CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this "Report") includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are those that predict or describe future events or trends and that do not relate solely to historical matters. You can generally identify forward-looking statements as statements containing the words "believe," "expect," "will," "anticipate," "intend," "estimate," "project," "plan," "assume" or other similar expressions, or negatives of those expressions, although not all forward-looking statements contain these identifying words. All statements contained in this Report regarding our future strategy, future operations, projected financial position, estimated future revenues, projected costs, future prospects, the future of our industries and results that might be obtained by pursuing management's current or future plans and objectives are forward-looking statements.

Our forward-looking statements are based on the information currently available to us and speak only as of the date of the filing of this Report. New risks and uncertainties arise from time to time, and it is impossible for us to predict these matters or how they may affect us. Over time, our actual results, performance, financial condition or achievements may differ from the anticipated results, performance, financial condition or achievements that are expressed or implied by our forward-looking statements, and such differences may be significant and materially adverse to our security holders. Our forward-looking statements contained herein speak only as of the date hereof, and we make no commitment to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances or changes in expectations.

MANAGEMENT'S DISCUSSION AND ANALYSIS

Overview

Millennium Sustainable Ventures Corp., formerly known as Millennium Investment & Acquisition Co. Inc., formerly known as Millennium India Acquisition Company, Inc. ("MILC", "we", "our", the "Company") is focused on the "Triple Bottom Line" and a commitment to Profit, Planet and People and conducts operations in three segments: sustainable cultivation of cannabis in greenhouses, sustainable cultivation of food in greenhouses and sustainable production of activated carbon.

On October 1, 2021, MILC filed an application with FINRA for approval to change its name to Millennium Sustainable Ventures Corp and received approval for the name change as disclosed in a Form 8-K and Press Release issued on February 16, 2022. We believe the name change better reflects our focus on sustainable Controlled Environment Agriculture (CEA) cultivation in greenhouses and the sustainable production of activated carbon. MILC, with a focus on the "Triple Bottom Line" and a commitment to Profit, Planet and People is focused on sustainable business practices.

During 2020, MILC announced that it was seeking to de-register as an Investment Company that is regulated under Investment Company Act of 1940 (the "1940 Act"). As previously announced, MILC has completed the liquidation of its sole investment in securities - its investment in SMC and plans to invest the proceeds in operating businesses. On October 14, 2020, shareholders approved a proposal to change the nature of the Company's business from a registered investment company under the 1940 Act to a holding company that focuses primarily on owning and operating businesses (collectively, the "Deregistration Proposal"). On March 1, 2021, as amended on May 11, 2021, December 9, 2021 and January 21, 2022, the Company filed an application pursuant Section 8(f) of the Investment Company Act of 1940 for an Order Declaring that MILC has Ceased to be an Investment Company (the "Deregistration Order"). On February 2, 2022, the SEC issued a notice that it was commencing the 25-day public review period in response to MILC's application. On February 28, 2022, MILC received the Deregistration Order declaring that is has ceased to be an Investment Company. Consequently, the financial statements presented in this Annual Report on Form 10-K are presented in accordance with the reporting requirements under the Securities Exchange Act of 1934, as amended.

As of March 31, 2022, MILC has two areas of focus (sustainable cultivation of food started April 1, 2022) and conducts business in two operating segments as follows:



  1. Sustainable cultivation of cannabis in greenhouses
  2. Sustainable production of Activated Carbon

Cultivation of Cannabis and Food

Millennium Cannabis LLC, ("MillCann"), a wholly-owned subsidiary of MILC, is focused on a sustainable approach to cannabis cultivation through Controlled Environmental Agriculture (CEA) in the form of greenhouses, with operations in Colorado, Oklahoma, and Michigan.



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The Walsenburg cannabis campus was a distressed acquisition of a facility that had ceased operations. MILC believes that it was acquired at an attractive basis relative to the in-place improvements which provided an attractive opportunity to immediately commercialize the facility for cannabis cultivation. MILC believes that this WC property has the potential to become a large-scale, low-cost producer of high-quality cannabis to compete effectively in the Colorado market. The campus is subdivided into five parcels which allows for a significant availability of plant count based on how the Colorado Marijuana licensing works. The property is currently behind schedule and over-budget related to capital improvements but is taking steps to rectify the situation after which it anticipates its plant count will increase significantly and drive down its cost of production. The Price for wholesale cannabis in the Colorado market has compressed dramatically from historical prices which has had a negative impact on our performance.

The Vinita facility was a distressed acquisition purchased from an undercapitalized operator. MILC believes that it was acquired at an attractive basis relative to the in-place improvements which provided an attractive opportunity to immediately commercialize the facility for cannabis cultivation. MILC believes that the VC Property has the potential to become a large-scale, low-cost producer of high-quality cannabis to compete effectively in the Oklahoma market. The price for wholesale cannabis in the Oklahoma market has compressed dramatically from historical prices which has had a negative impact on our performance.

The Michigan facility was a distressed acquisition purchase that was vacant at the time of acquisition. MILC believes that it was acquired at an attractive basis relative to the in-place improvements which provide an attractive opportunity to commercialize the facility for cannabis cultivation. MILC believes that this property has the potential to become a large-scale, low-cost producer of high-quality cannabis to compete effectively in the Michigan market once issues related to receiving the remaining approvals for the cultivation of cannabis are received.

On January 1, 2022, the Lease between Walsenburg Cannabis LLC ("WC") and PW CO CanRE Walsenburg LLC, a subsidiary of Power REIT, a related party of which the CEO is also the CEO of MILC, was amended to allow Power REIT to provide funding for additional budget items (the "Additional Items") for the purpose of constructing and operating a Marijuana Infused Product manufacturing and processing facility ("MIP"). Simultaneous to the Lease Amendment, WC entered into a sublease (the "Sublease") with Fifth Ace, LLC coterminous with the lease between Fifth Ace, LLC and PW CO CanRE Tam 7, a subsidiary of Power REIT. Pursuant to the Sublease, Fifth Ace, LLC has granted WC use of a portion of the property located at 7889 Tamarack Lane, Ordway, Colorado 81063 (the "MIP Area") for the purpose of assembling the Additional Items and operating the constructed MIP. The straight-line rent pursuant to the Sublease is $120,497 per annum.

On April 1, 2022, MILC announced that it is expanding its sustainable greenhouse cultivation activities by establishing its first produce related operations. A newly wholly-owned subsidiary of MILC, Millennium Produce of Nebraska LLC, ("Millennium Produce"), has executed a long-term lease (the "Lease") for an approximately 1.1 million square foot greenhouse cultivation facility located in O'Neill, Nebraska (the "Property"). The Lease was entered into simultaneously with the acquisition of the Property by Power REIT. David H. Lesser, MILC's Chairman and CEO is also Chairman and CEO of Power REIT. As part of the transaction, Power REIT has agreed to fund capital improvements of approximately $534,000 for the initial phase of improvements, which includes costs related to the replacement of energy curtains. As part of the transaction, Millennium Produce arranged a $3 million non-recourse loan with a fixed interest rate of 1.5%and a four-year term. The loan is secured by Furniture, Fixtures, and Equipment, which was purchased by Millennium Produce, as well as crops.

Activated Carbon

Millennium HI Carbon, LLC ("MHC") is a wholly owned subsidiary that acquired an activated carbon plant in Hawaii (the "Hawaii Plant") that was intended to produce a very high-grade form of Activated Carbon for the production of ultracapacitors which are an advanced electrical storage device. During the first half of 2019, MHC concluded that the Hawaii Plant was not capable of producing consistent results and has made efforts to minimize overhead and cash drain while it seeks a strategic alternative for the Hawaii Plant. Effective December 31, 2021, MILC determined to write off $2,765,000, the remaining value of the HI asset for accounting purposes given that the plant is dormant and there is uncertainty around a business plan for this asset.

Millennium Carbon, LLC ("MillCarbon") is a wholly owned subsidiary that has developed a novel method for the sustainable production of activated carbon and has constructed a proof-of-concept pilot-scale plant in Kentucky to produce activated carbon from a waste stream generated by Bourbon distilleries. The plant recently completed its 150th batch of Activated Carbon, Biochar, and Horticultural Vinegar and MillCarbon believes it has proven itself at the pilot level. MILC is evaluating the construction of a commercial scale plant based on the technology it has developed.



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Critical Accounting Policies

The consolidated financial statements are prepared in conformity with U.S. GAAP, which requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses in the periods presented. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, due to inherent uncertainties in making estimates, actual results may differ from the original estimates, requiring adjustments to these balances in future periods.

The Company has identified its reportable segments and, for each period for which a statement of operations is presented, discloses certain information, separately by reportable segment, relative to the segment industries. MILC businesses are organized, managed and internally reported as two reportable segments. As of March 31, 2022, the reportable segments are determined based on the difference in the product produced. The cannabis segment, MillCann, is focused on a sustainable approach to cannabis cultivation through Controlled Environmental Agriculture in the form of greenhouses, with operations in Colorado, Oklahoma, and Michigan. The carbon segment, MillCarbon, has developed a novel method for the sustainable production of activated carbon and has constructed a proof-of-concept pilot-scale plant in Kentucky to produce activated carbon from a waste stream generated by Bourbon distilleries

As of March 31, 2022, the Company's Property, Plant and Equipment consisted of Activated Carbon production machinery and equipment at the MillCarbon pilot plant in Kentucky, as well as machinery and equipment, furniture and fixtures and office equipment at the three operations related to Millennium Cannabis. Property, plant and equipment is carried at historical cost, net of depreciation and adjustments for impairment. The Company assesses the carrying value of its property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Property, plant and equipment was never commercially operational and is now dormant for MHC and therefore has not incurred a depreciation expense on this asset and has since written off the asset. Millennium Cannabis recognized depreciation on its property, plant and equipment at its Walsenburg, CO, Vinita, OK and Marengo, MI locations on a straight-line basis over the useful life of five years and leasehold improvements are amortized over the remaining term of the lease.

Finished goods inventory is initially valued at cost and subsequently at the lower of cost and net realizable value. Net realizable value is determined as the estimated selling price in the ordinary course of business less the estimated costs of completion, disposal and transportation for inventories in process. The Company periodically reviews its inventory and identifies that which is excess, slow moving or poor product quality by considering factors such as inventory levels and forecasted sales demand. Any identified excess, slow moving and poor-quality inventory is written down to its net realizable value through a charge to cost of goods sold.

Results of Operations

Three Months Ended March 31, 2022 and 2021:

Revenue

During the three months ended March 31, 2022, the cultivation segment's revenue increased by $255,085 and cost of goods sold increased by $1,360,827 resulting in a gross loss of $1,105,742 compared to no revenue an no cost of goods sold during the three months ended March 31, 2021. This was a result of MILC shifting its focus to cannabis cultivation and the expenses incurred to continue operations in the first quarter of 2022. There was no revenue or cost of goods sold for the carbon segment for both three-month periods ending 2022 and 2021.



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Operating Expenses

During the three months ended March 31, 2022, MILC's total operating expenses were $1,998,113 compared to $120,726 during the three months ended March 31, 2021. The increase of $1,877,387 was primarily related to an increase in lease expense for $1,418,780 for the cultivation segment, an increase in general & administrative expense of $401,305 and an increase in professional fees of $56,001 of which both were allocated to the carbon and cultivation segments. The increased G&A and professional fees were related to the continued costs of running operations for both the cultivation and carbon segments and increased insurance costs.

Other Income and Net Loss

Other income for the three months ended March 31, 2022 was $7,580 compared to $69,694 during the three months ended March 31, 2021. The decrease of $62,114 was due to a decrease in dividend income of $67,383. For the carbon segment, there was a decrease in other income of $5,320 and a decrease in interest income of $51. As a result, consolidated net loss for MILC for the three months ended March 31, 2022 and 2021 was $3,096,275 compared to $51,032, respectively.

Liquidity and Capital Resources

Our cash totaled $2,962,884 as of March 31, 2022 compared to $1,623,291 as of December 31, 2021. The increase of $1,340,593 is primarily from loan proceeds related to the Company's credit facility with an affiliate (Note 6) and the Company's non-recourse loan (Note 7).

With the cash available as of March 31, 2022 and access to the credit facility, we believe these resources should be sufficient to fund our operations and commitments for twelve months from the date of the filing of this Quarterly Report on Form 10-Q. However, the Company may seek to raise additional funds through the sale of its securities or other capital sources.

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