NOTES TO FINANCIAL
STATEMENTS
OCTOBER 31,
2019
(UNAUDITED)
NOTE 1: DESCRIPTION
OF BUSINESS
GRN Holding
Corporation (formerly Discovery Gold Corporation), a Nevada corporation, (“GRN,” “the Company,” “We,"
"Us" or “Our’) is a publicly-quoted shell company seeking to create value for its shareholders by seeking
out acquisitions, mergers and business combinations.
On June 20,
2019, GRN Funds, LLC, a Washington limited liability company, and its manager and Chief Executive Officer, Justin Costello, purchased
a total of 139 million shares of the Company’s common stock representing 55.65% of its issued and outstanding shares, in
a private transaction with Stephen Flechner and David Cutler. As a result of the closing of the transaction on June 25, 2019,
GRN Funds, LLC and Mr. Costello acquired a majority of the issued shares eligible to vote. As a condition to the closing of the
transaction, the Company’s Directors Mr. Stephen Flechner and Mr. Ralph Shearing resigned, and Mr. Flechner resigned as
Chief Executive Officer and President, and Mr. Justin Costello was concurrently named Director of the Company, President and Chief
Executive Officer. As a term and condition of the transaction, Messrs. Flechner and Cutler agreed to satisfy Company outstanding
liabilities totaling $111,579 and forgive outstanding liabilities of $86,147.
On July 16,
2019, the Board of Directors met and unanimously approved a resolution recommending an amendment to the Company’s articles
of incorporation to change the name of the Company to GRN Holding Corporation, and to file a Corporate Action Notification Form
with FINRA to formally change the Company’s name and trading symbol. The Board of Directors thereafter called for and convened
a special meeting of the stockholders. On July 16, 2019, stockholders beneficially owning a majority of the shares eligible to
vote consented to the amendment of the Company’s articles of incorporation to change its name to GRN Holding Corporation
and authorized the filing of a Corporate Action Notification Form with FINRA to formally change the Company’s name and trading
symbol.
On August 19,
2019, the Company filed a formal amendment to its articles of incorporation with the Nevada Secretary of State formally changing
its name to GRN Holding Corporation.
On October 17,
2019, the Company entered into an executive employment agreement with Justin Costello to secure his services as President, Secretary,
Treasurer and Director of the Company. The term of the agreement is for one year, which automatically renews for one-year terms.
Mr. Costello agreed to an annual salary of $1.00.
On November
5, 2019, FINRA notified the Company of its processing and completion of the Corporate Action Notification Form to change the Company’s
name to GRN Holding Corporation, and the concurrent issuance of the new trading symbol: “GRNF” that is currently listed
on the OTC Markets.
NOTE 2. GOING
CONCERN
Our financial
statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern,
which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. We have no ongoing
business or income. For the six months ended October 31, 2019, we reported a net loss of $25,180, and had an accumulated deficit
of $8,672,276 as of October 31, 2019. These conditions raise substantial doubt about our ability to continue as a going concern.
The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification
of assets or the amounts and classification of liabilities that may result from the outcome of these uncertainties. Our ability
to continue as a going concern is dependent upon our ability to raise additional debt or equity funding to meet our ongoing operating
expenses and ultimately in merging with another entity with experienced management and profitable operations. No assurances can
be given that we will be successful in achieving these objectives.
NOTE 3. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Basis of
Presentation
The summary
of significant accounting policies is presented to assist in the understanding of the financial statements. These policies conform
to accounting principles generally accepted in the United States of America (“US GAAP”) and have been consistently
applied. The Company has elected an April 30 year-end.
Interim Financial
Statements
The accompanying
unaudited interim condensed financial statements have been prepared in accordance with US GAAP for interim financial information
in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required
by US GAAP for complete financial statements. The accompanying condensed financial statements have been prepared by the Company
without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present
fairly the financial position, results of operations, and cash flows at October 31, 2019 and for the related periods presented.
The results for the three and six months ended October 31, 2019 are not necessarily indicative of the results of operations for
the full year. These financial statements and related footnotes should be read in conjunction with the financial statements and
footnotes thereto for the year ended April 30, 2019 included in the Form 10K, filed with the Securities and Exchange Commission
on August 14, 2019.
Use of Estimates
The
preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Cash and
Cash Equivalents
We
maintain cash balances in a non-interest-bearing account that currently does not exceed federally insured limits. For the purpose
of the statements of cash flows, all highly liquid investments with a maturity of three months or less are considered to be cash
equivalents. As of October 31, 2019 and April 30, 2019, our cash balance was $0.
Fair Value
Measurements
ASC
Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), provides a comprehensive framework for measuring fair
value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a
definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority
to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC
820 defines the hierarchy as follows:
Level
1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types
of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities
listed on the New York Stock Exchange.
Level
2 – Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of
the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded
securities or contracts or priced with models using highly observable inputs.
Level
3 – Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities
included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective
models and forecasts used to determine the fair value of financial transmission rights.
Our financial
instruments consist of bank overdraft, accounts payable, accrued expenses - related parties and loans – related parties. The
carrying amount of our bank overdraft, accounts payable, accrued expenses- related parties and loans payable – related party
approximates their fair values because of the short-term maturities of these instruments
Related Party
Transactions
A related party
is generally defined as (i) any person that holds 10% or more of our membership interests including such person's immediate families,
(ii) our management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with us,
or (iv) anyone who can significantly influence our financial and operating decisions. A transaction is considered to be a related
party transaction when there is a transfer of resources or obligations between related parties. See Notes 5, 6 and 7 below for
details of related party transactions in the period presented.
Income Taxes
The provision
for income taxes is computed using the asset and liability method, under which 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 losses and tax credit carry-forwards. Deferred tax assets and liabilities are measured using the
currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be
realized or settled. We record a valuation allowance to reduce deferred tax assets to the amount that is believed more likely
than not to be realized.
Net Loss
per Share Calculation
Basic
net loss per common share ("EPS") is computed by dividing loss available to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted
average shares outstanding, assuming all dilutive potential common shares were issued. Dilutive loss per share excludes all potential
common shares if their effect is anti-dilutive.
No
potentially dilutive debt or equity instruments were issued or outstanding during the three-
and six-month periods ended October 31, 2019 and 2018.
Recently-Issued
Accounting Pronouncements
We
have reviewed all the recently-issued, but not yet effective, accounting pronouncements and do not believe any of these pronouncements
will have a material impact on our financial statements.
NOTE 4. ACCOUNTS
PAYABLE
As of October
31, 2019 and April 30, 2019, our balance of accounts payable was $12,618 and $129,360, respectively.
Effective
June 25, 2019, as a condition of the change of control in the Company described above, our former principal shareholders agreed
to satisfy outstanding accounts payable totaling $101,579 by way of capital contributions to the Company. These capital contributions
have been recognized in additional paid in capital. Contemporaneously with these payments, unrelated creditors
who were owed a total of $125,000 agreed to accept payment of $92,619 in full and final of their liabilities. According we recognized
a gain of $32,381 on the settlement of these liabilities as other income.
NOTE 5. ACCRUALS
- RELATED PARTIES
As of October
31, 2019 and April 30, 2019, our balance of accrual – related parties was $0 and $77,218, respectively.
Effective
June 25, 2019, as a condition of the change of control in the Company described above, our former principal shareholders agreed
to settle the entire outstanding balance of accruals – related parties by payment of $10,000 by way of capital contributions
to the Company and forgiveness of accruals- related parties of $77,218. Both the capital contribution of $10,000 and the forgiveness
of accruals-related parties of $77,218 have been recognized in additional paid in capital.
NOTE 6. LOANS-
RELATED PARTIES
As of October
31, 2019 and April 30, 2019, our balance of loans – related parties was $29,122 and $7,697, respectively.
Between May
1, 2019 and June 25, 2019, one of our former principal shareholders advanced to us $1,232 to fund our working capital needs
Effective
June 25, 2019, as a condition of the change of control in the Company described above, our former principal shareholders agreed
to forgive the total balance of loans- related parties of $8,929. The forgiveness of the balance of $8,929 loan -related parties
has been recognized in additional paid-in capital.
During the period
from June 26, 2019 to October 31, 2019, our new principal shareholder, GRN Funds, LLC, advanced $29,122 to us by way of loan to
fund our working capital requirements. The loan was unsecured, interest free and due on demand.
NOTE 7. SHAREHOLDERS’
DEFICIT
Preferred
Stock
As of October
31, 2019 and April 30, 2019, we were authorized to issue 10,000,000 shares of preferred stock with a par value of $0.001.
As of October
31, 2019 and April 30, 2019, no shares of preferred stock were issued and outstanding.
Common Stock
As of October
31, 2019 and April 30, 2019, we were authorized to issue 250,000,000 shares of common stock with a par value of $0.001.
No shares of
common stock were issued during the three-and six-month periods ended October 31, 2019 and 2018.
As of October
31, 2019 and April 30, 2019, 249,777,311 shares of common stock were issued and outstanding.
Additional
Paid-in Capital
Effective
June 25, 2019, as a condition of the change of control in the Company described above, our former principal shareholders agreed
to satisfy outstanding accounts payable totaling approximately $101,579 and accruals- related party of $10,000 by way of capital
contributions to the Company. These capital contributions totaling $111,579 have been recognized in additional paid in capital.
In
addition, effective June 25, 2019, as a condition of the change of control in the Company described above, our former principal
shareholders agreed to forgive accruals-related parties of $77,218 and loans-related parties of $8,829. The total forgiveness
of $86,147 related party debt has been recognized in additional paid in capital.
NOTE 8. SUBSEQUENT
EVENTS
The Company
evaluated subsequent events after October 31, 2019, in accordance with FASB ASC 855 Subsequent Events, through the
date of the issuance of these financial statements and has determined there have been no subsequent events for which disclosure
is required other than as discussed below:
On November
5, 2019, FINRA notified the Company of its processing and completion of the Corporate Action Notification Form to change the Company’s
name to GRN Holding Corporation, and the concurrent issuance of the new trading symbol: “GRNF” that is currently listed
on the OTC Markets.
On November
14, 2019, the Company announced it signed non-binding letters of intent to acquire Pacific Banking Corp., Pacific Merchant Processing,
Inc., Microcap Advisors, LLC, SMLY, Inc. (d/b/a: 7 Point Financial and 9 Square Consulting), Soulshine Development Group, Inc.,
Soulshine CBD, Inc., One Source CBD, Mystic Ranch Development Co., LLC, Magic Beans Hemp, LLC and Sunshine Hemp, Inc. The closing
of the transactions are subject to the completion of due diligence and the execution of material definitive agreements.
On December
9, 2019, the Company issued 66,666 shares of common stock to Nancy Norton for services rendered valued at $65,999.
On December
11, 2019, the Company announced it signed a non-binding letter of intent to acquire Squad Drone, located in Bellevue, Washington.
The closing of the transaction is subject to the completion of due diligence and the execution of a material definitive agreement.
Subsequent to
October 31, 2019, our principal shareholder, GRN Funds LLC, has provided a further $7,770 to us by way of loan to fund our operating
expenses.