UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

☒   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended April 30, 2021

 

or

 

☐   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ___________ to ___________

 

Commission File Number 000-54338

 

GREEN HYGIENICS HOLDINGS INC.

(Exact name of registrant as specified in its charter)

 

Nevada

 

26-2801338

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification No.)

 

13795 Blaisdell Place, Suite 202, Poway, CA 92064

(Address of principal executive offices) (Zip Code)

 

1-855-802-0299

(Registrant’s telephone number, including area code)

 

N/A

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

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

None

 

N/A

 

N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒     No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒     No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-Accelerated filer

Emerging growth company

Smaller reporting company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐      No ☒

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

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

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 44,126,138 common shares issued and outstanding as of June 14, 2021.

 

 

 

 

TABLE OF CONTENTS

 

 

 

ITEM 1

Financial Statements (Unaudited)

 

3

 

 

Condensed Consolidated Balance Sheets as of April 30, 2021, and July 31, 2020 (Unaudited)

 

3

 

 

Condensed Consolidated Statements of Operations for the three and nine months ended April 30, 2021, and 2020 (Unaudited)

 

4

 

 

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and nine months ended April 30, 2021, and 2020 (Unaudited)

 

5

 

 

Condensed Consolidated Statements of Cash Flows for the nine months ended April 30, 2021, and 2020 (Unaudited)

 

6

 

 

Notes to Interim Unaudited Condensed Consolidated Financial Statements

 

7

 

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

 

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

 

29

 

ITEM 4.

Controls and Procedures

 

29

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

ITEM 1.

Legal Proceedings

 

30

 

ITEM 1A.

Risk Factors

 

30

 

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

30

 

ITEM 3.

Defaults Upon Senior Securities

 

30

 

ITEM 4.

Mine Safety Disclosures

 

30

 

ITEM 5.

Other Information

 

30

 

ITEM 6.

Exhibits

 

31

 

 

 

 

 

 

SIGNATURES

 

32

 

 
2

Table of Contents

 

GREEN HYGIENICS HOLDINGS INC.

Condensed Consolidated Balance Sheets

(Expressed in U.S. dollars)

(Unaudited)

   

 

 

April 30,

 

 

July 31,

 

 

 

2021

 

 

2020

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash

 

$ 79,606

 

 

$ 40,538

 

Accounts receivable

 

 

80,510

 

 

 

-

 

Prepaid expenses (Note 4)

 

 

155,383

 

 

 

-

 

Inventory

 

 

1,014,240

 

 

 

-

 

Total Current Assets

 

 

1,329,739

 

 

 

40,538

 

 

 

 

 

 

 

 

 

 

Fixed Assets, net (Note 5)

 

 

5,189,459

 

 

 

4,727,464

 

Intangible assets

 

 

60,000

 

 

 

-

 

Total Assets

 

$ 6,579,198

 

 

$ 4,768,002

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$ 944,321

 

 

$ 1,019,027

 

Accounts payable – related parties (Note 8)

 

 

506,297

 

 

 

302,144

 

Accrued interest payable

 

 

39,220

 

 

 

158,416

 

Deferred revenue

 

 

-

 

 

 

15,973

 

Current portion of long-term debt (Note 6)

 

 

896,968

 

 

 

510,311

 

Convertible note payable (Note 7)

 

 

-

 

 

 

171,213

 

Due to related parties (Note 8)

 

 

2,673,292

 

 

 

2,405,306

 

Total Current Liabilities

 

 

5,060,098

 

 

 

4,582,390

 

 

 

 

 

 

 

 

 

 

Long Term Liabilities

 

 

 

 

 

 

 

 

Notes payable (less current portion) (Note 6)

 

 

73,399

 

 

 

108,132

 

Mortgage payable (Note 6)

 

 

2,750,000

 

 

 

2,750,000

 

Second mortgage payable (Note 6)

 

 

1,760,000

 

 

 

1,760,000

 

Third mortgage payable, net of discount (Note 6)

 

 

2,653,763

 

 

 

-

 

Total Long-Term Liabilities

 

 

7,237,162

 

 

 

4,618,132

 

 

 

 

 

 

 

 

 

 

Total Current and Long-Term Liabilities

 

 

12,297,260

 

 

 

9,200,522

 

 

 

 

 

 

 

 

 

 

Nature of operations and continuance of business (Notes 1 and 2)

 

 

 

 

 

 

 

 

Commitments (Note 10)

 

 

 

 

 

 

 

 

Subsequent events (Note 13)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholder’s Deficit

 

 

 

 

 

 

 

 

Common stock, 375,000,000 shares authorized, $0.001 par value 43,183,638 and 39,577,781 shares issued and outstanding respectively

 

 

43,139

 

 

 

39,578

 

Stock payable

 

 

1,119,375

 

 

 

192,000

 

Additional paid-in capital

 

 

49,762,688

 

 

 

45,830,289

 

Deficit

 

 

(56,643,264 )

 

 

(50,494,387 )

Total Stockholder’s Deficit

 

 

(5,718,062 )

 

 

(4,432,520 )

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholder’s Deficit

 

$ 6,579,198

 

 

$ 4,768,002

 

  

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

 

 
3

Table of Contents

 

GREEN HYGIENICS HOLDINGS INC.

Condensed Consolidated Statements of Operations

(Expressed in U.S. dollars)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

April 30,

 

 

April 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Revenue

 

$ -

 

 

$ 52,800

 

 

$ 40,954

 

 

$ 108,574

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

2,412,151

 

 

 

1,096,990

 

 

 

5,490,980

 

 

 

4,940,927

 

Total Operating Expenses

 

 

2,412,151

 

 

 

1,096,990

 

 

 

5,490,980

 

 

 

4,940,927

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss Before Other Income (Expense)

 

 

(2,412,151 )

 

 

(1,044,190 )

 

 

(5,450,026 )

 

 

(4,832,353 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(297,048 )

 

 

(509,727 )

 

 

(698,851 )

 

 

(785,106 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

$ (2,709,199 )

 

$ (1,553,917 )

 

$ (6,148,877 )

 

$ (5,617,459 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss Per Share, Basic and Diluted

 

$ (0.06 )

 

$ (0.04 )

 

$ (0.15 )

 

$ (0.15 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

42,839,256

 

 

 

37,534,687

 

 

 

41,971,046

 

 

 

37,496,856

 

 

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

 

 
4

Table of Contents

 

GREEN HYGIENICS HOLDINGS, INC.

Condensed Consolidated Statements of Stockholders' Equity (Deficit)

(Unaudited)

 

 

 

Common Stock

 

 

Stock

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Total Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Payable

 

 

 Capital

 

 

 Deficit

 

 

Deficit

 

Balance at July 31, 2020

 

 

39,577,781

 

 

$ 39,578

 

 

$ 192,000

 

 

$ 45,830,289

 

 

$ (50,494,387 )

 

$ (4,432,520 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for services

 

 

2,000,000

 

 

 

2,000

 

 

 

(92,000 )

 

 

1,994,050

 

 

 

-

 

 

 

1,904,050

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Imputed interest

 

 

-

 

 

 

-

 

 

 

-

 

 

 

76,778

 

 

 

-

 

 

 

76,778

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for prepaid expenses

 

 

150,857

 

 

 

151

 

 

 

-

 

 

 

155,232

 

 

 

-

 

 

 

155,383

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for acquisition of fixed assets

 

 

190,000

 

 

 

190

 

 

 

-

 

 

 

188,510

 

 

 

-

 

 

 

188,700

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,429,721 )

 

 

(2,429,721 )

Balance October 31, 2020

 

 

41,918,638

 

 

 

41,919

 

 

 

100,000

 

 

 

48,244,859

 

 

 

(52,924,108 )

 

 

(4,537,330 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for services

 

 

375,000

 

 

 

375

 

 

 

-

 

 

 

383,625

 

 

 

-

 

 

 

384,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Imputed interest

 

 

-

 

 

 

-

 

 

 

-

 

 

 

37,907

 

 

 

-

 

 

 

37,907

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,009,957 )

 

 

(1,009,957 )

Balance at January 31, 2021

 

 

42,293,638

 

 

 

42,294

 

 

 

100,000

 

 

 

48,666,391

 

 

 

(53,934,065 )

 

 

(5,125,380 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for services

 

 

785,000

 

 

 

785

 

 

 

-

 

 

 

952,965

 

 

 

-

 

 

 

953,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for Asset Purchase Agreement

 

 

60,000

 

 

 

60

 

 

 

-

 

 

 

69,540

 

 

 

-

 

 

 

69,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock to be isssued for services

 

 

-

 

 

 

-

 

 

 

1,019,375

 

 

 

-

 

 

 

-

 

 

 

1,019,375

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Imputed interest

 

 

-

 

 

 

-

 

 

 

-

 

 

 

73,792

 

 

 

-

 

 

 

73,792

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,709,199 )

 

 

(2,709,199 )

Balance at April 30, 2021

 

 

43,138,638

 

 

$ 43,139

 

 

$ 1,119,375

 

 

$ 49,762,688

 

 

$ (56,643,264 )

 

$ (5,718,062 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at July 31, 2019

 

 

36,657,835

 

 

 

36,658

 

 

 

-

 

 

 

42,089,489

 

 

 

(42,766,142 )

 

 

(639,995 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for services

 

 

825,000

 

 

 

825

 

 

 

-

 

 

 

1,220,175

 

 

 

-

 

 

 

1,221,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Imputed interest

 

 

-

 

 

 

-

 

 

 

-

 

 

 

18,633

 

 

 

-

 

 

 

18,633

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,194,725 )

 

 

(2,194,725 )

Balance October 31, 2019

 

 

37,482,835

 

 

 

37,483

 

 

 

-

 

 

 

43,328,297

 

 

 

(44,960,867 )

 

 

(1,595,087 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Imputed interest

 

 

-

 

 

 

-

 

 

 

-

 

 

 

36,989

 

 

 

-

 

 

 

36,989

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount on warrants

 

 

-

 

 

 

-

 

 

 

-

 

 

 

85,000

 

 

 

-

 

 

 

85,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares to be issued for services

 

 

-

 

 

 

-

 

 

 

600,000

 

 

 

-

 

 

 

-

 

 

 

600,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,868,817 )

 

 

(1,868,817 )

Balance at January 31, 2020

 

 

37,482,835

 

 

 

37,483

 

 

 

600,000

 

 

 

43,450,286

 

 

 

(46,829,684 )

 

 

(2,741,915 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for services

 

 

300,000

 

 

 

300

 

 

 

-

 

 

 

599,700

 

 

 

-

 

 

 

600,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount on warrants

 

 

-

 

 

 

-

 

 

 

-

 

 

 

343,700

 

 

 

-

 

 

 

343,700

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for debt conversion

 

 

166,667

 

 

 

167

 

 

 

-

 

 

 

49,833

 

 

 

-

 

 

 

50,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Imputed interest

 

 

-

 

 

 

-

 

 

 

-

 

 

 

39,212

 

 

 

-

 

 

 

39,212

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,553,917 )

 

 

(1,553,917 )

Balance at April 30, 2020

 

 

37,949,502

 

 

$ 37,950

 

 

$ 600,000

 

 

$ 44,482,731

 

 

$ (48,383,601 )

 

$ (3,262,920 )

  

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

 

 
5

Table of Contents

 

GREEN HYGIENICS HOLDINGS INC.

Condensed Consolidated Statements of Cash Flows

(Expressed in U.S. dollars)

(unaudited)

 

 

 

Nine months ended April 30,

 

 

 

2021

 

 

2020

 

Operating Activities

 

 

 

 

 

 

Net loss

 

$ (6,148,877 )

 

$ (5,617,459 )

Imputed interest

 

 

188,477

 

 

 

94,834

 

Inventory impairment

 

 

-

 

 

 

306,450

 

Depreciation expense

 

 

98,530

 

 

 

55,923

 

Share based compensation

 

 

4,261,175

 

 

 

2,421,000

 

Amortization of discount on note payable

 

 

11,438

 

 

 

365,412

 

Non-cash interest

 

 

715

 

 

 

-

 

Common stock issued for vehicles

 

 

1,500

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses

 

 

-

 

 

 

-

 

Inventory

 

 

(613,683 )

 

 

-

 

Accrued interest payable

 

 

(119,196 )

 

 

21,240

 

Accounts payable and accrued liabilities

 

 

(187,106 )

 

 

435,472

 

Accounts payable - related party

 

 

204,153

 

 

 

237,083

 

Deferred revenue

 

 

(15,973 )

 

 

15,973

 

Net Cash Used In Operating Activities

 

 

(2,318,847 )

 

 

(1,664,071 )

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

 

Cash paid for purchase of assets

 

 

(35,000 )

 

 

-

 

Cash paid for purchase of fixed assets

 

 

(291,255 )

 

 

(118,586 )

Net Cash Used In Investing Activities

 

 

(326,255 )

 

 

(118,586 )

 

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

 

Payments on Convertible Note Payable

 

 

(171,213 )

 

 

-

 

Proceeds from notes payable

 

 

1,502,326

 

 

 

297,638

 

Proceeds from discounted notes payable

 

 

-

 

 

 

585,000

 

Proceeds from SBA Loan Payable

 

 

-

 

 

 

444,850

 

Payments to related parties

 

 

(470,229 )

 

 

-

 

Payments on notes payable

 

 

(24,989 )

 

 

-

 

Payments on discounted notes payable

 

 

-

 

 

 

(250,000 )

Principal Payments on Agreements payable

 

 

(29,225 )

 

 

(23,825 )

Principal Payments on Defaulted Loan Payable

 

 

-

 

 

 

(130,261 )

Advances from related parties

 

 

1,877,500

 

 

 

1,084,239

 

Net Cash Provided by Financing Activities

 

 

2,684,170

 

 

 

2,007,641

 

 

 

 

 

 

 

 

 

 

Increase in cash

 

 

39,068

 

 

 

224,984

 

Cash, Beginning of Period

 

 

40,538

 

 

 

3,253

 

Cash, End of Period

 

$ 79,606

 

 

$ 228,237

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosures:

 

 

 

 

 

 

 

 

Interest paid

 

$ 565,353

 

 

$ 397,944

 

Income taxes paid

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

Non-Cash Transactions

 

 

 

 

 

 

 

 

Shares issued for stock payable

 

 

92,000

 

 

 

 

Shares issued for vehicles

 

 

188,700

 

 

 

 

Shares issued for prepaid expenses

 

 

155,383

 

 

 

 

Non-cash repayment of related party payable

 

 

1,140,000

 

 

 

 

Reclass from long term debt to short term

 

 

5,509

 

 

 

 

Assets financed through debt

 

 

518,537

 

 

 

 

Shares issued for Castillo assets

 

 

69,600

 

 

 

 

Equipment financed through debt

 

 

 

 

 

183,031

 

Land acquired through debt

 

 

 

 

 

2,750,000

 

Deposit on acquisition of property

 

 

 

 

 

100,000

 

Equipment purchased on accounts payable

 

 

 

 

 

46,423

 

Shares issued for conversion of debt

 

 

 

 

 

50,000

 

Discount on warrants

 

 

 

 

 

428,700

 

 

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

 

 
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Table of Contents

 

GREEN HYGIENICS HOLDINGS INC.

Notes to the Condensed Consolidated Financial Statements

April 30, 2021

(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 Intellectual Property, 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.

 

A novel strain of coronavirus (“COVID-19”) continues to spread and severely impact the economy of the United States and other countries around the world. Federal, state, and local governmental policies and initiatives designed to reduce the transmission of COVID-19 have resulted in, among other things, matters 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, the adoption of work-from-home or shelter-in-place policies. and to generate sufficient cash flow to operate our business and meet our obligations. The COVID-19 impact on the Company’s operations is consistent with the overall industry and publicly issued statements from competitors, partners, and vendors.

 

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.

 

The extent to which our businesses may be affected by the COVID-19 pandemic will largely depend on both current and future developments, including its duration, spread, and treatment, including vaccines in various stages of development and federal approval, and related work and travel advisories and restrictions, all of which are highly uncertain and cannot be reasonably predicted at this time.

 

2. Going Concern and Management’s Plans

 

Going Concern

 

These condensed consolidated unaudited 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 limited revenues 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, 2021, the Company has a working capital deficiency of $3,730,359 and has an accumulated deficit of $56,643,264. 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.

 

 
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Table of Contents

 

Management’s Plans

 

As discussed in Note 1, the Company business model includes generating revenues from the sale of hemp and premium-grade CBD products, creating trusted global consumer brands, developing valuable Intellectual Property, and growing the Company rapidly through strategic acquisitions. Recent events in the execution of this plan include:

 

 

·

On February 24, 2021, TruLife Labs LLC (“TLL”) and TruLife Biotech LLC (“TLB”) were formed and Articles of Organization with the State of California were filed. The Company is the sole member of TLL and TLB and Mr. Loudoun is the Manager of both.

 

 

 

 

·

On March 2, 2021, the Company entered into an Asset Purchase Agreement (the “Primordia APA”) with Primordia, LLC (“Primordia”), a Nevada limited liability company (see Note 12).

 

 

 

 

·

On March 15, 2021, the Company entered into an Asset Purchase Agreement (the “Castillo APA”) with Castillo Seed L.L.C. (“Castillo”), a Puerto Rico limited liability company (see Note 12).

 

 

 

 

·

On April 14, 2021, the Company entered into an Asset Purchase Agreement (the “Admay APA”) with Admay, Inc (“Admay”), a Wyoming company.

 

On February 15, 2021, the Company engaged (the “Engagement Agreement”), Trimark Capital Partners (“Trimark”), a Grand Cayman company to provide agent services for the sale and issuance of up to $100 million in a series of bonds. Any proceeds will be used to acquire real estate assets and advance the company’s business development plans.

 

3. 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. Certain amounts from the July 31, 2020 annual report have been reclassified to conform to the presentation used in the current period.

 

(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.

 

 
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Table of Contents

 

(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 July 2020, the Company planted its first large scale hemp crops for cultivation. The planting covers approximately 120 acres of land and three greenhouses. During the nine months ended April 30, 2021, the Company purchased additional seeds and nutrients to plant in its greenhouses to be later transferred into the fields. The Company determined to recognize these costs as inventory as of April 30, 2021. These costs included approximately $61,000 for seeds and nutrients and $552,000 on labor to prepare the fields, plant seeds, and to begin harvesting. The Company anticipates harvesting and beginning to market and sell these crops during the fiscal year ending July 31, 2021.

 

(f) Intangible Assets

 

During the nine months ended April 30, 2021, the Company acquired trademarks of $60,000 comprised of $35,000 for the Primordia trademark (see Note 2) and $25,000 for the American Hemp and Diablo trademarks (see Note 2).In accordance with ASC 350, “Intangibles—Goodwill and Other,” goodwill and other intangible assets with indefinite lives are no longer subject to amortization but are tested for impairment annually or whenever events or changes in circumstances indicate that the asset might be impaired.

 

(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.

 

 
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Table of Contents

 

(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 and Deferred Revenue

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) which amended the existing accounting standards for revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. As of the date of this report, the Company has not recognized any revenue related to the hemp production business.

 

For the nine months ended April 30, 2021, revenue recognized of $40,954 is related to the land use rental income from San Diego Gas and Electric Company (“SDGE”). SDGE vacated the property in October 2020. As of July 31, 2020, the Company recorded deferred revenue of $15,973, representing a portion of the payment received in July 2020, that pertains to August 2020 rental income and accordingly has been recognized and is included in the revenue for the nine months ended April 30, 2021.

 

 
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Table of Contents

 

(m) Leases

 

The Company evaluates lease assets and lease liabilities, (if any), pursuant to ASC 842, 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.

 

(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, 2021, 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 three and nine months ended April 30, 2021, 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.

 

4. Prepaid expenses

 

On September 13, 2020, and concurrently with the execution of the Financing Agreement, the Company issued to GHS Investments, LLC, 150,857 restricted shares of its common stock (“Commitment Shares”) to offset transaction costs. The shares were valued at $155,383 based on OTC’s closing trade price on the date of the agreement and were recorded as a prepaid expense on the condensed consolidated balance sheets presented herein. The expense will be recognized upon the Company selling shares of common stock to GHS under the equity line (see Note 9 (o)).

 

5. 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.

 

 
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Table of Contents

 

Fixed assets consist of the following:

 

 

 

Useful Life

 

Balance at

July 31,

2020

 

 

Additions

 

 

Accumulated Depreciation

 

 

Balance at

April 30,

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production equipment

 

5 years

 

$ 359,909

 

 

$ 267,770

 

 

$ (144,402 )

 

$ 483,277

 

Furniture and office equipment

 

5 years

 

 

8,102

 

 

 

-

 

 

 

(2,838 )

 

 

5,264

 

Buildings and improvements

 

15 years

 

 

225,167

 

 

 

292,755

 

 

 

(29,366 )

 

 

488,556

 

Land

 

 

 

 

4,212,362

 

 

 

-

 

 

 

-

 

 

 

4,212,362

 

 

 

 

 

$ 4,805,540

 

 

$ 560,525

 

 

$ (176,606 )

 

$ 5,189,459

 

 

Fixed asset costs are being depreciated using the straight-line method based on the useful life of the asset. Depreciation expenses was $98,530 and $55,923 for the nine months ended April 30, 2021, and 2020, respectively.

 

6. Loans Payable

 

The Company has the following notes payable outstanding as of April 30, 2021, and July 31, 2020:

 

 

 

April 30,

2021

 

 

July 31,

2020

 

Promissory Note payable, interest at 10%, matured December 19, 2019, in default at July 31, 2020

 

$

 -0-

 

 

$ 24,989

 

Secured Promissory Note payable, interest at 15%, matures August 15, 2024.

 

 

1,760,000

 

 

 

1,760,000

 

Secured Promissory Note payable, interest at 6%, matures August 23, 2024

 

 

2,750,000

 

 

 

2,750,000

 

Promissory Note, interest at 5.66%, matures October 1, 2023

 

 

119,379

 

 

 

148,604

 

Paycheck Protection Program loan

 

 

444,850

 

 

 

444,850

 

Secured Promissory Note payable, interest at 15%, matures June 15, 2022, net of discount

 

 

2,653,764

 

 

-0-

 

Promissory Note, interest at 4.75%, matures March 2, 2022

 

 

406,137

 

 

 

          -0-

 

Sub- total notes payable, net of discount

 

 

8,134,130

 

 

 

5,128,443

 

Less long-term portion

 

 

7,237,162

 

 

 

4,618,132

 

Current portion of notes payable

 

$ 896,968

 

 

$ 510,311

 

 

On June 18, 2019, the Company entered into a Promissory Note with a face value of $155,250, with a non-related third party. The note was initially due July 19, 2019, however the parties agreed to extend the note for six months pursuant to the terms of the note. The extension also carried a 10% interest rate.

 

 
12

Table of Contents

 

On August 15, 2019, the Company entered into a Secured Promissory Note with a face value of $1,760,000, with a non-related party. The note requires monthly payments of interest only at the rate of 15% per annum. The note is 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.

 

On August 23, 2019, the Company entered into a Secured Promissory Note with a face value of $2,750,000, with a non-related party. The note requires monthly payments of interest only at the rate of 6% per annum. The note is 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 September 12, 2019, the Company entered into a Promissory Note with a face value of $183,031 with a non-related party for the purchase of equipment. The note requires monthly payments of $4,290 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. Of the amount owed, $45,981 is included in current liabilities and $73,398 is included in long-term liabilities on the consolidated balance sheet resented herein.

 

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 (the “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 believes it has used the proceeds for purposes consistent with the PPP, however, we cannot assure you that the Company will be eligible for forgiveness of the loan, in whole or in part.

 

On December 15, 2020, the Company entered into a Secured Promissory Note with a face value of $2,668,748, with the same lender of the August 23, 2019, Secured Promissory Note. The principal balance of the note included an initial debt discount of $26,423, that will be amortized to interest expense over the term of the note. For the three and nine months ended April 30, 2021, the Company recorded $10,705 and $11,439, respectively, of interest expense. As of April 30, 2021, there remains $14,984 of unamortized debt discount. The note requires monthly payments of interest only at the rate of 15% per annum. The note is secured by a third Deed of Trust on real property commonly known as Round Potrero Road, Potrero, California. The maturity date of the debt is June 15, 2022. A portion of the face value of this note was used to repay $1,140,000 of related party amounts due (see Note 8).

 

On March 2, 2021, the Company entered into a Promissory Note with a face value of $406,137 related to the Asset Purchase Agreement with Primordia. The note matures with a balloon a payment of principal and all accrued and unpaid interest on March 2, 2022.

 

7. Convertible Note Payable

 

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, subject to adjustment, 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.

 

 
13

Table of Contents

 

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. The original issue discount on the Note is a total of $150,000. 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 on that date 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. As of July 31, 2020, the principal balance of the Note was $171,213. On August 19, 2020, the Company paid the remaining principal and accrued and unpaid interest in the aggregate of $200,000 and as of that date the note balance is $-0-.

 

8. Related Party Transactions

 

Controlling Shareholder

 

As of April 30, 2021, Alita Capital, Inc., together with its affiliates (collectively, “Alita”), is the controlling shareholder of the Company’s common stock, as Alita owns approximately 52.2% of our issued and outstanding common stock, accordingly, Alita has the ability to exercise significant control over our affairs, including the election of directors and most actions requiring the approval of shareholders, including the approval of any potential merger or sale of all or substantially all assets or segments of the Company, or the Company itself. Alita is controlled by Mr. Ron Loudoun, the Company’s Chief Executive Officer.

 

Alita is subject to certain restrictions under federal securities laws on sales of its shares as an affiliate. Should Alita sell or otherwise dispose of all or a portion of its position in the Company, a change in ownership and control of the Company could occur. A change in ownership, as defined by Internal Revenue Code Section 382, could reduce the availability of the Company’s net operating losses (“NOLs”) for federal and state income tax purposes. Furthermore, a change of control could trigger the change of control provisions in a number of our material agreements.

 

During the nine months ended April 30, 2021, Alita made advances to the Company (including direct payments to vendors) and received reimbursements from the Company as follows:

 

Balance July 31, 2020

 

$ 2,405,306

 

Advances and interest charged

 

 

1,878,215

 

Reimbursements

 

 

(1,610,229 )

Balance April 30, 2021

 

$ 2,673,292

 

 

The above balances as of April 30, 2021, and July 31, 2020, are presented in due to related parties on the condensed consolidated balance sheets presented herein. Imputed interest of $188,477 and $94,834 for the nine months ended April 30, 2021, and 2020, respectively, has been recorded for the above related party debts with the offset to additional paid in capital.

 

Management Fees and accounts payable – related parties

 

For the three and nine months ended April 30, 2021, and 2020, the Company recorded expenses to its officers and former officers in the following amounts:

 

 

 

Three months

ended

April 30,

2021

 

 

Three months

ended

April 30,

2020

 

 

Nine months

ended

April 30,

2021

 

 

Nine months

ended

April 30,

2020

 

CEO, parent

 

$ 22,500

 

 

$ 22,500

 

 

$ 67,500

 

 

$ 67,500

 

Chief Technology Officer

 

 

7,500

 

 

 

7,500

 

 

 

22,500

 

 

 

22,500

 

Chief Operating Officer

 

 

22,500

 

 

 

-

 

 

 

127,500

 

 

 

-

 

Former CEO, subsidiary

 

 

-

 

 

 

22,500

 

 

 

-

 

 

 

75,000

 

Former President, subsidiary

 

 

-

 

 

 

22,500

 

 

 

-

 

 

 

75,000

 

Former Director

 

 

-

 

 

 

-

 

 

 

-

 

 

 

7.500

 

 

 

$ 52,500

 

 

$ 75,000

 

 

$ 217,500

 

 

$ 247,500

 

 

 
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For the nine months ended April 30, 2021, the activity for expenses recognized expenses and payments to officers and former officers as follows:

 

 

 

Balance at

July 31,

2020

 

 

Additions

 

 

Payments

 

 

Balance at

April 30,

2021

 

CEO, parent

 

$ 90,000

 

 

$ 67,500

 

 

$ -

 

 

$ 157,500

 

Chief Technology Officer

 

 

15,000

 

 

 

22,500

 

 

 

45,000

 

 

 

(7,500 )

Chief Operating Officer

 

 

-

 

 

 

138,679

 

 

 

37,500

 

 

 

101,179

 

Chief Project Manager

 

 

-

 

 

 

179,974

 

 

 

122,000

 

 

 

57,974

 

Former CEO, subsidiary

 

 

67,500

 

 

 

-

 

 

 

-

 

 

 

67,500

 

Former President, subsidiary

 

 

67,500

 

 

 

-

 

 

 

-

 

 

 

67,500

 

Former Chief Agricultural Officer, subsidiary

 

 

27,144

 

 

 

-

 

 

 

-

 

 

 

27,144

 

Former Director

 

 

35,000

 

 

 

-

 

 

 

-

 

 

 

35,000

 

 

 

$ 302,144

 

 

$ 408,653

 

 

$ 204,500

 

 

$ 506,297

 

 

All of the above amounts are non-interest bearing, unsecured and due on demand, and are presented in accounts payable related parties on the condensed consolidated balance sheets presented herein.

 

Other

 

On September 21, 2020, the Company issued 50,000 shares of common stock in the aggregate to two relatives of our Chief Project Manager (the “CPM”) in exchange for production equipment, pursuant to a Stock Purchase Agreement dated September 3, 2020, with an effective date of January 31, 2020. The shares were valued at $51,500 based on OTC’s closing trade price on the date of the agreement (see Note 9).

 

9. Stockholders’ Equity

 

Common Stock

 

As of April 30, 2021, the Company has 375,000,000 shares of $0.001 par value common stock authorized and there are 43,138,638 shares of common stock issued and outstanding.

 

For the three months ended April 30, 2021, the Company issued the following shares:

 

On February 17, 2021, the Company issued 125,000 shares of restricted common stock to a consultant, pursuant to a consultant agreement dated February 1, 2021, for services performed (see Note 10 (s)). The shares were valued at $113,750 based on OTC’s closing trade price on the effective date of the agreement.

 

On February 17, 2021, the Company issued 200,000 shares of restricted common stock to a consultant, pursuant to a consultant agreement dated August 1, 2019, for services performed (see Note 10 (c)). The shares were valued at $296,000 based on OTC’s closing trade price on the effective date of the agreement.

 

On March 10, 2021, the Company recorded the issuance in the aggregate of 200,000 shares of restricted common stock to two consultants, pursuant to a consultant agreement dated March 10, 2021, for services performed (see Note 10 (w)). The shares were valued at $206,000 based on OTC’s closing trade price on the effective date of the agreement.

 

 
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On March 11, 2021, the Company recorded the issuance in the aggregate of 60,000 shares of restricted common stock pursuant to an Asset Purchase Agreement between the Company and Castillo (see Note 12) for the purchase of certain assets. The shares were valued at $69,600 based on OTC’s closing trade price on the effective date of the agreement and the Company recorded inventory of $69,400.

 

On March 15, 2021, the Company recorded the issuance of 260,000 shares of restricted common stock pursuant to a consultant agreement dated March 15, 2021, for services performed (see Note 10 (x)). The shares were valued at $338,000 based on OTC’s closing trade price on the effective date of the agreement.

 

Common Stock to be issued

 

During the three months ended April 30, 2021, the Company recorded 762,500 shares of common stock to be issued pursuant to various consulting agreements. Of the shares to be issued, 125,000 are to be issued to the Company’s CEO and 100,000 shares are to be issued to the Company’s COO pursuant to their respective agreements (see Note 10 (a) and 10 (c), respectively). All of the shares were valued in the aggregate $1,019,375, based on the market price of the common stock on the dates of the various agreements, and is included in stock- based compensation expense for the three and nine months ended April 30, 2021.

 

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 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 pursuant to which, the Company agreed to issue the CEO 250,000 shares of common stock of the Company annually. The Company recorded expenses of $22,500 and $67,500 for the three and nine months ended April 30, 2021 and 2020, respectively. Pursuant to the agreement, during the nine months ended April 30, 2021, the Company issued 250,000 shares of restricted common stock.

 

 

 

 

(c)

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. Pursuant to the agreement, the Company also agreed to annually issue to the Consultant 200,000 shares of common stock of the Company. Pursuant to the agreement, during the nine months ended April 30, 2021, the Company issued 300,000 shares of restricted common stock.

 

 

 

 

(d)

On August 1, 2019, the Company entered into a consulting agreement with a shareholder. Pursuant to the agreement, the consultant will provide general advisory services, strategic planning advice and support. The Company agreed to issue to the consultant 125,000 shares of restricted common stock of the Company on the one- year anniversary of the agreement. The shares were issued September 21, 2020.

 

 

 

 

(e)

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 year. At the end of the six-month period, the Company may evaluate the performance with regards to an extension of the agreement. Pursuant to the agreement, the Company also issued the Consultant 25,000 shares of common stock of the Company. Pursuant to the agreement, during the six months ended April 30, 2021, the Company issued 25,000 shares of restricted common stock.

 

 
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(f)

On November 15, 2019, the Company agreed to issue 100,000 common shares to a former Independent Director of the Company, William Creekmur, 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. The remaining 50,000 shares valued at $100,000 have not been issued and are included in Stock payable as of April 30, 2021, and July 31, 2020.

 

 

 

 

(g)

On November 15, 2019, the Company entered into a consulting agreement with Kyle MacKinnon. Pursuant to the agreement, the consultant is to fulfill the role of Chief Operating Officer (the “COO”) of the Company. The Company agreed to compensate the consultant $7,500 per month and issue 200,000 shares of restricted common stock annually. Each year, the first 100,000 shares are to be issued on the effective date and subsequent anniversary dates and an additional 100,000 shares are to be issued six (6) months thereafter. On November 15, 2020, the Company issued 100,000 shares of restricted common stock.

 

 

 

 

(h)

On February 1, 2020, the Company entered onto a consulting agreement with David Racz as an advisor to the Board of Directors of the Company. Pursuant to the agreement, the consultant is to provide among other matters, strategic planning and general advisory services. The Consultant is to be issued 100,000 shares of restricted common stock, of which 50,000 were due on the effective date. On September 21, 2020, the Company issued 100,000 shares of restricted common stock.

 

 

 

 

(i)

On February 13, 2020, the Company entered into a six-month consulting agreement with the CFO of the Company, Todd Mueller, whereby the Company agreed to pay a consulting fee of 100,000 shares, 50,000 shares would be delivered upon the execution of the agreement (certificated on July 14, 2020) and 50,000 delivered in six months based on the continuation of the agreement. Following the initial term, the Company and the consultant may extend the term for up to 5 years on similar terms and conditions by further agreement in writing to that effect. The Company may terminate this agreement for any reason prior to the expiry of this agreement with 30-day notice and full vesting of stock or stock options for the period of engagement. The consultant may end this agreement with 30 days written notice prior to the end of the term. On September 21, 2020, the Company issued 50,000 shares of restricted common stock.

 

 

 

 

(j)

On July 23, 2020, the Company entered onto a consulting agreement with Joseph D. Kowal as an advisor to the Board of Directors of the Company. Pursuant to the agreement, the consultant is to provide among other matters, general advisory services, strategic planning and financial planning services. The consultant is to receive a monthly fee of $6,000 and to be issued 500,000 shares of restricted common stock. The shares are to be issued in quarterly installments of 125,000 beginning on the effective date and every 90 days thereafter. The initial 125,000 shares were issued on September 21, 2020. Pursuant to the terms of the agreement, the Company terminated the agreement on October 21, 2020. As of the termination date, there are no additional shares due to the Consultant.

 

 

 

 

(k)

On July 23, 2020, the Company entered onto a consulting agreement with Ralph Olson as an advisor to the Board of Directors of the Company. Pursuant to the agreement, the consultant is to provide among other matters, general advisory services, strategic planning and financial planning services. The consultant is to receive a monthly fee of $6,000 and to be issued 500,000 shares of restricted common stock. The shares are to be issued in quarterly installments of 125,000 beginning on the effective date and every 90 days thereafter. The initial 125,000 shares were issued on September 21, 2020. Pursuant to the terms of the agreement, the Company terminated the agreement on October 21, 2020. As of the termination date, there are no additional shares due to the consultant.

 

 

 

 

(l)

Effective August 1, 2020, the Company entered into an employment agreement with Dr. Levan Darjania, PhD as the Company’s Chief Science Officer. Dr. Darjania is a seasoned and accomplished research and development (“R&D”) professional and program manager with over 26-years’ experience in biotechnology, pharmaceutical drug development (both industry and academia) and proven track record of success in developing and directing in-house and collaborative R&D programs, and forward-thinking strategic planning capabilities. Pursuant to the agreement the Company has agreed to compensate Dr. Darjania an annual base salary of $250,000, and the issuance of 200,000 shares of common stock, of which 100,000 vested on the effective date and 100,000 vested six (6) months from the effective date. The initial 100,000 shares were issued on September 21, 2020.

 

 

 

 

(m)

On August 18, 2020, the Company entered into a one-year consulting agreement with a non-related third party. Pursuant to the terms of the agreement; the consultant will provide assistance in the Company’s public reporting responsibilities and other matters as may be requested by the Board of Directors of the Company. The Company has agreed to compensate the consultant $5,000 per month and after ninety (90) days issue the consultant $75,000 of restricted common stock, based on the market price of the common stock on that date. On November 15, 2020, the Company issued 125,000 shares of restricted common stock to the consultant, based on the price of $0.60 per share.

 

 

 

 

(n)

On September 1, 2020, the Company entered into a one- year consulting agreement with a consultant to provide advice on real-estate acquisitions. On September 21, 2020, pursuant to the terms of the agreement, the Company issued 50,000 shares of restricted common stock to the consultant.

 

 
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 (o)

On September 13, 2020, the Company entered into an Equity Financing Agreement (the “Financing Agreement”) with GHS Investments, LLC (“GHS”) for an equity line. Although the Company is not required to sell shares under the Financing Agreement, the Financing Agreement gives the Company 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 the Company’s common stock pursuant to the Financing Agreement, or (ii) the date that the registration statement for the registration of the secondary offering and resale of the shares to be acquired by GHS pursuant to the Financing Agreement is no longer in effect (the “Open Period”). Concurrently with the execution of the Financing Agreement, on September 13, 2020, the Company issued 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 the Financing Agreement.

 

 

 

 

The Company will sell shares of its common stock to GHS at a price equal to 100% of the lowest closing price of the Company’s common stock during the ten (10) consecutive trading day period ending on the date on which it delivers a put notice to GHS (the “Market Price”), and the Company will be obligated to simultaneously deliver the number of shares equal to120% of the put notice amount based on 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.

 

 

 

 

Concurrently therewith, the Company entered into a registration rights agreement with GHS, pursuant to which the Company 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 the Financing Agreement and the 150,857 Commitment Shares and to have the registration statement declared effective by the SEC at the earliest possible date. The registration statement was declared effective by the SEC on September 21, 2020.

 

 

 

 

 (p)

On September 18, 2020, the Company entered into a Placement Agent and Advisory Services Agreement (the “Placement Agreement”) with Boustead Securities, LLC (“BSL”), an investment banking firm that advises clients on mergers and acquisitions, capital raises, and restructuring assignments in a wide array of industries and circumstances.

 

 

 

 

The initial term of this agreement shall be exclusive for six (6) months from the Company’s delivery of an offering memorandum to BSL. After the initial term, the term of the Placement Agreement will automatically be extended for additional successive one (1) year periods unless either party provides written notice to the other party of its intent not to so extend the term at least thirty (30) days before the expiration of the then current term. Under the terms of the Placement Agreement, the Company issued to BSL an advisory fee of two hundred fifty thousand (250,000) shares of restricted common stock on September 21, 2020.

 

 

 

 

 (q)

On December 1, 2020, the Company entered onto a consulting agreement with Heidi Thomassen. Pursuant to the agreement, the consultant is to fulfill the role of Chief Communications Officer (the “CCO”) of the Company. The Company agreed to compensate the consultant $5,000 per month and issue 100,000 shares of restricted common stock annually. Each year, the first 50,000 shares are to be issued on the effective date and subsequent anniversary dates and an additional 50,000 shares are to be issued six (6) months thereafter. The Company issued the initial 50,000 shares of restricted common stock on the effective date.

 

 

 

 

 (r)

On January 15, 2021, the Company entered into a consulting agreement with a non-related third party (the “Consultant”). Pursuant to the terms of the agreement; the Consultant, among other matters, will provide services to the Company related to reviewing, analyzing and assessing the Company’s financial requirements. The Company has agreed to compensate the Consultant 200,000 shares of restricted common stock. The first 100,000 shares were issued on the effective date and the remaining 100,000 shares are to be issued at the beginning of the third month from the effective date.

 

 

 

(s)

On February 1, 2021, the Company entered into a consulting agreement with Ralph Olson as an advisor to the Board of Directors of the Company. Pursuant to the agreement, the consultant is to provide among other matters, general advisory services, strategic planning and support. The consultant is to receive a monthly fee of $6,000 and to be issued 125,000 shares of restricted common stock. The shares were issued during the nine months ended April 30, 2021.

 

 

 

 

(t)

On February 1, 2021, the Company entered into a six- month consulting agreement with Daniel Claycamp as an advisor to the Board of Directors of the Company. Pursuant to the agreement, the consultant is to provide among other matters, general advisory services, strategic planning and support. The consultant is to be issued 100,000 shares of restricted common stock, of which 50,000 shares were due upon the signing of the agreement and 50,000 shares to be issued on the six- month anniversary of the agreement. The Company recorded the initial 50,000 shares as stock compensation expense of $44,500 for the three and nine months ended April 30, 2021, based on the market price of the common stock on the date of the agreement, with the offset included in common stock to be issued as of April 30, 2021.

 

 
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(u)

On February 1, 2021, the Company entered into a six- month consulting agreement with Jason Smithson as an advisor to the Board of Directors of the Company. Pursuant to the agreement, the consultant is to provide among other matters, general advisory services, strategic planning and support. The consultant is to be issued 25,000 shares of restricted common stock. The Company recorded the initial 50,000 shares as stock compensation expense of $32,500 for the three and nine months ended April 30, 2021, based on the market price of the common stock on the date of the agreement, with the offset included in common stock to be issued as of April 30, 2021.

 

 

 

 

(v)

On March 1, 2021, the Company entered into a consulting agreement with Scott Skyler. Pursuant to the agreement, the consultant is to fulfill the role of Project Manager, Processing Division of the Company. The Company agreed to compensate the consultant $75 per hour and issue 25,000 shares of restricted common stock annually. Each year, the first 12,500 shares are to be issued on the effective date and subsequent anniversary dates and an additional 12,500 shares are to be issued six (6) months thereafter. The Company recorded the initial 12,500 shares as stock compensation expense of $15,125 for the three and nine months ended April 30, 2021, based on the market price of the common stock on the date of the agreement, with the offset included in common stock to be issued as of April 30, 2021.

 

 

 

 

(w)

On March 10, 2021, the Company entered into a consulting agreement with a non-related third party (the “Consultant”). Pursuant to the terms of the agreement; the Consultant, among other matters, will provide services to the Company related to reviewing, analyzing and assessing the Company’s financial requirements. The Company has agreed to compensate the Consultant or its designees, 200,000 shares of restricted common stock. The shares were issued during the nine months ended April 30, 2021.

 

 

 

 

(x)

On March 15, 2021, the Company entered into a consulting agreement with Ron Frank as an advisor to the Board of Directors of the Company. Pursuant to the agreement, the consultant is to provide among other matters, general advisory services, strategic planning and support. The consultant is to be issued 260,000 shares of restricted common stock. The shares were issued during the nine months ended April 30, 2021.

 

 

 

 

(y)

On March 15, 2021, the Company entered into a consulting agreement with Dylan Piccolo as an advisor to the Board of Directors of the Company. Pursuant to the agreement, the consultant is to provide among other matters, general advisory services, strategic planning and support. The consultant is to be issued 100,000 shares of restricted common stock. The Company recorded the 100,000 shares as stock compensation expense of $130,000 for the three and nine months ended April 30, 2021, based on the market price of the common stock on the date of the agreement, with the offset included in common stock to be issued as of April 30, 2021.

 

 

 

 

(z)

On March 15, 2021, the Company entered into a consulting agreement with David Mapley as an advisor to the Board of Directors of the Company. Pursuant to the agreement, the consultant is to provide among other matters, general advisory services, strategic planning and support. The consultant is to be issued 100,000 shares of restricted common stock. The Company recorded the 100,000 shares as stock compensation expense of $130,000 for the three and nine months ended April 30, 2021, based on the market price of the common stock on the date of the agreement, with the offset included in common stock to be issued as of April 30, 2021.

 

 

 

 

(aa)

On March 15, 2021, the Company entered into a consulting agreement with Biome Sciences, Inc as a Scientific Advisory Board Member of the Company. Pursuant to the agreement, the consultant is to provide among other matters, general advisory services, strategic planning and support. The consultant is to be issued 100,000 shares of restricted common stock, of which 50,000 shares are to be issued on the date of the agreement and 50,000 shares are to be issued on the six- month anniversary of the agreement. The Company recorded the initial 50,000 shares as stock compensation expense of $65,000 for the three and nine months ended April 30, 2021, based on the market price of the common stock on the date of the agreement, with the offset included in common stock to be issued as of April 30, 2021.

 

 

 

 

(ab)

On March 15, 2021, the Company entered into a consulting agreement with Matthew Schwaigert. Pursuant to the agreement, the consultant is to fulfill the role of Director of Cultivation of the Company. The Company agreed to compensate the consultant $7,500 per month and issue 100,000 shares of restricted common stock upon the execution of the agreement and 100,000 shares of restricted common stock on the six-month anniversary of the agreement. The Company recorded the initial 100,000 shares as stock compensation expense of $130,000 for the three and nine months ended April 30, 2021, based on the market price of the common stock on the date of the agreement, with the offset included in common stock to be issued as of April 30, 2021.

 

On March 1, 2021 (the “Agreement Date”), the Company’s wholly owned subsidiary, Green Hygienics Properties, LLC (“GHP”) executed a Purchase and Sale Agreement (the “PSA”) to acquire a 37,530 square foot building, located at 13955 Stowe Drive, Poway near San Diego, California (the “Stowe Drive Building”). GHP was initially formed as Green Hygienics Farms LLC (“GHF”) in the State of California on July 22, 2019. GHF changed its’ name to GHP on June 5, 2020. The Company is the sole member of GHP, and Mr. Loudoun, the Company’s CEO is the Manager of GHP. The Company will utilize the Stowe Drive Building for post processing, manufacturing and distribution activities related to its business. Pursuant to the PSA, the closing for the purchase of the Stowe Drive Building is to occur on or before 120 days from the Agreement Date for a cash payment of $7,500,000 and 300,000 restricted common shares. As of the date of this filing, there has been no consideration paid by the Company or any assets transferred to the Company.

 

There is currently no pending or threatened litigation.

 

11. Sales concentration

 

For the nine months ended April 30, 2021, 100% of our revenue of $40,954 is from the land use rental income from SDGE (see Note 2). SDGE vacated the property in October 2020.

 

 
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12.  Asset Purchase Agreements

 

Primordia Asset Purchase Agreement

 

On March 2, 2021, the Company entered into an Asset Purchase Agreement (the “Primordia APA”) with Primordia, LLC (“Primordia”), a Nevada limited liability company. Pursuant to the Primordia APA, the Company will acquire from Primordia certain assets for the purchase price of $431,137. The Company paid Primordia $25,000 and issued a $406,137 Promissory Note (the “Note”). The Note matures March 2, 2022, and carries a per annum interest rate of 4.75%.

 

Consideration given:

 

 

 

 

 

 

 

 

 

Cash

 

$ 25,000

 

Promissory note

 

 

406,137

 

Total consideration

 

$ 431,137

 

 

Assets acquired:

 

 

 

Inventory

 

$ 233,557

 

Accounts receivable

 

 

80,510

 

Machinery and equipment

 

 

82,070

 

Intangible assets (trademarks)

 

 

35,000

 

Total assets acquired

 

$ 431,137

 

 

Intangible assets are recorded at estimated fair value, as determined by management based on available information. The brand has an indefinite life and will not be amortized. There was no change in any of the assets since the APA date, and the above asset amounts are included in the condensed consolidated balance sheet as of April 30, 2021. There are no sales or costs included in the condensed consolidation statement of operations for the three and nine months ended April 30, 2021. There are no pro-forma tables included as the Company was unable to obtain financial statements from the above entity.

 

Castillo Asset Purchase Agreement

 

On March 15, 2021, the Company entered into an Asset Purchase Agreement (the “Castillo APA”) with Castillo Seed L.L.C. (“Castillo”), a Puerto Rico limited liability company. Pursuant to the Castillo APA, the Company acquired from Castillo certain assets per the Castillo APA in exchange for 60,000 shares of restricted common stock.

  

Consideration given:

 

 

 

60,000 shares of common stock values at $1.16 per share

 

$ 69,400

 

Assets acquired:

 

 

 

 

Inventory

 

$ 69,400

 

 

There was no change in any of the assets since the APA date, and the above asset amounts are included in the condensed consolidated balance sheet as of April 30, 2021. There are sales or costs included in the condensed consolidation statement of operations for the three and nine months ended April 30, 2021. There are no pro-forma tables included as the Company was unable to obtain financial statements from the above entity.

 

 
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Admay Asset Purchase Agreement

 

On April 14, 2021, the Company entered into an Asset Purchase Agreement (the “Admay APA”) with Admay, Inc (“Admay”), a Wyoming company. Pursuant to the Admay APA, the Company can acquire from Admay certain assets per the APA in exchange for up to $2,822,000 (the “Purchase Price”). The Purchase Price will be a combination of cash and restricted shares of common stock of the Company. On April 15, 2021, the APA was consummated and the Company agreed to pay $122,400 for the purchase of the brands American Hemp and Diablo related to hemp cigarettes only and part of the inventory (the “Initial Purchase”). The Company is not obligated to buy any additional inventory. As of April 30, 2021, the Company had paid $10,000 of the Initial Purchase.

 

Consideration given:

 

 

 

Cash

 

$ 10,000

 

Commitment payable

 

 

112,400

 

Total consideration

 

$ 122,400

 

 

 

 

 

 

Assets Acquired:

 

 

 

 

Inventory

 

$ 97,400

 

Intangible assets (trademarks)

 

 

25,000

 

Total assets acquired

 

$ 122,400

 

 

Intangible assets are recorded at estimated fair value, as determined by management based on available information. The brand has an indefinite life and will not be amortized. There was no change in any of the assets since the APA date, and the above asset amounts are included in the condensed consolidated balance sheet as of April 30, 2021. There are sales or costs included in the condensed consolidation statement of operations for the three and nine months ended April 30, 2021.There are no pro-forma tables included as the Company was unable to obtain financial statements from the above entity.

 

13. Subsequent Events

 

On May 1, 2021, the Company entered into a consulting agreement with Patrick Kolenik as an advisor to the Board of Directors of the Company. Pursuant to the agreement, the consultant is to provide among other matters, general advisory services, strategic planning and support. The consultant is to be issued 75,000 shares of restricted common stock on the date of the agreement. The shares were issued June 10, 2021.

 

On June 10, 2021, the Company issued in the aggregate 762,500 shares of common that were recorded as shares to be issued as of April 30, 2021. On the same date, the Company also issued 100,000 and 50,000 shares of restricted common stock pursuant to consulting agreements dated November 15, 2019, (see Note 10 (g)) and December 1, 2020, (see Note 10 (q)), respectively.

 

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

 

FORWARD-LOOKING STATEMENTS

 

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

 

Corporate Overview

 

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

 

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

 

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

 

The independent auditors’ report on our financial statements for the years ended July 31, 2020, and 2019, includes a “going concern” explanatory paragraph that describes substantial doubt about our ability to continue as a going concern. Management’s plans in regard to the factors prompting the explanatory paragraph are discussed below and also in Note 1 to the unaudited condensed consolidated financial statements filed herein.

 

While our unaudited condensed consolidated financial statements are presented on the basis that we are a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time, our auditors have raised a substantial doubt about our ability to continue as a going concern.

 

Results of Operations for the three and six months ended January 31, 2021, and 2020.

 

Revenues

 

We recognized $40,954 in revenue for the nine months ended April 30, 2021, 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. The tenant vacated the property in October 2020. The Company plans to continue to seek other additional similar license agreements or sub-leases of our properties.

 

 
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In June and July 2020, the Company planted its seasonal large-scale outdoor hemp crop as well as its first indoor test crop in three greenhouses. During the nine months ended April 30, 2021, the Company purchased additional seeds and nutrients. As of the date of this report, the Company has harvested approximately 110,000 lbs. of flower and biomass.

 

The Company is currently in the process of drying and curing these harvested crops and plans to market and sell these crops during this fiscal year at market prices based on market demand. The Company seeks to sell at optimal market pricing in order to maximize potential revenues. Some of these crops will be sold as flower and finished smokable products, whereas some crops will be processed into higher valued oils, isolate, and other processed products. We intend to sell the crops, whether in raw form or as processed goods, through wholesale channels as well as through the Company’s existing and upcoming e-commerce site under the Sol Valley Ranch brand.

 

Additionally, new greenhouse plantings are planned, with a total of three indoor crops planned for each calendar year. The Company expects to plant an expanded outdoor crop during this fiscal year for two crops; however, revenues from these crops are not expected until the following fiscal year.

 

Operating Expenses

 

Operating expenses for the three and nine months ended April 30, 2021, were $2,412,151 and $5,490,980, respectively, compared to $1,096,990 and $4,940,927 for the three and nine months ended April 30, 2020, respectively. These expenses consisted of stock-based compensation, consulting and business development costs, supplies, payroll and subcontractor expenses, 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 as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

April 30,

 

 

April 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Consulting and business development

 

$ 161,162

 

 

$ 205,699

 

 

$ 355,004

 

 

$ 332,479

 

Related party fees and expenses

 

 

52,500

 

 

 

75,000

 

 

 

217,500

 

 

 

247,500

 

Stock based compensation

 

 

1,973,125

 

 

 

-

 

 

 

4,261,175

 

 

 

2,421,000

 

Supplies

 

 

63,071

 

 

 

112,685

 

 

 

230,045

 

 

 

594,150

 

Payroll and subcontractor expenses

 

 

53,796

 

 

 

111,219

 

 

 

53,796

 

 

 

570,614

 

Depreciation

 

 

35,066

 

 

 

21,459

 

 

 

98,531

 

 

 

55,923

 

Inventory write off

 

 

-

 

 

 

306,450

 

 

 

-

 

 

 

306,450

 

General and administrative, other

 

 

73,431

 

 

 

264,478

 

 

 

274,929

 

 

 

412,811

 

Total Operating Expenses

 

$ 2,412,151

 

 

$ 1,096,990

 

 

$ 5,490,980

 

 

$ 4,940,927

 

 

This increases for the three and nine months ended April 30, 2021, are primarily due to stock-based compensation expenses partially offset by decreases in consulting and related party fees and expenses, supplies and general and administrative expenses for the three months ended April 30, 2021, compared to the three months ended April 30, 2020. During the three and nine months ended April 30, 2020, supplies (predominantly seeds and nutrients) and labor were expensed as the Company was planting for the first time. For the three and nine months ended April 30, 2021, the Company recorded as work in process inventory the seeds and nutrients as well as the labor, as it became apparent that the seeding and planting done this season has yielded a successful harvest.

 

Stock compensation expense for the three and nine months ended April 30, 2021, was the result of the following issuances:

 

 

·

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, pursuant to a Platform Account Contract dated August 4, 2020. The shares were valued at $355,550 based on OTC’s closing trade price on the date of the agreement.

 

 

 

 

·

On September 21, 2020, the Company issued 250,000 shares of common stock to the CEO of the Company in exchange for consulting services, pursuant to his agreement dated August 1, 2019 (see Note 9 (b)). The shares were valued at $370,000 based on OTC’s closing trade price on the date of the agreement.

 

 

 

 

·

On September 21, 2020, the Company issued 100,000 shares of common stock to the Chief Project Manager of the Company in exchange for consulting services, pursuant to his consulting agreement dated August 1, 2019 (see Note 9 (c)). The shares were valued at $148,000 based on OTC’s closing trade price on the date of the agreement.

 

 

 

 

·

On September 21, 2020, the Company issued 100,000 shares of common stock to the Chief Science Officer of the Company pursuant to his employment agreement dated August 1, 2020 (see Note 9 (l)). The shares were valued at $87,250 based on OTC’s closing trade price on the date of the agreement.

 

 
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·

On September 21, 2020, the Company issued 25,000 common shares to the Assistant Agricultural Operations Manager of the Company in exchange for consulting services, pursuant to her consulting agreement dated August 1, 2019 (see Note 9 (e)). The shares were valued at $37,000 based on OTC’s closing trade price on the date of the agreement.

 

 

 

 

·

On September 21, 2020 and under the terms of the Placement Agreement dated September 18, 2020, with Boustead Securities LLC (“BSL”)., the Company issued to BSL an advisory fee of two hundred fifty thousand (250,000) shares of common stock (see Note 9 (p)). The shares were valued at $187,500 based on OTC’s closing trade price on the date of the agreement.

 

 

 

 

·

On September 21, 2020, the Company issued 50,000 shares to the Company’s CFO, pursuant to his consulting agreement dated February 13, 2020 (see Note 9 (i)). The shares were valued at $60,750 based on OTC’s closing trade price on the date of the agreement.

 

 

 

 

·

On September 21, 2020, the Company issued 50,000 shares of common stock to a consultant for advice on real estate acquisitions, pursuant to his consulting agreement (see Note 9 (n)). The shares were valued at $58,500 based on OTC’s closing trade price on the date of the agreement.

 

 

 

 

·

On September 21, 2020, the Company issued 125,000 shares of common stock to a consultant for advisory services to the Board of Directors of the Company, pursuant to his consulting agreement (see Note 9 (j)). The shares were valued at $113,750 based on OTC’s closing trade price on the date of the agreement.

 

 

 

 

·

On September 21, 2020, the Company issued 125,000 shares of common stock to a consultant for advisory services to the Board of Directors of the Company, pursuant to his consulting agreement (see Note 9 (k)). The shares were valued at $113,750 based on OTC’s closing trade price on the date of the agreement.

 

 

 

 

·

On September 21, 2020, the Company issued 100,000 shares of common stock to a consultant for services, pursuant to his agreement dated February 1, 2020 (see Note 9 (h)). The shares were valued at $187,000 based on OTC’s closing trade price on the date of the agreement.

 

 

 

 

·

On September 21, 2020, the Company issued 125,000 shares of common stock to a shareholder for advisory services to the Company, pursuant to his consulting agreement dated August 1, 2019 (see Note 9 (d)). The shares were valued at $185,000 based on OTC’s closing trade price on the date of the agreement.

 

 

 

 

·

On November 15, 2020, the Company issued 125,000 shares of common stock to a consultant for services to the Company, pursuant to his consulting agreement dated August 18, 2020 (see Note 9 (m)). The shares were valued at $75,000 based on OTC’s closing trade price on the issuance date, pursuant to the agreement.

 

 

 

 

·

On November 15, 2020, the Company issued 100,000 shares of common stock to a pursuant to a consulting agreement dated November 15, 2019, for services performed as COO of the Company (see Note 9 (g)). The shares were valued at $200,000 based on OTC’s closing trade price on the effective date of the agreement.

 

 

 

 

·

On December 1, 2020, the Company issued 50,000 shares of common stock to a consultant for services, pursuant to her agreement dated December 1, 2020 (see note 9 (q)). The shares were valued at $34,000 based on OTC’s closing trade price on the date of the agreement.

 

 

 

 

·

 

 

On January 15, 2021, the Company issued 100,000 shares of common stock to a consultant for services, pursuant to her agreement dated January 15, 2021 (see note 9 (r)). The shares were valued at $75,000 based on OTC’s closing trade price on the date of the agreement.

 

On February 17, 2021, the Company issued 125,000 shares of restricted common stock to a consultant, pursuant to a consultant agreement dated February 1, 2021, for services performed (see Note 10 (s)). The shares were valued at $113,750 based on OTC’s closing trade price on the effective date of the agreement.

 

On February 17, 2021, the Company issued 200,000 shares of restricted common stock to a consultant, pursuant to a consultant agreement dated August 1, 2019, for services performed (see Note 10 (c)). The shares were valued at $296,000 based on OTC’s closing trade price on the effective date of the agreement.

 

On March 10, 2021, the Company recorded the issuance in the aggregate of 200,000 shares of restricted common stock to two consultants, pursuant to a consultant agreement dated March 10, 2021, for services performed (see Note 10 (w)). The shares were valued at $206,000 based on OTC’s closing trade price on the effective date of the agreement.

 

On March 11, 2021, the Company recorded the issuance in the aggregate of 60,000 shares of restricted common stock pursuant to an Asset Purchase Agreement between the Company and Castillo. The shares were valued at $150,000 based on OTC’s closing trade price on the effective date of the agreement.

 

On March 15, 2021, the Company recorded the issuance of 260,000 shares of restricted common stock pursuant to a consultant agreement dated March 15, 2021, for services performed (see Note 10 (x)). The shares were valued at $338,000 based on OTC’s closing trade price on the effective date of the agreement.

 

 
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For the nine months ended April 30, 2020, the Company issued 1,125,000 shares of common stock and had commitments to issue an additional 600,000 shares of common stock. The Company recorded stock-based compensation expense of $2,421,000 for the nine months ended April 30, 2020, for those transactions.

 

Other Income (Expenses)

 

Interest expense for the three and nine months ended April 30, 2021, was $297,048 and $698,851, respectively, compared to $509,727 and $785,106 for the three and nine months ended April 30, 2020. The decreases for the three and nine months ended April 30, 2021, compared to the prior year periods is the result of the prior periods included amortization of debt discounts of $358,049 and $ 365,412, respectively, related to convertible notes that have now been extinguished. Such decrease was partially offset by the increase in the imputed interest expense of $34,579 and $92,832, for the three and nine months ended April 30, 2021, compared to the three and nine months ended April 30, 2020, respectively.

 

Net loss

 

The net loss for the three and nine months ended April 30, 2021, was $2,709,199 and $6,148,877, respectively, compared to $1,553,917 and $5,617,459 for the three and nine months ended April 30, 2020. The increase is a result of the changes discussed above.

 

Liquidity and Capital Resources

 

In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to most other countries and infections have been reported globally. Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but it may have a material adverse impact on our business, financial condition and results of operations. Management expects that its business will be impacted to some degree, but the significance of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact cannot be determined at this time.

 

Currently, we have limited operating capital. Our current capital and our other existing resources will not be sufficient to provide the working capital needed for our current business. Additional capital will be required to meet our debt obligations, and to further expand our business. We may be unable to obtain the additional capital required. Our inability to generate capital or raise additional funds when required will have a negative impact on our business development and financial results.

 

For the nine months ended April 30, 2021, we primarily funded our business operations with $1,502,326 net proceeds from the issuance of a note payable in the face amount of $2,668,748 and $1,887,500 of proceeds and amounts paid directly from related parties. Of the proceeds, $171,213 was used for repayment of a convertible note, $54,214 for repayments on notes payable and other agreements and $470,229 was paid back to related parties.

 

Working Capital

 

 

 

April 30,

2021

 

 

July 31,

2020

 

 

 

 

 

 

 

 

Current Assets

 

$ 1,329,739

 

 

$ 40,538

 

Current Liabilities

 

 

5,060,098

 

 

 

4,582,390

 

Working Capital (Deficit)

 

$ (3,750,359 )

 

$ (4,541,852 )

 

 
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Cash was $79,606 and $40,538 as of April 30, 2021, and July 31, 2020, respectively. The current liabilities are comprised of accounts payable, accrued expenses, convertible debt, liabilities to related parties and notes payable.

 

Cash Flows

 

 

 

Nine Months

Ended

April 30,

2021

 

 

Nine Months

Ended

April 30,

2020

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

$ (2,318,847 )

 

$ (1,664,071 )

Net cash used in investing activities

 

 

(326,255 )

 

 

(118,586 )

Net cash provided by financing activities

 

 

2,684,170

 

 

 

2,007,641

 

Net change in cash

 

$ 39,068

 

 

$ 224,984

 

 

With our current cash balance will be unable to sustain operations for the next twelve months. We need to raise additional funds by issuing new debt or equity securities or otherwise. Other than amounts received from the issuance of a note payable and related parties, we have raised no funds for the nine months ended April 30, 2021. 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 limited revenue to date. The future of our Company is dependent upon its ability to obtain financing and upon future profitable operations.

 

We estimate that our expenses over the next 12 months will be approximately $2,600,000, comprised of $2,400,000 in operating expenses and $200,000 in investing activities. 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 anticipate continuing to rely on equity sales and grants 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.

 

Except as described below, 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.

 

Since August 1, 2020, the Company has entered into the following agreements to address the cash needs of the Company:

 

The Company entered into an Equity Financing Agreement (the “Financing Agreement”) dated as of September 13, 2020 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 the registration statement for the registration of the secondary offering and resale of the shares to be acquired by GHS pursuant to the Financing Agreement is no longer in effect (the “Open Period”). Concurrently with the execution of the Financing Agreement, the Company issued to GHS 150,857 restricted shares of its Common stock (“Commitment Shares”) to offset transaction costs.

 

We can 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. 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. As of the date of this report, the Company has not sold any shares to GHS.

 

Concurrently therewith, we entered into a registration rights agreement with GHS, 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 to be acquired by GHS pursuant to the Financing Agreement and the 150,857 Commitment Shares and to have the registration statement declared effective by the SEC at the earliest possible date. The registration statement was declared effective by the SEC on September 21, 2020.

 

 
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On September 18, 2020 (the “Effective Date”), the Company entered into a Placement Agent and Advisory Services Agreement (the “Placement Agreement”) with Boustead Securities, LLC (“BSL”), an investment banking firm that advises clients on mergers and acquisitions, capital raises, and restructuring assignments in a wide array of industries and circumstances.

 

The initial term of this Agreement shall be exclusive for six (6) months from the Company’s delivery of an offering memorandum to BSL (the “Initial Term”). After the Initial Term, the term of the Placement Agreement will automatically be extended for additional successive one (1) year periods unless either party provides written notice to the other party of its intent not to so extend the term at least thirty (30) days before the expiration of the then current term. Pursuant to the terms of the Placement Agreement, the Company issued to BSL an advisory fee of two hundred fifty thousand (250,000) common stock shares with an issuance date of the Effective Date.

 

On February 15, 2021, the Company engaged Trimark Capital Partners, a Grand Cayman company, to provide agent services for the sale and issuance of up to $100 million in a series of bonds. Any proceeds will be used to acquire real estate assets and advance the Company’s business development plans.

 

Critical Accounting Policies

 

Use of Estimates

 

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

 

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.

 

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.

 

 
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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.

 

 
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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 January 31, 2021, the Company does not have any potentially dilutive shares.

 

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

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

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

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

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

 

As of April 30, 2021, we carried out an evaluation, under the supervision and with the participation of our president and chief financial officer of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president and chief financial officer concluded that our disclosure controls and procedures were not effective in providing reasonable assurance in the reliability of our corporate reporting as of the end of the period covered by this quarterly report due to certain deficiencies that existed in the design or operation of our internal controls over financial reporting and that may be considered to be material weaknesses. 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.

 

Changes in Internal Controls

 

There have been no changes in our internal controls over financial reporting that occurred during the quarter ended April 30, 2021, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

 

M&K CPAs, our independent registered public accounting firm, is not required to and has not provided an assessment over the design or effectiveness of our internal controls over financial reporting.

 

 
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PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We know of no material existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

 

Item 1A. Risk Factors

 

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A to our Annual Report on Form 10-K for the fiscal year ended July 31, 2020.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

On February 17, 2021, the Company issued 125,000 shares of restricted common stock to a consultant, pursuant to a consultant agreement dated February 1, 2021.

 

On February 17, 2021, the Company issued 200,000 shares of restricted common stock to a consultant, pursuant to a consultant agreement dated August 1, 2019.

 

On March 10, 2021, the Company recorded the issuance in the aggregate of 200,000 shares of restricted common stock to two consultants, pursuant to a consultant agreement dated March 10, 2021.

 

On March 11, 2021, the Company recorded the issuance in the aggregate of 60,000 shares of restricted common stock pursuant to an Asset Purchase Agreement between the Company and Castillo.

 

On March 15, 2021, the Company recorded the issuance of 260,000 shares of restricted common stock pursuant to a consultant agreement dated March 15, 2021.

 

In issuing these shares the Company relied on the exemption afforded by Section 4(a)(2) of the Securities Act of 1933, as amended.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine safety Disclosures

 

None.

 

Item 5. Other Information

 

(a) None.

 

(b) During the quarter ended April 30, 2021, there have not been any material changes to the procedures by which security holders may recommend nominees to the board of Directors.

 

 
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Item 6. Exhibits

 

Exhibit Number

 

Description

 

 

 

2.1

 

Definitive Agreement dated April 29, 2019 by and among between Coastal Labs, LLC and Green Hygienics Holdings Inc., incorporated by reference to our Registration Statement on Form S-1 filed on April 30, 2020 (File No. 333-236212).

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., incorporated by reference to our Registration Statement on Form S-1 filed on September 14, 2020 (File No. 333-236212).

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.

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 Registration Statement on Form S-1 filed on April 30, 2020 (File No. 333-236212).

10.6

 

Secured Promissory Note dated August 15, 2019, incorporated by reference to our Registration Statement on Form S-1 filed on April 30, 2020 (File No. 333-236212).

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 Registration Statement on Form S-1 filed on April 30, 2020 (File No. 333-236212).

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.

10.11

 

Modification Agreement dated March 31, 2020 between Triton Funds LP and Green Hygienics Holdings Inc.

10.12

 

Equity Financing Agreement by and between Green Hygienics Holdings, Inc. and GHS Investments, LLC, dated September 13, 2020, incorporated by reference to our Registration Statement on Form S-1 filed on September 14, 2020 (File No. 333-236212).

10.13

 

Registration Rights Agreement by and between Green Hygienics Holdings, Inc. and GHS Investments, LLC, dated September 13, 2020, incorporated by reference to our Registration Statement on Form S-1 filed on September 14, 2020 (File No. 333-236212).

10.14

 

Promissory Note Secured by Deed of Trust dated December 15, 2020, incorporated by reference to our Current Report on Form 8-K filed December 28, 2020.

10.15

 

Engagement Agreement with Trimark Capital Partners, incorporated by reference to our Current Report on Form 8-K filed on February 16, 2021.

10.16

 

Agreement with Singer Lewak, incorporated by reference to our Current Report on Form 8-K filed on February 16, 2021.

10.17

 

Purchase and Sale Agreement, incorporated by reference to our Current Report on Form 8-K filed on March 1, 2021.

10.18

 

Purchase and Sale Agreement with Primordia, incorporated by reference to our Current Report on Form 8-K filed on March 4, 2021.

10.19

 

Promissory Note issued March 2, 2021, incorporated by reference to our Current Report on Form 8-K filed on March 4, 2021.

31.1*

 

Section 302 Certification of Principal Executive Officer

31.2*

 

Section 302 Certification of Principal Financial Officer and Principal Accounting Officer.

32.1*

 

Section 906 Certification of Principal Executive Officer

32.2*

 

Section 906 Certification of Principal Financial Officer and Principal Accounting Officer.

 

 

 

101

 

Interactive Data Files

 

 

 

101.INS

 

XBRL Instance Document

101.SCH

 

XBRL Taxonomy Extension Schema Document

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

 

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document

_________

* Filed herewith

 

 
31

Table of Contents

 

SIGNATURES

 

In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

GREEN HYGIENICS HOLDINGS INC.

(Registrant)

 

 

 

 

 

Date: June 17, 2021

 

/s/ Ron Loudoun

 

 

 

Ron Loudoun

 

 

 

President, Chief Executive Officer,

Secretary and Treasurer

 

 

 

Director

 

 

 

(Principal Executive Officer)

 

 

Date: June 17, 2021

 

/s/ Todd Mueller

 

 

 

Todd Mueller

 

 

 

Chief Financial Officer

 

 

 

(Principal Financial Officer and

 

 

 

Principal Accounting Officer)

 

 

32

 

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