GREEN HYGIENICS HOLDINGS INC. - Annual Report: 2013 (Form 10-K)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURUTIES EXCHANGE ACT OF 1934
For the fiscal year ended July 31, 2013
Commission file number 333-153510
GREEN HYGIENICS HOLDINGS INC.
(Exact Name of Registrant as Specified in Its Charter)
| Nevada | 26-2801338 |
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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1937 Pendrell Street, Suite 1004, Vancouver, B.C., Canada V6G 1T4
(Address of Principal Executive Offices & Zip Code)
1-855-922-2368
(Telephone Number)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to section 12(g) of the Act:
Common Stock, $0.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act
Yes o No x
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 x No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
(Do not check if a smaller reporting company)
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Smaller reporting company x
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
Aggregate market value of voting common equity held by non-affiliates as of October 31, 2013: $3,800,000 approximately.
As of November 1, 2013 the registrant had 9,298,313 shares of common stock issued and outstanding.
GREEN HYGIENICS HOLDINGS INC.
TABLE OF CONTENTS
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Item 1.
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Item 1A.
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4 | |
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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7 | |
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Item 3.
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7 | |
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Item 4.
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7 | |
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Item 5.
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8 | |
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Item 6.
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Selected Financial Data
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Item 7.
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8 | |
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 8.
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10 | |
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Item 9.
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11 | |
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Item 9A.
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11 | |
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Item 9B.
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Other Information
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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15 |
Part I
Item 1. Business
COMPANY OVERVIEW
Green Hygienics Holdings Inc. (the Company) was incorporated in the State of Nevada on June 12, 2008 as Silver Bay Resources Inc. and issued 55,000 shares of common stock on June 12, 2008 (after accounting for the forward and reverse splits detailed below) for cash of $20,000. On June 30, 2010 the Company changed its name to Takedown Entertainment Inc and forward split its issued shares on the basis of five new shares for one old share (5:1) on the same date. On July 24, 2012 the Company changed its name to Green Hygienics Holdings Inc. and, on the same date, reverse split both its issued and outstanding shares of common stock on a two thousand old for one new basis (1:2000).
During 2008 the Company staked one mineral claim located 100 km northwest of Vancouver, British Columbia and acquired a molybdenum property comprised of one mineral claim located approximately 35 kilometers north of Vancouver, British Columbia. We did not proceed with further exploration of the mineral claims due to a determination that the results of our initial geological program did not generate investor interest in the claims and we were unable to finance further exploration. Mineral property costs of $20,000 were expensed during 2009. Both properties have since been abandoned by the Company.
During the years 2009 to date the Company was involved in the acquisition, production, licensing, marketing and distribution of mixed martial arts (MMA) content, programming and merchandising for North American and International markets. The Company is currently negotiating to transfer to the former President of the Company all of its rights to and interests in its mixed martial arts program (Takedown), including any and all Takedown assets, in return for the forgiveness of a liability of $29,812 owing to the former President of the Company.
We had $4,324 in cash reserves as of the year ended July 31, 2013. We anticipate that we will incur $50,000 for administrative expenses, including professional legal and accounting expenses associated with compliance with our periodic reporting requirements over the next twelve months, and approximately $10,000 per month ($120,000) to continue with our business development.
We are contemplating raising additional capital to finance our business operations. No final decisions regarding financing have been made at this time. It is anticipated that funding for the Company will come from one or more of the following means: engaging in an offering of our stock; engaging in borrowing; locating a joint venture partner or partners.
BANKRUPTCY OR SIMILAR PROCEEDINGS
We have not been the subject of a bankruptcy, receivership or similar proceedings.
PRODUCTS AND SERVICES
During the years 2009 to date the Company was involved in the acquisition, production, licensing, marketing and distribution of mixed martial arts (MMA) content, programming and merchandising for North American and International markets. The Company was never able to close asset acquisition agreements due to a lack of funding. As a result, we have no customers or consumers of our products, we have no principal suppliers or sources for materials. There is no need for government approval of our products and services.
MARKETS AND CUSTOMERS
According to the directors of the Company: Mixed Martial Arts (MMA) is an international sport with mainstream acceptance: MMA events, featuring athletes using a variety of fighting styles including boxing, jiu jitsu and wrestling have seen growth over the last five years; In 2009, total MMA pay-per-view revenues reached $450 million USD as compared to HBO Boxing at $175 million USD and WWE at $80 million USD; Add to that the revenue earned from live event ticket sales, television licensing, home video, merchandise and sponsorship, and the MMA industry is becoming the competition, with estimates of the global MMA market being a $1 billion USD industry. The Company continues to search for funding to continue its business.
COMPETITION
The entertainment industry is highly competitive. Competitors will include the Ultimate Fighting Championship (UFC), ProElite, and other independent media companies and individual producers and operators, most of which will have financial resources, personnel and facilities substantially greater than we have. We will face competition for the acquisition of broadcast rights and media network time.
REGULATIONS
We expect that our operations will comply in all respects with applicable laws and regulations. We believe that the existence and enforcement of such laws and regulations will have no more restrictive an effect on our operations than on other similar companies in the media and entertainment industry.
EMPLOYEES
The Company has no employees.
RESEARCH AND DEVELOPMENT EXPENDITURES
We have not incurred any research or development expenditures since our incorporation.
PATENTS AND TRADEMARKS
We do not own, either legally or beneficially, any patents or trademarks.
Reports to Securities Holders
We provide an annual report that includes audited financial information to our shareholders. We will make our financial information equally available to any interested parties or investors through compliance with the disclosure rules of Regulation S-K for a small business issuer under the Securities Exchange Act of 1934. We are subject to disclosure filing requirements including filing a Form 10K annually and Forms 10Q quarterly. In addition, we will file a Form 8K and other proxy and information statements from time to time as required. We do not intend to voluntarily file the above reports in the event that our obligation to file such reports is suspended under the Exchange Act. The public may read and copy any materials that we file with the Securities and Exchange Commission, (“SEC”), at the SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
Item 1A. Risk Factors
THERE ARE SIGNIFICANT RISKS ASSOCIATED WITH AN INVESTMENT IN OUR COMMON STOCK. BEFORE MAKING A DECISION CONCERNING THE PURCHASE OF OUR SECURITIES, YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS AND OTHER INFORMATION IN THIS ANNUAL REPORT WHEN YOU EVALUATE OUR BUSINESS.
Business Risks:
Risks Associated with Our Company. We have limited operating history which makes it difficult to evaluate the investment merits of our Company.
If we do not obtain additional financing, our business will fail because we will be unable to fund even the administration of our minimal operations. In order for the Company to continue we need to obtain additional financing. As of July 31, 2013 we had $4,324 cash on hand. We currently have limited operations.
The future issuance of debt may contain contractual restrictions that may curtail implementation of our business plan. We do not have any contractual restrictions limiting our ability to incur debt. Any significant indebtedness, however, could restrict our ability to fully implement our business plan. If we are unable to repay the debt, we could be forced to cease operating.
The loss of any of our key personnel may affect our ability to implement our business plan and cause our stock to decline in value. We are dependent on David Ashby, President and Director of the Company, to implement our business plan. The loss of his services may have a negative effect on our ability to timely and successfully implement our business plan. We do not have an employment agreement with Mr. Ashby and we have not obtained key man insurance over him.
Investment Risks:
Our issuance of additional shares may have the effect of diluting the interest of shareholders; our common stock shareholders do not have preemptive rights. Any additional issuances of common stock by us from our authorized but unissued shares may have the effect of diluting the percentage interest of existing shareholders. The securities issued to raise funds may have rights, preferences or privileges that are senior to those of the holders of our other securities, including our common stock. The board of directors has the power to issue such shares without shareholder approval. We fully intend to issue additional common shares in order to raise capital to fund our business operations and growth objectives.
We do not anticipate paying dividends to our common stockholders in the foreseeable future, which makes investment in our stock speculative and risky. We have not paid dividends on our common stock and do not anticipate paying dividends on our common stock in the foreseeable future. The board of directors has sole authority to declare dividends payable to our stockholders. The fact that we have not paid and do not plan to pay dividends indicates that we must use all of our funds we generate for reinvestment in our business activities. Investors also must evaluate an investment in the Company solely on the basis of anticipated capital gains.
Limited liability of our executive officers and directors may discourage shareholders from bringing a lawsuit against them. Our Memorandum and Articles of Incorporation contain provisions that limit the liability of our directors for monetary damages and provide for indemnification of officers and directors. These provisions may discourage shareholders from bringing a lawsuit against officers and directors for breaches of fiduciary duty and may reduce the likelihood of derivative litigation against officers and directors even though such action, if successful, might otherwise have benefited the shareholders. In addition, a shareholder's investment in the Company may be adversely affected to the extent that we pay costs of settlement and damage awards against officers or directors pursuant to the indemnification provisions of the bylaw. The impact on a shareholder's investment in terms of the cost of defending a lawsuit may deter the shareholder from bringing suit against any of our officers or directors. We have been advised that the SEC takes the position that these article and bylaw provisions do not affect the liability of any director under applicable federal and state securities laws.
We are a development stage company and we expect to incur operating losses for the foreseeable future. We were incorporated on June 12, 2008 and our business to date has been principally organizational activities. We have no way to evaluate the likelihood that our business will be successful. Potential investors should be aware of the difficulties normally encountered by startup companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the business that we plan to undertake. These potential problems include, but are not limited to, additional costs and expenses that may exceed current estimates. We anticipate that we will incur increased operating expenses without realizing any revenues. We recognize that if business revenues are not forthcoming, we will not be able to continue business operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and if we are unsuccessful in addressing these risks, our business will most likely fail.
We have yet to earn continuous or sufficient revenue and our ability to sustain our operations is dependent on our ability to raise additional financing. As a result there is substantial doubt about our ability to continue as a going concern. We have accumulated net losses of $10,542,026 for the period from inception June 12, 2008 to July 31, 2013 and have insufficient revenues to date. Our future is dependent upon our ability to obtain financing and upon future profitable operations from the development of our business. These factors raise substantial doubt that we will be able to continue as a going concern. Our independent auditor has expressed substantial doubt about our ability to continue as a going concern. This opinion could materially limit our ability to raise additional funds by issuing new debt or equity securities or otherwise. If we fail to raise sufficient capital when needed, we will not be able to complete our business plan. As a result we may have to liquidate our business and you may lose your investment. You should consider our auditor's comments when determining if an investment in our company is suitable.
Because our current officers and directors have other business interests, they may not be able or willing to devote a sufficient amount of time to our business operations, causing our business to fail. Mr. David Ashby, our President and director, currently devotes his full attention providing services to the Company. While he presently possesses adequate time to attend to our interest, it is possible that the demands on him from other obligations could increase, with the result that he would no longer be able to devote sufficient time to the management of our business. This could negatively impact our business development.
We may be unable to obtain additional capital that we may require to implement our business plan. This would restrict our ability to grow. The proceeds from our financing efforts to date have provided us with a limited amount of working capital not sufficient to fund our proposed operations. We will require additional capital to continue to operate our business and our proposed operations. We may be unable to obtain additional capital as and when required.
Future acquisitions and future development, production and marketing activities, as well as our administrative requirements (such as salaries, insurance expenses and general overhead expenses, as well as legal compliance costs and accounting expenses) will require a substantial amount of additional capital and cash flow.
We may not be successful in locating suitable financing transactions in the time period required or at all, and we may not obtain the capital we require by other means. If we do not succeed in raising additional capital, the capital we have received to date is not sufficient to fund our operations going forward without obtaining additional capital financing.
Any additional capital raised through the sale of equity may dilute your ownership percentage. This could result in a decrease in the fair market value of our equity securities because our assets would be owned by a larger pool of outstanding equity. The terms of securities we issue in future may be more favorable to our new investors, and may include preferences, superior voting rights and the issuance of warrants or other derivative securities, and issuances of incentive awards under equity employee incentive plans, which may have a further dilutive effect.
Our ability to obtain needed financing may be impaired by such factors as the capital markets generally, our status as a new enterprise without a demonstrated operating history or the retention or loss of key management. If the amount of capital we are able to raise from financing activities is not sufficient to satisfy our capital needs, we may be required to cease our operations.
We may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees, securities law compliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which may adversely impact our financial condition.
The limited trading of our common stock may impair your ability to sell your shares. There has been no trading market for our common stock since our inception. The lack of trading of our common stock and the low volume of any future trading may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. Such factors may also impair our ability to raise capital by selling shares of capital stock and may impair our ability to acquire other companies or technologies by using common stock as consideration.
The market price of our common stock is likely to be highly volatile and subject to wide fluctuations. Assuming we are able to establish an active trading market for our common stock, the market price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in response to a number of factors that are beyond our control, including:
* dilution caused by our issuance of additional shares of common stock and other forms of equity securities, which we expect to make in connection with future capital financings to fund our operations and growth, to attract and retain valuable personnel and in connection with future strategic partnerships with other companies;
* announcements of acquisitions or other business initiatives by our competitors;
* market changes in the demand for products and services;
* quarterly variations in our revenues and operating expenses;
* changes in the valuation of similarly situated companies, both in our industry and in other industries;
* changes in analysts' estimates affecting us, our competitors or our industry;
* additions and departures of key personnel;
* fluctuations in interest rates and the availability of capital in the capital markets;
These and other factors are largely beyond our control, and the impact of these risks, singly or in the aggregate, may result in material adverse changes to the market price of our common stock and our results of operations and financial condition.
Our operating results may fluctuate significantly, and these fluctuations may cause our stock price to decline. Our operating results will likely vary in the future primarily as the result of fluctuations in our revenues and operating expenses, costs that we incur, and other factors. If our results of operations do not meet the expectations of current or potential investors, the price of our common stock may decline.
Applicable SEC rules governing the trading of "penny stocks" will limit the trading and liquidity of our common stock, which may affect the trading price of our common stock. Our common stock is presently considered to be a "penny stock" and is subject to SEC rules and regulations which impose limitations upon the manner in which such shares may be publicly traded and which regulate broker-dealer practices in connection with transactions in "penny stocks." Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the FINRA system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules which may increase the difficulty investors may experience in attempting to liquidate such securities.
Forward-looking statements
This Form 10-K contains forward-looking statements that involve risk and uncertainties. We use words such as anticipate, believe, will, plan, expect, future, intend and similar expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements. Our actual results are likely to differ materially from those anticipated in these forward-looking statements for many reasons.
We currently do not own any physical property or own any real property. Our principal executive office is located at: 1937 Pendrell Street, Suite 1004, Vancouver, B.C., Canada V6G 1T4
Item 3. Legal Proceedings
We are not currently involved in any legal proceedings and we are not aware of any pending or potential legal actions.
Item 4. Mine Safety Procedures
Not applicable
Part II
Item 5. Market for Common Equity and Related Stockholder Matters
No Public Market for Common Stock
As of the date of this report we have approximately 18 shareholders of record. We have paid no cash dividends and have no outstanding options. We have no securities authorized for issuance under equity compensation plans.
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of Securities' laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation. The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a suitably written statement.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock if it becomes subject to these penny stock rules. Therefore, if our common stock becomes subject to the penny stock rules, stockholders may have difficulty selling those securities.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward Looking Statements
This section of this report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of our report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions. We are a development stage company and have not yet generated or realized any revenues.
Results of Operations
We are still in the development stage and have not generated any revenues to date.
We incurred operating losses of $10,542,026 from date of incorporation June 12, 2008 to the year ended July 31, 2013. These losses consisted of general operating expenses and professional fees incurred in connection with the day to day operation of our business, the preparation and filing of our periodic reports and the development of our media content, systems and business. Our net loss for the year ending July 31, 2013 was $8,302,903. The loss consists principally of a loss on conversion of debt in the amount of $7,939,914 (see note 6 to the July 31, 2013 year end audited financial statements) and operating expenses of $353,723 incurred in analyzing, reorganizing, planning and evaluating the Company’s business focus and direction.
Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated revenues. There is no assurance we will ever generate revenues. We are still in our development stage and have generated no revenues to date. The following table provides selected financial data about our company for the years ended July 31, 2013 and 2012.
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Balance Sheet Data:
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2013
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2012
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Cash
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$ | 4,324 | $ | 0 | ||||
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Total assets
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$ | 4,324 | $ | 0 | ||||
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Total liabilities
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$ | 236,882 | $ | 612,744 | ||||
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Shareholders' (deficit)
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$ | (232,558 | ) | $ | (612,744 | ) | ||
Liquidity and Capital Resources
Our cash balance at July 31, 2013 was $4,324 (2012- $0) with outstanding liabilities of $236,882 (2012 - $612,744).
Our current cash balance will be unable to sustain operations for the next twelve months. We will be forced to raise additional funds by issuing new debt or equity securities or otherwise. During the year ended July 31, 2013 we raised $250,000 in equity and increased our debt to a related party by $68,976. If we fail to raise sufficient capital when needed, we will not be able to complete our business plan. We are a development stage company and have generated no revenue to date.
Plan of Operation
We are not currently able to fund our levels of operations for the next twelve months. As a result we will be forced to raise additional funds by issuing new debt or equity securities or otherwise. If we fail to raise sufficient capital when needed, we will not be able to complete our business plan. We are a development stage company and have generated no revenue to date.
Our auditor has issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills.
The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of acquisitions. Management has plans to seek additional capital through a private placement and public offering of its common stock.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Item 8. Financial Statements
FINANCIAL STATEMENTS
Green Hygienics Holdings Inc.
July 31, 2013
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F-2
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F-3
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F-4
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F-5
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F-6 – F-10
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Green Hygienics Holdings Inc.
(formerly known as Takedown Entertainment, Inc.)
(A Development Stage Company)
We have audited the accompanying balance sheets of Green Hygienics Holdings Inc. (a development stage company, formerly known as Takedown Entertainment, Inc.) as of July 31, 2013 and 2012 the related statements of operations, changes in stockholders' deficit, and cash flows for the years ended July 31, 2013 and 2012 and for the period from June 12, 2008 (inception) through July 31, 2013. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Green Hygienics Holdings Inc., as of July 31, 2013 and 2012, and the results of its operations and cash flows for the periods described above in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has a working capital deficit and incurred an accumulated net loss from operations, which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ M&K CPAS, PLLC
www.mkacpas.com
Houston, Texas
November 5, 2013
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GREEN HYGIENICS HOLDINGS INC
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(a development stage company)
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Balance Sheets
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(Stated in US Dollars)
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As of
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As of
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July 31
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July 31
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2013
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2012
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Assets
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Current assets
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Cash
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$
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4,324
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$
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-
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Total current assets
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4,324
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-
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Total Assets
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$
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4,324
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$
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-
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Liabilities
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Current liabilities
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Accounts payable
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$
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23,844
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$
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267,240
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Management fees payable
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29,812
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132,504
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Loan payable to related party
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183,226
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213,000
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Total current liabilities
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236,882
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612,744
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Total Liabilities
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236,882
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612,744
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Stockholders' Deficit
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Common Stock, $0.001 par value
375,000,000 common shares authorized
9,298,313 shares issued July 31, 2013
(42,133 issued July 31, 2012)
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9,298
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42
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Additional paid-in capital
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10,300,170
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1,626,337
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Deficit accumulated during development stage
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(10,542,026
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)
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(2,239,123
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)
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Total stockholders' deficit
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(232,558
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)
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(612,744
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)
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Total liabilities and stockholders' deficit
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$
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4,324
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$
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-
|
||||
The accompanying notes are an integral part of these financial statements
|
GREEN HYGIENICS HOLDINGS INC
|
|
(a development stage company)
|
|
Statements of Operations
|
|
(Stated in US Dollars)
|
|
For the year ending
|
For the year ending
|
From inception
(June 12, 2008) to
|
||||||||||
|
July 31 2013
|
July 31 2012
|
July 31 2013
|
||||||||||
|
Revenue
|
$
|
-
|
$
|
75,000
|
$
|
150,000
|
||||||
|
Expenses
|
||||||||||||
|
Mining claims
|
-
|
-
|
20,000
|
|||||||||
|
Administration fees
|
52,000
|
-
|
52,000
|
|||||||||
|
Business and systems development
|
82,034
|
798,226
|
1,535,926
|
|||||||||
|
Consulting fees
|
45,000
|
139,875
|
245,997
|
|||||||||
|
Management fees
|
56,962
|
90,000
|
255,712
|
|||||||||
|
General and administrative expense
|
117,727
|
173,739
|
462,450
|
|||||||||
|
Total Expenses
|
353,723
|
1,201,840
|
2,572,085
|
|||||||||
|
|
||||||||||||
|
Loss from operations
before other expense
|
(353,723
|
)
|
(1,126,840
|
)
|
(2,422,085
|
)
|
||||||
|
Loss on conversion of debt
|
(7,939,914
|
)
|
(106,785
|
) |
(8,046,699
|
)
|
||||||
|
Interest
|
(9,266
|
)
|
(4,429
|
)
|
(73,242
|
)
|
||||||
|
Net loss before income tax
|
(8,302,903
|
)
|
(1,238,054
|
)
|
(10,542,026
|
)
|
||||||
|
Provision for income tax
|
-
|
-
|
-
|
|||||||||
|
Net Loss
|
$
|
(8,302,903
|
)
|
$
|
(1,238,054
|
)
|
$
|
(10,542,026
|
)
|
|||
|
Basic and Diluted Loss per Common Share
|
$
|
(2.37
|
)
|
$
|
(30.15
|
)
|
||||||
|
Weighted Average Number of Common Shares
|
3,376,713
|
41,067
|
||||||||||
The accompanying notes are an integral part of these financial statements
|
GREEN HYGIENICS HOLDINGS INC
|
|
(a development stage company)
|
|
Statements of Cash Flows
|
|
(Stated in US Dollars)
|
|
For the year ending
|
For the year ending
|
From inception
(June 12, 2008) to
|
||||||||||
|
July 31, 2013
|
July 31, 2012
|
July 31, 2013
|
||||||||||
|
Cash Flow From Operating Activities
|
||||||||||||
|
Net loss
|
$
|
(8,302,903
|
)
|
$
|
(1,238,054
|
)
|
$
|
(10,542,026
|
)
|
|||
|
Adjustments to reconcile net loss
to net cash used:
|
||||||||||||
|
Imputed interest
|
9,266
|
4,429
|
13,695
|
|||||||||
|
Loss on conversion of debt
|
793,750
|
106,785
|
900,535
|
|||||||||
|
Loss on settlement of accounts payable
|
4,756,209
|
-
|
4,756,209
|
|||||||||
|
Loss on settlement of management fees payable
|
2,389,955
|
-
|
2,389,955
|
|||||||||
|
Non cash directors fees
|
16,800
|
-
|
16,800
|
|||||||||
|
Changes in:
|
||||||||||||
|
Prepaid expense
|
-
|
3,500
|
-
|
|||||||||
|
Accounts payable
|
22,271
|
244,787
|
1,374,774
|
|||||||||
|
Management fees payable
|
-
|
23,754
|
-
|
|||||||||
|
Conversion of debt
|
-
|
75,000
|
-
|
|||||||||
|
Net cash used in operating activities
|
(314,652
|
)
|
(779,799
|
)
|
(1,090,058
|
)
|
||||||
|
Cash Flow From Investing Activities
|
|
|
|
|||||||||
|
Net cash used in investing activities
|
-
|
-
|
-
|
|||||||||
|
Cash Flow From Financing Activities
|
||||||||||||
|
Loans payable to related party
|
68,976
|
213,000
|
369,382
|
|||||||||
|
Proceeds from shares issued for cash
|
250,000
|
455,000
|
705,000
|
|||||||||
|
Proceeds form shares issued to founders
|
-
|
-
|
20,000
|
|||||||||
|
Net cash provided by financing activities
|
318,976
|
668,000
|
1,094,382
|
|||||||||
|
Change in cash for the period
|
4,324
|
(111,799
|
)
|
4,324
|
||||||||
|
Cash at beginning of period
|
-
|
111,799
|
-
|
|||||||||
|
Cash at end of period
|
$
|
4,324
|
$
|
-
|
$
|
4,324
|
||||||
|
Cash paid for:
|
||||||||||||
|
Interest
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
|
Income Tax
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
|
Non cash transactions:
|
||||||||||||
|
Conversion of debt
|
$
|
-
|
$
|
-
|
$
|
1,146,950
|
||||||
The accompanying notes are an integral part of these financial statements
GREEN HYGIENICS HOLDINGS INC
(a development stage company)
Statement of Stockholders' Equity (Deficit)
From Inception (June 12, 2008) to July 31, 2013
(Stated in US Dollars)
|
Deficit
|
||||||||||||||||||||||||||||
|
Accumulated
|
||||||||||||||||||||||||||||
| Stock |
During
|
Total
|
||||||||||||||||||||||||||
| Common Stock |
Paid in
|
Stock
|
Subscription |
Exploration
|
Equity
|
|||||||||||||||||||||||
| Shares |
Amount
|
Capital
|
Payable
|
Receivable |
Stage
|
(Deficit)
|
||||||||||||||||||||||
|
Shares issued to founders - June 12, 2008
|
55,000 | $ | 55 | $ | 19,945 | $ | - | - | $ | - | $ | 20,000 | ||||||||||||||||
|
Net loss for period
|
(81,747 | ) | (81,747 | ) | ||||||||||||||||||||||||
|
Balance, July 31, 2008
|
55,000 | $ | 55 | $ | 19,945 | $ | - | - | $ | (81,747 | ) | $ | (61,747 | ) | ||||||||||||||
|
Net loss for year
|
- | - | - | - | - | (34,237 | ) | (34,237 | ) | |||||||||||||||||||
|
Balance, July 31, 2009
|
55,000 | $ | 55 | $ | 19,945 | $ | - | - | $ | (115,984 | ) | $ | (95,984 | ) | ||||||||||||||
|
Net loss for year
|
- | - | - | - | - | (55,107 | ) | (55,107 | ) | |||||||||||||||||||
|
Balance, July 31, 2010
|
55,000 | $ | 55 | $ | 19,945 | $ | - | - | $ | (171,091 | ) | $ | (151,091 | ) | ||||||||||||||
|
Conversion of Debt
|
- | - | - | 1,146,950 | (181,785 | ) | - | 965,165 | ||||||||||||||||||||
|
Net loss for year
|
- | - | - | - | - | (829,978 | ) | (829,978 | ) | |||||||||||||||||||
|
Balance, July 31, 2011
|
55,000 | $ | 55 | $ | 19,945 | $ | 1,146,950 | (181,785 | ) | $ | (1,001,069 | ) | $ | (15,904 | ) | |||||||||||||
|
Cancellation of shares
|
(15,000 | ) | (15 | ) | 15 | - | - | - | - | |||||||||||||||||||
|
Issuance of shares for debt settlement
|
764 | 1 | 1,146,949 | (1,146,950 | ) | 181,785 | - | 181,785 | ||||||||||||||||||||
|
Issuance of shares for cash
|
1,369 | 1 | 454,999 | - | - | - | 455,000 | |||||||||||||||||||||
|
Imputed interest
|
- | - | 4,429 | - | - | - | 4,429 | |||||||||||||||||||||
|
Net loss for year
|
- | - | - | - | - | (1,238,054 | ) | (1,238,054 | ) | |||||||||||||||||||
|
Balance, July 31, 2012
|
42,133 | $ | 42 | $ | 1,626,337 | $ | - | - | $ | (2,239,123 | ) | $ | (612,744 | ) | ||||||||||||||
| Issuance of shares for: | ||||||||||||||||||||||||||||
| Services | 14,000 | 14 | 16,786 | - | - | 16,800 | ||||||||||||||||||||||
| Cash | 1,000,000 | 1,000 | 249,000 | - | - | 250,000 | ||||||||||||||||||||||
| Conversion of loans payable | 875,000 | 875 | 891,625 | - | - | 892,500 | ||||||||||||||||||||||
| Conversion of accounts payable | 4,873,390 | 4,873 | 4,996,503 | - | - | 5,001,376 | ||||||||||||||||||||||
| Conversion of management fee payable | 2,493,790 | 2,494 | 2,510,653 | - | - | 2,513,147 | ||||||||||||||||||||||
| Imputed interest | - | - | 9,266 | - | - | 9,266 | ||||||||||||||||||||||
| Net loss for year | - | - | - | - | - | (8,302,903 | ) | (8,302,903 | ) | |||||||||||||||||||
| Balance, July 31, 2013 | 9,298,313 | $ | 9,298 | $ | 10,300,170 | $ | - | - | $ | (10,542,026 | ) | $ | (232,558 | ) | ||||||||||||||
The accompanying notes are an integral part of these financial statements
GREEN HYGIENICS HOLDINGS INC
(a development stage company)
Footnotes to the Financial Statements
For the year ended July 31, 2013
(Stated in US Dollars)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
The Company was incorporated under the laws of the State of Nevada on June 12, 2008. On June 30, 2010 the Company changed its name to Takedown Entertainment Inc. and changed its business focus to mixed martial arts media entertainment. On July 24, 2012 the Company changed its name to Green Hygienics Holdings Inc. and is pursuing alternative energy and other environmentally friendly ventures .
The Company has been unable to raise additional capital to further its business and has been looking at all opportunities to maintain and enhance shareholder value, which may include a possible disposition of its current operations and/or entering into a potential business combination. The Company has been in negotiations with one potential business combination candidate. However, no definitive agreements have yet been entered into. There can be no assurances that a definitive agreement will be entered into or that a subsequent transaction will be closed.
CONCENTRATIONS AND ECONOMIC DEPENDENCE
During the year ended July 31, 2012 one customer accounted for 100% of the Company's revenue.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Company follows accounting principles generally accepted in the United States of America. In the opinion of management all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein.
REVENUE RECOGNITION
The Company will recognize revenue in accordance with Accounting Standards Codification No. 605, REVENUE RECOGNITION ("ASC-605"), ASC-605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company will defer any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.
Revenue was earned for the placement of product endorsements in the filming of a promotion that was carried on to the pre-production stage by the Company.
USE OF ESTIMATES
The preparation of the financial statements in conformity with 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. The Company regularly evaluates estimates and assumptions related to deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates.
To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of July 31, 2013 the Company had $4,324 in cash or cash equivalents (July 31, 2012 cash of $0).
DEVELOPMENT STAGE COMPANY
The Company is considered a development stage company, having limited operating revenues during the period presented, as defined by Accounting Standards Codification ASC 915-205 “Development-Stage Entities”. ASC 915-205 requires companies to report their operations, shareholders equity and cash flows since inception through the date that revenues are generated from management’s intended operations, among other things.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 and 825 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 and 825 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
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
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 amounts due to related parties. Pursuant to ASC 820 and 825, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of July 31, 2013 and 2012:
|
Fair Value Measurement at July 31, 2013
|
Fair Value Measurement at July 31, 2012
|
|||||||||||||||||||||||
|
Financial Instrument
|
Level 1
|
Level 2
|
Level 3
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||||||||
|
Assets:
|
|
|||||||||||||||||||||||
|
Cash
|
$ | 4,324 | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
|
Liabilities:
|
||||||||||||||||||||||||
|
Accounts payable
|
$ | - | $ | 23,844 | $ | - | $ | - | $ | 267,240 | $ | - | ||||||||||||
|
Loan payable to related party
|
$ | - | $ | 183,226 | $ | - | $ | - | $ | 213,000 | $ | - | ||||||||||||
INCOME TAXES
The Company provides for income taxes under ASC 740, Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse.
ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company has $2,585,312 of net operating losses carried forward to offset taxable income in future years which expire commencing in fiscal 2030. The income tax benefit differs from the amount computed by applying the US federal income tax rate of 34% to net loss before income taxes for the year ended July 31, 2013 and had no uncertain tax positions as at July 31, 2013.
Net deferred tax assets consist of the following components as of:
|
July 31,
|
July 31,
|
|||||||
|
|
2013
|
2012
|
||||||
|
NOL Carryover
|
$
|
879,006
|
$
|
761,302
|
||||
|
Valuation allowance
|
(879,006
|
) |
(761,302
|
) | ||||
|
Net deferred tax asset
|
$
|
0
|
$
|
0
|
||||
BASIC AND DILUTED NET LOSS PER COMMON SHARE
The Company computes net 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 net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. As at July 31, 2013 and 2012, the Company had no potentially dilutive shares.
STOCK BASED COMPENSATION
The Company records stock based compensation in accordance with the guidance in ASC Topic 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 2013, Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:
|
-
|
Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income (but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period); and
|
|
-
|
Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.
|
The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations.
In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the FASB determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not expected to have a material impact on our financial position or results of operations.
In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.
In August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.
In July 2012, the FASB issued ASU 2012-02, “Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment” in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 is not expected to have a material impact on our financial position or results of operations.
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. However, the Company has accumulated a loss and has a limited operating history. This raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty.
As shown in the accompanying financial statements, the Company has incurred a net loss of $10,542,026 for the period from June 12, 2008 (inception) to July 31, 2013 and has generated minimal revenues. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of acquisitions. Management has plans to seek additional capital through a private placement and public offering of its common stock. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
NOTE 4 - RELATED PARTY TRANSACTIONS
LOAN PAYABLE - A shareholder advanced $213,000 to the Company as a loan with no fixed terms of repayment and non interest bearing. At July 31, 2013 the Company had settled $98,750 of the debt with the issuance of 875,000 common shares and recorded $6,914 in imputed interest expense as a credit to Additional Paid in Capital. The conversion of the debt for the issuance of common shares fairly valued at the market price on the date of authorization according to GAAP resulted in a loss on conversion of $687,825. At July 31, 2013 $183,226 remained owing.
MANAGEMENT FEES PAYABLE - During the year ended July 31, 2013 the Company accrued management fees payable of $22,500 to a former director of the Company for services as an officer of the Company (2012 - $67,500). The management fees payable are unsecured, non interest bearing and with no fixed terms of repayment. During the year, $123,192 in fees payable were settled for the issuance of 2,493,790 shares of common stock. At July 31, 2013 $29,812 remained owing.
During the year ended July 31, 2013 the current President of the Company received $14,000 in management fees related to the operations of the Company.
The above transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. (see also note 6 – conversion of debt)
NOTE 5 - COMMON STOCK
Effective July 24, 2012 the Company reverse split its common shares on the basis of one new share for each two thousand shares held (1 for 2,000). All share amounts have been adjusted retroactively to reflect the reverse split.
The Company issued 55,000 shares of common stock (founder’s shares) for $20,000 cash on June 12, 2008.
During the first quarter ended October 31, 2011:
–15,000 shares of common stock were returned to the Company for cancellation and credited $15 to Additional Paid In Capital;
–764 shares of common stock were issued in settlement of debts of $1,146,950; the company converted and recognized a loss of $106,785.
–353 shares of common stock were issued for cash of $250,000;
–234 shares of common stock were issued for cash of $60,000;
During the second quarter ended January 31, 2012:
–191 shares of common stock were issued for cash of $45,000;
–591 shares of common stock were issued for cash of $100,000.
During the first quarter ended October 31, 2012:
– On August 31, 2012 the Company issued 14,000 shares of common stock to the directors of the Company for services rendered to the Company by the directors. The shares issued are valued based on fair market value as determined between the parties at the date of authorization at $16,800.
During the third quarter ended April 30, 2013:
– 875,000 shares of common stock were issued in the settlement of $98,750 of loans payable and recognized a loss on settlement of $793,750 because the shares were valued based on their fair market value using the market price on the date of settlement which amount was greater than the debt, resulting in a loss;
– 7,367,180 shares of common stock fairly valued between the parties at market were issued in the settlement of $123,192 in management fees and $245,167 of debt. A loss on settlement of $7,146,164 was recorded because the shares were valued based on their fair market value using the market price on the date of settlement which amount was greater than the debt, resulting in a loss;
During the fourth quarter ended July 31, 2013:
- The Company issued 1,000,000 common shares valued at $0.25 per share and received $250,000 cash.
STOCK OPTIONS
The Company has in place a stock option plan for the benefit of consultants and employees. The Company had not granted any options to acquire common shares under the plan at April 30, 2013 (2012 – nil).
NOTE 6 - CONVERSION OF DEBT
During the year ended July 31, 2013 the Company settled $467,109 in debt for the issuance of 8,242,180 shares of common stock fairly valued according to GAAP at a fair market value of $8,407,023. The fair valuation resulted in a loss on conversion of $7,939,914.
See also note 4 – Loan Payable and Management Fee Payable
NOTE 7 - SUBSEQUENT EVENTS AND CONTINGENCIES
There were no events of a material nature known to the Company and not disclosed in these financial statements at July 31, 2013 through the date of issuance of these financial statements.
Item 9. Changes in and Disagreements with Accountants on Financial Disclosure
There were no reportable disagreements between the Company and M&K CPA’s, the Company’s auditors.
Item 9A. Controls and Procedures
Management’s Report on Disclosure Controls and Procedures
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of July 31, 2013 using the criteria established in “ Internal Control - Integrated Framework ” issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of July 31, 2013, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.
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1.
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We do not have an Audit Committee – While not being legally obligated to have an audit committee, it is the management’s view that such a committee, including a financial expert member, is an utmost important entity level control over the Company’s financial statement. Currently the Board of Directors acts in the capacity of the Audit Committee, and does not include a member that is considered to be independent of management to provide the necessary oversight over management’s activities.
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2.
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We did not maintain appropriate cash controls – As of July 31, 2013, the Company has not maintained sufficient internal controls over financial reporting for the cash process, including failure to segregate cash handling and accounting functions, and did not require dual signature on the Company’s bank accounts. Alternatively, the effects of poor cash controls were mitigated by the fact that the Company had limited transactions in their bank accounts.
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3.
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We did not implement appropriate information technology controls – As at July 31, 2013, the Company retains copies of all financial data and material agreements; however there is no formal procedure or evidence of normal backup of the Company’s data or off-site storage of data in the event of theft, misplacement, or loss due to unmitigated factors.
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Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.
As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of July 31, 2013 based on criteria established in Internal Control—Integrated Framework issued by COSO.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting identified in connection with our evaluation we conducted of the effectiveness of our internal control over financial reporting as of July 31, 2013, that occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.
PART III
Item 10. Directors, Executive Officers and Control Persons
The names, ages and titles of our executive officers and director are as follows:
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Name and Address of Executive Officer and/or Director
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Age
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Position
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||
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David Ashby
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63 |
President, CEO and Director appointed January 24, 2013
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David Ashby is a professional engineer and combines experience in marketing, venture capital and global market expansion along with his contemporary education. Mr. Ashby held an Atomic Energy License for over 20 year as a Senior Radiographer and has extensive knowledge and experience in the field of infrared technology. Born and raised in Saskatchewan, Canada, he moved to Alberta, Canada, after completing a Bachelor of Arts with a major in Mathematics and a minor in Economics in the early 1970’s to pursue his interest in the oil and gas service sector. By age 28, Mr. Ashby was a co-founder/owner of a multi- million dollar international pipeline x-ray company. He has been under contract as a pipeline inspector with Enbridge.
Term of Office
Our directors are appointed to hold office until the next annual meeting of our stockholders or until a successor is qualified and elected, or until he resigns or is removed in accordance with the provisions of the State of Nevada Statutes. Our officers are appointed by our Board of Directors and hold office until removed by the Board.
Significant Employees
We have no significant employees other than our officers and/or directors. Our officers and directors have not been the subject of any order, judgment, or decree of any court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring, suspending or otherwise limiting them from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities.
Our officers and directors have not been convicted in any criminal proceeding (excluding traffic violations) nor are they subject of any currently pending criminal proceeding.
We conduct our business through agreements with consultants and arms-length third parties. We pay our consultants usual and customary rates received by other third parties for performing similar consulting services.
Code of Ethics
Our board of directors adopted our code of ethical conduct that applies to all of our employees and directors, including our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. We believe the adoption of our Code of Ethical Conduct is consistent with the requirements of the Sarbanes-Oxley Act of 2002.
Our Code of Ethical Conduct is designed to deter wrongdoing and to promote:
·Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
·Full, fair, accurate, timely and understandable disclosure in reports and documents that we file or submit to the Securities & Exchange Commission and in other public communications made by us;
·Compliance with applicable governmental laws, rules and regulations;
·The prompt internal reporting to an appropriate person or persons identified in the code of violations of our Code of Ethical Conduct; and
·Accountability for adherence to the Code.
Item 11. Executive Compensation
Management Compensation
The table below summarizes all compensation awarded to, earned by, or paid to our executive officers by any person for all services rendered in all capacities to us for the past three years ending July 31, 2013:
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Annual Compensation
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Long Term Compensation
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|||||||||||||||||||||||||||||||
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Name
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Title
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Year
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Salary ($)
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Bonus
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Other Annual Compensation
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Restricted
Stock Awarded
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Options/*
SARs (#)
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LTIP payouts ($)
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All Other
Compensation
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|||||||||||||||||||||||
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David Ashby
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President and
director (from
January 24, 2013)
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2013
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$ | 0 | $ | 0 | $ | 14,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
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Peter E. Wudy
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President
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2011
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$ | 0 | $ | 0 | $ | 90,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
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and director
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2012
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$ | 0 | $ | 0 | $ | 90,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||||||
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(from May 11, 2010
to January 24, 2013)
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2013
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$ | 0 | $ | 0 | $ | 22,500 | * | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
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Dr. Alan Fields
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Director (resigned)
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2011
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$ | 12,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
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2012
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$ | 12,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||
* accrued as payable
There are no current employment agreements between the company and its officer/director.
There are no annuity, pension or retirement benefits proposed to be paid to the officer or director or employees in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by the company or any of its subsidiaries, if any.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of August 15, 2013 by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) our director, and or (iii) our officer. Unless otherwise indicated, the stockholder listed possesses sole voting and investment power with respect to the shares shown.
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Title of Class
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Name and Address of Beneficial Owner
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Amount and
Nature of
Beneficial Ownership
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Percentage of
Common Stock (1)
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|||||||
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Common Stock
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36209051 Canada Ltd
10951 – 96th Ave, Grande Prairie Alberta
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700,000 | 7.5 | % | ||||||
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Alita Capital Partners Inc
201 – 127 Commercial Drive, Calgary Alberta
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2,463,840 | 26.5 | % | |||||||
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Bear Creek Gravel Inc
1559 Pritchard Street, Westbank British Columbia
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1,430,160 | 15.4 | % | |||||||
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Fairway Mobile Homes Ltd
1680 Ross Road, Kelowna British Columbia
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1,073,180 | 11.5 | % | |||||||
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Turon Capital Partners Inc
403 – 2877 Paradise Road, Las Vegas Nevada
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2,400,000 | 25.8 | % | |||||||
(1) A beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares.
Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on August 15, 2013.
Item 13. Certain Relationships and Related Transactions
None of our directors, or officers, any proposed nominee for election as a director, any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to all of our outstanding shares, any promoter, or any relative or spouse of any of the foregoing persons has any material interest, direct or indirect, in any transaction since our incorporation or in any presently proposed transaction which, in either case, has or will materially affect us other than the transactions described below.
Our management is involved in other business activities and may in the future be involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between our business and their other business interests. In the event that a conflict of interest arises at a meeting of our directors, a director who has such a conflict will disclose his interest in a proposed transaction and will abstain from voting for or against the approval of such transaction.
Item 14. Principal Accounting Fees and Services
For the year ended July 31, 2013, the total fees charged to the company for audit services, including quarterly reviews, were $17,200.
For the year ended July 31, 2012, the total fees charged to the company for audit services, including quarterly reviews, were $11,000.
PART IV
Item 15. Exhibits
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Exhibit Number
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Description
|
|
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31.1
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31.2
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||
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32.1
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32.2
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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Signatures
Pursuant to the requirements of Section 13(a) or 15(d) of the Securities 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. | |||
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November 5, 2013
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By:
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/s/ David Ashby | |
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David Ashby,
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|||
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President, Director, (Principal) Chief Executive Officer and Acting Chief Financial Officer
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16