GREEN HYGIENICS HOLDINGS INC. - Quarter Report: 2018 October (Form 10-Q)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

(Mark One)

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

 

For the quarterly period ended October 31, 2018

 

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)

 

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)

 

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). ☒   YES ☐ NO

 

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

 

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after 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. 34,707,835 common shares issued and outstanding as of December 14, 2018

 

 

Table of Contents

 

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PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

GREEN HYGIENICS HOLDINGS INC.

Condensed Interim Financial Statements

October 31, 2018

(Expressed in U.S. dollars)

(unaudited)

 

 

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GREEN HYGIENICS HOLDINGS INC.

Condensed Balance Sheets

(Expressed in U.S. dollars)

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

 

GREEN HYGIENICS HOLDINGS INC.

Condensed Statements of Operations and Comprehensive Loss

(Expressed in U.S. dollars)

(unaudited)

 

 

 

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

 

GREEN HYGIENICS HOLDINGS INC.

Condensed Statements of Cash Flows

(Expressed in U.S. dollars)

(unaudited)

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

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. to pursue alternative energy and other environmentally friendly ventures.

2. Significant Accounting Policies

(a) Basis of Presentation

The accompanying condensed financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results of operations for the interim periods are not necessarily indicative of the operating results to be attained in the entire fiscal year.

(b) Use of Estimates

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

(c) Recent Accounting Pronouncements

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

3. Loan Payable

As at October 31, 2018, the Company owes $18,750 (July 31, 2018 - $18,750) to a non-related party, which is non-interest bearing, unsecured, and due on demand.

4. Related Party Transactions

(a) As at October 31, 2018, the Company owes $56,824 (July 31, 2018 - $56,824) to a former director of the Company which bears interest at 5% per annum, is unsecured, and is due on demand. In the event of default, the holder may convert the unpaid amount of principal and accrued interest at a price of $0.003 per share of the Company’s common stock. As at July 31, 2018, accrued interest of $12,677 (2017 - $11,961) has been included in accounts payable and accrued liabilities.

 

4. Related Party Transactions (continued)

(b) As at October 31, 2018, the Company owes $26,212 (Cdn$34,119) (July 31, 2018 - $26,212 (Cdn$34,119)) and $114,925 (July 31, 2018 - $89,925) to a company controlled by the President of the Company, which is non-interest bearing, unsecured, and due on demand.

(c) As at October 31, 2018, the Company owes $5,000 (July 31, 2018 - $nil) to a director of the Company, which is included in accounts payable and accrued liabilities.

(d) As at October 31, 2018, the Company owes $7,500 (July 31, 2018 - $nil) to the Chief Technology Officer (“CTO”) of the Company, which is included in accounts payable and accrued liabilities.

(e) During the three months ended October 31, 2018, the Company incurred $7,500 (2017 - $7,500) in consulting fees to a company controlled by the President of the Company.

(f) During the three months ended October 31, 2018, the Company incurred $5,000 (2017 - $nil) in consulting fees to a director of the Company.

(g) During the three months ended October 31, 2018, the Company incurred $7,500 (2017 - $nil) in consulting fees to the CTO.

5. Commitments

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

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

(c) On September 15, 2018, the Company executed a definitive agreement to acquire a portfolio of IP assets from the CTO, pertaining to the cannabis and urban agriculture industries (the “Asset”). The Asset consists of a destination portal that includes news, reviews, ecommerce and automatic content curation with an integrated E-Commerce system that can be set-up for product sales and marketing. The system is a mobile online directory platform that supports premium listings, self-service, geolocation and reviews and is mobile optimized. In exchange for the Asset, the Company will issue 1,000,000 shares of common stock to the CTO.

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

FORWARD-LOOKING STATEMENTS

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

Corporate Overview

 

Green Hygienics Holdings Inc. (the Company) was incorporated in the State of Nevada on June 12, 2008 as Silver Bay Resources Inc. and issued 55,000 shares of common stock on June 12, 2008 for cash of $20,000. 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.

 

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 June 3, 2015, 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 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.

 

On June 3, 2015, through the expertise of its new management, Rick Powell and Jim Loseth, we entered into the commercial indoor cultivation business specializing in the construction of cannabis growing facilities and the management thereof. Currently, we are planning to obtain contracts to build marijuana growing operations for third parties.

 

We were to build pre-fabricated buildings which meet new mandatory fire and energy codes with structural products that are fire, rot, mold, and termite resistant. Our, pre-fabricated Green Hygienics material render the electrical, mechanical and HVAC engineering and installation more efficiently than conventional construction methods. This cuts the initial set up cost and time. Utilizing a sterile growing environment increases the likelihood of meeting requisite quality assurance standards. We use a soilless, scalable, production system. This provides the low running costs and high yielding required to produce the both quality of product, but volume consistently, while maintaining the possible lowest carbon footprint.

On June 1, 2017, David Ashby resigned as a Director.

On June 1, 2017, Rick Powell resigned as CEO and as a Director.

On June 1, 2017, Jim Loseth resigned as COO and as a Director.

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

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

On August 30, 2018, Jeff Palumbo was appointed as Chief technology Officer (“CTO”).

On September 15, 2018, the Company executed a definitive agreement to acquire a portfolio of IP assets from the CTO, pertaining to the cannabis and urban agriculture industries (the “Asset”). The Asset consists of a destination portal that includes news, reviews, ecommerce and automatic content curation with an integrated E-Commerce system that can be set-up for product sales and marketing. The system is a mobile online directory platform that supports premium listings, self-service, geolocation and reviews and is mobile optimized. In exchange for the Asset, the Company will issue 1,000,000 shares of common stock to the CTO.

 

 

We are still in the development stage and have not generated any revenues to date.

We incurred operating losses of $40,952,373 from date of incorporation June 12, 2008 to the period ended October 31, 2018. These losses consisted of general operating expenses and professional fees incurred in connection with the day to day operation of our business and the preparation and filing of our periodic reports. An analysis of the loss is as follows:

 

  

 

 

During the three months ended October 31, 2018 and 2017, we did not raise any cash and had minimal expenditures for operating activities.

 

Our current cash balance will be unable to sustain operations for the next twelve months. We will be forced to raise additional funds by issuing new debt or equity securities or otherwise. We have raised no funds during the current quarter. If we fail to raise sufficient capital when needed, we will not be able to complete our business plan. We are a development stage company and have generated no revenue to date.

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

 

We estimate that our expenses over the next 12 months will be approximately $220,000 as described in the table below.  These estimates may change significantly depending on the performance of our products in the marketplace and our ability to raise capital from shareholders or other sources.

 

We intend to meet our cash requirements for the next 12 months through a combination of debt financing and equity financing by way of private placements.  We currently do not have any arrangements in place to complete any private placement financings and there is no assurance that we will be successful in completing any private placement financings on terms that will be acceptable to us.  We may not raise sufficient funds to fully carry out our business plan.

 

Future Financings

 

We will require additional financing in order to enable us to proceed with our plan of operations, as discussed above, including approximately $220,000 over the next 12 months to pay for our ongoing expenses. These expenses include legal, accounting and audit fees as well as general and administrative expenses.  These cash requirements are in excess of our current cash and working capital resources. Accordingly, we will require additional financing in order to continue operations and to repay our liabilities. There is no assurance that any party will advance additional funds to us in order to enable us to sustain our plan of operations or to repay our liabilities.

 

We anticipate continuing to rely on equity sales of our common stock in order to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned business activities.

 

We presently do not have any arrangements for additional financing and no potential lines of credit or sources of financing are currently available for the purpose of proceeding with our plan of operations.

Off-Balance Sheet Arrangements

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

 

Critical Accounting Policies

 

Use of Estimates

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

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

 

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

As of October 31, 2018, we carried out an evaluation, under the supervision and with the participation of our president and chief financial officer (also our principal executive officer, principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president and chief financial officer (also our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective in providing reasonable assurance in the reliability of our corporate reporting as of the end of the period covered by this quarterly report due to certain deficiencies that existed in the design or operation of our internal controls over financial reporting and that may be considered to be material weaknesses.

 

Changes in Internal Controls

There have been no changes in our internal controls over financial reporting that occurred during the quarter ended October 31, 2018 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

Saturna Group Chartered Professional Accountants LLP, our independent registered public accounting firm, is not required to and has not provided an assessment over the design or effectiveness of our internal controls over financial reporting.

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

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

 

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

 

None

 

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine safety Disclosures

None.

 

Item 5. Other Information

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

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

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

 

 

Item 6. Exhibits

* Filed herewith

 

 

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.