As filed with
the Securities and Exchange Commission on September 14,
2020
Registration No.
____________
UNITED
STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
FORM S-1
REGISTRATION
STATEMENT
UNDER
THE SECURITIES
ACT OF 1933
|
GREEN HYGIENICS HOLDINGS INC.
|
|
(Exact name of
registrant as specified in its charter)
|
|
Nevada
|
|
100
|
|
26-2801338
|
|
(State or other
Jurisdiction
of Incorporation)
|
|
(Primary Standard
Classification Code)
|
|
(IRS Employer
Identification No.)
|
13795 Blaisdell
Place, Suite 202
Poway,
California 92064
Tel.: (855)
802-0299
(Address and Telephone
Number of Registrant’s Principal
Executive Offices and
Principal Place of Business)
Ron
Loudoun
Chief Executive
Officer
GREEN HYGIENICS
HOLDINGS INC.
13795 Blaisdell
Place, Suite 202
Poway,
California 92064
Tel.: (855)
802-0299
(Name, Address and
Telephone Number of Agent for Service)
Copies of communications
to:
Marc A.
Indeglia, Esq.
Indeglia
PC
13274 Fiji Way,
Suite 250
Marina del Rey,
CA 90292
Tel No.: (310)
982-2720
Approximate date of
commencement of proposed sale to the public: From time to time
after the effective date of this registration statement.
If any of the
securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. ☒
If this Form is filed
to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act of 1933, please check the following
box and list the Securities Act registration Statement number of
the earlier effective registration statement for the same offering.
☐
If this Form is a
post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier
effective registration statement for the same offering. ☐
If this Form is a
post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier
effective registration statement for the same offering. ☐
If delivery of the
prospectus is expected to be made pursuant to Rule 434, please
check the following box. ☐
Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer”
and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☒
|
CALCULATION OF
REGISTRATION FEE
|
Title of each class of securities to
be registered
|
|
Amount to be
Registered (1)
|
|
|
Proposed
maximum offering
price per
share (2)
|
|
|
Proposed
maximum aggregate
offering price
|
|
|
Amount of
registration
fee
|
|
|
Common Stock underlying Equity Financing
Agreement
|
|
|
5,249,143 |
|
|
$ |
0.8125 |
|
|
$ |
4,264,929 |
|
|
$ |
553.59 |
|
|
Common Stock issued as Commitment Shares
|
|
|
150,857 |
|
|
$ |
0.8125 |
|
|
$ |
122,571 |
|
|
$ |
15.91 |
|
|
TOTAL
|
|
|
5,400,000 |
|
|
$ |
0.8125 |
|
|
$ |
4,387,500 |
|
|
$ |
569.50 |
|
_____________
|
(1)
|
The registrant is registering for resale by
GHS Investments, LLC (“GHS”) (i) shares of the registrant’s common
stock potentially issuable to GHS in accordance with the terms of
an Equity Financing Agreement between GHS and the registrant (the
“Equity Financing Agreement”), and (ii) 150,857 shares of the
registrant’s common stock issued to GHS as commitment shares
pursuant to the Equity Financing Agreement. The number of shares of
common stock registered hereunder represents a good faith estimate
of the number of shares of the registrant’s common stock issuable
upon delivery of a “put” notice. Should the number of shares being
registered be an insufficient number of shares to fully utilize the
equity financing facility, the registrant will not rely upon Rule
416, but will file a new registration statement to cover the resale
of such additional shares should that become necessary. Pursuant to
Rule 416 under the Securities Act, the shares being registered
hereunder include such indeterminate number of shares of common
stock as may be issuable with respect to the shares being
registered hereunder as a result of stock splits, stock dividends,
or similar transactions affecting the shares to be offered by the
selling shareholders.
|
|
(2)
|
The proposed maximum offering price per share
and the proposed maximum aggregate offering price have been
estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(c) under the
Securities Act of 1933 on the basis of the average of the high and
low prices of the Common Stock on the OTC Markets on September 9,
2020, a date within 5 trading days prior to the date of the filing
of this registration statement.
|
The registrant
hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in
accordance with section 8(a) of the securities act of 1933 or until
the registration statement shall become effective on such date as
the commission, acting pursuant to said section 8(a), may
determine.
The information in this prospectus is not complete and
may be changed. We may not sell these securities until the
registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not
permitted.
|
PREPRELIMINARY PROSPECTUS
|
SUBJECT TO COMPLETION
|
DATED ————-, 2020
|
Up to 5,400,000 Common
Shares
GREEN HYGIENICS
HOLDINGS INC.
This prospectus relates
to the resale of up to 5,249,143 shares of the common stock of
Green Hygienics Holdings Inc., a Nevada corporation, by GHS
Investments, LLC, a Nevada limited liability company (“GHS”), a
selling shareholder, pursuant to one or more put notices under an
Equity Financing Agreement (the “Financing Agreement”) that we have
entered into with GHS. The Financing Agreement permits us to sell
shares of our common stock to GHS enabling us to put up to
$25,000,000 worth of common stock to GHS. The registration
statement covers the offer and possible sale of approximately
$5,700,000 in common stock by GHS based on our September 10, 2020
closing market price of $0.90 per share before the discount offered
to GHS. This prospectus also relates to the resale of up to 150,587
shares of our common stock to be issued as commitment shares to
GHS.
If issued presently,
the 5,400,000 shares of common stock registered for resale by GHS
would represent approximately 11.9% of the Company’s issued and
outstanding shares of common stock, based on the Company’s issued
and outstanding 40,077,781 shares of common stock as of September
14, 2020.
The selling stockholder
may sell all or a portion of the shares being offered pursuant to
this prospectus at fixed prices and prevailing market prices at the
time of sale, at varying prices, or at negotiated prices.
We will not receive any
proceeds from the sale of the shares of our common stock by GHS.
However, we will receive proceeds from our sale of shares to GHS
pursuant to the Financing Agreement. We will sell shares of our
common stock to GHS at a price equal to 100% of the lowest closing
price of our common stock during the ten (10) consecutive trading
day period ending on the date on which we deliver a put notice to
GHS (the “Market Price”), and we will be obligated to
simultaneously deliver the number of shares equal to 120% of the
put notice amount based on the Market Price. For example, if we
delivered a put notice to GHS for $250,000, and the Market Price
were $2.00/share, we would be obligated to issue GHS $300,000 of
our common stock based 100% of the Market Price, or approximately
150,000 shares.
GHS is an underwriter
within the meaning of the Securities Act of 1933, and any
broker-dealers or agents that are involved in selling the shares
may be deemed to be “underwriters” within the meaning of the
Securities Act of 1933 in connection with such sales. In such
event, any commissions received by such broker-dealers or agents
and any profit on the resale of the shares purchased by them may be
deemed to be underwriting commissions or discounts under the
Securities Act of 1933.
Our common
stock is quoted on the OTC Markets (QB Marketplace Tier under the
symbol “GRYN”). On September 11, 2020, the reported closing sale
price of our common stock on the OTC Markets was $0.90 per
share.
This offering
is highly speculative and these securities involve a high degree of
risk and should be considered only by persons who can afford the
loss of their entire investment. See “Risk Factors” beginning on
page 5. Neither the Securities and Exchange Commission nor any
state securities commission has approved or disapproved of these
securities or passed upon the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is _________, 2020.
TABLE OF
CONTENTS
FORWARD-LOOKING
STATEMENTS
This
prospectus contains forward-looking statements. These statements
are not historical facts, but rather are based on our current
expectations, estimates and projections about our industry, our
beliefs and assumptions. Words including “may,” “could,” “would,”
“anticipates,” “expects,” “intends,” “plans,” “projects,”
“believes,” “seeks,” “estimates” and similar expressions are
intended to identify forward-looking statements. These statements
are not guarantees of future performance and are subject to certain
risks, uncertainties and other factors, some of which remain beyond
our control, are difficult to predict and could cause actual
results to differ materially from those expressed or forecasted in
the forward-looking statements. These risks and uncertainties are
described in “Risk Factors” and elsewhere in this prospectus. We
caution you not to place undue reliance on these forward-looking
statements, which reflect our management’s view only as of the date
of this prospectus. We are not obligated to update these statements
or publicly release the results of any revisions to them to reflect
events or circumstances after the date of this prospectus or to
reflect the occurrence of unanticipated events.
PROSPECTUS
SUMMARY
This summary
highlights selected information contained elsewhere in this
prospectus. This summary does not contain all the information that
you should consider before investing in the common stock. You
should carefully read the entire prospectus, including “Risk
Factors”, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and the Consolidated Financial
Statements, before making an investment decision.
Overview
Green Hygienics Holdings Inc. (“we” or the “Company”) seeks to be
an innovative, full-scope, science-driven, premium hemp cultivation
and branding enterprise focused on the cultivation and processing
of industrial hemp for the purpose of extracting cannabidiol
(“CBD”).
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., and on July 24, 2012, the
Company changed its name to Green Hygienics Holdings Inc.
On
June 1, 2017, the Company accepted the resignations of Rick Powell,
Jim Loseth and David Ashby as Directors and Officers of the Company
and the Company accepted the appointment of Ronald Loudoun as
President, Secretary, Treasurer, Interim Chief Financial Officer
and Director of the Company.
On
October 30, 2018, Rick Powell transferred 13,500,000 common shares
of the Company by way of a Gifting Agreement to Alita Capital Inc.,
a company controlled by Ronald Loudoun, and on October 30th, 2018,
Wilderness Custom Exteriors Ltd. transferred 9,000,000 common
shares by way of a Gifting Agreement to Alita Capital Inc.
Effective April 29, 2019, the Company entered into a definitive
agreement with Coastal Labs, LLC (“Coastal”), a California, limited
liability company to acquire all of the assets of Coastal. The
total consideration for the assets would be, at the Company’s
election, $3,000,000 or a total of 2,000,000 shares of the
Company’s common stock issuable over five years. In addition, the
Company would enter into consulting agreements with each individual
member of Coastal, or such entity as each respective member may
designate, that sets forth ongoing compensation to each individual
member of Coastal. The parties further agreed to form a new entity
or arrange for the transfer of ownership of Coastal to a
wholly-owned subsidiary of the Company to hold the acquired assets,
to enter into an operating agreement that governs the operation of
the assets, and to establish a board of directors for the
subsidiary of up to 6 members, of whom 3, or half, whichever is
greater, shall be nominees of Coastal. Further, the Company would
assume all of Coastal’s contracts relating to sales and
distribution of the products. The acquisition of the assets of
Coastal has not closed, and either party may terminate the
agreement at any time.
In
June, 2019, the Company formed two wholly owned subsidiaries,
Coastal Labs NC LLC (“Coastal NC”) and Green Hygienics NC LLC
(“Green NC”) for the purpose of registering as an industrial hemp
processor and cultivator in the State of North Carolina pursuant to
the North Carolina Industrial Hemp Pilot Program.
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. Since the
issuance of the purchase order, the Company and US Tobacco De
Mexico determined to renegotiate the purchase order due to several
reasons, including production capacity and market price
fluctuation. This contract has been cancelled due to the
significant drop of more than 90% in wholesale price of hemp
biomass which is used to make CBD hemp cigarettes. The parties are
working on a modified version of the deal.
On
June 14, 2019 the Company secured from the County of San Diego
Department of Agriculture, Weights and Measures a registration for
industrial hemp cultivation as a grower.
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 NC, by the North
Carolina Industrial Hemp Commission. The Company’s second
subsidiary in the state is Green NC, 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.
On
August 26, 2019, the Company the completed the acquisition of 824
acres of land known as the Potrero Ranch Property, located near San
Diego, California for a purchase price of $4 million. The Company
is utilizing 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.
The Company entered into an agreement payable with the seller 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. This debt is secured by a promissory note
secured by a deed of trust on the real property. The maturity date
of the debt is August 23, 2024. The Company also entered into an
agreement payable for $1,760,000 with monthly payments of interest
only at the rate of 15% per annum. This debt is also secured by a
promissory note secured by a second charge on the deed of trust on
the real property. The maturity date of this debt is August 15,
2024. As of April 30, 2020, the Company has spent $184,342 in
property and building improvements and has acquired over $300,000
worth of production equipment.
In
October 2019, the Company entered into an agreement to purchase the
real property located at 13795 Blaisdell Place, Poway, California
92064, which includes a building containing approximately 15,048
square feet of R&D space on a 0.95 acre lot, for $4,000,000, of
which $2,000,000 is payable in cash or common stock of the Company,
and of which $2,000,000 would be financed pursuant to a promissory
note and secured by a deed of trust on the property. The Company
has until April 2020 to obtain the necessary financing to
consummate the transaction. The Company has received an extension
to January 15th, 2021.
In
April 2020, the Company received USDA Organic Certification for its
824 acre farm and 400,000 square feet of greenhouse space. The
Company considers the USDA Organic Certification to be one of the
most recognized certifications among US consumers and provides
another level of assurance to shoppers who may be concerned about
the safety of CBD products. In addition to assuring that no
synthetic fertilizers, pesticides or herbicides have been used in
the cultivation of hemp, the USDA organic certification ensures
that farmers are using tillage and cultivation practices that
maintain or improve the condition of soil and minimize soil erosion
through crop rotations, cover crops and the application of plant
and animal materials.
In
July 2020, the Company planted its first large scale hemp crops for
cultivation. The initial planting covers approximately 120 acres of
land and three greenhouses. The Company anticipates harvesting
these initial crops in October 2020 and selling the crops by the
end of 2020. The Company estimates that the wholesale value of
these crops will be between $10,000,000 and $20,000,000.
We
had $228,237 in cash reserves as at April 30, 2020. We anticipate
that we will incur approximately $240,000 for administrative
expenses, including professional legal and accounting expenses
associated with compliance with our periodic reporting requirements
over the next twelve months.
We
are contemplating raising additional capital to finance our
business operations. No final decisions regarding financing have
been made at this time. It is anticipated that funding for the
Company will come from one or more of the following means: engaging
in an offering of our stock; engaging in borrowing; locating a
joint venture partner or partners.
Corporate
Information
Our
executive offices are located at 13795 Blaisdell Place, Suite 202,
Poway, California 92064. Our telephone number is (855) 802-0299 and
our Internet address is www.greenhygienicsholdings.com. The
information on, or that may be, accessed from our website is not
part of this Prospectus.
GHS Equity
Financing Agreement and Registration Rights Agreement
Summary of the
Offering
|
Company:
|
|
Green Hygienics Holdings,
Inc.
|
|
|
|
|
|
Shares currently
outstanding:
|
|
40,077,781
|
|
|
|
|
|
Shares being offered:
|
|
5,400,000
|
|
|
|
|
|
Offering Price per
share:
|
|
The selling stockholder may sell all
or a portion of the shares being offered pursuant to this
prospectus at fixed prices, at prevailing market prices at the time
of sale, at varying prices, or at negotiated prices.
|
|
|
|
|
|
Use of Proceeds:
|
|
The Company will not receive any
proceeds from the sale of the shares of our common stock by the
selling stockholder. However, we will receive proceeds from our
sale of shares to the selling stockholder pursuant to the Financing
Agreement. The proceeds from the sale of shares to the selling
stockholder will be used for the purpose of providing the company
working capital.
|
|
|
|
|
|
OTC Markets Symbol:
|
|
GRYN
|
|
|
|
|
|
Risk Factors:
|
|
See “Risk Factors” beginning on page
5 and the other information in this prospectus for a discussion of
the factors you should consider before deciding to invest in shares
of our common stock.
|
Summary
Financial Information
Summary Historical Financial Data
The
summary financial information set forth below has been derived from
the financial statements of Green Hygienics Holdings Inc., a Nevada
corporation for periods presented and should be read in conjunction
with the financial statements and the notes thereto included
elsewhere in this Prospectus and in the information set forth in
the section titled “Management’s Discussion and Analysis of
Financial Condition and Results of Operations.”
Green Hygienics Holdings, Inc., a Nevada
corporation
|
|
|
Nine Months
Ended
April 30,
|
|
|
Years Ended
July 31,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2019
|
|
|
2018
|
|
|
Revenues
|
|
$ |
108,574 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
Cost of Revenues
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
Operating Expenses
|
|
$ |
4,885,004 |
|
|
$ |
112,268 |
|
|
$ |
1,818,511 |
|
|
$ |
165,989 |
|
|
Other Income (Expense)
|
|
$ |
(841,029 |
) |
|
$ |
(2,148 |
) |
|
$ |
(25,383 |
) |
|
$ |
36,909 |
|
|
Net Loss
|
|
$ |
(5,617,459 |
) |
|
$ |
(114,416 |
) |
|
$ |
(1,843,894 |
) |
|
$ |
(129,080 |
) |
|
|
|
April
30,
|
|
|
July
31,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
Total Assets
|
|
$ |
4,977,854 |
|
|
$ |
554,841 |
|
|
$ |
592 |
|
|
Total Liabilities
|
|
$ |
8,240,775 |
|
|
$ |
1,194,836 |
|
|
$ |
341,202 |
|
|
Accumulated Deficit
|
|
$ |
(48,383,601 |
) |
|
$ |
(42,766,142 |
) |
|
$ |
(40,992,248 |
) |
|
Stockholders’ Deficit
|
|
$ |
(3,262,921 |
) |
|
$ |
(639,995 |
) |
|
$ |
(340,610 |
) |
RISK FACTORS
The
following is a summary of the risk factors that we believe are most
relevant to our business. You should understand that it is not
possible to predict or identify all such factors. Consequently, you
should not consider the following to be a complete discussion of
all potential risks or uncertainties. We undertake no obligation to
publicly update forward-looking statements, whether as a result of
new information, future events, or otherwise.
Business
Risks:
We are entering
into a new business, the construction of hemp growing facilities,
and we expect to incur operating losses for the foreseeable
future.
We
were incorporated on June 12, 2008. We have no way to evaluate the
likelihood that our business will be successful. We have had
minimal revenues to date. The Company’s present business model is
as 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
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
through strategic acquisitions. Potential investors should be aware
of the difficulties normally encountered by these types of
companies and the high rate of failure of such enterprises. The
likelihood of success must be considered in light of the problems,
expenses, difficulties, complications and delays encountered in
connection with the regulatory hurdles surrounding this
industry
We have yet to
earn significant revenue to achieve profitability and our ability
to sustain our operations is dependent on our ability to raise
additional financing to complete our program if warranted. As a
result, our accountant believes there is substantial doubt about
our ability to continue as a going concern.
We
have an accumulated deficit of $48,383,601 as of April 30, 2020.
Our future is dependent upon our ability to obtain financing and
upon future profitable operations from the development of our
business. These factors raise substantial doubt that we will be
able to continue as a going concern. Our independent auditors have
expressed substantial doubt about our ability to continue as a
going concern. This opinion could materially limit our ability to
raise additional funds by issuing new debt or equity securities or
otherwise. If we fail to raise sufficient capital when needed, we
will not be able to complete our business plan. We may have to
liquidate our business and you may lose your investment. You should
consider our auditor’s comments when determining if an investment
in our company is suitable.
Because of the
unique difficulties and uncertainties inherent in hemp growing
facility construction and management industry, we face a high risk
of business failure.
You
should be aware that the hemp growing industry is a new industry.
Consequently, the likelihood that there will be a high rate of
failure of such enterprises. The likelihood of success must be
considered in light of the problems, expenses, difficulties,
complications and delays encountered in connection with the
regulatory environment in which we must adhere to. These potential
problems include, but are not limited to, unanticipated problems
relating to obtaining a building permits, licenses to grow hemp,
the ability to market the hemp grown. If the results of our program
do not reveal viable commercialization options, we may decide to
abandon our venture into the hemp growing industry. Our ability to
continue in the hemp growing industry will be dependent upon our
possessing adequate capital resources when needed. If no funding is
available, we may be forced to abandon our operations.
Because of the
inherent dangers involved in hemp growing construction industry and
the management of the facilities, there is a risk that we may incur
liability or damages as we conduct our business.
The
growing of hemp involves numerous hazards. As a result, we may
become subject to liability for such hazards, which we cannot
insure or against which we may elect not to insure. At the present
time we have no insurance to cover against these hazards. The
payment of such liabilities may result in our inability to complete
our planned program and/or obtain additional financing to fund our
program.
As we undertake
the construction of hemp growing facilities, we will be subject to
compliance with government regulation that may increase the
anticipated cost of our program.
There are several governmental regulations that could materially
increase the costs of managing the facilities. We will be subject
to regulations and laws as we carry out our program. We will
require licenses to grow and process hemp in the United States and
Canada. There is a risk that new regulations could increase our
costs of doing business and prevent us from carrying out our
growing operations.
Because we have
no operating history in the hemp industry, we may not
succeed.
We
have no specific operating history in procuring, building out or
leasing real estate for agricultural purposes, specifically hemp
grow facilities, or with respect to any other activity in the hemp
industry. Moreover, we are subject to all risks inherent in a
developing a new business enterprise. Our likelihood of success
must be considered in light of the problems, expenses,
difficulties, complications, and delays frequently encountered in
connection with establishing a new business and the competitive and
regulatory environment in which we operate.
You
should further consider, among other factors, our prospects for
success in light of the risks and uncertainties encountered by
companies that, like us, are in their early stages. For example,
unanticipated expenses, delays and or complications with build
outs, zoning issues, legal disputes with neighbors, local
governments, communities and or tenants. We may not successfully
address these risks and uncertainties or successfully implement our
operating strategies. If we fail to do so, it could materially harm
our business to the point of having to cease operations and could
impair the value of our common stock to the point investors may
lose their entire investment.
Because our
business is dependent upon continued market acceptance by
consumers, any negative trends will adversely affect our business
operations.
We
are substantially dependent on continued market acceptance and
proliferation of consumers of hemp. We believe that as hemp becomes
more accepted consumer demand will continue to grow. And while we
believe that the market and opportunity in the hemp space continues
to grow, we cannot predict the future growth rate and size of the
market. Any negative outlook on the hemp industry will adversely
affect our business operations.
Laws and
regulations affecting the regulated hemp industry are constantly
changing, which could detrimentally affect our proposed operations
and we cannot predict the impact that future regulations may have
on us.
Local, state and federal hemp laws and regulations are broad in
scope and subject to evolving interpretations, which could require
us to incur substantial costs associated with compliance or alter
our business plan. In addition, violations of these laws, or
allegations of such violations, could disrupt our business and
result in a material adverse effect on its operations. In addition,
it is possible that regulations may be enacted in the future that
will be directly applicable to our proposed business. We cannot
predict the nature of any future laws, regulations, interpretations
or applications, nor can we determine what effect additional
governmental regulations or administrative policies and procedures,
when and if promulgated, could have on our business.
FDA regulation
of hemp and the possible registration of facilities where hemp is
grown could negatively affect the industry which would directly
affect our financial condition.
The
FDA may issue rules and regulations including CGMPs (certified good
manufacturing practices) related to the growth, cultivation,
harvesting and processing of hemp. Clinical trials may be needed to
verify efficacy and safety. It is also possible that the FDA would
require that facilities where hemp is grown be registered with the
FDA and comply with certain federally prescribed regulations. In
the event that some or all of these regulations are imposed, we do
not know what the impact would be on the hemp industry, what costs,
requirements and possible prohibitions may be enforced. If we or
our tenants are unable to comply with the regulations and or
registration as prescribed by the FDA, we and/or our tenants may be
unable to continue to operate their and our business in its current
form or at all.
Because our
business model depends upon the availability of private financing,
any change in our ability to raise money will adversely affect our
financial condition.
Our
ability to operate, engage in the business activities that we have
planned and achieve positive financial performance depends, in
large measure, on our ability to obtain financing in amounts and on
terms that are favorable.
Because we are
liable for hazardous substances on our properties, environmental
liabilities are possible and can be costly.
Federal, state and local laws impose liability on a landowner for
releases or the otherwise improper presence on the premises of
hazardous substances. This liability is without regard to fault
for, or knowledge of, the presence of such substances. A landowner
may be held liable for hazardous materials brought onto a property
before it acquired title and for hazardous materials that are not
discovered until after it sells the property. Similar liability may
occur under applicable state law. Sellers of properties may make
only limited representations as to the absence of hazardous
substances. If any hazardous materials are found within our
properties in violation of law at any time, we may be liable for
all cleanup costs, fines, penalties and other costs. This potential
liability will continue after we sell the properties and may apply
to hazardous materials present within the properties before we
acquire the properties. If losses arise from hazardous substance
contamination which cannot be recovered from a responsible party,
the financial viability of the properties may be adversely
affected. It is possible that we will purchase properties with
known or unknown environmental problems which may require material
expenditures for remediation.
If we are found
non-compliant with the Americans with Disabilities Act, we will be
subject to significant liabilities.
If
any of our properties are not in compliance with the Americans with
Disabilities Act of 1990, as amended (the “ADA”), we may be
required to pay for any required improvements. Under the ADA,
public accommodations must meet certain federal requirements
related to access and use by disabled persons. The ADA requirements
could require significant expenditures and could result in the
imposition of fines or an award of damages to private litigants. We
cannot assure that ADA violations do not or will not exist at any
of our properties.
The recent
global COVID-19 outbreak has significantly affected our
business and operations.
The potential impact and duration of
the COVID-19 pandemic on the global economy and our business are
difficult to assess or predict. Potential impacts include:
• Our customer prospects and our existing customers may experience
slowdowns in their businesses, which in turn may result in reduced
demand for our products, lengthening of sales cycles, loss of
customers, and difficulties in collections.
• Certain of our employees are working from home significantly more
frequently than they have historically, which may result in
decreased employee productivity and morale with increased unwanted
employee attrition.
• We continue to incur fixed costs, and are deriving reduced or no
benefit from those costs.
• We may continue to experience disruptions to our growth planning,
such as for facilities and expansion.
• We anticipate incurring costs in returning to work, including
changes to the workplace, such as space planning, food service, and
amenities.
• We may be subject to legal liability for safe workplace
claims.
• Our critical vendors could go out of business.
• Our in-person marketing events, including customer user
conferences, have been canceled and we may continue to experience
prolonged delays in our ability to reschedule or conduct in-person
marketing events and other sales and marketing activities.
• Our marketing, sales, professional services, and support
organizations are accustomed to extensive face-to-face customer and
partner interactions, and conducting business virtually is
unproven.
Any of the foregoing could
adversely affect our business, financial condition, and results of
operations.
More generally,
the COVID-19 pandemic has and is expected to continue to
adversely affect economies and financial markets globally, leading
to a continued economic downturn, which is expected to decrease
spending generally and could adversely affect demand for our
products. It is not possible at this time to estimate the full
impact that COVID-19 will have on our business, as the impact will
depend on future developments, which are highly uncertain and
cannot be predicted.
Moreover, to the extent the COVID-19 pandemic adversely
affects our business, financial condition, and results of
operations, it may also have the effect of heightening many of
the other risks described in this “Risk
Factors” section, including but not limited to, those related
to our ability to increase sales to existing and new customers,
continue to perform on existing contracts, develop and deploy new
technologies, expand our marketing capabilities and sales
organization and to generate sufficient cash flow to operate our
business and meet our obligations.
Investment Risks
Our issuance of additional shares may
have the effect of diluting the interest of shareholders; our
common stock shareholders do not have pre-emptive
rights
Any
additional issuances of common stock by us from our authorized but
unissued shares may have the effect of diluting the percentage
interest of existing shareholders. The securities issued to raise
funds may have rights, preferences or privileges that are senior to
those of the holders of our other securities, including our common
stock. The board of directors has the power to issue such shares
without shareholder approval. We fully intend to issue additional
common shares in order to raise capital to fund our business
operations and growth objectives.
We do not
anticipate paying dividends to our common stockholders in the
foreseeable future, which makes investment in our stock speculative
and risky.
We
have not paid dividends on our common stock and do not anticipate
paying dividends on our common stock in the foreseeable future. The
board of directors has sole authority to declare dividends payable
to our stockholders. The fact that we have not paid and do not plan
to pay dividends indicates that we must use all of our funds we
generate for reinvestment in our business activities. Investors
also must evaluate an investment in the Company solely on the basis
of anticipated capital gains.
Limited
liability of our executive officers and directors may discourage
shareholders from bringing a lawsuit against them.
Our
Memorandum and Articles of Incorporation contain provisions that
limit the liability of our directors for monetary damages and
provide for indemnification of officers and directors. These
provisions may discourage shareholders from bringing a lawsuit
against officers and directors for breaches of fiduciary duty and
may reduce the likelihood of derivative litigation against officers
and directors even though such action, if successful, might
otherwise have benefited the shareholders. In addition, a
shareholder’s investment in the Company may be adversely affected
to the extent that we pay costs of settlement and damage awards
against officers or directors pursuant to the indemnification
provisions of the bylaw. The impact on a shareholder’s investment
in terms of the cost of defending a lawsuit may deter the
shareholder from bringing suit against any of our officers or
directors. We have been advised that the SEC takes the position
that these article and bylaw provisions do not affect the liability
of any director under applicable federal and state securities
laws.
We are a
development stage company and we expect to incur operating losses
for the foreseeable future.
We
were incorporated on June 12, 2008 and our business to date has
been principally organizational activities. We have no way to
evaluate the likelihood that our business will be successful.
Potential investors should be aware of the difficulties normally
encountered by start-up companies and the high rate of failure of
such enterprises. The likelihood of success must be considered in
light of the problems, expenses, difficulties, complications and
delays encountered in connection with the business that we plan to
undertake. These potential problems include, but are not limited
to, additional costs and expenses that may exceed current
estimates. We anticipate that we will incur increased operating
expenses without realizing any revenues. We recognize that if
business revenues are not forthcoming, we will not be able to
continue business operations. There is no history upon which to
base any assumption as to the likelihood that we will prove
successful, and if we are unsuccessful in addressing these risks,
our business will most likely fail.
We have yet to
earn continuous or sufficient revenue and our ability to sustain
our operations is dependent on our ability to raise additional
financing. There is substantial doubt about our ability to continue
as a going concern.
We
have accumulated net losses of $48,383,601 for the period from
inception June 12, 2008 to April 30, 2020 and have generated
limited revenues to date. Our future is dependent upon our ability
to obtain financing and upon future profitable operations from the
development of our business. These factors raise substantial doubt
that we will be able to continue as a going concern. Our
independent auditor has expressed substantial doubt about our
ability to continue as a going concern. This opinion could
materially limit our ability to raise additional funds by issuing
new debt or equity securities or otherwise. If we fail to raise
sufficient capital when needed, we will not be able to complete our
business plan. We may have to liquidate our business and you may
lose your investment. You should consider our auditor’s comments
when determining if an investment in our company is suitable.
We may be
unable to obtain additional capital that we may require to
implement our business plan. This would restrict our ability to
grow.
The
proceeds from our financing efforts to date have provided us with a
limited amount of working capital not sufficient to fund our
proposed operations. We will require additional capital to continue
to operate our business and our proposed operations. We may be
unable to obtain additional capital as and when required.
Future acquisitions and future development, production and
marketing activities, as well as our administrative requirements
(such as salaries, insurance expenses and general overhead
expenses, as well as legal compliance costs and accounting
expenses) will require a substantial amount of additional capital
and cash flow.
We
may not be successful in locating suitable financing transactions
in the time period required or at all, and we may not obtain the
capital we require by other means. If we do not succeed in raising
additional capital, the capital we have received to date is not
sufficient to fund our operations going forward without obtaining
additional capital financing.
Any
additional capital raised through the sale of equity may dilute
your ownership percentage. This could result in a decrease in the
fair market value of our equity securities because our assets would
be owned by a larger pool of outstanding equity. The terms of
securities we issue in future may be more favorable to our new
investors, and may include preferences, superior voting rights and
the issuance of warrants or other derivative securities, and
issuances of incentive awards under equity employee incentive
plans, which may have a further dilutive effect.
Our
ability to obtain needed financing may be impaired by such factors
as the capital markets generally, our status as a new enterprise
without a demonstrated operating history or the retention or loss
of key management. If the amount of capital we are able to raise
from financing activities is not sufficient to satisfy our capital
needs, we may be required to cease our operations.
We
may incur substantial costs in pursuing future capital financing,
including investment banking fees, legal fees, accounting fees,
securities law compliance fees, printing and distribution expenses
and other costs. We may also be required to recognize non-cash
expenses in connection with certain securities we may issue, such
as convertible notes and warrants, which may adversely impact our
financial condition.
The limited
trading of our common stock may impair your ability to sell your
shares.
There has been limited trading of our common stock since our
inception. The lack of trading of our common stock and the low
volume of any future trading may impair your ability to sell your
shares at the time you wish to sell them or at a price that you
consider reasonable. Such factors may also impair our ability to
raise capital by selling shares of capital stock and may impair our
ability to acquire other companies or technologies by using common
stock as consideration.
The market
price of our common stock is likely to be highly volatile and
subject to wide fluctuations.
Assuming we are able to establish an active trading market for our
common stock, the market price of our common stock is likely to be
highly volatile and could be subject to wide fluctuations in
response to a number of factors that are beyond our control,
including:
|
|
●
|
dilution caused by our issuance of additional
shares of common stock and other forms of equity securities, which
we expect to make in connection with future capital financings to
fund our operations and growth, to attract and retain valuable
personnel and in connection with future strategic partnerships with
other companies;
|
|
|
●
|
announcements of acquisitions or other
business initiatives by our competitors;
|
|
|
●
|
market changes in the demand for products and
services;
|
|
|
●
|
quarterly variations in our revenues and
operating expenses;
|
|
|
●
|
changes in the valuation of similarly
situated companies, both in our industry and in other
industries;
|
|
|
●
|
changes in analysts’ estimates affecting us,
our competitors or our industry;
|
|
|
●
|
additions and departures of key
personnel;
|
|
|
●
|
fluctuations in interest rates and the
availability of capital in the capital markets;
|
These and other factors are largely beyond our control, and the
impact of these risks, singly or in the aggregate, may result in
material adverse changes to the market price of our common stock
and our results of operations and financial condition.
Our operating
results may fluctuate significantly, and these fluctuations may
cause our stock price to decline.
Our
operating results will likely vary in the future primarily as the
result of fluctuations in our revenues and operating expenses,
costs that we incur, and other factors. If our results of
operations do not meet the expectations of current or potential
investors, the price of our common stock may decline.
Applicable SEC
rules governing the trading of “penny stocks” will limit the
trading and liquidity of our common stock, which may affect the
trading price of our common stock.
Our
common stock is presently considered to be a “penny stock” and is
subject to SEC rules and regulations which impose limitations upon
the manner in which such shares may be publicly traded and which
regulate broker-dealer practices in connection with transactions in
“penny stocks.” Penny stocks generally are equity securities with a
price of less than $5.00 (other than securities registered on
certain national securities exchanges or quoted on the FINRA
system, provided that current price and volume information with
respect to transactions in such securities is provided by the
exchange or system). The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document that
provides information about penny stocks and the risks in the penny
stock market. The broker-dealer must also provide the customer with
current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the
transaction, and monthly account statements showing the market
value of each penny stock held in the customer’s account. In
addition, the penny stock rules generally require that prior to a
transaction in a penny stock, the broker-dealer make a special
written determination that the penny stock is a suitable investment
for the purchaser and receive the purchaser’s written agreement to
the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market
for a stock that becomes subject to the penny stock rules which may
increase the difficulty investors may experience in attempting to
liquidate such securities.
USE OF
PROCEEDS
We
will not receive any proceeds from the sale of the shares of our
common stock by GHS. All proceeds from the sale of such shares will
be for the account of GHS. However, we will receive proceeds from
the sale of securities pursuant to each put notice we send to GHS.
We will pay for expenses of this offering, except that GHS will pay
any broker discounts or commissions or equivalent expenses
applicable to the sale of its shares.
DETERMINATION OF
OFFERING PRICE
We
have not set an offering price for the shares registered hereunder,
as the only shares being registered are those sold pursuant to the
Financing Agreement with GHS. GHS may sell all or a portion of the
shares being offered pursuant to this prospectus at fixed prices,
at prevailing market prices at the time of sale, at varying prices,
or at negotiated prices.
DILUTION
Not
applicable. The shares registered under this registration statement
are not being offered for purchase. The shares are being registered
on behalf of the selling shareholder, GHS, pursuant to the GHS
Financing Agreement.
SELLING SECURITY
HOLDER
The
selling stockholder identified in this prospectus, GHS, may offer
and sell up to 5,400,000 shares of our common stock, which consists
of shares of common stock to be initially purchased by GHS pursuant
to the Financing Agreement. If issued presently, the shares of
common stock registered for resale by GHS would represent
approximately 11.9% of our issued and outstanding shares of common
stock, based on the number of issued and outstanding shares as of
September 14, 2020 (40,077,781 shares).
We
may require the selling stockholder to suspend the sales of the
shares of our common stock being offered pursuant to this
prospectus upon the occurrence of any event that makes any
statement in this prospectus or the related registration statement
untrue in any material respect or that requires the changing of
statements in those documents in order to make statements in those
documents not misleading.
The
selling stockholder identified in the table below may from time to
time offer and sell under this prospectus any or all of the shares
of common stock described under the column “Shares of Common Stock
Being Offered” in the table below.
GHS
will be deemed to be an underwriter within the meaning of the
Securities Act. Any profits realized by the selling stockholder may
be deemed to be underwriting commissions.
We
cannot give an estimate as to the number of shares of common stock
that will actually be held by the selling stockholder upon
termination of this offering, because the selling stockholder may
offer some or all of the common stock under the offering
contemplated by this prospectus or acquire additional shares of
common stock. The total number of shares that may be sold hereunder
will not exceed the number of shares offered hereby. Please read
the section entitled “Plan of Distribution” in this prospectus.
The
manner in which the selling stockholder acquired or will acquire
shares of our common stock is discussed below under “The
Offering.”
The
following table sets forth the name of the selling stockholder, the
number of shares of our common stock beneficially owned by such
stockholder before this offering, the number of shares to be
offered for such stockholder’s account and the number and (if one
percent or more) the percentage of the class to be beneficially
owned by such stockholder after completion of the offering. The
number of shares owned are those beneficially owned, as determined
under the rules of the SEC, and such information is not necessarily
indicative of beneficial ownership for any other purpose. Under
such rules, beneficial ownership includes any shares of our common
stock as to which a person has sole or shared voting power or
investment power and any shares of common stock which the person
has the right to acquire within 60 days of September 14, 2020,
through the exercise of any option, warrant or right, through
conversion of any security or pursuant to the automatic termination
of a power of attorney or revocation of a trust, discretionary
account or similar arrangement, and such shares are deemed to be
beneficially owned and outstanding for computing the share
ownership and percentage of the person holding such options,
warrants or other rights, but are not deemed outstanding for
computing the percentage of any other person. Beneficial ownership
percentages are calculated based on 40,077,781 shares of our common
stock outstanding as of September 14, 2020.
The
“Common Shares Beneficially Owned after Offering” column assumes
the sale of all shares offered. The “Percentage of Common Shares
Beneficially Owned after Offering” column is based on 40,077,781
shares of common stock outstanding as of September 14, 2020.
|
Name of Selling
Shareholder
|
|
Shares of
Common Stock
Owned prior to
Offering (1)
|
|
Maximum
Number of
Shares of
Common
Stock to be
Offered
|
|
|
Shares of
Common Stock
Owned after
Offering (2)
|
|
|
Percent of
Common Stock
Owned After
Offering (2)
|
|
|
GHS Investments, LLC (3)
|
|
-0-
|
|
|
5,400,000 |
(4) |
|
|
0 |
|
|
|
0 |
|
|
(1)
|
Beneficial ownership is determined in
accordance with Securities and Exchange Commission rules and
generally includes voting or investment power with respect to
shares of common stock. Shares of common stock subject to options,
warrants and convertible debentures currently exercisable or
convertible, or exercisable or convertible within 60 days, are
counted as outstanding.
|
|
(2)
|
Because the selling stockholder may offer and
sell all or only some portion of the 5,100,000 shares of our common
stock being offered pursuant to this prospectus and may acquire
additional shares of our common stock in the future, we can only
estimate the number and percentage of shares of our common stock
that the selling stockholder will hold upon termination of the
offering.
|
|
|
|
|
(3)
|
Mark Grober exercises voting and dispositive
power with respect to the shares of our common stock that are
beneficially owned by GHS.
|
|
|
|
|
(4)
|
Consists of up to 5,400,000 shares of common
stock to be sold by GHS pursuant to the Financing Agreement, which
includes 150,587 shares issued to GHS as commitment shares pursuant
to the Financing Agreement.
|
THE
OFFERING
On
September 13, 2020, we entered into an Equity Financing Agreement
(the “Financing Agreement”) with GHS Investments, LLC (“GHS”) for
an equity line. Although we are not required to sell shares under
the Financing Agreement, the Financing Agreement gives us the
option to sell to GHS up to $25,000,000 worth of our common stock,
in increments, over the period ending on the earlier of (i) the
date GHS has purchased an aggregate of $25,000,000 of our common
stock pursuant to the Financing Agreement, or (ii) the date that
this registration statement is no longer in effect (the “Open
Period”). $25,000,000 was stated to be the total amount of
available funding in the Financing Agreement, because this was the
maximum amount that GHS agreed to offer us in funding. There is no
assurance the market price of our common stock will increase in the
future, or that we will ever sell (i) $25,000,000 of our common
stock to GHS, or (ii) all 5,400,000 shares being registered
hereunder. The number of common shares that remain issuable to GHS
may not be sufficient, dependent upon our share price, to allow us
to access the full amount contemplated under the Financing
Agreement. If the closing prices of our common stock remains the
same and does not materially increase, we will not be able to place
puts for the full commitment amount under the Financing Agreement.
Based on the closing price of our common stock on September 10,
2020, the registration statement covers the offer and possible sale
of only approximately $5,700,000 worth of our shares. Concurrently
with the execution of this Agreement, the Company shall issue to
GHS 150,857 restricted shares of its Common stock (“Commitment
Shares”) to offset transaction costs. The Commitment Shares are
deemed earned upon the execution of this Agreements.
We
will sell shares of our common stock to GHS at a price equal to
100% of the lowest closing price of our common stock during the ten
(10) consecutive trading day period ending on the date on which we
deliver a put notice to GHS (the “Market Price”), and we will be
obligated to simultaneously deliver the number of shares equal
to120% of the put notice amount based on the Market Price. For
example, if we delivered a put notice to GHS for $250,000, and the
Market Price were $2.00/share, we would be obligated to issue GHS
$300,000 of our common stock based 100% of the Market Price, or
approximately 150,000 shares. For example, if we delivered a put
notice to GHS for $250,000, we would be obligated to issue GHS
$300,000 of our common stock. The share premium GHS will receive
with each put sale means that GHS will effectively be purchasing
our shares at an approximately 17% discount to the Market
Price.
In
addition, the Financing Agreement (i) imposes an ownership
limitation on GHS of 4.99% (i.e., GHS has no obligation to purchase
shares if it beneficially owns more than 4.99% of our common
stock), (ii) requires a minimum of ten (10) trading days between
put notices, and (iii) prohibits any single Put Amount from
exceeding $500,000.
In
order for the Company to be eligible to deliver put notices to GHS,
the following conditions must be met: (i) a registration statement
shall be declared effective and remain effective; (ii) at all times
during the period beginning on the related put notice date and
ending on and including the related closing date of the put, the
Company’s common stock shall have been listed or quoted for trading
on OTC Markets or its equivalent and shall not have been suspended
from trading thereon for a period of two (2) consecutive trading
days during the open period; (iii) the Company has not defaulted or
be in breach of the Financing Agreement; (iv) no injunction shall
be issued or remain in force in connection with the purchase of the
Company’s shares; and (v) the issuance of the shares will not
violate any shareholder approval requirements of OTC Markets. If
any of the events described above occurs during a pricing period,
then GHS shall have not obligation to purchase the shares delivered
in the Put Notice. Further the terms of the Registration Rights
Agreement entered into in connection with the Financing Agreement
require that the Company use commercially reasonable efforts to
have this registration statement be declared effective no more than
30 days following the date this registration statement was
originally filed.
GHS
is not permitted to engage in short sales involving our common
stock, or to engage in other activities that could manipulate the
market for our common stock, during the period commencing September
13, 2020, and continuing through the termination of the Financing
Agreement. In accordance with Regulation SHO, however, sales of our
common stock by GHS after delivery of a put notice of such number
of shares reasonably expected to be purchased by GHS under a put
will not be deemed short sales.
As
we draw down on the equity line of credit reflected in the
Financing Agreement, shares of our common stock will be sold into
the market by GHS. The sale of these shares could cause our stock
price to decline. In turn, if our stock price declines and we issue
more put notices to GHS to purchase more of our shares, more shares
will likely come into the market, which could cause a further drop
in our stock price. The Company determines when and whether to
issue a put to GHS, so the Company will know precisely both the
stock price used as the reference point, and the number of shares
issuable to GHS upon such exercise. You should be aware that there
is an inverse relationship between the market price of our common
stock and the number of shares to be issued under the equity line
of credit. We have no obligation to utilize the full amount
available under the equity line of credit, and we will likely not
be able to do so.
Neither the Financing Agreement nor any of our rights or GHS’s
rights thereunder may be assigned to any other person.
PLAN OF
DISTRIBUTION
The
selling stockholder may, from time to time, sell any or all of its
shares of Company common stock through the OTC Link or any other
stock exchange, quotation board, market or trading facility on
which the shares of our common stock are quoted or traded, or in
private transactions. These sales may be at fixed prices,
prevailing market prices at the time of sale, at varying prices, or
at negotiated prices. The selling stockholder may use any one or
more of the following methods when selling shares:
|
|
☐
|
ordinary brokerage transactions and
transactions in which the broker-dealer solicits purchasers;
|
|
|
☐
|
block trades in which the broker-dealer will
attempt to sell the shares as agent but may position and resell a
portion of the block as principal to facilitate the
transaction;
|
|
|
☐
|
purchases by a broker-dealer as principal and
resale by the broker-dealer for its account;
|
|
|
☐
|
privately negotiated transactions;
|
|
|
☐
|
broker-dealers may agree with the selling
stockholders to sell a specified number of such shares at a
stipulated price per share; or
|
|
|
☐
|
a combination of any such methods of
sale.
|
Additionally, broker-dealers engaged by the selling stockholder may
arrange for other brokers-dealers to participate in sales.
Broker-dealers may receive commissions or discounts from the
selling stockholder (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be
negotiated, but, except as set forth in a supplement to this
prospectus, in the case of an agency transaction not in excess of a
customary brokerage commissions in compliance with FINRA Rule 2440;
and in the case of a principal transaction, a markup or markdown in
compliance with FINRA IM-2440.
GHS
is an underwriter within the meaning of the Securities Act of 1933,
and any broker-dealers or agents that are involved in selling the
shares may be deemed to be “underwriters” within the meaning of the
Securities Act of 1933 in connection with such sales. Any
commissions received by such broker-dealers or agents, and any
profit on the resale of the shares purchased by them, may be deemed
to be underwriting commissions or discounts under the Securities
Act of 1933. GHS has informed us that it does not have any written
or oral agreement or understanding, directly or indirectly, with
any person to distribute the Company’s common stock. Pursuant to a
requirement by FINRA, the maximum commission or discount to be
received by any FINRA member or independent broker-dealer may not
be greater than 8% of the gross proceeds received by us for the
sale of any securities being registered pursuant to Rule 415
promulgated under the Securities Act of 1933.
Discounts, concessions, commissions and similar selling expenses,
if any, attributable to the sale of shares will be borne by the
selling stockholder. The selling stockholder may agree to indemnify
any agent, dealer, or broker-dealer that participates in
transactions involving sales of the shares if liabilities are
imposed on that person under the Securities Act of 1933.
We
are required to pay certain fees and expenses incurred by us
incident to the registration of the shares covered by this
prospectus. We have agreed to indemnify the selling stockholder
against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act of 1933. We will not receive
any proceeds from the resale of any of the shares of our common
stock by the selling stockholder. We will receive proceeds from the
sale of our common stock to GHS under the Financing Agreement.
Neither the Financing Agreement with GHS nor any rights of the
parties under the Financing Agreement with GHS may be assigned or
delegated to any other person.
We
have entered into an agreement with GHS to keep this prospectus
effective until GHS (i) has sold all of the common shares purchased
by it under the Financing Agreement, and (ii) has no further right
to acquire any additional shares of common stock under the
Financing Agreement.
The
resale shares will be sold only through registered or licensed
brokers or dealers if required under applicable state securities
laws. In addition, in certain states, the resale shares may not be
sold unless they have been registered or qualified for sale in the
applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
Under applicable rules and regulations under the Securities
Exchange Act of 1934, any person engaged in the distribution of the
resale shares may not simultaneously engage in market making
activities with respect to the common stock for the applicable
restricted period, as defined in Regulation M, prior to the
commencement of the distribution. In addition, the selling
stockholders will be subject to applicable provisions of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder, including Regulation M, which may limit the timing of
purchases and sales of shares of the common stock by the selling
stockholder or any other person. We will make copies of this
prospectus available to the selling stockholder.
DESCRIPTION OF
BUSINESS
Overview
Green Hygienics Holdings Inc. (“we” or the “Company”) seeks to be
an innovative, full-scope, science-driven, premium hemp cultivation
and branding enterprise focused on the cultivation and processing
of industrial hemp for the purpose of extracting cannabidiol
(“CBD”).
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., and on July 24, 2012, the
Company changed its name to Green Hygienics Holdings Inc.
On
June 1, 2017, the Company accepted the resignations of Rick Powell,
Jim Loseth and David Ashby as Directors and Officers of the Company
and the Company accepted the appointment of Ronald Loudoun as
President, Secretary, Treasurer, Interim Chief Financial Officer
and Director of the Company.
On
October 30, 2018, Rick Powell transferred 13,500,000 common shares
of the Company by way of a Gifting Agreement to Alita Capital Inc.,
a company controlled by Ronald Loudoun, and on October 30th, 2018,
Wilderness Custom Exteriors Ltd. transferred 9,000,000 common
shares by way of a Gifting Agreement to Alita Capital Inc.
Effective April 29, 2019, the Company entered into a definitive
agreement with Coastal Labs, LLC (“Coastal”), a California, limited
liability company to acquire all of the assets of Coastal. The
total consideration for the assets would be, at the Company’s
election, $3,000,000 or a total of 2,000,000 shares of the
Company’s common stock issuable over five years. In addition, the
Company would enter into consulting agreements with each individual
member of Coastal, or such entity as each respective member may
designate, that sets forth ongoing compensation to each individual
member of Coastal. The parties further agreed to form a new entity
or arrange for the transfer of ownership of Coastal to a
wholly-owned subsidiary of the Company to hold the acquired assets,
to enter into an operating agreement that governs the operation of
the assets, and to establish a board of directors for the
subsidiary of up to 6 members, of whom 3, or half, whichever is
greater, shall be nominees of Coastal. Further, the Company would
assume all of Coastal’s contracts relating to sales and
distribution of the products. The acquisition of the assets of
Coastal has not closed, and either party may terminate the
agreement at any time.
In
June, 2019, the Company formed two wholly owned subsidiaries,
Coastal Labs NC LLC (“Coastal NC”) and Green Hygienics NC LLC
(“Green NC”) for the purpose of registering as an industrial hemp
processor and cultivator in the State of North Carolina pursuant to
the North Carolina Industrial Hemp Pilot Program.
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. Since the
issuance of the purchase order, the Company and US Tobacco De
Mexico determined to renegotiate the purchase order due to several
reasons, including production capacity and market price
fluctuation. This contract has been cancelled due to the
significant drop of more than 90% in wholesale price of hemp
biomass which is used to make CBD hemp cigarettes. The parties are
working on a modified version of the deal.
On
June 14, 2019 the Company secured from the County of San Diego
Department of Agriculture, Weights and Measures a registration for
industrial hemp cultivation as a grower.
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 NC, by the North
Carolina Industrial Hemp Commission. The Company’s second
subsidiary in the state is Green NC, 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.
On
August 26, 2019, the Company the completed the acquisition of 824
acres of land known as the Potrero Ranch Property, located near San
Diego, California for a purchase price of $4 million. The Company
is utilizing 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.
The Company entered into an agreement payable with the seller 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. This debt is secured by a promissory note
secured by a deed of trust on the real property. The maturity date
of the debt is August 23, 2024. The Company also entered into an
agreement payable for $1,760,000 with monthly payments of interest
only at the rate of 15% per annum. This debt is also secured by a
promissory note secured by a second charge on the deed of trust on
the real property. The maturity date of this debt is August 15,
2024. As of April 30, 2020, the Company has spent $184,342 in
property and building improvements and has acquired over $300,000
worth of production equipment.
In
October 2019, the Company entered into an agreement to purchase the
real property located at 13795 Blaisdell Place, Poway, California
92064, which includes a building containing approximately 15,048
square feet of R&D space on a 0.95 acre lot, for $4,000,000, of
which $2,000,000 is payable in cash or common stock of the Company,
and of which $2,000,000 would be financed pursuant to a promissory
note and secured by a deed of trust on the property. The Company
has until April 2020 to obtain the necessary financing to
consummate the transaction. The Company has received an extension
to January 15th, 2021.
In
April 2020, the Company received USDA Organic Certification for its
824 acre farm and 400,000 square feet of greenhouse space. The
Company considers the USDA Organic Certification to be one of the
most recognized certifications among US consumers and provides
another level of assurance to shoppers who may be concerned about
the safety of CBD products. In addition to assuring that no
synthetic fertilizers, pesticides or herbicides have been used in
the cultivation of hemp, the USDA organic certification ensures
that farmers are using tillage and cultivation practices that
maintain or improve the condition of soil and minimize soil erosion
through crop rotations, cover crops and the application of plant
and animal materials.
In
July 2020, the Company planted its first large scale hemp crops for
cultivation. The initial planting covers approximately 120 acres of
land and three greenhouses. The Company anticipates harvesting
these initial crops in October 2020 and selling the crops by the
end of 2020. The Company estimates that the wholesale value of
these crops will be between $10,000,000 and $20,000,000.
We
had $228,237 in cash reserves as at April 30, 2020. We anticipate
that we will incur approximately $240,000 for administrative
expenses, including professional legal and accounting expenses
associated with compliance with our periodic reporting requirements
over the next twelve months.
We
are contemplating raising additional capital to finance our
business operations. No final decisions regarding financing have
been made at this time. It is anticipated that funding for the
Company will come from one or more of the following means: engaging
in an offering of our stock; engaging in borrowing; locating a
joint venture partner or partners.
Corporate
Information
Our
executive offices are located at 13795 Blaisdell Place, Suite 202,
Poway, California 92064. Our telephone number is (855) 802-0299 and
our Internet address is www.greenhygienicsholdings.com. The
information on, or that may be, accessed from our website is not
part of this Prospectus.
BANKRUPTCY OR
SIMILAR PROCEEDINGS
We
have not been the subject of a bankruptcy, receivership or similar
proceedings.
PRODUCTS AND
SERVICES
The
Company focuses on hemp cultivation and is an innovative,
full-scope, science-based premium hemp cultivation and branding
enterprise focused on the cultivation and processing of industrial
hemp for the purpose of extracting cannabidiol (“CBD”). Utilizing
the land and building for the production of industrial hemp for CBD
cultivation, 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 rapidly through strategic acquisitions and development.
MARKETS AND
CUSTOMERS
Industries as diverse as cosmetics, food and beverage and
pharmaceuticals are potential clients for the sale and purchase of
CBD (cannabidiol) derived from industrial hemp. Licensed
dispensaries, pharmacies and general retail market which includes
cafes, smoke shops, grocery stores are buyers for products
containing CBD derived from industrial hemp.
COMPETITION
Competition in the hemp industry is increasing steadily. Some of
the biggest names in the hemp industry expect to make their
presence known in the global market.
REGULATORY
CONSIDERATIONS
The
Hemp Farming Act of 2018 removed hemp from the list of Schedule 1
controlled substances (defined as less than 0.3% THC), making it an
ordinary agricultural commodity. There is the potential for the FDA
to introduce new regulations for the industry.
EMPLOYEES
The
Company currently has 30 plus part time and full-time employees and
consultants, including those working at the Potrero Ranch
property.
RESEARCH AND
DEVELOPMENT EXPENDITURES
We
have not incurred any research or development expenditures since
our incorporation.
PATENTS AND
TRADEMARKS
We
do not own, either legally or beneficially, any patents or
trademarks.
DESCRIPTION OF
PROPERTY
We
currently own 824 acres of land referred to as the Potrero Ranch
Property near San Diego, California, which includes some out
buildings. 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. The Company entered into an agreement
payable with the seller 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. This
debt is secured by a promissory note secured by a deed of trust on
the real property. The maturity date of the debt is August 23,
2024. The Company also entered into an agreement payable for
$1,760,000 with monthly payments of interest only at the rate of
15% per annum. This debt is also secured by a promissory note
secured by a second charge on the deed of trust on the real
property. The maturity date of this debt is August 15, 2024.
Through April 30, 2020, the Company has spent $184,342 in property
and building improvements and has acquired over $300,000 worth of
production equipment.
In
October 2019, the Company entered into an agreement to purchase the
real property located at 13795 Blaisdell Place, Poway, California
92064, which includes a building containing approximately 15,048
square feet of R&D space on a 0.95 acre lot, for $4,000,000, of
which $2,000,000 is payable in cash or common stock of the Company,
and of which $2,000,000 would be financed pursuant to a promissory
note and secured by a deed of trust on the property. The Company
has until April 2020 to obtain the necessary financing to
consummate the transaction. The Company currently uses a portion of
this facility for its corporate offices. The Company has received
an extension to January 15th, 2021.
LEGAL
PROCEEDINGS
We
are not currently involved in any legal proceedings and we are not
aware of any pending or potential legal actions.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information as of September 14, 2020 as
to each person or group who is known to us to be the beneficial
owner of more than 5% of our outstanding voting securities and as
to the security and percentage ownership of each of our executive
officers and directors and of all of our officers and directors as
a group. As of September 14, 2020, we had 40,077,781 shares of
common stock outstanding.
Beneficial ownership is determined under the rules of the
Securities and Exchange Commission and generally includes voting or
investment power over securities. Except in cases where community
property laws apply or as indicated in the footnotes to this table,
we believe that each stockholder identified in the table possesses
sole voting and investment power over all shares of common stock
shown as beneficially owned by the stockholder.
Shares of common stock subject to options or warrants that are
currently exercisable or exercisable within 60 days of the date of
this prospectus are considered outstanding and beneficially owned
by the person holding the options for the purpose of computing the
percentage ownership of that person but are not treated as
outstanding for the purpose of computing the percentage ownership
of any other person.
|
Name And Address (1)
|
|
Number Of
Shares
Beneficially
Owned
|
|
|
Percentage
Owned
|
|
|
Officers and Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ron Loudoun (2)
|
|
|
22,012,320 |
|
|
|
54.92 |
% |
|
Todd Mueller
|
|
|
50,000 |
|
|
*
|
|
|
Jeff Palumbo
|
|
|
500,000 |
|
|
|
1.25 |
% |
|
Kyle MacKinnon
|
|
|
200,000 |
|
|
*
|
|
|
Hamid Rowshan (3)
|
|
|
500,000 |
|
|
|
1.25 |
% |
|
Paymon Omidi DC
|
|
|
500,000 |
|
|
*
|
|
|
Jerry Halamuda
|
|
|
250,000 |
|
|
*
|
|
|
John Gildea
|
|
|
250,000 |
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
All directors and officers as a group (8
persons)
|
|
|
24,262,320 |
|
|
|
60.54 |
% |
_________
|
(1)
|
Unless otherwise noted, the address is c/o
Green Hygienics Holdings Inc., 13795 Blaisdell Place, Suite 202,
Poway, California 92064.
|
|
(2)
|
Includes 22,012,320 shares held by Alita
Capital, Inc., of which Mr. Loudoun is the controlling
shareholder.
|
|
(3)
|
Includes 500,000 shares held by Hamid
Rowshan, Inc., of which Mr. Rowshan is the controlling
shareholder.
|
DIRECTORS AND EXECUTIVE
OFFICERS
Set forth below is
certain information concerning our directors and executive
officers:
|
Name
|
|
Age
|
|
Position
|
|
Ronald Loudoun
|
|
57
|
|
Chief Executive Officer, President and
director
|
|
Todd Mueller
|
|
59
|
|
Chief Financial Officer
|
|
Jeff Palumbo
|
|
39
|
|
Chief Technology Officer
|
|
Kyle MacKinnon
|
|
40
|
|
Chief Operating Officer
|
|
Hamid Rowshan DC
|
|
54
|
|
Chief Development Officer
|
|
Paymon Omidi DC
|
|
59
|
|
Business Development Officer
|
|
Jerry Halamuda
|
|
70
|
|
Senior Vice President, Agriculture
Division
|
|
John Gildea
|
|
48
|
|
Senior Vice President, Corporate
Development
|
Ronald
Loudoun
President
Chief Executive Officer and director
Mr.
Loudoun has served as our President, Chief Executive Officer, Chief
Financial Officer and director since June 1, 2017. Mr. Loudoun is a
successful business strategist with more than 25 years of
experience as a real estate agent and in business administration.
For the seven years prior to this, Mr. Loudoun was a founder and
director of Archer Cleantech Inc., a renewable energy project
company based in Canada and pursuing projects abroad. The
responsibilities included sourcing and identifying renewable
project opportunities and negotiating related land leases and
advancing the associated business development. Prior to this time,
Mr. Loudoun was a licensed realtor historically and was involved in
commercial property sales and development. In addition, from
December 5, 2017 through January 30, 2018, for a period of
fifty-five days, Mr. Loudoun served as an officer and director of
Verde Science, Inc. Mr. Loudoun graduated with a Diploma of
Administrative Management from BCIT in 1983 with an elective in
Real Estate. He possesses an excellent background in new business
development, multi-site operations, performance/quality
improvement, administration and long-term planning. He has
maintained a longstanding interest in both communicating the need
for and sourcing new methods for conscious minded development and
growth. Recognized as an astute and persuasive negotiator, Mr.
Loudoun has a reputation for honesty and integrity and has the
ability to successfully balance the risks of continual change and
innovation through disciplined implementation. Capitalizing on his
exceptional leadership qualities, out of the box thinking and real
estate development expertise, Ron continues to develop innovative
ideas that add significant value to any organization in which he is
involved.
Todd
Mueller
Chief
Financial Officer
Mr.
Mueller has served as our Chief Financial Officer since February
15, 2020. Prior to joining the Company, Mr. Mueller served as a
fractional executive officer for his clientele for the past 16
years. During that time as a fractional executive officer, he
accepted the Chief Financial Officer position with LifeMed Alaska,
a medevac company held by two independent hospital systems from
2013 to 2015. LifeMed was previously a client of Mr. Mueller’s
services. Prior to providing fractional services, Todd was Chief
Financial Officer for USA Capital, LLC, a privately held equipment
leasing company from 1998 to 2003. Mr. Mueller was the Corporate
Controller for Asset Investors Corporation, a NYSE publicly held
real estate investment trust from 1990 to 1997 and Director of
Finance for Skyworld Airlines, a NASDAQ publicly held charter
airline and travel club from 1987 to 1989. He worked for two
nationally and internationally ranked CPA firms auditing both
private and publicly held companies upon graduating from Wartburg
College and earned a BA in Accounting and Business Management in
1983.
Jeff
Palumbo
Chief
Technology Officer
Mr.
Palumbo has served as our Chief Technology Officer since August 30,
2018. Mr. Palumbo is an active entrepreneur with knowledge of
technology and a passion for philanthropy which has led to his
success in creating multiple platforms that empower publishers and
merchants and engage consumers. For the past 20 years, he has
extensive experience starting companies in the areas of
entertainment, live streaming, augmented reality, virtual reality,
development and Internet marketing. Mr. Palumbo is the founder of
Y!RM/AMAZE, a celebrity fan engagement platform that leverages live
streaming and augmented reality technologies to connect celebrities
and fans together while also raising money for worthy causes. He
has also developed platforms for several Fortune 1000 companies and
continues to provide them with technology guidance. Mr. Palumbo is
a mentor at a Top 10 U.S. technology incubator and another Virginia
start-up community where he advises early-stage companies.
Kyle
MacKinnon
Chief Operating
Officer
Mr.
MacKinnon has served as our Chief Operating Officer since November
15, 2019. Bringing to the table a multi-faceted and in-depth
understanding of the CBD Industry, including vast knowledge of
cannabis processing, Kyle will assist the company in all facets of
day to day business operations. Previously, as the Business
Development Manager for Advanced Extraction, a leader in CO2
Supercritical Fluid extraction systems, Kyle built relationships
with some of the largest Cannabis companies in the world and helped
to guide the company through rapid growth and regulatory challenges
in the technology and processing sectors of the Cannabis industry.
Mr. MacKinnon has been a licensed realtor in Toronto and has
managed a personal real estate portfolio with holdings in multiple
Countries. He has also owned his own import business, Danbury
Imports. Kyle is a graduate of St. Mary’s University in Halifax,
Nova Scotia, Canada. He graduated with a Bachelor of Commerce
Degree and was the recipient of the Entrepreneur of the Year
Award.
Hamid Rowshan
DC
Chief Development
Officer
Dr.
Rowshan has served as our Chief Development Officer since April 1,
2019. Dr. Rowshan has served as president and CEO of over numerous
companies in the areas of cannabis, research, medical and
chiropractic, real-estate, import and export, venture capital
investments, stock market and investment, investment advisory
board, capital investing, development and construction, and is a
published author. Since 2014, Dr. Rowshan has participated in
various verticals of the cannabis industry - including
consultation, design and management of cannabis facilities,
cultivation and production operations, and the production of
quality oil and vapes – and continuously studies the effect of
cannabis in a wide range of mental and physical ailments.
Paymon Omidi
DC
Business
Development Officer
Dr.
Omidi has served as our Business Development Officer since April 1,
2019. Dr. Omidi is an international business consultant and
business developer, an expert in new market penetration, and a
retired doctor of chiropractic and nutrition. After a decade owning
and operating three multi-specialty clinics, Dr. Omidi in 1996
established a food manufacturing plant in Tijuana, Mexico, along
with four Japanese and Asian Fusion restaurants. Following the sale
of these establishments in 2004, Dr. Omidi returned to health care
as a consultant for organizations such as Pacific West Surgical
Centers, where he nearly tripled the company’s annual revenue. From
September 2008 to March 2013, Dr. Omidi assisted Vital Funds, a
financial consulting firm, in raising funds for clients in various
business sectors around the world. For the last five years, Dr.
Omidi has traveled internationally, consulting on joint ventures,
new market and market penetration strategies, location and site
planning for major construction projects, and green energy.
Jerry
Halamuda
Senior Vice
President, Agriculture Division
Mr.
Halamuda has served as our Senior Vice President, Agriculture
Division, since November 15, 2019. Over his extensive career in the
agri/horticulture space, Mr. Halamuda has founded, managed and
operated multiple successful companies. The most prominent of these
businesses was Color Spot Nurseries, which he founded and acted as
CEO, COO and president over a span of 37 years. Color Spot operated
over 6,000 acres in multiple states, including 20 million feet of
greenhouses, and employed a staff of over 5,000, all of which led
to a business with an annual turnover in excess of $300 million.
Halamuda brings a wealth of industry and management experience; his
knowledge and expertise at scaling businesses will be a key
component as he leads the growth of GRYN’s Agriculture
Division.
John
Gildea
Senior Vice
President, Corporate Development
Mr.
Gildea has served as our Senior Vice President, Corporate
Development, since November 15, 2019. Mr. Gildea has more than 20
years of experience in the public and private markets. His
expertise includes structuring, negotiating and effecting private
and public financings and mergers and acquisitions, as well as
marketing, public and investor relations. Through the course of his
career, Gildea established a trusted and extensive network of
equity and capital partners, with whom he has maintained successful
and proven relationships over the years, resulting in multiple
uplistings to higher exchanges and capital raises.
Director
Qualifications
We
considered Mr. Loudoun’s prior experience as a successful business
strategist and in real estate, including his prior experience with
Archer Cleantech, Inc., other renewable project opportunities, as
well as experience with other start-up businesses and real estate
development as important factors in concluding that he was
qualified to serve as one of our directors.
Advisory
Board
The
Company has established an advisory board to advise and assist our
management in pursuing the Company’s strategy to advance in the
hemp industry. The advisory board consists of the following
individuals:
Bipin Patel BSc
MSc PhD MBA
Dr.
Patel is a biotech pharma entrepreneur with over 20 years of
experience and a track record for building value across early-stage
drug discovery, development and commercialization. Based in
Cambridge, U.K., and highly regarded for his work in international
pharmaceutical business development, Dr. Patel has established an
extensive global big-pharma network across the U.S., Europe, Japan
and China. He specializes in surfacing and shaping opportunities,
securing finance, and driving assets to conclusion. He has held
senior roles including CEO, CSO, COO, strategic council and board
of directors, and has driven various initiatives such as drug
discovery, preclinical and clinical development in numerous fields
within the biotech industry. Dr. Patel has a strong business and
commercial acumen with an aptitude for deal making and
partnering.
Edwin
Stoughton
Mr.
Stoughton has a 40-year history of proven success in sales,
marketing, construction management, development and consulting to
management groups. He is a skilled executive with extensive direct
experience in team building, constructive conflict resolution, and
consensus management, which helped him build highly successful
construction and development companies. Stoughton is currently the
vice president and a current principal of Demcon Concrete
Contractors Inc.
David
Racz
Mr.
Racz has held global, senior-level positions with distinguished
pharmaceutical companies including Pfizer, GlaxoSmithKline and
Novartis. Mr. Racz began his pharmaceutical career at Pfizer
Pharmaceuticals where he became Vice President of Sales and Human
Resources. Mr. Racz managed the largest expansion in Pfizer’s sale
force in history. Shortly thereafter, SmithKlineBeecham recruited
Mr. Racz to manage over 4,000 employees in 20 countries throughout
Asia,
Latin America,
Australia and
South Africa in Sales, Marketing and Research and
Development. Mr. Racz was also a key member of the team responsible
for orchestrating the unparalleled transcontinental merger of
SmithKline and Beecham. In 2002, Mr. Racz was recruited by Novartis
Pharmaceuticals as Senior Vice President North America. In this
capacity, he delivered strategy and resource allocation for an
$8 billion health care company and oversaw 14,000 global
employees in Pharmaceutical Operations, Global Oncology,
Manufacturing and R&D. Mr. Racz was Senior Vice President for
Mona Vie Inc. (“Mona Vie”), the fastest growing private company in
the food and beverage industry incorporated in 2003 with annual
sales in excess of
$942 million and growth of over 100% per quarter for a
three-year period. In addition, Mr. Racz has served on various
boards of both private and public companies, in the pharmaceutical,
consumer brands and CBD space. His primary areas of expertise
reside in aligning business strategy with operational strategy,
management systems, as well as merger and acquisition related
activities. Mr. Racz also served as a Medical Service Corp Officer
in
United States Army, achieving the rank of Major and was
awarded numerous times for service and merit. He earned his BS from
Wayne State University and his MS from
Troy University.
Since January 31, 2020, Kiriash Mirkia, MD, Ashkan Mapar, and Sid
Senroy have departed from our board of advisors.
Involvement in
Certain Legal Proceedings
None of our directors
or executive officers has, during the past ten years:
|
|
●
|
has had any bankruptcy petition filed by or
against any business of which he was a general partner or executive
officer, either at the time of the bankruptcy or within two years
prior to that time;
|
|
|
●
|
been convicted in a criminal proceeding or
been subject to a pending criminal proceeding (excluding traffic
violations and other minor offences);
|
|
|
●
|
been subject to any order, judgment, or
decree, not subsequently reversed, suspended or vacated, of any
court of competent jurisdiction, permanently or temporarily
enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities, futures,
commodities or banking activities;
|
|
|
●
|
been found by a court of competent
jurisdiction (in a civil action), the Securities and Exchange
Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated;
|
|
|
●
|
been subject or a party to or any other
disclosable event required by Item 401(f) of Regulation S-K.
|
Family
Relationships
None.
Stockholders can send communications to the Board of Directors by
sending a certified or registered letter to the Chairman of the
Board, care of the President, at our main business address set
forth above. Communications that are threatening, illegal, or
similarly inappropriate, and advertisements, solicitations for
periodical or other subscriptions, and other similar communications
will generally not be forwarded to the Chairman.
EXECUTIVE
COMPENSATION
The
following table sets forth the compensation paid to our executive
officers for services rendered during the fiscal years ended July
31, 2019, and 2018.
|
|
|
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other
|
|
|
|
|
|
Name and Position
|
|
Year
|
|
Salary
|
|
|
Bonus
|
|
|
Compensation
(1)
|
|
|
Total
($)
|
|
|
Ronald Loudoun
|
|
2019
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
30,000 |
|
|
$ |
30,000 |
|
|
President, Chief Executive Officer and
Chief Financial Officer
|
|
2018
|
|
$ |
-- |
|
|
|
-- |
|
|
$ |
30,000 |
|
|
$ |
30,000 |
|
All Other
Compensation
Mr.
Loudoun earned $30,000 in consulting fees during each the fiscal
years ended July 31, 2019 and 2018.
Outstanding
Equity Awards
There were no outstanding equity awards as of the year ended July
31, 2019.
Employment
Agreements
We
have no employment agreement with Ronald Loudoun. However, on
August 1, 2019, we entered into a consulting agreement with Mr.
Loudoun to serve as President and Chief Executive Officer. The
agreement is for an initial six month term, to be re-evaluated
after six months, and provides for (i) an annual allocation of
250,000 options (priced at $0.50 per share with a term of three
years) or common shares, and (ii) a monthly base fee of $7,500 per
month during the term of the agreement, subject to adjustment on a
quarterly basis by the Company and Mr. Loudoun. Mr. Loudoun is
eligible to receive annual bonuses, in cash or in common shares, at
the discretion of the board of directors. The agreement also
provides for reimbursement for all reasonable travel and other
out-of-pocket expenses incurred in connection with his
services.
We
have no employment agreement with Todd Mueller. However, on
February 15, 2020, we entered into a consulting agreement with Mr.
Mueller to serve as our Chief Financial Officer. The agreement is
for an initial term ending on August 15, 2020 and provides for no
annual base salary during the term of the agreement. Mr. Mueller
shall receive an annual allocation of 100,000 shares of our common
stock (or options to acquire same), of which 50,000 shares (or
options) vested immediately and 50,000 shares (or options) vest at
the end of the initial term. Future allocations of shares will be
determined by the compensation committee of the board of directors
or, if none, the entire board of directors. In addition, Mr.
Mueller is eligible to receive bonuses of at the discretion of the
compensation committee of the board of directors or, if none, the
entire board of directors. The agreement also provides for
reimbursement for all reasonable travel and other out-of-pocket
expenses incidental to his services, provided, however, that the
Company has the right to pre-approve any expense that may
reasonably be expected to exceed $1,000.
Retirement
Plans
There are no annuity, pension or retirement benefits proposed to be
paid to officers or directors or employees in the event of
retirement at normal retirement date pursuant to any presently
existing plan provided or contributed to by the company or any of
its subsidiaries, if any.
Compensation of
Directors
Currently, directors receive no compensation for their services on
our Board. All directors will be reimbursed for their reasonable
out-of-pocket expenses incurred in connection with attending board
of director and committee meetings provided that we have the
resources to pay these expenses.
Code of
Ethics
We
have adopted a code of ethics that applies to the principal
executive officer and principal financial and accounting officer.
We will provide to any person without charge, upon request, a copy
of our code of ethics. Requests may be directed to our principal
executive offices at 13795 Blaisdell Place, Poway CA 92064.
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
None
of our directors, officers, any proposed nominee for election as a
director, any person who beneficially owns, directly or indirectly,
shares carrying more than 10% of the voting rights attached to all
of our outstanding shares, any promoter, or any relative or spouse
of any of the foregoing persons has any material interest, direct
or indirect, in any transaction since our incorporation or in any
presently proposed transaction which, in either case, has or will
materially affect us, except as follows:
(a)
As of April 30, 2020, 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 of April 30, 2020, accrued interest of $16,973 (July 31,
2019 - $14,825) has been included in amounts due to related
parties.
(b)
As of April 30, 2020, the Company owes $1,807,813 (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 of April 30, 2020, the Company owes $67,500 (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 of April 30, 2020, the Company owes $35,000 (July 31, 2019 -
$27,500) to a former 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 of April 30, 2020, the Company owes $67,500 (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 of April 30, 2020, the Company owes $67,500 (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 of April 30, 2020, the Company owes $10,000 (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 of April 30, 2020, the Company owes $43,833 (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)
As of April 30, 2020, the Company owes $3,250 (July 31, 2019 -
$nil) to the Chief Financial Officer of the Company for consulting
fees. The debt is non-interest bearing, unsecured, and due on
demand and is included in accounts payable.
(j)
During the nine months ended April 30, 2020, the Company incurred
$67,500 (2019 - $nil) in consulting fees to the CEO of the
Company.
(k)
During the nine months ended April 30, 2020, the Company incurred
$22,500 (2019 - $7,500) in consulting fees to the CTO of the
Company.
(l)
During the nine months ended April 30, 2020, the Company incurred
$7,500 (2019 - $7,500) in consulting fees to a former VP and former
Director of the Company.
(m)
During the nine months ended April 30, 2020, the Company incurred
$67,500 (2019 - $nil) in consulting fees to the President of a
subsidiary of the Company.
(n)
During the nine months ended April 30, 2020, the Company incurred
$67,500 (2019 - $nil) in consulting fees to the CEO of a subsidiary
of the Company.
(o)
During the nine months ended April 30, 2020, the Company incurred
$7,500 (2019 - $nil) in consulting fees to the CFO of the
Company.
(p)
Imputed interest of $94,833 for the nine months ended April 30,
2020 and $22,009 for the year ended July 31, 2019 has been recorded
for the above related party debts.
Consistent with Section 78.140 of the Nevada Revised Statutes, it
is our current policy that all transactions between us and our
officers, directors and their affiliates will be entered into only
if such transactions are approved by a majority of the
disinterested directors, are approved by vote of the stockholders,
or are fair to us as a corporation as of the time it is authorized,
approved, or ratified by the board. We will conduct an appropriate
review of all related party transactions on an ongoing basis, and,
where appropriate, we will utilize our audit committee for the
review of potential conflicts of interest.
Director
Independence
Our
Board of Directors has determined that none of our directors are
“independent” as defined under the standards set forth in Section
803 of the NYSE American LLC Company Guide. In making this
determination, the Board of Directors considered all transactions
set forth under “Certain Relationships and Related Transactions”
above.
MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
Our
common stock trades on the OTC Markets (QB Marketplace Tier) under
the symbol “GRYN.” Very limited trading of our common stock has
occurred during the past two years; therefore, only limited
historical price information is available. The following table sets
forth the high and low closing bid prices of our common stock (USD)
for the current fiscal year to date and the last two fiscal years,
as reported by OTC Markets Group Inc. and represents inter dealer
quotations, without retail mark-up, mark-down or commission and may
not be reflective of actual transactions:
We
consider our stock to be “thinly traded” and any reported sale
prices may not be a true market-based valuation of our stock. Some
of the bid quotations from the OTC Bulletin Board set forth below
may reflect inter-dealer prices, without retail mark-up, mark-down
or commission and may not represent actual transactions.
|
Fiscal Year ending July 31, 2020 (OTC
Markets)
|
|
High
Bid
|
|
|
Low
Bid
|
|
|
First quarter (ended October 31, 2019)
|
|
$ |
2.32 |
|
|
$ |
1.00 |
|
|
Second quarter (ended January 31, 2020)
|
|
|
2.29 |
|
|
|
1.80 |
|
|
Third quarter (ended April 30, 2020)
|
|
|
1.76 |
|
|
|
0.39 |
|
|
Fiscal Year ending July 31, 2019 (OTC
Markets)
|
|
High
Bid
|
|
|
Low
Bid
|
|
|
First quarter (ended October 31, 2018)
|
|
$ |
0.45 |
|
|
$ |
0.45 |
|
|
Second quarter (ended January 31, 2019)
|
|
|
0.51 |
|
|
|
0.51 |
|
|
Third quarter (ended April 30, 2019)
|
|
|
0.72 |
|
|
|
0.72 |
|
|
Fourth quarter (ended July 31, 2019)
|
|
|
1.54 |
|
|
|
1.30 |
|
|
Fiscal Year ending July 31, 2018 (OTC
Markets)
|
|
High
Bid
|
|
|
Low
Bid
|
|
|
First quarter (ended October 31, 2017)
|
|
$ |
0.01 |
|
|
$ |
0.01 |
|
|
Second quarter (ended January 31, 2018)
|
|
|
0.03 |
|
|
|
0.03 |
|
|
Third quarter (ended April 30, 2018)
|
|
|
0.08 |
|
|
|
0.08 |
|
|
Fourth quarter (ended July 31, 2018)
|
|
|
0.18 |
|
|
|
0.16 |
|
Shareholders
Our
shares of common stock are issued in registered form. The registrar
and transfer agent for our shares of common stock is VStock
Transfer, LLC, 18 Lafayette Place, Woodmere, New York 11598
(Telephone: (212) 828-8436).
On
September 10, 2020, the shareholders’ list of our shares of common
stock showed 86 registered holders of our shares of common stock
and 40,077,781 shares of common stock outstanding. The number of
record holders was determined from the records of our transfer
agent and does not include beneficial owners of shares of common
stock whose shares are held in the names of various security
brokers, dealers, and registered clearing agencies.
Dividend
Policy
We
have not paid cash dividends on our common stock since our
inception and we do not contemplate paying dividends in the
foreseeable future.
Securities
Authorized for Issuance Under Equity Compensation
Plans.
On
September 2, 2011, our board of directors adopted the 2011 Stock
Plan, which permits the Company to issue up to 15,000,000 shares of
our common stock to directors, officers, employees, and consultants
of the Company. The purpose of this plan is to secure for the
Company and its stockholders the benefits arising from capital
stock ownership by employees, officers and directors of, and
consultants or advisors to, the Company and its subsidiary
corporations who are expected to contribute to the Company’s future
growth and success. No securities have been issued under this
plan.
DESCRIPTION OF
SECURITIES
Authorized Shares of
Capital Stock
Our authorized capital
stock consists of 385,000,000 shares of capital stock, of which
375,000,000 is authorized as common stock, par value $0.001 and
10,000,000 shares are authorized as preferred stock, par value
$0.001.
Common
Stock
We
are authorized by our Articles of Incorporation to issue
375,000,000 shares of common stock, $0.001 par value of which
40,077,781 shares are outstanding as of September 14, 2020. Holders
of our common stock are entitled to one vote per share on all
matters subject to stockholder vote. If the Board of Directors were
to declare a dividend out of funds legally available therefore, all
of the outstanding shares of common stock would be entitled to
receive such dividend ratably. We have never declared dividends and
we do not intend to declare dividends in the foreseeable future. If
our business was liquidated or dissolved, holders of shares of
common stock would be entitled to share ratably in assets remaining
after satisfaction of our liabilities. The holders of shares of
common stock have no preemptive, conversion, subscription or
cumulative voting rights.
Preferred
stock
We
are authorized by our Articles of Incorporation to issue 10,000,000
shares of blank check preferred stock, $0.001 par value. As of
September 14, 2020, there are no shares of preferred stock issued
and outstanding
The
Preferred Stock may be divided into and issued in series. The Board
of Directors of the Corporation is authorized to divide the
authorized shares of Preferred Stock into one or more series, each
of which shall be so designated as to distinguish the shares
thereof from the shares of all other series and classes. The Board
of Directors of the Corporation is authorized, within any
limitations prescribed by law and this Article, to fix and
determine the designations, rights, qualifications, preferences,
limitations and terms of the shares of any series of Preferred
Stock including but not limited to the following:
|
|
a.
|
The rate of dividend, the time of
payment of dividends, whether dividends are cumulative, and the
date from which any dividends shall accrue; |
|
|
b.
|
Whether shares may be redeemed,
and, if so, the redemption price and the terms and conditions of
redemption; |
|
|
c.
|
The amount payable upon shares in
the event of voluntary or involuntary liquidation; |
|
|
d.
|
Sinking fund or other provisions,
if any, for the redemption or purchase of shares; |
|
|
e.
|
The terms and conditions on which
shares may be converted, if the shares of any series are issued
with the privilege of conversion; |
|
|
f.
|
Voting powers, if any, provided
that if any of the Preferred Stock or series thereof shall have
voting rights, such Preferred Stock or series shall vote only on a
share for share basis with the Common Stock on any matter,
including but not limited to the election of directors, for which
such Preferred Stock or series has such rights; and, |
|
|
g.
|
Subject to the foregoing, such
other terms, qualifications, privileges, limitations, options,
restrictions, and special or relative rights and preferences, if
any, of shares or such series as the Board of Directors of the
Corporation may, at the time so acting, lawfully fix and determine
under the laws of the State of Nevada. |
The
Corporation shall not declare, pay or set apart for payment any
dividend or other distribution (unless payable solely in shares of
Common Stock or other class of stock junior to the Preferred Stock
as to dividends or upon liquidation) in respect of Common Stock, or
other class of stock junior to the Preferred Stock, nor shall it
redeem, purchase or otherwise acquire for consideration shares of
any of the foregoing, unless dividends, if any, payable to holders
of Preferred Stock for the current period (and in the case of
cumulative dividends, if any, for all past periods) have been paid,
are being paid or have been set aside for payment, in accordance
with the terms of the Preferred Stock, as fixed by the Board of
Directors.
In
the event of the liquidation of the Corporation, holders of
Preferred Stock shall be entitled to receive, before any payment or
distribution on the Common Stock or any other class of stock junior
to the Preferred Stock upon liquidation, a distribution per share
in the amount of the liquidation preference, if any, fixed or
determined in accordance with the terms of such Preferred Stock
plus, if so provided in such terms, an amount per share equal to
accumulated and unpaid dividends in respect of such Preferred Stock
(whether or not earned or declared) to the date of such
distribution. Neither the sale, lease or exchange of all or
substantially all of the property and assets of the Corporation,
nor any consolidation or merger of the Corporation, shall be deemed
to be a liquidation for the purposes of this Article.
Convertible Promissory Note
Effective December 19, 2019, we entered into a securities purchase
agreement dated as of December 19, 2019 (the “SPA”) with Triton
Funds, LP, an accredited investor (“Triton” or the “Buyer”),
pursuant to which the Company issued and sold to the Buyer (i) a
convertible promissory note (the “Note”) in the aggregate principal
amount of up to $750,000, due June 30, 2020, bearing interest at a
rate of ten percent (10%) per annum and convertible into shares of
the Company’s common stock at a conversion price of $2.50 per share
and (ii) a common stock purchase warrant (the “Warrant”),
exercisable for two (2) years, to purchase up to 250,000 shares of
the Company’s common stock at an exercise price of $3.00 per share,
for an aggregate purchase price of $600,000.
On
December 31, 2019, the Buyer paid an initial purchase price of
$100,000 at the initial closing. The purchase price balance of
$500,000 was paid on February 20, 2020. The Note is totally vested
and the Warrant initially vested only as to the right to purchase
41,667 shares. The original issue discount on the Note fully vested
is $150,000.
The
Note can be prepaid at any time by paying 110% of the then
outstanding principal, interest, default interest (if any), and any
other amounts then due under the Note. The Note is initially
convertible at a price per share equal to $2.50 (the “Fixed
Conversion Price”); provided, however, that during the continuance
of an event of default under the Note, the conversion price shall
be equal to 75% of the lowest trading price of the Company’s common
stock during the 30 trading days prior to conversion.
Concurrently therewith, we entered into a registration rights
agreement with the Buyer, pursuant to which we agreed to file a
registration statement with the SEC for the registration of the
secondary offering and resale of the shares issuable upon
conversion of the Note and exercise of the Warrant and to have the
registration statement declared effective by the SEC at the
earliest possible date. The registration was declared effective by
the SEC on February 11, 2020. The Buyer paid the purchase balance,
and the Note and Warrant fully vested, on February 20, 2020.
On
March 31, 2020, we and Triton entered into a Modification
Agreement, pursuant to which (i) we paid $250,000 of the principal
amount of the Note, bringing the principal balance of the Note to
$500,000, (ii) the maturity date of the Note was extended to August
20, 2020, (iii) the conversion price of the Note was established as
75% of the lowest trading price of our common stock during the 30
trading days prior to conversion, and (iv) the minimum volume
weighted price requirement of the Note was deleted.
From
April 2, 2020, through July 21, 2020, the Company issued in the
aggregate 1,234,946 shares of common stock to Triton for the
conversion of $328,786 of debt, and on August 14, 2020, the Company
paid $200,000 as payment in full all remaining amounts due to
Triton.
Warrant
On
December 31, 2019, we issued a common stock purchase warrant (the
“Warrant”), exercisable for two (2) years, to purchase up to
250,000 shares of the Company’s common stock at an exercise price
of $3.00 per share. The Warrant initially vested only as to the
right to purchase 41,667 shares. The remainder of the Warrant (as
to the right to purchase up to 203,333 shares) shall vest if, and
only if, the Buyer pays the purchase price balance of $500,000 upon
a registration statement being declared effective by the SEC. The
registration was declared effective by the SEC on February 11,
2020. The Buyer paid the purchase balance, and the Note and Warrant
fully vested, on February 20, 2020.
Warrant holders are not entitled to vote, receive dividends, or
exercise any of the rights of a stockholder of the Company for any
purpose until the Warrant have been duly exercised and payment of
the purchase price has been made. The Warrants are issued in
unregistered form and may be presented for transfer, exchange, or
exercise at the corporate office of the Company.
The
Warrant may be exercised on a “cashless” basis if there is not an
effective registration statement for the registration of the
secondary offering and resale of the shares issuable upon exercise
of the Warrant at the time of exercise. If the Warrant is partially
exercised, a new Warrant for the remaining number of such shares
will be issued upon surrender of the Warrant. There will be no
fractional share exercise.
Registration
Rights
We
agreed to file a registration statement with the SEC for the
registration of the secondary offering and resale of the shares
issuable upon conversion of the Note and exercise of the Warrant on
or before January 31, 2020 and to have the registration statement
declared effective by the SEC at the earliest possible date. This
registration statement was filed on January 31, 2020 and became
effective on February 11, 2020.
We
agreed to file a registration statement with the SEC for the
registration of the secondary offering and resale of the shares to
be acquired by GHS pursuant to that certain Equity Finance
Agreement dated September 13, 2020 under which GHS agreed to
purchase up to $25,000,000 of our common stock, subject to certain
conditions, and the 150,857 commitment shares we agreed to issue to
GHS thereunder.
Dividends
We
do not anticipate the payment of cash dividends on its common stock
in the foreseeable future.
Anti-takeover
Effects of Our Articles of Incorporation and Bylaws
Our
Articles of Incorporation and bylaws contain certain provisions
that may have anti-takeover effects, making it more difficult for
or preventing a third party from acquiring control of us or
changing its board of directors and management.
The
holders of our common stock do not have cumulative voting rights in
the election of our directors. The combination of the present
ownership by a few stockholders of a significant portion of our
issued and outstanding common stock and lack of cumulative voting
makes it more difficult for other stockholders to replace our board
of directors or for a third party to obtain control of us by
replacing its board of directors.
The
authorization of classes of preferred stock with either specified
voting rights or rights providing for the approval of extraordinary
corporate action could be used to create voting impediments or to
frustrate persons seeking to effect a merger or to otherwise gain
control of the Company by diluting their stock ownership.
Nevada
Anti-Takeover laws
Business
Combinations
The
“business combination” provisions of Sections 78.411 to 78.444,
inclusive, of the NRS, prohibit a Nevada corporation with at least
200 stockholders from engaging in various “combination”
transactions with any interested stockholder: for a period of three
years after the date of the transaction in which the person became
an interested stockholder, unless the transaction is approved by
the board of directors prior to the date the interested stockholder
obtained such status; or after the expiration of the three-year
period, unless:
|
|
●
|
the transaction is approved by the board of
directors or a majority of the voting power held by disinterested
stockholders, or
|
|
|
●
|
if the consideration to be paid by the
interested stockholder is at least equal to the highest of: (a) the
highest price per share paid by the interested stockholder within
the three years immediately preceding the date of the announcement
of the combination or in the transaction in which it became an
interested stockholder, whichever is higher, (b) the market value
per share of common stock on the date of announcement of the
combination and the date the interested stockholder acquired the
shares, whichever is higher, or (c) for holders of preferred stock,
the highest liquidation value of the preferred stock, if it is
higher.
|
A
“combination” is defined to include mergers or consolidations or
any sale, lease exchange, mortgage, pledge, transfer or other
disposition, in one transaction or a series of transactions, with
an “interested stockholder” having: (a) an aggregate market value
equal to five per cent or more of the aggregate market value of the
assets of the corporation, (b) an aggregate market value equal to
five per cent or more of the aggregate market value of all
outstanding shares of the corporation, or (c) ten per cent or more
of the earning power or net income of the corporation.
In
general, an “interested stockholder” is a person who, together with
affiliates and associates, owns (or within three years, did own)
ten per cent or more of a corporation’s voting stock. The statute
could prohibit or delay mergers or other takeover or change in
control attempts and, accordingly, may discourage attempts to
acquire our company even though such a transaction may offer our
stockholders the opportunity to sell their stock at a price above
the prevailing market price.
Control Share
Acquisitions.
The
“control share” provisions of Sections 78.378 to 78.3793,
inclusive, of the NRS, which apply only to Nevada corporations with
at least 200 stockholders, including at least 100 stockholders of
record who are Nevada residents, and which conduct business
directly or indirectly in Nevada, prohibit an acquirer, under
certain circumstances, from voting its shares of a target
corporation’s stock after crossing certain ownership threshold
percentages, unless the acquirer obtains approval of the target
corporation’s disinterested stockholders. The statute specifies
three thresholds: one-fifth or more but less than one-third,
one-third but less than a majority, and a majority or more, of the
outstanding voting power. Once an acquirer crosses one of the above
thresholds, those shares in an offer or acquisition and acquired
within 90 days thereof become “control shares” and such control
shares are deprived of the right to vote until disinterested
stockholders restore the right. These provisions also provide that
if control shares are accorded full voting rights and the acquiring
person has acquired a majority or more of all voting power, all
other stockholders who do not vote in favor of authorizing voting
rights to the control shares are entitled to demand payment for the
fair value of their shares in accordance with statutory procedures
established for dissenters’ rights.
Transfer
Agent
The
registrar and transfer agent for our shares of common stock is
VStock Transfer, LLC, 18 Lafayette Place, Woodmere, New York 11598
(Telephone: (212) 828-8436).
LEGAL MATTERS
The
validity of the common stock offered by this prospectus will be
passed upon for us by Indeglia PC, Marina del Rey, California.
EXPERTS
The
consolidated financial statements of Green Hygienics Holdings Inc.
included in this prospectus and in the registration statement have
been audited by Saturna Group Chartered Professional Accountants
LLP and by M&K CPAs, both independent registered public
accounting firms, to the extent and for the periods set forth in
their report appearing elsewhere herein and in the registration
statement, and are included in reliance on such report, given the
authority of said firms as experts in auditing and accounting.
AVAILABLE
INFORMATION
We
are filing with the SEC this registration statement on Form S-1
under the Securities Act with respect to the common stock offered
hereby. This prospectus, which constitutes part of the registration
statement, does not contain all of the information set forth in the
registration statement and the exhibits and schedule thereto,
certain parts of which are omitted in accordance with the rules and
regulations of the SEC. For further information regarding our
common stock and our company, please review the registration
statement, including exhibits, schedules and reports filed as a
part thereof. Statements in this prospectus as to the contents of
any contract or other document filed as an exhibit to the
registration statement, set forth the material terms of such
contract or other document but are not necessarily complete, and in
each instance reference is made to the copy of such document filed
as an exhibit to the registration statement, each such statement
being qualified in all respects by such reference.
We
are also subject to the informational requirements of the Exchange
Act which requires us to file reports, proxy statements and other
information with the SEC. Such reports, proxy statements and other
information along with the registration statement, including the
exhibits and schedules thereto, may be inspected at public
reference facilities of the SEC at 100 F Street N.E., Washington
D.C. 20549. Copies of such material can be obtained from the Public
Reference Section of the SEC at prescribed rates. You may call the
SEC at 1-800-SEC-0330 for further information on the operation of
the public reference room. Because we file documents electronically
with the SEC, you may also obtain this information by visiting the
SEC’s Internet website at http://www.sec.gov.
INDEX TO FINANCIAL
STATEMENTS
GREEN HYGIENICS HOLDINGS
INC.
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of
Directors and
Stockholders of Green
Hygienics Holdings, Inc.
Opinion on the
Financial Statements
We have audited the
accompanying balance sheet of Green Hygienics Holdings, Inc. (the
Company) as of July 31, 2019 and the related statement of
operations, statement of stockholders’ equity, and statement of
cash flows for the year ending July 31, 2019, and the related notes
and schedules (collectively referred to as the financial
statements). The financial statements of Green Hygienics, Inc. as
of July 31, 2018, were audited by other auditors whose report dated
November 8, 2018 expressed an unqualified opinion on those
statements. In our opinion, the financial statements present
fairly, in all material respects, the financial position of the
Company as of July 31, 2019, and the results of its operations and
its cash flows, in conformity with accounting principles generally
accepted in the United States of America.
Basis for
Opinion
These financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on the Company’s financial
statements based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with
respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits
in accordance with the standards of the PCAOB. Those standards
require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of
material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit
of its internal control over financial reporting. As part of our
audits, we are required to obtain an understanding of internal
control over financial reporting, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express
no such opinion.
Our audits included
performing procedures to assess the risks of material misstatement
of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our
audits provide a reasonable basis for our opinion.
The accompanying
financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company suffered a net loss from
operations and has a net capital deficiency, which raises
substantial doubt about its ability to continue as a going concern.
Management’s plans regarding those matters are also described in
Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
We have served as the
Company’s auditor since 2019.
Houston, TX
November 13, 2019
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of
Directors and Stockholders of Green Hygienics Holdings Inc.
Opinion on the
Financial Statements
We have audited the
accompanying balance sheet of Green Hygienics Holdings Inc. (the
“Company”) as of July 31, 2018, and the related statements of
operations and comprehensive loss, stockholders’ deficit, and cash
flows for the year then ended and related notes (collectively, the
“financial statements”). In our opinion, the financial statements
present fairly, in all material respects, the financial position of
the Company as at July 31, 2018, and the results of their
operations and cash flows for the year then ended, in conformity
with accounting principles generally accepted in the United States
of America.
Explanatory
Paragraph Regarding Going Concern
The accompanying
financial statements have been prepared assuming the Company will
continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has not generated any revenues,
has a working capital deficit, and has incurred significant
operating losses and negative cash flows from operations since
inception. As at July 31, 2018, the Company had a working capital
deficit of $340,610 and an accumulated deficit of $40,922,248.
These factors raise substantial doubt about the Company’s ability
to continue as a going concern. Management’s plans in regard to
these matters are also discussed in Note 1 to the financial
statements. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Basis for
Opinion
These financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on the Company’s financial
statements based on our audit. We are a public accounting firm
registered with the Public Company Accounting Oversight Board
(United States) (“PCAOB”) and are required to be independent with
respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audit
in accordance with the standards of the PCAOB. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement, whether due to fraud or error. The Company
is not required to have, nor were we engaged to perform, an audit
of its internal controls over financial reporting. As part of our
audit, we are required to obtain an understanding of the Company’s
internal controls over financial reporting, but not for the purpose
of expressing an opinion on the effectiveness of the Company’s
internal controls over financial reporting. Accordingly, we express
no such opinion.
Our audit included
performing procedures to assess the risks of material misstatement
of the financial statements, whether due to fraud or error, and
performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements. Our audit also
included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audit
provides a reasonable basis for our opinion.
|
/s/ SATURNA GROUP CHARTERED
PROFESSIONAL ACCOUNTANTS LLP
|
|
Saturna Group Chartered
Professional Accountants LLP
We have served as the
Company’s auditor since 2014
November 8, 2018
GREEN HYGIENICS
HOLDINGS INC.
Balance Sheets
(Expressed in U.S.
dollars)
|
|
|
July 31,
2019
|
|
|
July 31,
2018
|
|
|
|
|
$
|
|
|
$
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash
|
|
|
767 |
|
|
|
132 |
|
|
Trust funds
|
|
|
2,486 |
|
|
|
- |
|
|
Prepaids
|
|
|
- |
|
|
|
460 |
|
|
Inventory-seeds (Note
4)
|
|
|
306,450 |
|
|
|
- |
|
|
Total Current Assets
|
|
|
309,703 |
|
|
|
592 |
|
|
|
|
|
|
|
|
|
|
|
|
Deposits (Note 3)
|
|
|
100,000 |
|
|
|
- |
|
|
Fixed Assets (Note 5)
|
|
|
145,138 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
554,841 |
|
|
|
592 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’
DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
|
201,178 |
|
|
|
149,491 |
|
|
Accounts payable –
related parties
|
|
|
57,500 |
|
|
|
- |
|
|
Accrued interest
payable
|
|
|
510 |
|
|
|
- |
|
|
Loan payable (Note
6)
|
|
|
155,250 |
|
|
|
18,750 |
|
|
Due to related parties
(Note 7)
|
|
|
780,398 |
|
|
|
172,961 |
|
|
|
|
|
|
|
|
|
|
|
|
Total Current
Liabilities
|
|
|
1,194,836 |
|
|
|
341,202 |
|
|
|
|
|
|
|
|
|
|
|
|
Nature of operations and continuance
of business (Notes 1 and 2)
|
|
|
|
|
|
|
|
|
|
Commitments (9)
|
|
|
|
|
|
|
|
|
|
Subsequent events (Note
11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholder’s Deficit
|
|
|
|
|
|
|
|
|
|
Common stock,
375,000,000 shares authorized, $0.001 par value 36,657,835 and
34,707,835 shares issued and outstanding respectively
|
|
|
36,658 |
|
|
|
34,708 |
|
|
Additional paid-in
capital
|
|
|
42,089,489 |
|
|
|
40,546,930 |
|
|
Deficit
|
|
|
(42,766,142 |
) |
|
|
(40,922,248 |
) |
|
Total Stockholder’s
Deficit
|
|
|
(639,995 |
) |
|
|
(340,610 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholder’s
Deficit
|
|
|
554,841 |
|
|
|
592 |
|
(The accompanying notes
are an integral part of these financial statements)
GREEN HYGIENICS HOLDINGS
INC.
Statements of
Operations and Comprehensive Loss
(Expressed in U.S.
dollars)
|
|
|
Year
Ended
July 31,
2019
|
|
|
Year
Ended
July 31,
2018
|
|
|
|
|
$
|
|
|
$
|
|
|
Expenses
|
|
|
|
|
|
|
|
Consulting fees (Note
4)
|
|
|
152,172 |
|
|
|
120,000 |
|
|
Business development
costs
|
|
|
1,595,036 |
|
|
|
- |
|
|
General and
administrative
|
|
|
71,303 |
|
|
|
45,989 |
|
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
|
1,818,511 |
|
|
|
165,989 |
|
|
|
|
|
|
|
|
|
|
|
|
Loss Before Other Income
(Expense)
|
|
|
(1,818,511 |
) |
|
|
(165,989 |
) |
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
Gain on forgiveness of
debt
|
|
|
- |
|
|
|
39,750 |
|
|
Interest
expense
|
|
|
(25,383 |
) |
|
|
(2,841 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total Other Income
(Expense)
|
|
|
(25,383 |
) |
|
|
36,909 |
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss and Comprehensive
Loss
|
|
|
(1,843,894 |
) |
|
|
(129,080 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net Loss Per Share, Basic and
Diluted
|
|
|
(0.05 |
) |
|
|
(0.00 |
) |
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding
|
|
|
35,203,862 |
|
|
|
34,707,835 |
|
(The accompanying notes
are an integral part of these financial statements)
GREEN HYGIENICS HOLDINGS
INC.
Statements of
Stockholders’ Equity (Deficit)
(Expressed in U.S.
dollars)
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
Paid-in
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 31, 2017
|
|
|
34,707,835 |
|
|
|
34,708 |
|
|
|
40,546,930 |
|
|
|
(40,793,168 |
) |
|
|
(211,530 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(129,080 |
) |
|
|
(129,080 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 for the year
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(1,843,894 |
) |
|
|
(1,843,894 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 31, 2019
|
|
|
36,657,835 |
|
|
|
36,658 |
|
|
|
42,089,489 |
|
|
|
(42,766,142 |
) |
|
|
(639,995 |
) |
(The accompanying notes
are an integral part of these financial statements)
GREEN HYGIENICS HOLDINGS
INC.
Statements of Cash
Flows
(Expressed in U.S.
dollars)
|
|
|
Year Ended
July 31,
2019
|
|
|
Year Ended
July 31,
2018
|
|
|
|
|
$
|
|
|
$
|
|
|
Operating Activities
|
|
|
|
|
|
|
|
Net loss
|
|
|
(1,843,894 |
) |
|
|
(129,080 |
) |
|
Related party imputed
interest
|
|
|
22,009 |
|
|
|
- |
|
|
Share based
compensation
|
|
|
1,522,500 |
|
|
|
- |
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Prepaid
expenses
|
|
|
460 |
|
|
|
(460 |
) |
|
Accrued interest
payable
|
|
|
510 |
|
|
|
- |
|
|
Inventory
|
|
|
306,450 |
|
|
|
- |
|
|
Accounts payable and
accrued liabilities
|
|
|
51,687 |
|
|
|
64,999 |
|
|
Due to related
parties
|
|
|
- |
|
|
|
61,924 |
|
|
Net Cash Provided by (Used In)
Operating Activities
|
|
|
(556,178 |
) |
|
|
(2,617 |
) |
|
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
Deposit on acquisition
of property
|
|
|
(100,000 |
) |
|
|
- |
|
|
Purchase of fixed
assets
|
|
|
(145,138 |
) |
|
|
- |
|
|
Net Cash Provided by (Used in)
Investing Activities
|
|
|
(245,138 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
Proceeds on loans
payable
|
|
|
155,250 |
|
|
|
- |
|
|
Advances from related
parties
|
|
|
646,187 |
|
|
|
- |
|
|
Net Cash Provided by Financing
Activities
|
|
|
801,437 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in
Cash
|
|
|
3,121 |
|
|
|
(2,617 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash, Beginning of Year
|
|
|
132 |
|
|
|
2,749 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash, End of Year
|
|
|
3,253 |
|
|
|
132 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosures:
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
|
– |
|
|
|
– |
|
|
Income taxes
paid
|
|
|
– |
|
|
|
– |
|
(The accompanying notes
are an integral part of these financial statements)
GREEN HYGIENICS HOLDINGS
INC.
Notes to the Financial
Statements
Years Ended July 31,
2019 and 2018
(Expressed in U.S.
dollars)
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. Since the
issuance of the purchase order, the Company and US Tobacco De
Mexico determined to renegotiate the purchase order due to several
reasons, including production capacity and market price
fluctuation. This contract has been cancelled due to the
significant drop of more than 90% in wholesale price of hemp
biomass which is used to make CBD hemp cigarettes. The parties are
working on a modified version of the deal.
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 July 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 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.
Going Concern
These 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 or foreseeable 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 July
31, 2019, the Company has not generated any revenues, has a working
capital deficiency of $885,133 and has an accumulated deficit of
$42,766,142 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.
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) 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.
(c) 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.
(d) 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.
(e) 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.
(f) 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.
(g) 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.
2. Significant
Accounting Policies (continued)
(h) 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.
(i) 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.
(j) 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.
(k) 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 July 31,
2019 and 2018, the Company does not have any potentially dilutive
shares.
2. Significant
Accounting Policies (continued)
(l) Comprehensive
Loss
ASC 220, “Comprehensive
Income”, establishes standards for the reporting and display of
comprehensive loss and its components in the financial
statements.
(m) 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. Deposits
During the year ended
July 31, 2019, the Company advanced funds of $100,000 toward the
acquisition of property known as the Potrero Ranch. The Company
completed the acquisition on August 24, 2019.
4. Inventory
Inventory consists of
hemp seeds. Inventory is recorded at cost.
5. Fixed Assets
Fixed assets 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. No depreciation has
been recorded to date due to immateriality as the assets were
acquired near year end.
Fixed assets consist of
the following:
|
|
|
Useful
Life
|
|
Balance at
July 31,
2018
|
|
|
Additions
|
|
|
Amortization
|
|
|
Balance at
July 31,
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production equipment
|
|
5 years
|
|
$ |
- |
|
|
$ |
46,379 |
|
|
$ |
- |
|
|
$ |
46,379 |
|
|
Buildings and improvements
|
|
15 years
|
|
|
- |
|
|
|
90,657 |
|
|
|
- |
|
|
|
90,657 |
|
|
Furniture and office equipment
|
|
5 years
|
|
|
- |
|
|
|
8,102 |
|
|
|
- |
|
|
|
8,102 |
|
|
|
|
|
|
$ |
- |
|
|
$ |
145,138 |
|
|
$ |
- |
|
|
$ |
145,138 |
|
Fixed asset costs are
being depreciated using the straight-line method based on the
useful life of the asset. No depreciation expense has been recorded
for the year ended July 31, 2019 due to the immateriality as the
assets were acquired near year end.
6. Loans Payable
(a) As at July 31,
2019, the Company owes $155,250 (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.
(b) As at July 31,
2019, the Company owes $nil (2018 - $18,750) to a non-related
party, which is non-interest bearing, unsecured, and due on demand.
During the year ended July 31, 2018, the amount owing was
transferred to a company controlled by the President of the
Company.
7. Related Party
Transactions
(a) As at July 31,
2019, the Company owes $56,824 (2018 - $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 July 31, 2019,
accrued interest of $14,825 (2018 - $11,961) has been included in
accounts payable and accrued liabilities.
(b) As at July 31,
2019, the Company owes $696,074 (2018 - $116,137) 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 July 31,
2019, the Company owes $27,500 (2018 - $nil) 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.
(d) During the year
ended July 31, 2019, the Company incurred $30,000 (2018 - $30,000)
in consulting fees to a company controlled by the CEO of the
Company.
(e) During the year
ended July 31, 2019, the Company incurred $30,000 (2018 - $nil) in
consulting fees to the CTO of the Company.
(f) During the year
ended July 31, 2019, the Company incurred $27,500 (2018 - $nil) in
consulting fees to a VP and Director of the Company.
(g) During the year
ended July 31, 2019, the Company incurred $15,000 (2018 - $nil) in
consulting fees to the President of a subsidiary of the
Company.
(h) During the year
ended July 31, 2019, the Company incurred $15,000 (2018 - $nil) in
consulting fees to the CEO of a subsidiary of the Company.
(i) Imputed interest of
$22,009 was recorded for the above related party debts.
8. Share Issuances
(a) During the year
ended July 31, 2019, the Company issued 500,000 common shares to
the Chief Development Officer of the Company in exchange for
services rendered. The shares were valued based on OTC’s closing
trade price on the date of the agreement.
(b) During the year
ended July 31, 2019, the Company issued 500,000 common shares to
the Business Development Officer of the Company in exchange for
services rendered. The shares were valued based on OTC’s closing
trade price on the date of the agreement.
(c) During the year
ended July 31, 2019, the Company issued 500,000 common shares to
the Chief Technology Officer of the Company in exchange for
services rendered. The shares were valued based on OTC’s closing
trade price on the date of the agreement.
(d) During the year
ended July 31, 2019, the Company issued 50,000 common shares to the
Head of Research and Development of a subsidiary of the Company in
exchange for services rendered. The shares were valued based on
OTC’s closing trade price on the date of the agreement.
(e) During the year
ended July 31, 2019, the Company issued 200,000 common shares to
the Chief Development Officer of the Company in exchange for
services rendered. The shares were valued based on OTC’s closing
trade price on the date of the agreement.
(f) During the year
ended July 31, 2019, the Company issued 200,000 common shares to
the President of a subsidiary of the Company in exchange for
services rendered. The shares were valued based on OTC’s closing
trade price on the date of the agreement.
9. Commitments
(a)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.
9. Commitments
(continued)
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.
(b) 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.
(c) 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.
(d) On June 1, 2019,
the Company entered into a consulting agreement with the President
of a subsidiary of the Company, 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.
10. Income Taxes
The Company has net
operating losses carried forward of $5,237,753 available to offset
taxable income in future years which commence expiring in fiscal
2028.
The Company is subject
to United States federal and state income taxes at an approximate
rate of 26.42% (2018 – 26.42%). The reconciliation of the provision
for income taxes at the United States federal statutory rate
compared to the Company’s income tax expense as reported is as
follows:
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
Income tax recovery at statutory rate
|
|
|
(387,218 |
) |
|
|
(34,099 |
) |
|
Change in enacted tax rates
|
|
|
- |
|
|
|
6,993 |
|
|
Change in valuation allowance
|
|
|
387,218 |
|
|
|
27,106 |
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
– |
|
|
|
– |
|
The significant
components of deferred income tax assets and liabilities as at July
31, 2019 and 2018 are as follows:
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
Net operating losses carried forward
|
|
$ |
1,009,928 |
|
|
|
712,710 |
|
|
Valuation allowance
|
|
|
(1,009,928 |
) |
|
|
(712,710 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net deferred income tax asset
|
|
|
– |
|
|
|
– |
|
10. Income Taxes
(continued)
The 2017 Act reduces
the corporate tax rate from 34% to 21% for tax years beginning
after December 31, 2017. For net operating losses arising after
December 31, 2017, the 2017 Act limits a taxpayer’s ability to
utilize net operating losses carryforwards to 80% of taxable
income. In addition, net operating losses arising after 2017 can be
carried forward indefinitely, but carryback is generally
prohibited. Net operating losses generated in tax years beginning
before January 1, 2018 will not be subject to the taxable income
limitation. The 2017 Act would generally eliminate the carryback of
all net operating losses arising in a tax year ending after 2017
and instead would permit all such net operating losses to be
carried forward indefinitely.
As at July 31, 2019,
the Company is in arrears on filing its statutory corporate income
tax returns and the amounts presented above are based on estimates.
The actual losses available could differ from these estimates.
11. Subsequent
Events
(a) On August 23, 2019,
a company (Alita Capital Inc.) owned by the President of the
Company executed on a Purchase and Sale Agreement to acquire the
824-acre Potrero Ranch Property near San Diego, California (the
Agreement”). Alita in advance of the close immediately assigned the
Agreement to the Green Hygienics Holdings Inc.
The Property now owned
fully by Green Hygienics includes 824 acres of land and 400,000
square feet of outbuildings. The total purchase cost of the
Property is $4,510,000. The Vendor agreed to a take-back mortgage
of $2,750,000 (the ‘Mortgage”) and the Company borrowed $1,760,000
(the “Loan”) by way of a second mortgage to complete the
acquisition. The terms of the Mortgage include interest at the rate
of 6% per annum with monthly payments of interest only.commencing
September 23, 2019. The maturity date of the Mortgage is August 23,
2024. The terms of the Loan include interest at 15% per annum with
monthly payments of $22,000 commencing September 15, 2019. The
maturity date of the Loan is August 15, 2024.
(b) On August 1, 2019,
the Company entered into a consulting agreement with the CEO of the
Company, 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.
(c) On August 1, 2019,
the Company entered into a consulting agreement with the Chief
Agricultural Operations Manager 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.
(d) On August 1, 2019,
the Company entered into a consulting agreement with the Chief
Project Manager 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.
(e) On August 1, 2019,
the Company entered into a consulting agreement with the Assistant
Agricultural Operations Manager 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.
(f) 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.
(g) On September 1,
2018, the Company entered into a consulting agreement with a
director of the Company, 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.
(h) On September 1,
2018, the Company entered into a consulting agreement with the CTO,
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.
GREEN HYGIENICS HOLDINGS
INC.
Condensed Consolidated Balance
Sheets
(Expressed in U.S.
dollars)
|
|
|
April
30,
2020
$
|
|
|
July
31,
2019
$
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash
|
|
|
228,237 |
|
|
|
767 |
|
|
Trust
funds
|
|
|
- |
|
|
|
2,486 |
|
|
Inventory
|
|
|
- |
|
|
|
306,450 |
|
|
Total Current
Assets
|
|
|
228,237 |
|
|
|
309,703 |
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
- |
|
|
|
100,000 |
|
|
Fixed Assets (Note
3)
|
|
|
4,749,617 |
|
|
|
145,138 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
|
4,977,854 |
|
|
|
554,841 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
|
683,074 |
|
|
|
201,178 |
|
|
Accounts
payable – related parties
|
|
|
294,583 |
|
|
|
57,500 |
|
|
Accrued
interest payable
|
|
|
21,750 |
|
|
|
510 |
|
|
Deferred
revenue
|
|
|
15,973 |
|
|
|
- |
|
|
Defaulted
loan payable (Note 4a)
|
|
|
24,989 |
|
|
|
155,250 |
|
|
Discounted
convertible note payable (Note 4c)
|
|
|
221,712 |
|
|
|
- |
|
|
SBA loan
payable (Note 4b)
|
|
|
444,850 |
|
|
|
- |
|
|
Current
portion of long-term debt
|
|
|
39,897 |
|
|
|
- |
|
|
Due to
related parties (Note 8)
|
|
|
1,864,637 |
|
|
|
780,398 |
|
|
Total Current
Liabilities
|
|
|
3,611,465 |
|
|
|
1,194,836 |
|
|
|
|
|
|
|
|
|
|
|
|
Long Term
Liabilities
|
|
|
|
|
|
|
|
|
|
Agreement
payable (less current portion) (Note 5)
|
|
|
119,310 |
|
|
|
- |
|
|
Mortgage
payable (Note 6)
|
|
|
2,750,000 |
|
|
|
- |
|
|
Second
Mortgage payable (Note 7)
|
|
|
1,760,000 |
|
|
|
- |
|
|
Total Long-Term
Liabilities
|
|
|
4,629,310 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Total Current
and Long-Term Liabilities
|
|
|
8,240,775 |
|
|
|
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 37,949,502
and 36,657,835 shares issued and outstanding
|
|
|
37,949 |
|
|
|
36,658 |
|
|
Stock
payable
|
|
|
600,000 |
|
|
|
- |
|
|
Additional
paid-in capital
|
|
|
44,482,731 |
|
|
|
42,089,489 |
|
|
Deficit
|
|
|
(48,383,601 |
) |
|
|
(42,766,142 |
) |
|
Total Stockholder’s
Deficit
|
|
|
(3,262,921 |
) |
|
|
(639,995 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholder’s Deficit
|
|
|
4,977,854 |
|
|
|
554,841 |
|
(The accompanying notes
are an integral part of these Consolidated financial
statements)
GREEN HYGIENICS HOLDINGS
INC.
Condensed Consolidated
Statements of Operations
(Expressed in U.S.
dollars)
(unaudited)
|
|
|
Three
Months
Ended
April
30,
2020
$
|
|
|
Three
Months
Ended
April
30,
2019
$
|
|
|
Nine
Months
Ended
April
30,
2020
$
|
|
|
Nine
Months
Ended
April
30,
2019
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental Revenue
|
|
|
52,800 |
|
|
|
- |
|
|
|
108,574 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
fees (Note 4)
|
|
|
112,000 |
|
|
|
45,000 |
|
|
|
390,396 |
|
|
|
100,000 |
|
|
Business
development costs
|
|
|
30,000 |
|
|
|
- |
|
|
|
2,471,884 |
|
|
|
- |
|
|
Supplies
|
|
|
112,685 |
|
|
|
- |
|
|
|
594,150 |
|
|
|
- |
|
|
Sub
contracts
|
|
|
18,021 |
|
|
|
- |
|
|
|
138,699 |
|
|
|
- |
|
|
Payroll
expenses
|
|
|
231,897 |
|
|
|
- |
|
|
|
570,614 |
|
|
|
- |
|
|
Inventory
impairment expense
|
|
|
306,450 |
|
|
|
- |
|
|
|
306,450 |
|
|
|
- |
|
|
General
and administrative
|
|
|
264,478 |
|
|
|
2,096 |
|
|
|
412,811 |
|
|
|
12,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
|
1,075,531 |
|
|
|
47,096 |
|
|
|
4,885,004 |
|
|
|
112,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss Before Other
Income (Expense)
|
|
|
(1,022,731 |
) |
|
|
(47,096 |
) |
|
|
(4,776,430 |
) |
|
|
(112,268 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
(Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
(21,459 |
) |
|
|
- |
|
|
|
(55,923 |
) |
|
|
- |
|
|
Interest
expense
|
|
|
(509,727 |
) |
|
|
(716 |
) |
|
|
(785,106 |
) |
|
|
(2,148 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
(1,553,917 |
) |
|
|
(47,812 |
) |
|
|
(5,617,459 |
) |
|
|
(114,416 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Earnings (Loss) Per
Share, Basic and Diluted
|
|
|
(0.04 |
) |
|
|
(0.00 |
) |
|
|
(0.15 |
) |
|
|
(0.00 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding
|
|
|
37,534,687 |
|
|
|
34,707,835 |
|
|
|
37,496,856 |
|
|
|
34,707,835 |
|
(The accompanying notes
are an integral part of these Consolidated financial
statements)
GREEN HYGIENICS HOLDINGS INC.
Condensed Consolidated
Statements of Cash Flows
(Expressed in U.S.
dollars)
(unaudited)
|
|
|
Nine
Months
Ended
April
30,
2020
$
|
|
|
Nine
Months
Ended
April
30,
2019
$
|
|
|
Operating
Activities
|
|
|
|
|
|
|
|
Net
loss
|
|
|
(5,617,459 |
) |
|
|
(114,416 |
) |
|
Imputed
interest
|
|
|
94,834 |
|
|
|
- |
|
|
Inventory
impairment
|
|
|
306,450 |
|
|
|
- |
|
|
Depreciation expense
|
|
|
55,923 |
|
|
|
- |
|
|
Amortization of discount on note payable
|
|
|
365,412 |
|
|
|
- |
|
|
Share
based compensation
|
|
|
2,421,000 |
|
|
|
- |
|
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Prepaid
expenses
|
|
|
- |
|
|
|
- |
|
|
Accrued
interest payable
|
|
|
21,240 |
|
|
|
- |
|
|
Accounts
payable and accrued liabilities
|
|
|
435,473 |
|
|
|
48,013 |
|
|
Accounts
payable - related party
|
|
|
237,083 |
|
|
|
- |
|
|
Deferred
revenue
|
|
|
15,973 |
|
|
|
- |
|
|
Due to
related parties
|
|
|
- |
|
|
|
66,459 |
|
|
Net Cash Provided By
(Used In) Operating Activities
|
|
|
(1,664,071 |
) |
|
|
56 |
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
|
Cash paid
for purchase of fixed assets
|
|
|
(118,586 |
) |
|
|
- |
|
|
Net Cash Provided by
(Used In) Investing Activities
|
|
|
(118,586 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
|
Proceeds
from Discounted Note Payable
|
|
|
585,000 |
|
|
|
- |
|
|
Payments
on Discounted Note Payable
|
|
|
(250,000 |
) |
|
|
- |
|
|
Proceeds
from notes payable
|
|
|
297,638 |
|
|
|
- |
|
|
Proceeds
from SBA Loan Payable
|
|
|
444,850 |
|
|
|
|
|
|
Principle
payments on Agreement Payable
|
|
|
(23,825 |
) |
|
|
- |
|
|
Principle
payments on Defaulted Loan Payable
|
|
|
(130,261 |
) |
|
|
|
|
|
Advances
from related parties
|
|
|
1,084,239 |
|
|
|
- |
|
|
Net Cash Provided by
Financing Activities
|
|
|
2,007,641 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash
|
|
|
224,984 |
|
|
|
56 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and trust funds,
Beginning of Period
|
|
|
3,253 |
|
|
|
132 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and trust funds,
End of Period
|
|
|
228,237 |
|
|
|
188 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosures:
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
|
397,944 |
|
|
|
– |
|
|
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 |
|
|
|
-- |
|
|
Shares
issued for conversion of debt
|
|
|
50,000 |
|
|
|
- |
|
|
Equipment
purchased on accounts payable
|
|
|
46,423 |
|
|
|
|
|
|
Loan
payable transferred to related party
|
|
|
- |
|
|
|
18,750 |
|
|
Discount
on warrants
|
|
|
428,700 |
|
|
|
- |
|
(The accompanying notes
are an integral part of these Consolidated financial
statements)
GREEN HYGIENICS HOLDINGS
INC.
Condensed Consolidated
Statements of Stockholders’ Deficit
(Expressed in U.S.
dollars)
(unaudited)
|
|
|
Common
Stock
|
|
|
Additional
Paid-In
|
|
|
Stock
|
|
|
Accumulated
|
|
|
Total
Stockholders’
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Payable
|
|
|
Deficit
|
|
|
Equity
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Balance, July 31,
2018
|
|
|
34,707,835 |
|
|
|
34,708 |
|
|
|
40,544,980 |
|
|
|
- |
|
|
|
(40,922,248 |
) |
|
|
(342,560 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
94,834 |
|
|
|
|
|
|
|
|
|
|
|
94,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount on
warrants
|
|
|
|
|
|
|
|
|
|
|
428,700 |
|
|
|
|
|
|
|
|
|
|
|
428,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for
services
|
|
|
1,125,000 |
|
|
|
1,125 |
|
|
|
1,819,875 |
|
|
|
|
|
|
|
|
|
|
|
1,821,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares to be issued for
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600,000 |
|
|
|
|
|
|
|
600,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for debt
conversion
|
|
|
166,667 |
|
|
|
167 |
|
|
|
49,833 |
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,617,459 |
) |
|
|
(5,617,459 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, April 30,
2020
|
|
|
37,949,502 |
|
|
|
37,950 |
|
|
|
44,482,731 |
|
|
|
600,000 |
|
|
|
(48,383,601 |
) |
|
|
(3,262,921 |
) |
(The accompanying notes
are an integral part of these Consolidated financial
statements)
GREEN HYGIENICS HOLDINGS
INC.
Notes to the Condensed
Consolidated Financial Statements
April 30, 2020
(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 April 30, 2020. 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 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 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 generated revenues of $108,574 since 2013. 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 of
April 30, 2020, the Company has a working capital deficiency of
$3,383,228 and has an accumulated deficit of $48,383,601 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.
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. In the current
quarter the inventory was fully impaired due to unfavorable weather
conditions. In the early growing stages the plants were severely
damaged by a sand storm and could not be salvaged.
(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.
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) Revenue
Pursuant to ASC 606,
Revenue from contracts with customers. As of the date of this
report, the Company has not recognized any revenue related to the
hemp production business. The only revenue recognized to date is
the land use rental income from San Diego Gas and Electric Company
in the amount of $108,574. The term of the rental agreement is in
effect until December 2020 with a monthly payment of $17,000.
(m) Leases
Pursuant to ASC 842,
transparency and comparability among organizations by recognizing
lease assets and lease liabilities on the balance sheet and
disclosing key information about leasing transactions. As of the
date of this report, the Company has no material transactions to
report.
2. Significant
Accounting Policies (continued)
(n) 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 of April 30,
2020, the Company does not have any potentially dilutive
shares.
(o) Comprehensive
Loss
ASC 220, “Comprehensive
Income”, establishes standards for the reporting and display of
comprehensive loss and its components in the financial
statements.
(p) Recent Accounting
Pronouncements
In July 2018, the FASB
issued ASU No. 2018-10, Codification Improvements to Topic 842,
Leases. The amendments in ASU 2018-10 provide additional
clarification and implementation guidance on certain aspects of the
previously issued ASU No. 2016-02, Leases (Topic 842) (“ASU
2016-02”) and have the same effective and transition requirements
as ASU 2016-02. Upon the effective date, ASU 2018-10 will supersede
the current lease guidance in ASC Topic 840, Leases. Under the new
guidance, lessees will be required to recognize for all leases,
with the exception of short-term leases, a lease liability, which
is a lessee’s obligation to make lease payments arising from a
lease, measured on a discounted basis. Concurrently, lessees will
be required to recognize a right-of-use asset, which is an asset
that represents the lessee’s right to use, or control the use of, a
specified asset for the lease term. ASU 2018-10 is effective for
private companies and emerging growth public companies for interim
and annual reporting periods beginning after December 15, 2019,
with early adoption permitted. The guidance is required to be
applied using a modified retrospective transition approach for
leases existing at, or entered into after, the beginning of the
earliest comparative periods presented in the financial statements.
During the nine months ended April 30, 2020 the Company assessed
the impact this guidance had on its financial statements and
concluded that at present ASU No. 2018-10 has no impact on its
financial statements.
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
$
|
|
|
Accumulated
Depreciation
$
|
|
|
Balance
at
April
30,
2020
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
equipment
|
|
5 years
|
|
|
46,379 |
|
|
|
313,530 |
|
|
|
(45,733 |
) |
|
|
314,176 |
|
|
Furniture and office
equipment
|
|
5 years
|
|
|
8,102 |
|
|
|
- |
|
|
|
(1,218 |
) |
|
|
6,884 |
|
|
Buildings and
improvements
|
|
15 years
|
|
|
90,657 |
|
|
|
134,510 |
|
|
|
(8,972 |
) |
|
|
216,195 |
|
|
Land
|
|
|
|
|
- |
|
|
|
4,212,362 |
|
|
|
- |
|
|
|
4,212,362 |
|
|
|
|
|
|
|
145,138 |
|
|
|
4,660,402 |
|
|
|
(55,923 |
) |
|
|
4,749,617 |
|
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.
4. Loans Payable
|
|
(a)
|
As of April 30, 2020, the Company
owes $24,989 (2019 - $nil) plus accrued interest of $301 (2018 -
$nil) to a non-related party, which bears interest at the rate of
10% per annum, is unsecured and was due and payable on or before
December 19, 2019. This loan payable is in default, and the Company
is currently in negotiations to extend the maturity date. |
|
|
|
|
|
|
(b)
|
On April 30, 2020 the Company
received loan proceeds in the amount of $444,850 under the Paycheck
Protection Program (“PPP”). The PPP, established as part of the
Coronavirus Aid, Relief and Economic Security Act (“CARES Act”),
provides for loans to qualifying businesses for amounts up to 2.5
times of the average monthly payroll expenses of the qualifying
business. The loans and accrued interest are forgivable after eight
weeks as long as the borrower uses the loan proceeds for eligible
purposes, including payroll, benefits, rent and utilities, and
maintains its payroll levels. The amount of loan forgiveness will
be reduced if the borrower terminates employees or reduces salaries
during the eight-week period. The unforgiven portion of the PPP
loan is payable over two years at an interest rate of 1%, with a
deferral of payments for the first six months. The Company intends
to use the proceeds for purposes consistent with the PPP. While the
Company currently believes that its use of the loan proceeds will
meet the conditions for forgiveness of the loan, we cannot assure
you that we will not take actions that could cause the Company to
be ineligible for forgiveness of the loan, in whole or in
part. |
|
|
|
|
|
|
(c)
|
As of April 30, 2020, the Company owes
$221,712 (2019 - $nil) to a non-related party. On December 19,
2019, the Company entered into an securities purchase agreement,
which was amended on January 8, 2020 (collectively, the “SPA”) with
Triton Funds, LP, an accredited investor (“Triton”), pursuant to
which the Company issued and sold to Triton (i) a discounted
convertible promissory note (the “Note”) in the aggregate principal
amount of up to $750,000, due June 30, 2020, bearing interest at a
rate of ten percent (10%) per annum and convertible into shares of
the Company’s common stock at a conversion price of $2.50 per share
and (ii) a common stock purchase warrant (the “Warrant”),
exercisable for two (2) years, to purchase up to 250,000 shares of
the Company’s common stock at an exercise price of $3.00 per share,
for an aggregate purchase price of $600,000. If not exercised, the
Warrant will expire at 5:00 pm EST on December 31, 2021. The Note
can be prepaid at any time by paying 110% of the then outstanding
principal, interest, default interest (if any), and any other
amounts then due under the Note. The Note is initially convertible
at a price per share equal to $2.50 (the “Fixed Conversion Price”);
provided, however, that during the continuance of an event of
default under the Note, the conversion price shall be equal to 75%
of the lowest trading price of the Company’s common stock during
the 30 trading days prior to conversion.
|
On December
31, 2019, Triton paid an initial purchase price of $100,000 at the
initial closing. The Company received net proceeds of $85,000 after
paying fees of $15,000. On February 20, 2020, Triton paid the
purchase price balance of $500,000, at which point, the Note was
payable in the aggregate principal amount of $750,000 and the
Warrant was exercisable as to the right to purchase 250,000 shares.
The original issue discount on the Note is a total of $150,000.
The Note can be prepaid
at any time by paying 110% of the then outstanding principal,
interest, default interest (if any), and any other amounts then due
under the Note. The Note is initially convertible at a price per
share equal to $2.50 (the “Fixed Conversion Price”); provided,
however, that during the continuance of an event of default under
the Note, the conversion price shall be equal to 75% of the lowest
trading price of the Company’s common stock during the 30 trading
days prior to conversion.
On March 31, 2020, the
Company and Triton entered into a Modification Agreement, pursuant
to which (i) the Company paid $250,000 of the principal amount of
the Note, bringing the principal balance of the Note to $500,000,
(ii) the maturity date of the Note was extended to August 20, 2020,
(iii) the conversion price of the Note was established as 75% of
the lowest trading price of the Company’s common stock during the
30 trading days prior to conversion, and (iv) the minimum volume
weighted price requirement of the Note was deleted. As of April 30,
2020, Triton had converted $50,000 of the debt into 166,667 shares
which were converted within the terms of the Note.
The warrant discount is
$166,727 as of April 30, 2020. The Warrants was valued using a
Black Scholes model which created a discount of the full value of
cash received, bringing the full discount on the note to $428,700,
which is to be amortized over the term of the Note. Through April
30, 2020, $261,973 of the discount was amortized, bringing the
balance of the note to $221,712.
Warrants
During the nine months ended
April 30, 2020, the Company entered into warrant agreement in
conjunction with the note issued by Triton Funds, LP. The
warrant provided the right to purchase 250,000 shares of the
Company’s common stock at $3 per share exercise. As of the
nine months end April 30, 2020 and the year ended July 31, 2019,
there were 250,000 and zero warrants outstanding, respectively.
The fair value of the warrants
granted for the nine months ended April 30, 2020 were determined
using Black Scholes method with the following assumptions:
|
|
|
Nine
months ended April 30,
2020
|
|
|
Risk free interest of 1.62%
|
|
|
|
|
Stock volatility
|
|
|
338 |
% |
|
Weighted average expected warrant
life in years
|
|
|
2 |
|
|
Expected dividend yield
|
|
|
0.00 |
% |
|
|
|
|
|
|
|
|
|
Nine
months ended April 30, 2020
|
|
|
Year
ended July 31, 2019
|
|
|
|
|
Warrants
|
|
|
Weighted average exercise price
|
|
|
Warrants
|
|
|
Weighted average exercise price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding-beginning of the
year
|
|
|
0 |
|
|
$ |
0 |
|
|
|
0 |
|
|
$ |
0 |
|
|
Issued
|
|
|
250,000 |
|
|
$ |
3 |
|
|
|
0 |
|
|
$ |
0 |
|
|
Exercised
|
|
|
0 |
|
|
$ |
0 |
|
|
|
0 |
|
|
$ |
0 |
|
|
Forfeited
|
|
|
0 |
|
|
$ |
0 |
|
|
|
0 |
|
|
$ |
0 |
|
|
Outstanding at respective
periods
|
|
|
250,000 |
|
|
$ |
3 |
|
|
|
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at each respective
period
|
|
|
250,000 |
|
|
$ |
3 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average fair value of
warrants granted during the year
|
|
|
|
|
|
$ |
750,000 |
|
|
|
|
|
|
|
|
|
Warrant expense for the nine
months ended April 30, 2020 and for the year ended July 31, 2019
were $428,700 and $0.
The weighted average remaining
contractual life of the warrants outstanding as of April 30, 2020
was as follows:
|
Exercise price
|
|
|
Number of warrants outstanding
|
|
|
Weighted Average remaining
contractual life (years)
|
|
|
$ |
3.00
|
|
|
|
250,000 |
|
|
|
1.64 |
|
5. Agreement
Payable
As of April 30, 2020,
the Company owes $159,207 (2018 - $nil) to a non-related party and
requires monthly payments of $4,290.40 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 of April 30, 2020,
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. Second Mortgage
Payable
As of April 30, 2020,
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.
8. Related Party
Transactions
(a) As of April 30,
2020, 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 of
April 30, 2020, accrued interest of $16,973 (July 31, 2019 -
$14,825) has been included in amounts due to related parties.
(b) As of April 30,
2020, the Company owes $1,807,813 (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 of April 30,
2020, the Company owes $67,500 (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 of April 30,
2020, the Company owes $35,000 (July 31, 2019 - $27,500) to a
former 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 of April 30,
2020, the Company owes $67,500 (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 of April 30,
2020, the Company owes $67,500 (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 of April 30,
2020, the Company owes $10,000 (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 of April 30,
2020, the Company owes $43,833 (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) As of April 30,
2020, the Company owes $3,250 (July 31, 2019 - $nil) to the Chief
Financial Officer of the Company for consulting fees. The debt is
non-interest bearing, unsecured, and due on demand and is included
in accounts payable.
(j) During the nine
months ended April 30, 2020, the Company incurred $67,500 (2019 -
$nil) in consulting fees to the CEO of the Company.
(k) During the nine
months ended April 30, 2020, the Company incurred $22,500 (2019 -
$7,500) in consulting fees to the CTO of the Company.
(l) During the nine
months ended April 30, 2020, the Company incurred $7,500 (2019 -
$7,500) in consulting fees to a former VP and former Director of
the Company.
(m) During the nine
months ended April 30, 2020, the Company incurred $67,500 (2019 -
$nil) in consulting fees to the President of a subsidiary of the
Company.
(n) During the nine
months ended April 30, 2020, the Company incurred $67,500 (2019 -
$nil) in consulting fees to the CEO of a subsidiary of the
Company.
(o) During the nine
months ended April 30, 2020, the Company incurred $7,500 (2019 -
$nil) in consulting fees to the CFO of the Company.
(p) Imputed interest of
$94,833 for the nine months ended April 30, 2020 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 nine
months ended April 30, 2020, 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 nine
months ended April 30, 2020, 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 nine
months ended April 30, 2020, 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 nine
months ended April 30, 2020, 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 nine
months ended April 30, 2020, 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.
(f) During the nine
months ended April 30, 2020, the Company agreed to issue 100,000
common shares to an Independent Director 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. The Company
issued 50,000 of the shares on April 20, 2020.
(g) During the nine
months ended April 30, 2020, the Company agreed to issue 250,000
common shares to the Senior Vice President of Corporate Development
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. The Company issued 125,000 of the shares on April 20,
2020.
(h) During the nine
months ended April 30, 2020, the Company agreed to issue 250,000
common shares to a Senior Vice President of Business Development –
Agriculture Division 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. The Company issued 125,000 of the
shares on April 20, 2020.
(i) During the nine
months ended April 30, 2020, the Company issued 166,667 common
shares to Triton Funds Inc. in exchange for debt. The shares were
valued based on OTC’s closing trade price on the date of the
agreement.
10.
Commitments/Contingencies
(a) 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.
(b) 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. As of April 30, 2020, the Company
had issued 500,000 common shares but does notexpect to issue any
common shares in the future due to failure to meet conditions of
the consulting agreement.
(c) 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. As of April 30, 2020, the Company
had issued 500,000 common shares but does notexpect to issue any
common shares in the future due to failure to meet conditions of
the consulting agreement.
(d) 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. As of April 30, 2020, the Company had
issued 50,000 common shares but does notexpect to issue any common
shares in the future due to failure to meet conditions of the
consulting agreement.
(e) 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. As of April 30, 2020, the Company had
issued 200,000common shares but does notexpect to issue any common
shares in the future due to failure to meet conditions of the
consulting agreement.
(f) 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. As of April 30, 2020, the Company had
issued 200,000 common shares but does not expect to issue any
common shares in the future due to failure to meet conditions of
the consulting agreement.
(g) 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. On August 1, 2019,
the Company issued 250,000 common shares to the Consultant at a
value of $1.48 per share.
(h) 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 nine 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. On August 1,
2019, the Company issued 50,000 common shares to the Consultant at
a value of $1.48 per share but does not expect to issue any
additional common shares in the future due to failure to meet
conditions of the consulting agreement.
(i) 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 nine
months after the execution of the agreement. On August 31, 2019,
the Company issued 200,000 common shares to the Consultant at a
value of $1.48 per share. As of April 30, 2020, the Company has
fulfilled all current obligations under the consulting contract and
have been reflected in the Condensed Consolidated Financial
Statements.
(j) 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 nine 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 nine months
after the execution of the agreement. On August 31, 2019, the
Company issued 25,000 common shares to the Consultant at a value of
$1.48 per share. As of April 30, 2020, the Company has fulfilled
all current obligations under the consulting contract and have been
reflected in the Condensed Consolidated Financial Statements.
(k) On February 15,
2020, the Company entered into a consulting agreement with the
Chief Financial Officer of the Company, whereby the Company agreed
to pay a consulting fee of $7,500 per month and whereby the Company
granted the consultant an option to receive 100,000 common shares
for services rendered broken down into two allotment of 50,000
shares, the first at the execution of the agreement and the second
six months after the execution of the agreement. These initial
shares will be issued in June 2020 at market value of $.50 per
share. The Company has the option to extend the consulting
agreement for an additional 2 years. As of April 30, 2020, no
compensation for the common shares has been recognized under this
consulting agreement.
(l) On November 15,
2019, the Company entered into a consulting agreement with the
Chief Operations Officer, whereby the Company agreed to pay a
consulting fee of $7,500 per month for a period of three years and,
in addition whereby the Company agreed to pay a consulting fee
whereby the Company granted the consultant to receive 200,000
common shares for services rendered broken down into two allotment
of 100,000 shares, the first at the execution of the agreement and
the second six months after the execution of the agreement. These
initial shares will be issued in June 2020 at market value of $.50
per share. The Company has the option to extend the consulting
agreement for an additional 2 years. As of April 30, 2020, no
compensation for the common shares has been recognized under this
consulting agreement.
(m) On April 1, 2020,
the Company entered into a consulting agreement with the Compliance
Officer, whereby the Company agreed to pay a consulting fee of
$6,000 per month for a period of three years and, in addition
whereby the Company agreed to pay a consulting fee whereby the
Company granted the consultant to receive 35,000 common shares for
services rendered after the execution of the agreement. These
common shares will be issued in June 2020 at market value of $.50
per share. The Company has the option to extend the consulting
agreement for an additional 2 years. As of April 30, 2020, no
compensation for the common shares has been recognized under this
consulting agreement.
(n) On March 15, 2020,
the Company entered into a consulting agreement with the Director
of Grow Operations, whereby the Company agreed to pay a consulting
fee of $6,000 per month for a period of three years and, in
addition whereby the Company agreed to pay a consulting fee whereby
the Company granted the consultant to receive 25,000 common shares
for services rendered broken down into two allotment of 12,500
shares, the first at the execution of the agreement and the second
six months after the execution of the agreement. These initial
shares will be issued in June 2020 at market value of $.50 per
share. The Company has the option to extend the consulting
agreement for an additional 2 years. As of April 30, 2020, no
compensation for the common shares has been recognized under this
consulting agreement.
(o) During the nine
months ended April 30, 2020, the Company agreed to issue 50,000
common shares to an Independent Director 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.
(p) During the nine
months ended April 30, 2020, the Company agreed to issue 125,000
common shares to the Senior Vice President of Corporate Development
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.
(q) During the nine
months ended April 30, 2020, the Company agreed to issue 125,000
common shares to a Senior Vice President of Business Development –
Agriculture Division 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.
11. Subsequent
Events
On May 8, 2020, the Company issued 214,286
common shares to Triton Funds LP upon partial conversion of the
Note at the conversion price then in effect.
On May 22, 2020, the Company issued 178,571
common shares to Triton Funds LP upon partial conversion of the
Note at the conversion price then in effect.
On June 8, 2020, the Company issued 153,846
common shares to Triton Funds LP upon partial conversion of the
Note at the conversion price then in effect.
MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OR PLAN OF OPERATION
This section of the
Registration Statement includes a number of forward-looking
statements that reflect our current views with respect to future
events and financial performance. Forward-looking statements are
often identified by words like believe, expect, estimate,
anticipate, intend, project and similar expressions, or words
which, by their nature, refer to future events. You should not
place undue certainty on these forward-looking statements. These
forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially
from our predictions.
The
following discussion should be read in conjunction with the
consolidated financial statements and notes. In addition to
historical information, this discussion and analysis contains
forward-looking statements that involve risks, uncertainties and
assumptions, which could cause actual results to differ materially
from management’s expectations.
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.
Effective April 29, 2019, the Company entered into a definitive
agreement with Coastal Labs, LLC (“Coastal”) to acquire all of the
assets of Coastal. The total consideration for the assets would be,
at the Company’s election, $3,000,000 or a total of 2,000,000
shares of the Company’s common stock issuable over five years. In
addition, the Company would enter into consulting agreements with
each individual member of Coastal, or such entity as each
respective member may designate, that sets forth ongoing
compensation to each individual member of Coastal. The parties
further agreed to form a new entity or arrange for the transfer of
ownership of Coastal to a wholly-owned subsidiary of the Company to
hold the acquired assets, to enter into an operating agreement that
governs the operation of the assets, and to establish a board of
directors for the subsidiary of up to 6 members, of whom 3, or
half, whichever is greater, shall be nominees of Coastal. Further,
the Company would assume all of Coastal’s contracts relating to
sales and distribution of the products. The acquisition of the
assets of Coastal has not closed, and either party may terminate
the agreement at any time.
In
June, 2019, the Company formed two wholly owned subsidiaries,
Coastal Labs NC LLC (“Coastal NC”) and Green Hygienics NC LLC
(“Green NC”) for the purpose of registering as an industrial hemp
processor and cultivator in the State of North Carolina pursuant to
the North Carolina Industrial Hemp Pilot Program.
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. Since the
issuance of the purchase order, the Company and US Tobacco De
Mexico determined to renegotiate the purchase order due to several
reasons, including production capacity and market price
fluctuation. This contract has been cancelled due to the
significant drop of more than 90% in wholesale price of hemp
biomass which is used to make CBD hemp cigarettes. The parties are
working on a modified version of the deal.
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 subsidiary, Coastal NC, by the North Carolina
Industrial Hemp Commission. The Company’s second subsidiary in the
state, Green NC, 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.
On
August 26, 2019, the Company the completed the acquisition of 824
acres of land known as the Potrero Ranch Property, located near San
Diego, California for a 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.
The Company entered into an agreement payable with the seller 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. This debt is secured by a promissory note
secured by a deed of trust on the real property. The maturity date
of the debt is August 23, 2024. The Company also entered into an
agreement payable for $1,760,000 with monthly payments of interest
only at the rate of 15% per annum. This debt is also secured by a
promissory note secured by a second charge on the deed of trust on
the real property. The maturity date of this debt is August 15,
2024. To date, the Company has spent $184,342 in property and
building improvements and has acquired over $300,000 worth of
production equipment.
PRESENTATION OF
MANAGEMENT’S DISCUSSION AND ANALYSIS
Results of
Operations
Three
Months Ended April 30, 2020 Compared to the Three Months Ended
April 30, 2019
Revenues
We
are currently in the product growing and production stages and
anticipate producing revenue in the next six months. We have also
generated $52,800 in revenue for the three months ended April 30,
2020 from license fees pursuant to a license agreement for the
right to use the premises at the Potrero Ranch Property for
temporary storage of construction equipment.
Expenses
Operating expenses for the three months ended April 30, 2020
increased to $1,075,531 compared to $47,096 for the three months
ended April 30, 2019. This increase is primarily due to a material
increase in business development costs, consulting fees, supplies,
subcontracts, payroll expenses and general and administrative
costs, all of which resulted from our commencement of cultivation
operations. Additionally, inventory of $306,450 was fully impaired
due to unfavorable weather conditions. In the early growing stages,
the plants were severely damaged by a sand storm and could not be
salvaged.
We
incurred a total of $509,727 in interest expenses due to debt
financing during the three months ended April 30, 2020, which is an
increase from $716 for the same period in 2019. The debt financing
costs include $151,678 in interest expense and $358,049 in debt
discount costs.
We
recorded $21,459 of depreciation for the three months ended April
30, 2020.
We
experienced a net loss of $1,553,917 during the three months ended
April 30, 2020, as compared to a net loss of $47,812 for the three
months ended April 30, 2019.
An
analysis of our results of operations are as follows:
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
April 30,
2020
|
|
|
April 30,
2019
|
|
|
Change
|
|
|
Rental Revenue
|
|
$ |
52,800 |
|
|
$ |
- |
|
|
$ |
52,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting Fees
|
|
|
112,000 |
|
|
|
45,000 |
|
|
|
67,000 |
|
|
Business Development Costs
|
|
|
30,000 |
|
|
|
- |
|
|
|
30,000 |
|
|
Supplies
|
|
|
112,685 |
|
|
|
- |
|
|
|
112,685 |
|
|
Subcontracts
|
|
|
18,021 |
|
|
|
- |
|
|
|
18,021 |
|
|
Payroll Expenses
|
|
|
231,897 |
|
|
|
- |
|
|
|
231,897 |
|
|
General and Administrative
|
|
|
264,478 |
|
|
|
2,096 |
|
|
|
262.382 |
|
|
Inventory impairment expense
|
|
|
306,450 |
|
|
|
- |
|
|
|
306,450 |
|
|
Interest
|
|
|
509,727 |
|
|
|
716 |
|
|
|
509,011 |
|
|
Depreciation
|
|
|
21,459 |
|
|
|
- |
|
|
|
21,459 |
|
|
Net Loss for the Period
|
|
$ |
(1,553,917 |
) |
|
$ |
(47,812 |
) |
|
$ |
(1,506,105 |
) |
Nine months
Ended April 30, 2020 Compared to the Nine months Ended April 30,
2019
Revenues
We
are currently in the product growing and production stages and
anticipate producing revenue in the next six months. We have also
generated $108,574 in revenue for the nine months ended April 30,
2020 from license fees pursuant to a license agreement for the
right to use the premises at the Potrero Ranch Property for
temporary storage of construction equipment.
Expenses
We
incurred operating losses of $48,383,601 from date of incorporation
June 12, 2008 to the period ended April 30, 2020. These losses
consisted of consulting fees, business development costs, inventory
impairment, supplies, wages and general operating expenses incurred
in connection with the day to day operation of our business and the
preparation and filing of our periodic reports.
Operating expenses for the nine months ended April 30, 2020
increased to $4,885,004 compared to $112,268 for the nine months
ended April 30, 2019. This increase is primarily due to a material
increase in business development costs but was also due to
increases in consulting fees, supplies, subcontracts, payroll
expenses, and general and administrative costs, all of which
resulted from our commencement of cultivation operations.
We
incurred a total of $785,096 in interest expenses due to debt
financing during the three months ended April 30, 2020, which is an
increase from $2,148 for the same period in 2019. The debt
financing costs include $419,694 in interest expense and $365,412
in debt discount costs.
We
recorded $55,923 of depreciation for the nine months ended April
30, 2020.
We
experienced a net loss of $5,617,459 during the nine months ended
April 30, 2020, as compared to a net loss of $114,416 for the nine
months ended April 30, 2019.
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
|
April 30,
2020
|
|
|
April 30,
2019
|
|
|
Change
|
|
|
Rental Revenue
|
|
$ |
108,574 |
|
|
$ |
- |
|
|
$ |
108,574 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting Fees
|
|
|
390,396 |
|
|
|
100,000 |
|
|
|
290,396 |
|
|
Business Development Costs
|
|
|
2,471,884 |
|
|
|
- |
|
|
|
2,471,884 |
|
|
Supplies
|
|
|
594,150 |
|
|
|
- |
|
|
|
594,150 |
|
|
Subcontracts
|
|
|
138,699 |
|
|
|
- |
|
|
|
138,699 |
|
|
Payroll Expenses
|
|
|
570,614 |
|
|
|
- |
|
|
|
570,614 |
|
|
General and Administrative
|
|
|
412,811 |
|
|
|
12,268 |
|
|
|
400,543 |
|
|
Inventory impairment expense
|
|
|
306,450 |
|
|
|
- |
|
|
|
306,450 |
|
|
Interest
|
|
|
785,106 |
|
|
|
2,148 |
|
|
|
782,958 |
|
|
Depreciation
|
|
|
55,923 |
|
|
|
- |
|
|
|
55,923 |
|
|
Net Loss for the Period
|
|
$ |
(5,617,459 |
) |
|
$ |
(114,416 |
) |
|
$ |
(5,503,043 |
) |
Year Ended
July 31, 2019 Compared to the Year Ended July 31,
2018
Operating expenses for the year ended July 31, 2019 increased to
$1,818,511 compared to $165,989 for the year ended July 31, 2018.
This increase is primarily due to an increase in business
development costs resulting from the issuance of shares of common
stock for services but was also due to increases in consulting fees
from the addition of consultant and general and administrative
costs from increase legal and accounting expenditures, all of which
resulted from our commencement of cultivation operations.
We
incurred $25,383 in interest expenses due to debt financing during
the year ended July 31, 2019, which is an increase from $2,841 for
the same period in 2018.
We
recorded gain on forgiveness of debt of $39,750 in the year ended
July 31, 2018.
We
experienced a net loss of $1,843,894 during the year ended July 31,
2019, as compared to a net loss of $129,080 for the year ended July
31, 2018.
An
analysis of our results of operations are as follows:
|
|
|
Year
Ended
|
|
|
|
|
|
|
|
July 31,
2019
|
|
|
July 31,
2018
|
|
|
Change
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
Consulting Fees
|
|
$ |
152,172 |
|
|
$ |
120,000 |
|
|
$ |
32,172 |
|
|
Business Development Costs
|
|
|
1,595,036 |
|
|
|
- |
|
|
|
1,595,036 |
|
|
General and Administrative
|
|
|
71,303 |
|
|
|
45,989 |
|
|
|
25,314 |
|
|
Interest
|
|
|
25,383 |
|
|
|
2,841 |
|
|
|
22,542 |
|
|
Gain on forgiveness of debt
|
|
|
- |
|
|
|
(39,750 |
) |
|
|
39,750 |
|
|
Net Loss for the Period
|
|
$ |
(1,843,894 |
) |
|
$ |
(129,080 |
) |
|
$ |
(1,714,814 |
) |
Balance
Sheet
Our
total assets increased to $4,977,854 as of April 30, 2020, from
$554,841 as of July 31, 2019. This increase resulted primarily from
our acquisition of the 824-acre Potrero Ranch Property near San
Diego, California for a total purchase price of $4,000,000.
|
|
|
April 30,
2020
|
|
|
July 31,
2019
|
|
|
|
|
|
|
|
|
|
|
Cash and Prepaid Expenses
|
|
$ |
228,237 |
|
|
$ |
3,253 |
|
|
Inventory
|
|
|
- |
|
|
|
306,450 |
|
|
Fixed Assets
|
|
|
4,749,617 |
|
|
|
245,138 |
|
|
Total Assets
|
|
|
4,977,854 |
|
|
|
554,841 |
|
|
Total Liabilities
|
|
|
8,240,775 |
|
|
|
1,194,836 |
|
|
Stockholder’s Equity (Deficit)
|
|
|
(3,262,921 |
) |
|
|
(639,995 |
) |
Liquidity and
Capital Resources
As
of April 30, 2020, our current assets were $228,237, comprised of
cash. This is a decrease in current assets from $309,703 as of July
31, 2019. Our working capital deficit as of April 30, 2020 was
$3,383,228, compared to a working capital deficit of $885,133 as of
July 31, 2019.
Working
Capital:
|
|
|
April 30,
2020
|
|
|
July 31,
2019
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
$ |
228,237 |
|
|
$ |
309,703 |
|
|
Current Liabilities
|
|
|
3,611,465 |
|
|
|
1,194,836 |
|
|
Working Capital (Deficit)
|
|
|
(3,383,228 |
) |
|
|
(885,133 |
) |
During the nine months ended April 30, 2020, we used $1,664,071 of
cash for operating activities compared to generating $56 in the
nine months ended April 30, 2019.
During the nine months ended April 30, 2020, we used $118,586 of
cash for investing activities compared to none in the nine months
ended April 30, 2019.
During the nine months ended April 30, 2020, we generated
$2,007,641 of cash from financing activities compared to none in
the nine months ended April 30, 2019.
Cash
Flows:
|
|
|
Nine Months
Ended
|
|
|
|
|
April 30,
2020
|
|
|
April
30,
2019
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating
activities
|
|
$ |
(1,664,071 |
) |
|
$ |
56 |
|
|
Net cash used in investing activities
|
|
|
(118,586 |
) |
|
|
- |
|
|
Net cash provided by financing activities
|
|
|
2,007,641 |
|
|
|
- |
|
|
Net Change in Cash
|
|
$ |
224,984 |
|
|
$ |
56 |
|
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.
We
estimate that our expenses over the next 12 months will be
approximately $600,000, comprised of $120,000 in business
development costs and $480,000 in general and administrative
expenses. 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.
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.
Effective December 19, 2019, we entered into a securities purchase
agreement dated as of December 19, 2019 (the “SPA”) with Triton
Funds, LP, an accredited investor (the “Buyer”), pursuant to which
the Company issued and sold to the Buyer (i) a convertible
promissory note (the “Note”) in the aggregate principal amount of
up to $750,000, due June 30, 2020, bearing interest at a rate of
ten percent (10%) per annum and convertible into shares of the
Company’s common stock at a conversion price of $2.50 per share and
(ii) a common stock purchase warrant (the “Warrant”), exercisable
for two (2) years, to purchase up to 250,000 shares of the
Company’s common stock at an exercise price of $3.00 per share, for
an aggregate purchase price of $600,000.
On
December 31, 2019, the Buyer paid an initial purchase price of
$100,000 at the initial closing. The purchase price balance of
$500,000 was paid on February 20, 2020. The Note is totally vested
and the Warrant is currently vested only as to the right to
purchase 41,667 shares. The original issue discount on the Note
fully vested is $150,000.
The
Note can be prepaid at any time by paying 110% of the then
outstanding principal, interest, default interest (if any), and any
other amounts then due under the Note. The Note is initially
convertible at a price per share equal to $2.50 (the “Fixed
Conversion Price”); provided, however, that during the continuance
of an event of default under the Note, the conversion price shall
be equal to 75% of the lowest trading price of the Company’s common
stock during the 30 trading days prior to conversion.
Concurrently therewith, we entered into a registration rights
agreement with the Buyer, pursuant to which we agreed to file a
registration statement with the SEC for the registration of the
secondary offering and resale of the shares issuable upon
conversion of the Note and exercise of the Warrant and to have the
registration statement declared effective by the SEC at the
earliest possible date. The registration was declared effective by
the SEC on February 11, 2020. The Buyer paid the purchase balance,
and the Note and Warrant fully vested, on February 20, 2020.
On
March 31, 2020, we and Triton entered into a Modification
Agreement, pursuant to which (i) we paid $250,000 of the principal
amount of the Note, bringing the principal balance of the Note to
$500,000, (ii) the maturity date of the Note was extended to August
20, 2020, (iii) the conversion price of the Note was established as
75% of the lowest trading price of our common stock during the 30
trading days prior to conversion, and (iv) the minimum volume
weighted price requirement of the Note was deleted.
From
April 2, 2020, through July 21, 2020, the Company issued in the
aggregate 1,234,946 shares of common stock to Triton for the
conversion of $328,786 of debt, and on August 14, 2020, the Company
paid $200,000 as payment in full all remaining amounts due to
Triton.
On
April 30, 2020, we received loan proceeds in the amount of $444,850
under the Paycheck Protection Program (“PPP”). The PPP, established
as part of the Coronavirus Aid, Relief and Economic Security Act
(“CARES Act”), provides for loans to qualifying businesses for
amounts up to 2.5 times of the average monthly payroll expenses of
the qualifying business. The loans and accrued interest are
forgivable after eight weeks as long as the borrower uses the loan
proceeds for eligible purposes, including payroll, benefits, rent
and utilities, and maintains its payroll levels. The amount of loan
forgiveness will be reduced if the borrower terminates employees or
reduces salaries during the eight-week period. The unforgiven
portion of the PPP loan is payable over two years at an interest
rate of 1%, with a deferral of payments for the first six months.
We intend to use the proceeds for purposes consistent with the PPP.
While we currently believe that our use of the loan proceeds will
meet the conditions for forgiveness of the loan, we cannot assure
you that we will not take actions that could cause us to be
ineligible for forgiveness of the loan, in whole or in part.
We
will require additional financing in order to enable us to proceed
with our plan of operations, as discussed above, including
approximately an additional $120,000 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.
Critical
Accounting Policies
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.
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.
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.
In the current quarter the inventory was fully impaired due to
unfavorable weather conditions. In the early growing stages, the
plants were severely damaged by a sand storm and could not be
salvaged.
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.
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.
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.
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.
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.
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.
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 April 30, 2020 and 2019, the Company does not
have any potentially dilutive shares and as at July 31, 2019 and
2018, the Company does not have any potentially dilutive
shares.
Comprehensive
Loss
ASC
220, “Comprehensive Income”, establishes standards for the
reporting and display of comprehensive loss and its components in
the financial statements.
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.
Off-Balance
Sheet Arrangements
We
do not have any 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 investors.
SELECTED FINANCIAL
DATA
Not applicable because
we are a smaller reporting company.
SUPPLEMENTARY FINANCIAL
INFORMATION
Not applicable because
we are a smaller reporting company.
CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Previous
independent registered public accounting firm
On
August 15, 2019, Saturna Group Chartered Professional Accountants
LLP (“Saturna Group”) provided notice that they could no longer
provide audit services to the Company.
The
reports of Saturna Group on our financial statements for the fiscal
years ended July 31, 2018 and July 31, 2017 did not contain an
adverse opinion or a disclaimer of opinion, nor were such reports
qualified or modified as to uncertainty, audit scope or accounting
principles, except that the accountant’s reports of Saturna Group
on our financial statements as of and for the fiscal years ended
July 31, 2017 and 2018 stated that we have suffered losses from
operations and have a working capital deficit, and that these
conditions raise substantial doubt about our ability to continue as
a going concern.
During our fiscal years ended July 31, 2017 and 2018 and the
subsequent interim period through August 15, 2019, the date of the
notice from Saturna Group, we did not have any disagreement with
Saturna Group on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure.
During that time, there were no “reportable events” as set forth in
Item 304(a)(1) of Regulation S-K adopted by the Securities and
Exchange Commission, except that (i) the accountant’s reports of
Saturna Group on our financial statements as of and for the fiscal
years ended July 31, 2017 and 2018 stated that we have suffered
losses from operations and have a working capital deficit, and that
these conditions raise substantial doubt about our ability to
continue as a going concern, (ii) our disclosure controls and
procedures were not effective for the fiscal years ended July 31,
2017 and 2018, as reported in our annual reports on Form 10-K for
the fiscal years ended July 31, 2017 and 2018, and (iii) our
management identified material weaknesses in our internal control
over financial reporting for the fiscal years ended July 31, 2017
and 2018, as reported in our annual reports on Form 10-K for the
fiscal years ended July 31, 2017 and 2018. The material weaknesses
included weaknesses in procedures for control evaluation, a lack of
an audit committee, insufficient documentation of review
procedures, and insufficient information technology procedures. Our
board of directors have discussed these matters with Saturna Group,
and we authorized Saturna Group to respond fully to the inquiries
of our successor accountant, M&K CPAs, concerning these
matters.
New independent
registered public accounting firm
On
September 9, 2019, we engaged M&K CPAs as our independent
registered public accounting firm for our fiscal year ended July
31, 2019. The decision to engage M&K CPAs as our independent
registered public accounting firm was approved by our board of
directors.
During the two most recent fiscal years and through September 9,
2019, we have not consulted with M&K CPAs regarding either of
the following:
|
|
1.
|
the application of accounting principles to
any specified transaction, either completed or proposed, or the
type of audit opinion that might be rendered on our financial
statements, and neither a written report was provided to us nor
oral advice was provided that M&K CPAs concluded was an
important factor considered by us in reaching a decision as to the
accounting, auditing or financial reporting issue; or
|
|
|
2.
|
any matter that was either the subject of a
disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K and the related instructions thereto) or a
reportable event (as described in paragraph (a)(1)(v) of Item 304
of Regulation S-K).
|
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Not applicable because
we are a smaller reporting company.
5,100,000 Common
Shares
GREEN HYGIENICS
HOLDINGS INC.
PROSPECTUS
YOU SHOULD RELY ONLY ON
THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE HAVE REFERRED
YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO
SELL COMMON STOCK AND IS NOT SOLICITING AN OFFER TO BUY COMMON
STOCK IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Until ___________,
2020, all dealers that effect transactions in these securities
whether or not participating in this offering may be required to
deliver a prospectus. This is in addition to the dealer’s
obligation to deliver a prospectus when acting as underwriters and
with respect to their unsold allotments or subscriptions.
The Date of This
Prospectus Is: _______, 2020
PART II --
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item. 13 Other
Expenses Of Issuance And Distribution.
The estimated costs of
this offering are as follows:
|
Securities and Exchange Commission
registration fee
|
|
$ |
569.50 |
|
|
Transfer Agent Fees*
|
|
$ |
1,000 |
|
|
Accounting fees and expenses*
|
|
$ |
10,000 |
|
|
Legal fees and expenses*
|
|
$ |
10,000 |
|
|
Edgar filing, printing and engraving
fees*
|
|
$ |
4,000 |
|
|
TOTAL
|
|
$ |
25,569.50 |
|
*Indicates expenses
that have been estimated for filing purposes.
All amounts are
estimates other than the Securities and Exchange Commission’s
registration fee.
All amounts are
estimates other than the Commission’s registration fee. We are
paying all expenses of the offering listed above. No portion of
these expenses will be borne by the selling shareholders. The
selling shareholders, however, will pay any other expenses incurred
in selling their common stock, including any brokerage commissions
or costs of sale.
Item. 14
Indemnification Of Directors And Officers.
Nevada law provides for
discretionary indemnification for each person who serves as one of
our directors or officers. We may indemnify such individuals
against all costs, expenses and liabilities incurred in a
threatened, pending or completed action, suit or proceeding brought
because such individual is one of our officers or directors. Such
individual must have conducted himself in good faith and reasonably
believed that his conduct was in, or not opposed to, our best
interests. In a criminal action, he must not have had a reasonable
cause to believe his conduct was unlawful.
Article Eighth of our
Articles of Incorporation states as follows:
No director, officer or
shareholder of this corporation shall have personal liability for
damages for breach of any fiduciary duty as a director or officer
to the corporation, its shareholders or any other person except
for: (a) Acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law; or (B) the payment of
dividends in violation of NRS 78.300. Any amendment, repeal or
modification of the foregoing shall not adversely affect any right
or protection of a director of the corporation hereunder in respect
of any act or omission occurring prior to the time of such
amendment, modification or repeal.
Article IX of our
Bylaws provides for the following indemnification:
Indemnification
The Corporation may
indemnify and advance litigation expenses to its directors,
officers, employees and agents to the extent permitted by law, the
Articles or these Bylaws, and shall indemnify and advance
litigation expenses to its directors, officers, employees and
agents to the extent required by law, the Articles or these Bylaws.
The Corporation’s obligations of indemnification, if any, shall be
conditioned on the Corporation receiving prompt notice of the claim
and the opportunity to settle and defend the claim. The Corporation
may, to the extent permitted by law, purchase and maintain
insurance on behalf of an individual who is or was a director,
officer, employee or agent of the Corporation.
Disclosure
of Commission Position of Indemnification for Securities Act
Liabilities
Insofar as
indemnification for liabilities arising under the Act, may be
permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
Item
15. Recent Sales of Unregistered
Securities
During the year ended July 31, 2019, the Company issued 500,000
common shares to the Chief Development Officer of the Company in
exchange for services rendered. The issuance was exempt under
Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act”).
During the year ended July 31, 2019, the Company issued 500,000
common shares to the Business Development Officer of the Company in
exchange for services rendered. The issuance was exempt under
Section 4(a)(2) of the Securities Act.
During the year ended July 31, 2019, the Company issued 500,000
common shares to the Chief Technology Officer of the Company in
exchange for services rendered. The issuance was exempt under
Section 4(a)(2) of the Securities Act.
During the year ended July 31, 2019, the Company issued 50,000
common shares to the Head of Research and Development of a
subsidiary of the Company in exchange for services rendered. The
issuance was exempt under Section 4(a)(2) of the Securities
Act.
During the year ended July 31, 2019, the Company issued 200,000
common shares to the Chief Development Officer of the Company in
exchange for services rendered. The issuance was exempt under
Section 4(a)(2) of the Securities Act.
During the year ended July 31, 2019, the Company issued 200,000
common shares to the President of a subsidiary of the Company in
exchange for services rendered. The issuance was exempt under
Section 4(a)(2) of the Securities Act.
During the nine months ended April 30, 2020, the Company issued
250,000 common shares to the CEO of the Company in exchange for
consulting services. The issuance was exempt under Section 4(a)(2)
of the Securities Act.
During the nine months ended April 30, 2020, the Company issued
50,000 common shares to the Chief Agricultural Operations Manager
of the Company in exchange for consulting services. The issuance
was exempt under Section 4(a)(2) of the Securities Act.
During the nine months ended April 30, 2020, the Company issued
200,000 common shares to the Chief Project Manager of the Company
in exchange for consulting services. The issuance was exempt under
Section 4(a)(2) of the Securities Act.
During the nine months ended April 30, 2020, the Company issued
25,000 common shares to the Assistant Agricultural Operations
Manager of the Company in exchange for consulting services. The
issuance was exempt under Section 4(a)(2) of the Securities
Act.
During the nine months ended April 30, 2020, the Company issued
300,000 common shares to non-related parties in exchange for
consulting services. The issuances were exempt under Section
4(a)(2) of the Securities Act.
During the nine months ended April 30, 2020, the Company agreed to
issue 100,000 common shares to an independent director of the
Company in exchange for consulting services. The issuance was
exempt under Section 4(a)(2) of the Securities Act. The Company
issued 50,000 of the shares in April, 2020.
During the nine months ended April 30, 2020, the Company agreed to
issue 250,000 common shares to the Senior Vice President of
Corporate Development of the Company in exchange for consulting
services. The issuance was exempt under Section 4(a)(2) of the
Securities Act. The Company issued 125,000 of the shares in April,
2020.
During the nine months ended April 30, 2020, the Company agreed to
issue 250,000 common shares to a Senior Vice President of Business
Development – Agriculture Division of the Company in exchange for
consulting services. The issuance was exempt under Section 4(a)(2)
of the Securities Act. The Company issued 125,000 of the shares in
April, 2020.
During the nine months ended April 30, 2020, the Company issued
166,667 common shares to Triton Funds LP upon partial conversion of
the Note at the conversion price then in effect.
On
May 8, 2020, the Company issued 214,286 common shares to Triton
Funds LP in exchange for $60,000 debt. The shares were valued based
on OTC’s closing trade price on the date of the agreement.
On
May 22, 2020, the Company issued 178,571 common shares to Triton
Funds LP upon partial conversion of the Note at the conversion
price then in effect.
On
June 8, 2020, the Company issued 153,846 common shares to Triton
Funds LP upon partial conversion of the Note at the conversion
price then in effect.
On
June 18, 2020, the Company issued 200,000 common shares to Triton
Funds LP upon partial conversion of the Note at the conversion
price then in effect.
On
July 22, 2020, the Company issued 321,576 common shares to Triton
Funds LP upon partial conversion of the Note at the conversion
price then in effect.
On
September 2, 2020, the Company issued 500,000 common shares to
SRAX, Inc. (“SRAX”), in exchange for the right to use the SRAX
Sequire platform.
Effective December 19, 2019, we entered into a securities purchase
agreement dated as of December 19, 2019 (the “SPA”) with Triton
Funds, LP, an accredited investor (“Triton” or the “Buyer”),
pursuant to which the Company issued and sold to the Buyer (i) a
convertible promissory note (the “Note”) in the aggregate principal
amount of up to $750,000, due June 30, 2020, bearing interest at a
rate of ten percent (10%) per annum and convertible into shares of
the Company’s common stock at a conversion price of $2.50 per share
and (ii) a common stock purchase warrant (the “Warrant”),
exercisable for two (2) years, to purchase up to 250,000 shares of
the Company’s common stock at an exercise price of $3.00 per share,
for an aggregate purchase price of $600,000.
On
December 31, 2019, the Buyer paid an initial purchase price of
$100,000 at the initial closing. The purchase price balance of
$500,000 was paid on February 20, 2020. The Note is totally vested
and the Warrant initially vested only as to the right to purchase
41,667 shares. The original issue discount on the Note fully vested
is $150,000.
The
Note can be prepaid at any time by paying 110% of the then
outstanding principal, interest, default interest (if any), and any
other amounts then due under the Note. The Note is initially
convertible at a price per share equal to $2.50 (the “Fixed
Conversion Price”); provided, however, that during the continuance
of an event of default under the Note, the conversion price shall
be equal to 75% of the lowest trading price of the Company’s common
stock during the 30 trading days prior to conversion.
Concurrently therewith, we entered into a registration rights
agreement with the Buyer, pursuant to which we agreed to file a
registration statement with the SEC for the registration of the
secondary offering and resale of the shares issuable upon
conversion of the Note and exercise of the Warrant and to have the
registration statement declared effective by the SEC at the
earliest possible date. The registration was declared effective by
the SEC on February 11, 2020. The Buyer paid the purchase balance,
and the Note and Warrant fully vested, on February 20, 2020.
On
March 31, 2020, we and Triton entered into a Modification
Agreement, pursuant to which (i) we paid $250,000 of the principal
amount of the Note, bringing the principal balance of the Note to
$500,000, (ii) the maturity date of the Note was extended to August
20, 2020, (iii) the conversion price of the Note was established as
75% of the lowest trading price of our common stock during the 30
trading days prior to conversion, and (iv) the minimum volume
weighted price requirement of the Note was deleted.
From
April 2, 2020, through July 21, 2020, the Company issued in the
aggregate 1,234,946 shares of common stock to Triton for the
conversion of $328,786 of debt, and on August 14, 2020, the Company
paid $200,000 as payment in full all remaining amounts due to
Triton.
The
issuance was exempt under Section 4(a)(2) of the Securities
Act.
Item
16. Exhibits.
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
2.1
|
|
Definitive Agreement dated April 29, 2019 by and among between
Coastal Labs, LLC and Green Hygienics Holdings Inc. (1)
|
|
3.1
|
|
Articles of Incorporation of Silver Bay Resources, Inc. (now known
as Green Hygienics Holdings Inc.), incorporated by reference to our
Registration Statement on Form S-1 filed on September 17, 2008
(File No. 333-153510).
|
|
3.2
|
|
Certificate of Amendment of Silver Bay Resources, Inc. (now known
as Green Hygienics Holdings Inc.), incorporated by reference to our
Current Report on Form 8-K filed on July 1, 2010 (File No.
333-153510).
|
|
3.3
|
|
Articles of Merger dated June 1, 2012 between of Green Hygienics
Holdings Inc. and Takedown Entertainment, Inc., incorporated by
reference to our Current Report on Form 8-K filed on June 7,
2012.
|
|
3.4
|
|
Certificate of Change Pursuant to NRS 78.209, incorporated by
reference to our Current Report on Form 8-K filed on June 7,
2012.
|
|
3.5
|
|
Certificate of Amendment of Green Hygienics Holdings Inc.,
incorporated by reference to our Current Report on Form 8-K filed
on February 21, 2013.
|
|
3.6
|
|
Certificate of
Amendment of Green Hygienics Holdings Inc. (1)
|
|
3.7
|
|
Bylaws, incorporated by reference to our Registration Statement on
Form S-1 filed on September 17, 2008 (File No. 333-153510).
|
|
4.1
|
|
10% Convertible Promissory Note dated December 19, 2019,
incorporated by reference to our Current Report on Form 8-K filed
on January 15, 2020.
|
|
4.2
|
|
Common Stock Purchase Warrant dated December 19, 2019, incorporated
by reference to our Current Report on Form 8-K filed on January 15,
2020.
|
|
5.1
|
|
Legal Opinion of
Indeglia PC (1)
|
|
10.1
|
|
Securities Purchase Agreement by and between Green Hygienics
Holdings, Inc. and Triton Funds LP dated as of December 19, 2019,
incorporated by reference to our Current Report on Form 8-K filed
on January 15, 2020.
|
|
10.2
|
|
Registration Rights Agreement by and between Green Hygienics
Holdings, Inc. and Triton Funds LP dated as of December 19, 2019,
incorporated by reference to our Current Report on Form 8-K filed
on January 15, 2020.
|
|
10.3
|
|
Amending Agreement by and between Green Hygienics Holdings, Inc.
and Triton Funds LP dated as of January 8, 2020, incorporated by
reference to our Current Report on Form 8-K filed on January 15,
2020.
|
|
10.4
|
|
Standard Offer, Agreement and Escrow Instructions for Purchase of
Real Estate dated March 11, 2019 by and between Alita Capital, Inc.
or Assignee, and Kreutzkamp Trust, incorporated by reference to our
Current Report on Form 8-K filed on August 29, 2019.
|
|
10.5
|
|
Promissory Note Secured by Deed of Trust dated August 23, 2019,
incorporated by reference to our Current Report on Form 8-K filed
on January 31, 2020.
|
|
10.6
|
|
Secured Promissory Note dated August 15, 2019, incorporated by
reference to our Current Report on Form 8-K filed on January 31,
2020.
|
|
10.7
|
|
Standard Offer, Agreement and Escrow Instructions for Purchase of
Real Estate dated October 18, 2019 by and between Green Hygienics
Holdings, Inc. or Assignee, and Dos Molson LLC and Pat Reid,
incorporated by reference to our Current Report on Form 8-K filed
on October 25, 2019.
|
|
10.8
|
|
Consulting Agreement dated August 1, 2019 between Ronald Loudoun
and Green Hygienics Holdings Inc., incorporated by reference to our
Current Report on Form 8-K filed on January 31, 2020.
|
|
10.9
|
|
2011 Stock Plan, incorporated by reference to our Current Report on
Form 8-K filed on September 8, 2011.
|
|
10.10
|
|
Consulting Agreement dated February 15, 2020 between Todd Mueller
and Green Hygienics Holdings Inc., incorporated by reference to our
Form 10-Q filed on June 15, 2020.
|
|
10.11
|
|
Equity Financing
Agreement by and between Green Hygienics Holdings, Inc. and GHS
Investments, LLC, dated September 13, 2020 (1)
|
|
10.12
|
|
Registration
Rights Agreement by and between Green Hygienics Holdings, Inc. and
GHS Investments, LLC, dated September 13, 2020 (1)
|
|
14
|
|
Code of Ethics of Takedown Entertainment, Inc. (now known as Green
Hygienics Holdings Inc.), incorporated by reference to our Annual
Report on Form 10-K filed on October 27, 2011.
|
|
23.1
|
|
Consent of Saturna
Group (1)
|
|
23.2
|
|
Consent of M&K
CPAs (1)
|
|
23.3
|
|
Consent of Indeglia PC (filed as part of
Exhibit 5.1)
|
_________
(1) Filed herewith
Item
17. Undertakings.
The undersigned
registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
i.
To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
ii.
To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more
than 20% change in the maximum aggregate offering price set forth
in the “Calculation of Registration Fee” table in the effective
registration statement.
iii.
To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2)
That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3)
To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4)
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
(5)
Each prospectus filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be
part of and included in the registration statement as of the date
it is first used after effectiveness. Provided, however, that no
statement made in a registration statement or prospectus that is
part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of
contract of sale prior to such first use, supersede or modify any
statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such
document immediately prior to such date of first use.
(6)
That, for the purpose of determining liability of the registrant
under the Securities Act of 1933 to any purchaser in the initial
distribution of the securities: The undersigned registrant
undertakes that in a primary offering of securities of the
undersigned registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the securities
to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the
undersigned registrant will be a seller to the purchaser and will
be considered to offer or sell such securities to such
purchaser:
i.
Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant
to Rule 424;
ii.
Any free writing prospectus relating to the offering prepared by or
on behalf of the undersigned registrant or used or referred to by
the undersigned registrant;
iii.
The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the
undersigned registrant; and
iv.
Any other communication that is an offer in the offering made by
the undersigned registrant to the purchaser.
SIGNATURES
In accordance with the
requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-1 and authorized this
registration statement to be signed on its behalf by the
undersigned on September 14, 2020.
|
|
GREEN HYGIENICS HOLDINGS
INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Ronald Loudoun
|
|
|
|
|
Ronald Loudoun
|
|
|
|
|
President, Chief Executive Officer and
Director
|
|
|
|
|
(Principal Executive Officer)
|
|
POWER OF
ATTORNEY
KNOW ALL PERSONS BY
THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Ronald Loudoun, as his true and
lawful attorneys-in-fact and agents, each with full power of
substitution, for him or her in any and all capacities, to sign any
and all amendments to this registration statement (including
post-effective amendments), and to file the same, with all exhibits
thereto and other documents in connection therewith, with the SEC,
granting unto said attorneys-in-fact and agents, with full power of
each to act alone, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in
connection therewith, as fully for all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or his or their
substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the
requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following person in
the capacities and on the date indicated.
|
Signatures
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/ Ronald Loudoun
|
|
President, Chief Executive Officer,
|
|
September 14, 2020
|
|
Ronald Loudoun
|
|
and director
|
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
/s/ Todd Mueller
|
|
Chief Financial Officer
|
|
September 14, 2020
|
|
|
|
(Principal Accounting and Financial
Officer)
|
|
|
Green Hygienics (QB) (USOTC:GRYN)
Historical Stock Chart
From Dec 2020 to Jan 2021
Green Hygienics (QB) (USOTC:GRYN)
Historical Stock Chart
From Jan 2020 to Jan 2021
