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 quarterly period ended October 31, 2019
 
or
 
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from  ___________ to ___________
 
Commission File Number  000-54338
 

GREEN HYGIENICS HOLDINGS INC.
(Exact name of registrant as specified in its charter)

Nevada
 
26-2801338
(State or other jurisdiction of incorporation or organization)  
 
(IRS Employer Identification No.)

13795 Blaisdell Place, Suite 202, Poway, CA 92064
(Address of principal executive offices) (Zip Code)

1-855-802-0299
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading Symbol(s)
 
Name of exchange on which registered
 
 
 
 
 

 
 
 
 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such fling 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 the 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 ☒

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be fled by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 37,482,835 common shares issued and outstanding as of December 16, 2019.


 
Table of Contents
 
   
PART I - FINANCIAL INFORMATION
 
   
Item 1.  Financial Statements
3
   
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations
14
   
Item 3.  Quantitative and Qualitative Disclosures About Market Risk
16
   
Item 4.  Controls and Procedures
16
   
PART II - OTHER INFORMATION
 
   
Item 1.  Legal Proceedings
17
   
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
17
   
Item 3.  Defaults Upon Senior Securities
17
   
Item 4.  Mine Safety Disclosures
17
   
Item 5.  Other Information
17
   
Item 6.  Exhibits
18
   
SIGNATURES
19
 
2

 PART I - FINANCIAL INFORMATION
 
Item 1. Financial Statements

The interim consolidated financial statements included herein are unaudited but reflect, in management's opinion, all adjustments, consisting only of normal recurring adjustments that are necessary for a fair presentation of our financial position and the results of our operations for the interim periods presented.  Because of the nature of our business, the results of operations for the quarterly period ended October 31, 2019 are not necessarily indicative of the results that may be expected for the full fiscal year.

GREEN HYGIENICS HOLDINGS INC.
Consolidated Financial Statements
October 31, 2019
(Expressed in U.S. dollars)
(unaudited)

 
Index
 
 
Consolidated Balance Sheets
4
Consolidated Statements of Operations and Comprehensive Loss
5
Consolidated Statements of Cash Flows
6
Notes to the Consolidated Financial Statements
7
 
3


GREEN HYGIENICS HOLDINGS INC.
Consolidated Balance Sheets
(Expressed in U.S. dollars)


   
October 31, 2019
$
   
July 31, 2019
$
 
   
(unaudited)
       
ASSETS
           
             
Current Assets
           
Cash
 

46,218
     
767
 
Prepaid expense
   
5,000
     
-
 
Trust funds
   
-
     
2,486
 
Inventory
   
306,450
     
306,450
 
Total Current Assets
   
357,668
     
309,703
 
                 
Deposits
   
-
     
100,000
 
Fixed Assets (Note 5)
   
4,745,767
     
145,138
 
                 
Total Assets
   
5,103,435
     
554,841
 
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
               
                 
Current Liabilities
               
Accounts payable and accrued liabilities
   
259,436
     
201,178
 
Accounts payable – related parties
   
117,833
     
57,500
 
Accrued interest payable
   
25,872
     
510
 
Loan payable (Note 4)
   
155,250
     
155,250
 
Due to related parties (Note 8)
   
1,447,100
     
780,398
 
Total Current Liabilities
   
2,005,491
     
1,194,836
 
                 
Long Term Liabilities
               
Agreement payable (Note 5)
   
183,031
     
-
 
Mortgage payable (Note 6)
   
2,750,000
     
-
 
Note payable (Note 7)
   
1,760,000
     
-
 
Total Long-Term Liabilities
   
4,693,031
     
-
 
                 
Total Current and Long-Term Liabilities
   
6,698,522
     
1,194,836
 
                 
Nature of operations and continuance of business (Note 1 and 2)
               
Commitments (Note 10)
               
Subsequent events (Note 11)
               
                 
Stockholder’s Deficit
               
Common stock, 375,000,000 shares authorized, $0.001 par value
               
37,482,835 and 36,657,835 shares issued and outstanding
   
37,483
     
36,658
 
Additional paid-in capital
   
43,328,297
     
42,089,489
 
Deficit
   
(44,960,867
)
   
(42,766,142
)
Total Stockholder’s Deficit
   
(1,595,087
)
   
(639,995
)
                 
Total Liabilities and Stockholder’s Deficit
   
5,103,435
     
554,841
 




(The accompanying notes are an integral part of these Consolidated financial statements)

4


GREEN HYGIENICS HOLDINGS INC.
Consolidated Statements of Operations and Comprehensive Loss
(Expressed in U.S. dollars)
(unaudited)


   
Three Months
Ended
October 31, 2019
$
   
Three Months
Ended
October 31, 2018
$
 
Expenses
           
Consulting fees (Note 4)
 

164,396
     
27,500
 
Business development costs
   
1,227,592
     
-
 
Supplies
   
392,516
     
-
 
Sub contracts
   
68,289
     
-
 
Payroll expenses
   
158,731
     
-
 
General and administrative
   
54,400
     
1,909
 
                 
Loss Before Other Expense
   
(2,065,934
)
   
(29,409
)
                 
Other Expense
               
Interest expense
   
(115,451
)
   
(716
)
Depreciation
   
(13,350
)
   
-
 
                 
Net Loss and Comprehensive Loss
   
(2,194,725
)
   
(30,125
)
                 
Net Loss Per Share, Basic and Diluted
   
(.06
)
   
 
                 
Weighted Average Shares Outstanding
   
37,473,868
     
34,707,835
 




(The accompanying notes are an integral part of these Consolidated financial statements)

5


GREEN HYGIENICS HOLDINGS INC.
Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)
(unaudited)


   
Three Months
Ended
October 31, 2019
$
   
Three Months
Ended
October 31, 2018
$
 
Operating Activities
           
Net loss
 

(2,194,725
)
   
(30,125
)
Imputed interest
    18,633
      -
 
Depreciation expense
    13,350
      -
 
Share based compensation
   
1,221,000
     
-
 
Changes in operating assets and liabilities:
               
Prepaid expenses
   
(5,000
)
   
-
 
Accrued interest payable
   
25,362
         
Inventory
   
-
      -
 
Accounts payable and accrued liabilities
   
56,258
      5,216
 
Accounts payable - related party
    60,336
      -
 
Due to related parties
   
-
     
25,000
 
Net Cash Provided By (Used In) Operating Activities
   
(802,789
)
   
91
 
                 
Investing Activities
               
Cash paid for purchase of FA
   
(118,586
)
   
-
 
Net Cash Provided by (Used In) Investing Activities
   
(118,586
)
   
-
 
                 
Financing Activities
               
Proceeds from note payable
   
297,638
         
Advances from related parties
   
666,702
         
Net Cash Provided by Financing Activities
   
964,340
     
-
 
                 
Increase in cash
    42,965
      -
 
                 
Cash and trust funds, Beginning of Period
   
3,253
     
132
 
                 
Cash and trust funds, End of Period
   
46,218
     
223
 
                 
Supplemental Disclosures:
               
Interest paid
   
     
 
Income taxes paid
   
     
 
Non Cash Transactions
               
Equipment financed through debt
    183,031
         
Land acquired through debt
    2,750,000
         
Deposit on acquisition of property
    100,000
      -
 




(The accompanying notes are an integral part of these Consolidated financial statements)

6


GREEN HYGIENICS HOLDINGS INC.
Consolidated Statements of Stockholders’ Deficit
(Expressed in U.S. dollars)
(unaudited)



 
Common Stock
   
         
 
   
Number of
shares
   
Amount
$
   
Additional
paid-in
capital
$
   
Deficit
$
   
Total
stockholders’
deficit
$
 
                               
Balance, July 31, 2018
   
34,707,835
   

34,708
     
40,546,930
     
(40,922,248
)
   
(340,610
)
                                         
Imputed interest
   
-
     
-
     
22,009
     
-
     
22,009
 
                                         
Shares issued for services
   
1,950,000
     
1,950
     
1,522,500
     
-
     
1,522,500
 
                                         
Net loss
   
-
     
-
     
-
     
(1,843,894
)
   
(1,843,894
)
                                         
Balance, July 31, 2019
   
36,657,835
     
36,658
     
42,089,489
     
(42,766,142
)
   
(639,995
)
                                         
Imputed interest
    -
      -
      18,633
      -
      18,633
 
                                         
Shares issued for services
   
825,000
     
825
     
1,220,175
     
-
     
1,221,000
 
                                         
Net loss
   
     
     
     
(2,194,725
)
   
(2,194,725
)
                                         
Balance, October 31, 2019
   
37,482,835
     
37,483
     
43,328,297
     
(44,960,867
)
   
(1,595,087
)




(The accompanying notes are an integral part of these Consolidated financial statements)

7


GREEN HYGIENICS HOLDINGS INC.
Notes to the Consolidated Financial Statements
October 31, 2019
(Expressed in U.S. dollars)
(Unaudited)


1. Nature of Operations and Continuance of Business

Green Hygienics Holdings Inc. (the “Company”) was incorporated in the State of Nevada on June 12, 2008 as Silver Bay Resources, Inc. On June 30, 2010, the name was changed to Takedown Entertainment Inc. On July 24, 2012, the Company changed its name to Green Hygienics Holdings Inc.

The Company is an innovative, full-scope, science-driven, premium hemp cultivation and branding enterprise focused on the cultivation and processing of industrial hemp for cannabidiol (“CBD”). The Hemp Farming Act of 2018 removed hemp from Schedule I controlled substances (defined as cannabis with less than 0.3% THC) making it an ordinary agricultural commodity.

The Company’s business model includes generating revenues from the sale of hemp and premium-grade CBD products; creating trusted global consumer brands; developing valuable IP; and growing the company rapidly through strategic acquisitions. With direct regard to acquisitions, the Company acts as a business accelerator and a vertical integrator focusing to support rapid growth and development of companies with extraordinary potential.

On June 10, 2019, the company secured a multiyear purchase order for the sale of hemp to U.S. Tobacco De Mexico. Under the terms of the contract, the Company is required to deliver a total $56.4 million worth of hemp flower over a five-year period to US Tobacco De Mexico for use in the production of CBD hemp cigarettes. 

On June 14, 2019, the Company secured from the County of San Diego Department of Agriculture, Weights and Measures, a grower registration for industrial hemp cultivation.

On July 22, 2019, the Company secured licenses for the processing of hemp in the state of North Carolina.
The licenses were granted to the Company’s newly formed subsidiary, Coastal Labs North Carolina LLC, by the North Carolina Industrial Hemp Commission. The Company’s second subsidiary in the state is Green Hygienics North Carolina LLC, which will be partnering for cultivation this year with the intention of meeting the earnings qualification to be licensed on its own for next year’s cultivation.

The Company created Coastal labs and Green Hygienics near the end of July. There was no accounting activity prior to October 31, 2019. The Company’s policy is to consolidate all entities which we control and or own more than 51% of the voting stock. These entities are expected to have accounting activity during subsequent periods and will be consolidated accordingly.

On August 26, 2019, the Company the completed the acquisition of the 824-acre Potrero Ranch Property near San Diego, California for a total purchase price of $4,510,000. The Company will utilize the land and buildings for industrial hemp for CBD cultivation. The property includes over 400,000 square feet of outbuildings which are currently being converted into greenhouses.

Going Concern

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated revenues since inception and is unlikely to generate earnings in the immediate future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at October 31, 2019, the Company has not generated any revenues, has a working capital deficiency of $1,647,823 and has an accumulated deficit of $44,960,867 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

8


2. Significant Accounting Policies

(a) Basis of Presentation

These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States and are expressed in U.S. dollars.

(b) Principles of Consolidation

These financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are all entities (including structured entities) which the Company controls. For accounting purposes, control is established by an investor when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. All inter-company balances and transactions are eliminated.

(c) Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

(d) Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance and trust funds to be cash equivalents.

(e) Inventory

Inventory is carried at the lower of cost or net realizable value, with the cost being determined on a first-in, first-out (FIFO) basis. The Company periodically reviews physical inventory and will record a reserve for excess and/or obsolete inventory if necessary. As of the date of this report, no reserve was deemed necessary.

(f) Impairment of Long-Lived Assets

The Company evaluates the recoverability of its fixed assets and other assets in accordance with ASC 360-10-15, Impairment or Disposal of Long-Lived Assets. Impairment of long-lived assets is recognized when the net book value of such assets exceeds their expected cash flows, in which case the assets are written down to fair value, which is determined based on discounted future cash flows or appraised values.

(g) Related Party Transactions

The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. In accordance with ASC 850, the Company’s financial statements include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business, as well as transactions that are eliminated in the preparation of financial statements.

(h) Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

9


2. Significant Accounting Policies (continued)

(i) Foreign Currency Translation

The Company’s functional and reporting currency is the U.S. dollar. Transactions in foreign currencies are translated into the currency of measurement at the exchange rates in effect on the transaction date. Monetary balance sheet items expressed in foreign currencies are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. The resulting exchange gains and losses are recognized in the statement of operations.

(j) Financial Instruments and Fair Value Measures

ASC 820, “Fair Value Measurements and Disclosures”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, loans payable, and amounts due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

(k) Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation” and ASC 505, “Equity Based Payments to Non-Employees”, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

(l) Loss Per Share

The Company computes earnings (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing earnings (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at October 31, 2019 the Company does not have any potentially dilutive shares.

10


2. Significant Accounting Policies (continued)

(m) Comprehensive Loss

ASC 220, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements.

(n) Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

3. Fixed Assets

Fixed assets are recorded at cost reduced by accumulated depreciation. Depreciation expense is recognized over the assets’ estimated useful lives using the straight-line method. Estimated useful lives are periodically reviewed and, when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts.

Fixed assets consist of the following:
 

Useful Life  
Balance at
July 31, 2019
$
   
Additions
$
   
Amortization
$
   
Balance at
October 31, 2019
$
 
 
 
                       
Production equipment
5 years
 

46,379
   

305,531
   

(10,541
)
 

341,369
 
Furniture and office equipment
5 years
   
8,102
     
-
     
(408
)
   
7,694
 
Buildings and improvements
15 years
   
90,657
     
96,086
     
(2,401
)
   
184,342
 
Land
     
-
     
4,212,362
     
-
     
4,212,362
 
 
   
 

145,138
   

4,613,979
   

(13,350
)
 

4,745,767
 
 
Fixed asset costs are being depreciated using the straight-line method based on the useful life of the asset.

On August 26, 2019, the Company completed the acquisition of the 824-acre Potrero Ranch Property near San Diego, California for a total purchase price of $4,510,000. The Company will utilize the land and buildings for industrial hemp for CBD cultivation. The property includes over 400,000 square feet of outbuildings which are currently being converted into greenhouses. On August 23, 2019, the Company entered into an agreement payable with the Vendor of the Property for $2,750,000 for a portion of the purchase price. The terms of the agreement are monthly payments of interest only at the rate of 6% per annum. The debt is secured by a Promissory Note secured by a Deed of Trust on real property commonly known as Round Potrero Road, Potrero, California. The maturity date of the debt is August 23, 2024. On August 23, 2019 the Company entered into an agreement payable for $1,760,000 with monthly payments of interest only at the rate of 15% per annum. The debt is secured by a Promissory Note secured by a second charge on the Deed of Trust on real property commonly known as Round Potrero Road, Potrero, California. The maturity date of the debt is August 15, 2024. To date we have spent $184,342 in property and building improvements and have acquired over $300,000 worth of production equipment.

4. Loan Payable

As at October 31, 2019, the Company owes $155,250 (2018 - $nil) plus accrued interest of $4,423 (2018 - $nil) to a non-related party, which bears interest at the rate of 10% per annum, is unsecured and due and payable on or before December 19, 2019.

5. Agreement Payable

As at October 31, 2019, the Company owes $183,031 (2018 - $nil) to a non-related party and requires monthly payments of $4290.40 including interest at the rate of 5.66% per annum for a period of 48 months commencing November 1, 2019. The loan is secured by a collateral charge on production equipment.

6. Mortgage Payable

As at October 31, 2019, the Company owes $2,750,000 (2018 - $nil) to a non-related party, with monthly payments of interest only at the rate of 6% per annum. The debt is secured by a Promissory Note secured by a Deed of Trust on real property commonly known as Round Potrero Road, Potrero, California. The maturity date of the debt is August 23, 2024.

7. Note Payable

As at October 31, 2019, the Company owes $1,760,000 (2018 - $nil) to a non-related party, with monthly payments of interest only at the rate of 15% per annum. The debt is secured by a Promissory Note secured by a second charge on the Deed of Trust on real property commonly known as Round Potrero Road, Potrero, California. The maturity date of the debt is August 15, 2024.

11


8. Related Party Transactions

(a) As at October 31, 2019, the Company owes $56,824 (July 31, 2019 - $56,824) to a company controlled by the CEO of the Company. The debt bears interest at 5% per annum, is unsecured, and is due on demand. As at October 31, 2019, accrued interest of $15,541 (July 31, 2019 - $14,825) has been included in amounts due to related parties.

(b) As at October 31, 2019, the Company owes $1,390,275 (July 31, 2019 - $696,074) to a company controlled by the CEO of the Company. The debt includes funds advanced to the Company for business development purposes, is non-interest bearing, unsecured, and due on demand.

(c) As at October 31, 2019, the Company owes $22,500 (July 31, 2019 - $nil) to the CEO of the Company for accrued consulting fees. The debt is non-interest bearing, unsecured, and due on demand and is included in accounts payable.

(d) As at October 31, 2019, the Company owes $35,000 (July 31, 2019 - $27,500) to a director of the Company for accrued consulting fees. The debt is non-interest bearing, unsecured, and due on demand and is included in accounts payable.

(e) As at October 31, 2019, the Company owes $22,500 (July 31, 2019 - $15,000) to the CEO of a subsidiary of the Company for consulting fees. The debt is non-interest bearing, unsecured, and due on demand and is included in accounts payable.

(f) As at October 31, 2019, the Company owes $22,500 (July 31, 2019 - $15,000) to the President of a subsidiary of the Company for consulting fees. The debt is non-interest bearing, unsecured, and due on demand and is included in accounts payable.

(g) As at October 31, 2019, the Company owes $7,500 (July 31, 2019 - $nil) to the CTO of the Company for consulting fees. The debt is non-interest bearing, unsecured, and due on demand and is included in accounts payable.

(h) As at October 31, 2019, the Company owes $7,833 (July 31, 2019 - $nil) to the Chief Agricultural Operations Manager of the Company for consulting fees. The debt is non-interest bearing, unsecured, and due on demand and is included in accounts payable.

(i) During the quarter ended October 31, 2019, the Company incurred $nil (2018 - $7,500) in consulting fees to a company controlled by the CEO of the Company.

(j) During the quarter ended October 31, 2019, the Company incurred $22,500 (2018 - $nil) in consulting fees to the CEO of the Company.

(k) During the quarter ended October 31, 2019, the Company incurred $7,500 (2018 - $7,500) in consulting fees to the CTO of the Company.

(l) During the quarter ended October 31, 2019, the Company incurred $7,500 (2018 - $7,500) in consulting fees to a VP and Director of the Company.

(m) During the quarter ended October 31, 2019, the Company incurred $22,500 (2018 - $nil) in consulting fees to the President of a subsidiary of the Company.

(n) During the quarter ended October 31, 2019, the Company incurred $22,500 (2018 - $nil) in consulting fees to the CEO of a subsidiary of the Company.

(o) Imputed interest of $18,633 for the three months ended October 31, 2019 and $22,009 for the year ended July 31, 2019 has been recorded for the above related party debts.

9. Share Issuances

(a) During the quarter ended October 31, 2019, the Company issued 250,000 common shares to the CEO of the Company in exchange for consulting services. The shares were valued based on OTC’s closing trade price on the date of the agreement.

(b) During the quarter ended October 31, 2019, the Company issued 50,000 common shares to the Chief Agricultural Operations Manager of the Company in exchange for consulting services. The shares were valued based on OTC’s closing trade price on the date of the agreement.

(c) During the quarter ended October 31, 2019, the Company issued 200,000 common shares to the Chief Project Manager of the Company in exchange for consulting services. The shares were valued based on OTC’s closing trade price on the date of the agreement.

(d) During the quarter ended October 31, 2019, the Company issued 25,000 common shares to the Assistant Agricultural Operations Manager of the Company in exchange for consulting services. The shares were valued based on OTC’s closing trade price on the date of the agreement.

(e) During the quarter ended October 31, 2019, the Company issued 300,000 common shares to non-related parties in exchange for consulting services. The shares were valued based on OTC’s closing trade price on the date of the agreement.

12


10. Commitments/Contingencies

(a) On September 1, 2018, the Company entered into a consulting agreement with a director of the Company, Matthew Dole, whereby the Company agreed to pay a consulting fee of $2,500 per month for a period of two years, which can be extended to four years upon mutual agreement. Additionally, the Company will either grant the director 100,000 shares of common stock per year or 100,000 stock options per year to purchase shares of the Company’s common stock priced at 10% below market value at the date of grant.

(b) On September 1, 2018, the Company entered into a consulting agreement with the CTO, Jeff Palumbo, whereby the Company agreed to pay a consulting fee of $2,500 per month for a period of two years commencing August 1, 2018. The agreement can be extended to four years upon mutual agreement. Upon completion of a minimum $1,000,000 financing, the Company will increase this payment to $5,000 per month. Upon completion of a minimum $5,000,000 financing or profitable operations, the Company will increase this payment to an amount mutually agreed upon that reflects the market rate for services provided by the CTO.

(c) On April 1, 2019, the Company entered into a consulting agreement with the Chief Development Officer of the Company, Hamid Rowshan, whereby the Company agreed to pay a to be negotiated consulting fee for an initial period of three months, which can be extended to five years upon mutual agreement.

(d) On April 1, 2019, the Company entered into a consulting agreement with the Business Development Officer of the Company, Paymon Omidi, whereby the Company agreed to pay a to be negotiated consulting fee for an initial period of three months, which can be extended to five years upon mutual agreement.

(e) On April 1, 2019, the Company entered into a consulting agreement with the Head of Research and Development of a subsidiary of the Company, Kiarash Mirkia. Pursuant to the terms of the agreement, the Company issued the consultant 50,000 common shares upon execution of the agreement.

(f) On June 1, 2019, the Company entered into a consulting agreement with the CEO of a subsidiary of the Company, Kavan Thanasith, whereby the Company agreed to pay a consulting fee of $7,500 per month for a period of five years. The monthly fee will increase to: $10,000 per month if the Company generates gross revenue of $1,000,000 per month; $12,500 per month if the Company generates gross revenue of $1,500,000 per month; $15,000 per month if the Company generates gross revenue of $2,000,000 per month and $20,000 per month if the Company generates gross revenue of $2,500,000 per month. The consultant shall also be granted 200,000 common shares per year for a period of five years.

(g) On June 1, 2019, the Company entered into a consulting agreement with the President of a subsidiary of the Company, Travis Chrisman, whereby the Company agreed to pay a consulting fee of $7,500 per month for a period of five years. The monthly fee will increase to: $10,000 per month if the Company generates gross revenue of $1,000,000 per month; $12,500 per month if the Company generates gross revenue of $1,500,000 per month; $15,000 per month if the Company generates gross revenue of $2,000,000 per month and $20,000 per month if the Company generates gross revenue of $2,500,000 per month. The consultant shall also be granted 200,000 common shares per year for a period of five years.

(h) On August 1, 2019, the Company entered into a consulting agreement with the CEO of the Company, Ron Loudoun, whereby the Company agreed to pay a consulting fee of $7,500 per month for a period of three years and whereby the Company granted the Consultant an option to acquire 250,000 common shares of the Company or 250,000 Options at 10% below market value at the date of grant upon execution of the consulting agreement for an additional 2 years.

(i) On August 1, 2019, the Company entered into a consulting agreement with the Chief Agricultural Operations Manager, Anthony Curci, whereby the Company agreed to pay a signing bonus of $6,000 and a consulting fee of $6,000 per month for a period of six months. At the end of the six-month period, the Company may evaluate the performance with regards to an extension of the agreement.  The Company also granted the Consultant an option to acquire 25,000 common shares of the Company or 25,000 Options at 10% below market value at the date of grant upon execution of the consulting agreement.

(j) On August 1, 2019, the Company entered into a consulting agreement with the Chief Project Manager, Greg Stinson, whereby the Company agreed to pay a signing bonus of $15,000 and a consulting fee of $7,500 per month for a period of five years.  The Company also granted the Consultant an option to acquire 100,000 common shares of the Company or 100,000 Options priced at $0.50 per share upon execution of the consulting agreement and an additional 100,000 common shares or Options priced at 10% below market value at the date of grant six months after the execution of the agreement.

(k) On August 1, 2019, the Company entered into a consulting agreement with the Assistant Agricultural Operations Manager, Carol Snyder, whereby the Company agreed to pay a signing bonus of $4,000 and a consulting fee of $2,000 per month for a period of six months. At the end of the six-month period, the Company may evaluate the performance with regards to an extension of the agreement. The Company also granted the Consultant an option to acquire 25,000 common shares of the Company or Options at $0.50 per share upon execution of the consulting agreement and an additional 25,000 common shares or Options at 10% below market value at the date of grant six months after the execution of the agreement.

(l) On August 1, 2019, the Company granted an option to a non-related party to acquire 50,000 common shares of the Company at 10% below market value at the date of grant for services rendered.

There is currently no pending or threatened litigation.

11. Subsequent Events

None

13


Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

The information set forth in this section contains certain "forward-looking statements," including, among other things, (i) expected changes in our revenues and profitability, (ii) prospective business opportunities, and (iii) our strategy for financing our business. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as "believes," "anticipates," "intends," or "expects." These forward-looking statements relate to our plans, objectives and expectations for future operations. Although we believe that our expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of our knowledge of our business and operations, in light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this report should not be regarded as a representation by us or any other person that our objectives or plans will be achieved. Unless otherwise specified in this quarterly report, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to shares of our common stock. As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean Takedown Entertainment Inc. and our subsidiary Takedown Fight Media Inc., unless otherwise indicated.

Corporate Overview
 
Green Hygienics Holdings Inc. (the Company) was incorporated in the State of Nevada on June 12, 2008 as Silver Bay Resources Inc.  On June 30, 2010, the Company changed its name to Takedown Entertainment Inc. On July 24, 2012, the Company changed its name to Green Hygienics Holdings Inc.
 
The Company is an innovative, full-scope, science-driven, premium hemp cultivation and branding enterprise focused on the cultivation and processing of industrial hemp for cannabidiol (“CBD”). The Hemp Farming Act of 2018 removed hemp from Schedule I controlled substances (defined as cannabis with less than 0.3% THC) making it an ordinary agricultural commodity.

The Company’s business model includes generating revenues from the sale of hemp and premium-grade CBD products; creating trusted global consumer brands; developing valuable IP; and growing the company rapidly through strategic acquisitions. With direct regard to acquisitions, the Company acts as a business accelerator and a vertical integrator focusing to support rapid growth and development of companies with extraordinary potential.

On June 10, 2019, the company secured a multiyear purchase order for the sale of hemp to U.S. Tobacco De Mexico. Under the terms of the contract, the Company is required to deliver a total $56.4 million worth of hemp flower over a five-year period to US Tobacco De Mexico for use in the production of CBD hemp cigarettes. 

On June 14, 2019, the Company secured from the County of San Diego Department of Agriculture, Weights and Measures, a grower registration for industrial hemp cultivation.

On July 22, 2019, the Company secured licenses for the processing of hemp in the state of North Carolina.
The licenses were granted to the Company’s newly formed subsidiary, Coastal Labs North Carolina LLC, by the North Carolina Industrial Hemp Commission. The Company’s second subsidiary in the state is Green Hygienics North Carolina LLC, which will be partnering for cultivation this year with the intention of meeting the earnings qualification to be licensed on its own for next year’s cultivation.

The Company created Coastal labs and Green Hygienics near the end of July. There was no accounting activity prior to October 31, 2019. The Company’s policy is to consolidate all entities which we control and or own more than 51% of the voting stock.

On August 26, 2019, the Company the completed the acquisition of the 824-acre Potrero Ranch Property near San Diego, California for a total purchase price of $4 million. The Company will utilize the land and buildings for industrial hemp for CBD cultivation. The property includes over 400,000 square feet of outbuildings which are currently being converted into greenhouses.

Results of Operations
 
We are currently in the product growing and production stages and anticipate to be revenue producing in the next six months.

Expenses

We incurred operating losses of $45,241,260 from date of incorporation June 12, 2008 to the period ended October 31, 2019. These losses consisted of general operating expenses and professional fees incurred in connection with the day to day operation of our business and the preparation and filing of our periodic reports. An analysis of the loss is as follows:

14


   
Three Months Ended
       
   
October 31, 2019
$
   
October 31, 2018
$
   
Change
$
 
Expenses
                 
Consulting fees
 

164,396
     
27,500
   
$
136,896
 
Business development costs
   
1,227,592
     
-
     
1,227,592
 
Supplies
   
392,516
     
-
     
392,516
 
Sub contracts
   
68,289
     
-
     
68,269
 
Payroll expenses
   
158,731
     
-
     
158,731
 
General and administrative
   
54,400
     
1,909
     
52,491
 
Interest
   
115,451
     
716
     
114,735
 
Depreciation
   
13,350
     
-
     
13,350
 
Net loss for the period
   
(2,194,725
)
   
(30,125
)
   
(2,164,600
)

In 2019, our auditors issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated revenues. We have generated no revenues to date. The following table provides selected financial data about our company as at October 31, 2019 and July 31, 2019.

Balance Sheet Data:

 
 
October 31, 2019
$
   
July 31, 2019
$
 
 
           
Cash and prepaid expenses
 

51,218
     
3,253
 
Inventory
   
306,450
     
306,450
 
Fixed assets
   
4,745,767
     
245,138
 
Total assets
   
5,103,435
     
554,841
 
Total liabilities
   
6,698,522
     
1,194,836
 
Stockholders' equity (deficit)
   
(1,595,087
)
   
(639,995
)

Liquidity and Capital Resources

Working Capital
  
 
 
October 31, 2019
$
   
July 31,2019
$
 
 
           
Current Assets
 

357,668
     
309,703
 
Current Liabilities
   
2,005,497
     
1,194,836
 
Working Capital (Deficit)
   
(1,647,823
)
   
(885,133
)

Cash Flows
 
 
 
Three Months
Ended
October 31, 2019
$
   
Three Months
Ended
October 31, 2018
$
 
 
           
Net cash provided by (used in) operating activities
 

(802,789
)
 

(91
)
Net cash used in investing activities     (118,586
)
    -
 
Net cash provided by financing activities
    964,340
      -
 
Net change in cash
   
42,965
     
(91
)
 
Our current cash balance will be unable to sustain operations for the next twelve months. We will be forced to raise additional funds by issuing new debt or equity securities or otherwise. We have raised no funds during the current quarter. If we fail to raise sufficient capital when needed, we will not be able to complete our business plan. We are a development stage company and have generated no revenue to date.

The future of our company is dependent upon its ability to obtain financing and upon future profitable operations from the development of acquisitions.
 
15


We estimate that our expenses over the next 12 months will be approximately $600,000 as described in the table below.  These estimates may change significantly depending on the performance of our products in the marketplace and our ability to raise capital from shareholders or other sources.

Description
 
Estimated
Completion Date
 
Estimated
Expenses
 
 
 
 
     
Business development
 
12 months
 
$
120,000
 
General and administrative expenses
 
12 months
   
480,000
 
Total
 
 
   
600,000
 
 
We intend to meet our cash requirements for the next 12 months through a combination of debt financing and equity financing by way of private placements.  We currently do not have any arrangements in place to complete any private placement financings and there is no assurance that we will be successful in completing any private placement financings on terms that will be acceptable to us.  We may not raise sufficient funds to fully carry out our business plan.
 
FUTURE FINANCINGS
 
We will require additional financing in order to enable us to proceed with our plan of operations, as discussed above, including approximately $720,000 over the next 12 months to pay for our ongoing expenses. These expenses include legal, accounting and audit fees as well as general and administrative expenses.  These cash requirements are in excess of our current cash and working capital resources. Accordingly, we will require additional financing in order to continue operations and to repay our liabilities. There is no assurance that any party will advance additional funds to us in order to enable us to sustain our plan of operations or to repay our liabilities.
 
We anticipate continuing to rely on equity sales of our common stock in order to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned business activities.
 
We presently do not have any arrangements for additional financing and no potential lines of credit or sources of financing are currently available for the purpose of proceeding with our plan of operations.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
 
Critical Accounting Policies
 
Use of Estimates

The preparation of the financial statements in conformity with U.S. generally accepted accounting principles requires 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.  Our company regularly evaluates estimates and assumptions related to deferred income tax asset valuation allowances. Our company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by our company may differ materially and adversely from our company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company”, we are not required to provide the information required by this Item.
 
Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 , as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president and chief financial officer (also our principal executive officer, principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure.

16



As of October 31, 2019, we carried out an evaluation, under the supervision and with the participation of our president and chief financial officer (also our principal executive officer, principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president and chief financial officer (also our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective in providing reasonable assurance in the reliability of our corporate reporting as of the end of the period covered by this quarterly report due to certain deficiencies that existed in the design or operation of our internal controls over financial reporting and that may be considered to be material weaknesses.
 
Changes in Internal Controls

There have been no changes in our internal controls over financial reporting that occurred during the quarter ended October 31, 2019 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.
 

M&K CPAs, our independent registered public accounting firm, is not required to and has not provided an assessment over the design or effectiveness of our internal controls over financial reporting.
 
PART II - OTHER INFORMATION
 
Item 1. Legal Proceedings

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
None
 
Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine safety Disclosures

None.
 
Item 5. Other Information

On June 1, 2017, Ronald Loudoun was appointed as the CEO and President and as a Director.

On August 30, 2018 Matthew Dole was appointed as VP of Business Development and as a Director.

On August 30, 2018 Jeff Palumbo was appointed as Chief Technology Officer.

17


Item 6. Exhibits

Exhibit
Number
 
Description
 
 
 
(3)
 
(i) Articles of Incorporation; (ii) By-laws
     
3.1
 
     
3.2
 
     
3.3
 
     
(10)
 
Material Contracts
     
10.1
 
     
10.2
 
     
10.3
 
     
10.4
 
     
10.5
 
     
10.6
 
     
10.7
 
     
10.8
 
     
10.9
 
     
(21)
 
Subsidiaries of the Registrant
     
21.1
 
Takedown Fight Media Inc.
     
(31)
 
Section 1350 Certifications
     
31.1*
 
Section 302 Certification of Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer.
     
(32)
 
Section 906 Certifications
     
32.1*
 
Section 906 Certification of Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer.
     
101
 
Interactive Data Files
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
 
XBRL Instance Document
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Calculation Linkbase Document
XBRL Taxonomy Extension Definition Linkbase Document
XBRL Taxonomy Extension Label Linkbase Document
XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith

18


SIGNATURES
 
In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
GREEN HYGIENICS HOLDINGS INC.
 
 (Registrant)
 
 
 
 
Date: December 16, 2019
/s/ Ron Loudoun
 
 
Ron Loudoun
 
President, Chief Executive Officer, Chief Financial Officer,
 
Secretary and Treasurer Director
 
(Principal Executive Officer, Principal Financial Officer
 
and Principal Accounting Officer)
 
 

19
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