located in Cochran County, Texas within the Slaughter-Levelland Field of the San Andres formation in the Northwest Shelf of West Texas. EHR's oil & gas activities are currently held for sale and are presented in the consolidated financial statements as discontinued operations.

New Business Line - During the second quarter of 2022, management and the Board decided to enter a new but related line of business - bitcoin mining. Management determined after research that hemp biomass can be burned in a biomass boiler to generate heat and steam to drive a turbine for generating electricity. The BTU value of hemp is similar to wood waste generated at saw mills. Hemp plants grow to maturity within six to eight months whereas trees mature in excess of ten years.

The Company subsequently formed a new company, GenCrypto, LLC (a Delaware limited liability company) with a 50% partner, Cerberus Digital, LLC, an affiliate of Cryptech Solutions, Inc. Cryptech is one of the largest resellers of bitcoin mining equipment in North America.

GenCrypto now has approximately ten different bitcoin locations identified and either under contract, under letter of intent, or in final negotiating status, located in three states and in Costa Rica. All of these site locations are deemed "green" based upon the power being provided either from the local utility or co-op. They range in power size from 1.1 megawatts to 50 megawatts. Additionally, GenCrypto has been contacted by several larger bitcoin mining operators concerning utilizing some of these mining locations under "hosting" arrangements.

The Company anticipates closing its first acquisition which is currently operational in September 2022.

Grant Funding Opportunity- The U.S. Department of Agriculture has recently made available a funding opportunity for the Partnerships for Climate-Smart Commodities projects of up to $1 billion in order to build markets and invest in America's climate-smart farmers, ranchers and forest owners to strengthen U.S. rural and agricultural communities. Within this opportunity is the goal to develop markets and promote the resulting climate-smart commodities. The Company, through its wholly-owned subsidiary GENH Halcyon Acquisition, LLC, is an established floral hemp processor that has provided years of drying, cleaning, stripping and storing hemp, along with acting as a conduit between the supply side of hemp through farmers and the demand side of hemp through extraction labs, buyers and downstream products. Since its inception, the Company has also been a proponent and developer of climate-smart applications of fiber hemp for industry and has helped develop two new U.S. market products to utilize hemp hurd that was previously a waste product.

On May 6, 2022, the Company applied for a substantial grant under this funding opportunity that will contractually engage farmers to grow specific hemp genetics, thereby providing them lower risk costs that will be included in grant funding. Under this project, the Company will also build out a hemp supercenter from the nucleus of its current, established operation that will provide the necessary processing capacity for all varieties of hemp at one central location. This will include storage, logistics, testing and tracking capabilities. The Company has obtained a large group of commitments from industry players who have agreed to participate in the program.

Liquidity - The Company is dependent upon obtaining additional funding to continue ongoing operations and to pursue its strategy and execute its acquisition plans.

In the six months ended June 30, 2022, the Company used $1.0 million of cash for its operating activities. At June 30, 2022, the Company's current liabilities, including financing obligations due within one year, totaled $6.0 million as compared with its current assets of $364 thousand.

The Company will continue to pursue additional capital raising opportunities in order to fund future acquisitions and meet its obligations as they become due. We may not be successful in obtaining additional financing needed. In the event financing cannot be obtained, the Company may not be able to satisfy these plans and obligations. These factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Impact of COVID-19 Pandemic on Our Business - Our business, results of operations and financial condition were adversely affected by the COVID-19 pandemic. The COVID-19 pandemic and measures taken to contain it subjected our business, results of operations, financial condition, stock price and liquidity to a number of material risks and uncertainties, all of which may continue or may worsen.

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

The net loss for the three months ended June 30, 2022 was $2.1 million as compared with a net loss of $1.2 million for the same period of 2021. The net loss for the three months ended June 30, 2022 includes $1.3 million of stock-based compensation expense for stock options issued to executives and our board of directors and $261 thousand for depreciation and amortization largely due to the Halcyon acquisition. Excluding these non-cash items, the Company's cash loss was $560 thousand in the three months ended June 30, 2022 as compared with a loss of $775 thousand in the same period of 2021. The first part of each calendar year is typically a slower period for midstream operations within the hemp industry until the annual harvest begins in late-summer. In 2022, we commenced processing of six million pounds of hemp biomass for last year's harvest of our largest customer.

The Company reports its oil & gas activities as discontinued operations. Loss from discontinued operations was $28 thousand for the three months ended June 30, 2022 as compared with a loss of $6 thousand in the 2021 period, principally consisting of non-cash items each period. Results of operations for the Company's remaining oil & gas activities have been significantly reduced due to lower field productivity.

Revenue. Revenue from continuing operations for the first quarter of 2022 totaled $354 thousand as compared with $26 thousand for the same period of 2021. We generate revenue from post-harvest and midstream services in the hemp industry and from rental to a hemp seed company of our warehouse property located in Colorado.

Our post-harvest and midstream services revenue totaled $332 thousand in the second quarter of 2022 as compared with $3 thousand in the 2021 period. In June 2022, we commenced hemp processing of six million pounds of hemp biomass from last year's harvest of our largest customer. This customer had delayed processing in 2021 due to weaker hemp product pricing. We processed 862 thousand pounds of this stored hemp biomass in June 2022 and are continuing processing at this time.

Rental revenue totaled $23 thousand in the 2022 and 2021 periods. The lease of the Company's Denver warehouse expires on August 1, 2023 and provides for a rental of $7.5 thousand per month.

Cost of Revenue. Cost of revenue for the second quarter of 2022 was $164 thousand as compared with $112 thousand in the same period of last year. Our gross margin on hemp processing in the second quarter of 2022 was 50%. We expect these stronger margins to continue during processing periods. In periods when we are not processing, we take steps to reduce our operating expenses.

General and Administrative Expense. General and administrative expenses totaled $1.9 million for the three months ended June 30, 2022 as compared with $514 thousand in 2021 period. The increase in general and administrative expense is principally due to non-cash charges for stock-based compensation which totaled $1.3 million in the three months ended June 30, 2022 as compared with $39 thousand in the 2021 period.

Depreciation and Amortization. Depreciation and amortization expense totaled $261 thousand in the three months ended June 30, 2022 as compared with $341 thousand for the same period of 2021.

Other Income/Expense. Total other expense was $124 thousand for the three months ended June 30, 2022 as compared with $207 thousand for the comparable 2021 period. The largest item of total other expense is interest expense which has decreased due to conversions of indebtedness to equity in 2021.

Loss from Discontinued Operations. In the three months ended June 30, 2022, we recognized a loss from discontinued operations of $28 thousand as compared with a loss of $6 thousand in the three months ended June 30, 2021. The major classes of line items constituting the loss on discontinued operations are presented in Item I, "Financial Statements - Note 11 - Discontinued Operations." In the 2022 period, we revised our estimates of future asset retirement obligations for changes in inflation and interest rates. Until we fully dispose of our remaining oil & gas property interests, we expect lower future revenues and costs as production activities have declined substantially. We do not anticipate making future investment of growth capital into these properties.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

The net loss for the six months ended June 30, 2022 was $4.6 million as compared with a net loss of $3.0 million for the same period of 2021. The net loss for the 2022 period includes $2.6 million of stock-based compensation expense for stock options to our executives and board of directors and $482 thousand for depreciation and amortization largely due to the Halcyon acquisition. Excluding these non-cash items, the Company's cash loss was $1.5 million in the six months ended June 30, 2022 as compared with a loss of $2.2 million in the same period of 2021. The first part of each calendar year is typically a slower period for midstream operations within the hemp industry until the annual harvest begins in late-summer. The Company's hemp processing facilities were shut-in for much of the first six months of each year to limit operating expenditures. As mentioned above, we commenced processing in June 2022 of hemp biomass harvested last year by our largest customer.

Loss from discontinued operations was $40 thousand for the six months ended June 30, 2022 as compared with a loss of $10 thousand in the 2021 period, principally consisting of non-cash items each period. Results of operations for the Company's remaining oil & gas activities have been significantly reduced due to lower field productivity.

Revenue. Revenue from continuing operations for the first six months of 2022 totaled $377 thousand as compared with $93 thousand for the same period of 2021.

Our post-harvest and midstream services revenue totaled $332 thousand in the 2022 period as compared with $48 thousand in the 2021 period. The Company's hemp processing facilities were shut-in for much of the first half of each year to limit operating expenditures. As mentioned, we commenced processing of hemp biomass for our largest customer in June 2022. In 2021, our processing was limited until the late-summer harvest.

Rental revenue totaled $45 thousand in the 2022 and 2021 periods. The lease of the Company's Denver warehouse expires on August 1, 2023 and provides for a rental of $7.5 thousand per month.

Cost of Revenue. Cost of revenue for the first six months of 2022 was $269 thousand as compared with $270 thousand in the same period of last year. Our gross margin on post-harvest processing and midstream services are expected to be 50% or more during peak operating periods. In the first part of each year we take steps to reduce operating costs by idling our facilities.

Merger and Acquisition Costs. We incurred $16 thousand of costs for acquisition costs in the 2021 period for closing of the Halcyon acquisition. The amount of future expenses of this type that we incur will depend upon our future acquisition activities. The Company incurred no such expenses during the six months ended June 30, 2022.

General and Administrative Expense. General and administrative expenses totaled $3.9 million for the six months ended June 30, 2022 as compared with $1.6 million in 2021 period. The increase in general and administrative expense is principally due to non-cash charges for stock-based compensation which totaled $2.6 million in the 2022 period as compared with $81 thousand in the 2021 period. The Company had lower legal and professional expenses during the 2022 period.

Depreciation and Amortization. Depreciation and amortization expense totaled $482 thousand in the six months ended June 30, 2022 as compared with $691 thousand for the same period of 2021.

Other Income/Expense. Total other expense was $287 thousand for the six months ended June 30, 2022 as compared with $459 thousand for the comparable 2021 period. The largest item of total other expense is interest expense which has decreased due to conversions of indebtedness to equity in 2021.

Loss from Discontinued Operations. In the six months ended June 30, 2022, we recognized a loss from discontinued operations of $40 thousand as compared with a loss of $10 thousand in the same period of 2021. The major classes of line items constituting the loss on discontinued operations are presented in Item I, "Financial Statements - Note 11 - Discontinued Operations." As noted above, we revised our estimates of future asset retirement obligations for changes in inflation and interest rates in the 2022 period resulting in higher non-cash expense. Until we fully dispose of our remaining oil & gas property interests, we expect lower future revenues and costs as production activities have declined substantially. We do not anticipate making future investment of growth capital into these properties.

Our primary source of cash from continuing operations includes post-harvest and midstream services and rental revenue. Our primary uses of cash include our operating costs, general and administrative expenses and merger and acquisition expenses.

Cash flow information from continuing operations for the first six months of 2022 was as follows:

? Cash used in operating activities was $1 million principally due to the net

loss adjusted for non-cash items.

? The Company had no net cash used for investing activities during the period.

? Net cash from financing activities totaled $1 million from advances under notes

payable made by our CEO and his related company to fund our cash needs.

We used $3 thousand of cash for discontinued operations in the first six months of 2022.

We expect to continue to incur significant expenses and operating losses for the foreseeable future. We anticipate that our expenses may increase substantially as we grow our hemp business.

We expect that we will require additional capital to fund operations, including hiring additional employees, completing acquisitions and funding capital expenditures during the next twelve-month period.

Because of the numerous risks and uncertainties associated with the development and commercialization of our business, we are unable to estimate the amounts of increased capital outlays and operating expenses. Our future capital requirements will depend on many factors, including:

? our success in identifying and making acquisitions of profitable operations;

? our ability to negotiate operating contracts with growers and others within the

hemp industry on favorable terms, if at all;

? deriving revenue from our assets and operations; and

? the cost of such operations and costs of being a public company.

Until such time, if ever, as we can generate substantial revenues, we expect to finance our cash needs through a combination of equity offerings and debt financings. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common shareholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our growth plans and future commercialization efforts.

The Company's indebtedness at June 30, 2022 is presented in Item I, "Financial Statements - Note 5 - Notes Payable - Related Parties" and in Item I, "Financial Statements-Note 6 - Other Indebtedness."

Subsequently, the Company has received additional advances under new and existing note arrangements. Refer to Item I, "Financial Statements-Note 14 - Subsequent Events."

As of June 30, 2022, we had no material off-balance sheet arrangements.

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