GREEN HYGIENICS HOLDINGS INC. Forward Looking Statements
The following is management's discussion and analysis of certain significant
factors that have affected our financial position and operating results during
the periods included in the accompanying consolidated financial statements, as
well as information relating to the plans of our current management. This report
includes forward-looking statements. Generally, the words "believes,"
"anticipates," "may," "will," "should," "expect," "intend," "estimate,"
"continue," and similar expressions or the negative thereof or comparable
terminology are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties, including the matters set forth
in this report or other reports or documents we file with the
The independent auditors' report on our financial statements for the years ended
While our financial statements are presented on the basis that we are a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time, our auditors have raised a substantial doubt about our ability to continue as a going concern.
Results of Operations Revenues
We are currently in the product growing and production stages and anticipate
producing revenue during the fiscal year ending
Expenses
Operating expenses for the year ended
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Year Ended
July 31, July 31,
2021 2020 Change
Expenses:
Consulting Fees $ 519,804 $ 534,480 $ (14,676 )
Supplies 281,910 1,150,674 (868,764 )
Payroll and subcontractors 113,493 970,809 (857,316 )
Stock based compensation 4,748,058 3,024,160 1,723,898
General and Administrative 625,141 620,748 4,392
Research and development costs 803,002 - 803,002
Inventory impairment expense 172,400 306,450 (134,050 )
Depreciation 175,204 78,076 97,128
Total $ 7,439,012 $ 6,685,397 $ (753,614 ) This increase for the year ended
Stock compensation expense for the year ended
· On September 2, 2020 , the Company issued 500,000 common shares to SRAX,
Inc. ("SRAX"), in exchange for the one-year right to use the SRAX Sequire
platform, pursuant to a Platform Account Contract dated August 4, 2020 .
The shares were valued at $355,550 based on OTC's closing trade price on
the date of the agreement, and are included in stock-based compensation
expense for the year ended July 31, 2021 ,
On September 13, 2020 , and concurrently with the execution of the
Financing Agreement, the Company issued to GHS Investments, LLC , 150,857
restricted shares of its Common stock (the "Commitment Shares") to offset
transaction costs. The shares were valued at $155,383 based on OTC's
closing trade price on the date of the agreement and were recorded as a
prepaid expense. As a result of the Company not selling any shares to GHS,
and may not occur in the future, the Company recognized $155,383 as stock-
based compensation expense for the year ended July 31, 2021 .
· On September 21, 2020 , the Company issued 250,000 shares of common stock
to the CEO of the Company in exchange for consulting services, pursuant to
his agreement dated August 1, 2019 . The shares were valued at $370,000
based on OTC's closing trade price on the date of the agreement.
· On September 21, 2020 , the Company issued 100,000 shares of common stock
to the Chief Project Manager of the Company in exchange for consulting
services, pursuant to his consulting agreement dated August 1, 2019 . The
shares were valued at $148,000 based on OTC's closing trade price on the
date of the agreement.
· On September 21, 2020 , the Company issued 100,000 shares of common stock
to the Chief Science Officer of the Company pursuant to his employment
agreement dated August 1, 2020 . The shares were valued at $87,250 based on
OTC's closing trade price on the date of the agreement.
· On September 21, 2020 , the Company issued 25,000 common shares to the
Assistant Agricultural Operations Manager of the Company in exchange for
consulting services, pursuant to her consulting agreement dated August 1,
2019 . The shares were valued at $37,000 based on OTC's closing trade
price on the date of the agreement.
· On September 21, 2020 and under the terms of the Placement Agreement
dated September 18, 2020 , with Boustead Securities LLC ("BSL"), the
Company issued to BSL an advisory fee of 250,000 shares of common stock .
The shares were valued at $187,500 based on OTC's closing trade price on
the date of the agreement.
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· On September 21, 2020 , the Company issued 50,000 shares to the Company's
CFO, pursuant to his consulting agreement dated February 13, 2020 . The
shares were valued at $60,750 based on OTC's closing trade price on the
date of the agreement.
· On September 21, 2020 , the Company issued 50,000 shares of common stock to
a consultant for advice on real estate acquisitions, pursuant to his
consulting agreement. The shares were valued at $58,500 based on OTC's
closing trade price on the date of the agreement.
· On September 21, 2020 , the Company issued 125,000 shares of common stock
to a consultant for advisory services to the Board of Directors of the
Company, pursuant to his consulting agreement. The shares were valued at
$113,750 based on OTC's closing trade price on the date of the agreement.
· On September 21, 2020 , the Company issued 125,000 shares of common stock
to a consultant for advisory services to the Board of Directors of the
Company, pursuant to his consulting agreement. The shares were valued at
$113,750 based on OTC's closing trade price on the date of the agreement.
· On September 21, 2020 , the Company issued 100,000 shares of common stock
to a consultant for services, pursuant to his agreement dated February 1,
2020 . The shares were valued at $187,000 based on OTC's closing trade
price on the date of the agreement.
· On September 21, 2020 , the Company issued 125,000 shares of common stock
to a shareholder for advisory services to the Company, pursuant to his
consulting agreement dated August 1, 2019 . The shares were valued at
$185,000 based on OTC's closing trade price on the date of the agreement.
· On November 15, 2020 , the Company issued 125,000 shares of common stock to
a consultant for services to the Company, pursuant to his consulting
agreement dated August 18, 2020 . The shares were valued at $75,000 based
on OTC's closing trade price on the issuance date, pursuant to the
· agreement.
On September 21, 2020 , the Company issued 200,000 shares of common stock
pursuant to a consulting agreement dated July 1, 2020 . The value of the
shares of $92,000 was recorded against stock payable.
· On November 15, 2020 , the Company issued 100,000 shares of common stock to
a pursuant to a consulting agreement dated November 15, 2019 , for services
performed as COO of the Company. The shares were valued at $200,000 based
on OTC's closing trade price on the effective date of the agreement.
· On December 1, 2020 , the Company issued 50,000 shares of common stock to a
consultant for services, pursuant to her agreement dated December 1, 2020 .
The shares were valued at $34,000 based on OTC's closing trade price on
the date of the agreement.
· On January 15, 2021 , the Company issued 100,000 shares of common stock to
a consultant for services, pursuant to her agreement dated January 15,
2021 . The shares were valued at $75,000 based on OTC's closing trade price
on the date of the agreement.
On February 17, 2021 , the Company issued 125,000 shares of restricted
common stock to a consultant, pursuant to a consultant agreement dated
February 1, 2021 , for services performed. The shares were valued at
$113,750 based on OTC's closing trade price on the effective date of the
agreement.
On February 17, 2021 , the Company issued 200,000 shares of restricted
common stock to a consultant, pursuant to a consultant agreement dated
August 1, 2019 , for services performed. The shares were valued at $296,000
based on OTC's closing trade price on the effective date of the agreement
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On March 10, 2021 , the Company recorded the issuance in the aggregate of
200,000 shares of restricted common stock to two consultants, pursuant to
a consultant agreement dated March 10, 2021 , for services performed. The
shares were valued at $206,000 based on OTC's closing trade price on the
effective date of the agreement.
On March 11, 2021 , the Company recorded the issuance in the aggregate of
60,000 shares of restricted common stock pursuant to an Asset Purchase
Agreement between the Company and Castillo . The shares were valued at
$150,000 based on OTC's closing trade price on the effective date of the
agreement.
On March 15, 2021 , the Company recorded the issuance of 260,000 shares of
restricted common stock pursuant to a consultant agreement dated March 15,
2021 , for services performed. The shares were valued at $338,000 based on
OTC's closing trade price on the effective date of the agreement.
On June 8, 2021 , the Company issued 75,000 shares of restricted common
stock pursuant to a consulting agreement dated May 1, 2021 , for services.
The shares were valued at $97,500 based on OTC's closing trade price on
the date of the agreement.
On June 8, 2021 , the Company issued 125,000 shares of common stock to the
CEO of the Company in exchange for consulting services, pursuant to his
agreement dated August 1, 2019 . The shares were valued at $185,000 based
on OTC's closing trade price on the date of the agreement.
On June 8, 2021 , the Company issued 100,000 shares of restricted common
stock to a consultant, pursuant to a consulting agreement dated November
15, 2019 , for services performed as COO of the Company. The shares were
valued at $200,000 based on OTC's closing trade price on the effective
date of the agreement.
On June 8, 2021 , the Company issued 100,000 shares of common stock to the
Chief Science Officer of the Company pursuant to his employment agreement
dated August 1, 2020 . The shares were valued at $87,250 based on OTC's
closing trade price on the date of the agreement.
On June 8, 2021 , the Company issued 50,000 shares of common stock to a
non-related party consultant in exchange for consulting services pursuant
to a February 1, 2021 agreement. The shares were valued at $44,500 based
on OTC's closing trade price on the date of the agreement.
On June 8, 2021 , the Company issued 12,500 shares of common stock to a
non-related party consultant in exchange for consulting services pursuant
to a March 1, 2021 agreement. The shares were valued at $15,125 based on
OTC's closing trade price on the date of the agreement.
On June 8, 2021 , the Company issued 100,000 shares of common stock to a
non-related party consultant in exchange for consulting services pursuant
to a March 15, 2021 agreement. The shares were valued at $130,000 based on
OTC's closing trade price on the date of the agreement.
On June 8, 2021 , the Company issued 100,000 shares of common stock to a
non-related party consultant in exchange for consulting services pursuant
to a March 15, 2021 agreement. The shares were valued at $130,000 based on
OTC's closing trade price on the date of the agreement.
On June 8, 2021 , the Company issued 100,000 shares of common stock to a
non-related party consultant in exchange for consulting services pursuant
to a March 15, 2021 agreement. The shares were valued at $130,000 based on
OTC's closing trade price on the date of the agreement.
On June 8, 2021 , the Company issued 50,000 shares of common stock to a
non-related party consultant in exchange for consulting services pursuant
to a March 15, 2021 agreement. The shares were valued at $65,000 based on
OTC's closing trade price on the date of the agreement.
On June 8, 2021 , the Company issued 25,000 shares of common stock to a
non-related party consultant in exchange for consulting services pursuant
to a March 15, 2021 agreement. The shares were valued at $32,500 based on
OTC's closing trade price on the date of the agreement.
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On June 8, 2021 , the Company issued 12,500 shares of common stock to a
non-related party consultant in exchange for consulting services pursuant
to a March 1, 2021 agreement. The shares were valued at $15,125 based on
OTC's closing trade price on the date of the agreement.
On June 8, 2021 , the Company issued 100,000 shares of restricted common
stock to a consultant, pursuant to a consulting agreement dated November
15, 2019 for services performed as COO of the Company. The shares were
valued at $200,000 based on OTC's closing trade price on the effective
date of the agreement.
On June 8, 2021 , the Company issued 50,000 shares of restricted common
stock to a consultant, pursuant to a consulting agreement dated December
1, 2020 , for services performed as Corporate Communications Officer of the
Company. The shares were valued at $34,000 based on OTC's closing trade
price on the effective date of the agreement.
For the year ended
Other income (expenses)
We incurred a total of
Net Loss
We incurred net losses of
Our auditors have issued a going concern opinion as at
Liquidity and Capital Resources
Our cash balance at
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. If we fail to raise sufficient capital when needed, we will not be able to complete our business plan.
As of
Working Capital
July 31, July 31,
2021 2020
$ $
Current Assets 507,512 40,538
Current Liabilities 8,322,776 4,582,390
Working Capital (Deficit) (7,815,264 ) (4,541,852 )
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During the year ended
During the year ended
During the year ended
Cash Flows
Year Year
Ended Ended
July 31 , July 31,
2021 2020
$ $
Net cash used in operating activities (2,976,006 ) (2,381,837 ) Net cash used in investing activities
(376,729 ) (218,586 )
Net cash provided by financing activities 3,818,709 2,637,708 Net increase in cash
466,974 37,285
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. If we fail to raise sufficient capital when needed, we will not be able to complete our business plan.
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
We intend to meet our cash requirements for the next 12 months through a combination of debt financing and equity financing by way of private placements. We currently do not have any arrangements in place to complete any private placement financings and there is no assurance that we will be successful in completing any private placement financings on terms that will be acceptable to us. We may not raise sufficient funds to fully carry out our business plan.
Effective
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On
Concurrently therewith, we entered into a registration rights agreement with the
Buyer, pursuant to which we agreed to file a registration statement with the
On
On
We may 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.
The Company entered into an Equity Financing Agreement (the "Financing
Agreement") dated as of
We will sell shares of our common stock to GHS at a price equal to 100% of the
lowest closing price of our common stock during the ten (10) consecutive trading
day period ending on the date on which we deliver a put notice to GHS (the
"Market Price"), and we will be obligated to simultaneously deliver the number
of shares equal to120% of the put notice amount based on the Market Price. In
addition, the Financing Agreement (i) imposes an ownership limitation on GHS of
4.99% (i.e., GHS has no obligation to purchase shares if it beneficially owns
more than 4.99% of our common stock), (ii) requires a minimum of ten (10)
trading days between put notices, and (iii) prohibits any single Put Amount from
exceeding
Concurrently therewith, we entered into a registration rights agreement with
GHS, pursuant to which we agreed to file a registration statement with the
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On
The initial term of this Agreement shall be exclusive for six (6) months from the Company's delivery of an offering memorandum to BSL (the "Initial Term"). After the Initial Term, the term of the Placement Agreement will automatically be extended for additional successive one (1) year periods unless either party provides written notice to the other party of its intent not to so extend the term at least thirty (30) days before the expiration of the then current term. Under the terms of the Placement Agreement, the Company has agreed to issue to BSL an advisory fee of two hundred fifty thousand (250,000) common stock shares with an issuance date of the Effective Date.
Critical Accounting Policies Use of Estimates
The preparation of the financial statements in conformity with
Cash and Cash Equivalents
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance and trust funds to be cash equivalents.
Inventory
Inventory is carried at the lower of cost or net realizable value, with the cost
being determined on a first-in, first-out (FIFO) basis. The Company periodically
reviews physical inventory and will record a reserve for excess and/or obsolete
inventory if necessary. During the years ended
Impairment of Long-Lived Assets
The Company evaluates the recoverability of its fixed assets and other assets in accordance with ASC 360-10- 15, Impairment or Disposal of Long-Lived Assets. Impairment of long-lived assets is recognized when the net book value of such assets exceeds their expected cash flows, in which case the assets are written down to fair value, which is determined based on discounted future cash flows or appraised values.
Related Party Transactions
The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. In accordance with ASC 850, the Company's financial statements include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business, as well as transactions that are eliminated in the preparation of financial statements.
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Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, "Income Taxes". The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
Foreign Currency Translation
The Company's functional and reporting currency is the
Financial Instruments and Fair Value Measures
ASC 820, "Fair Value Measurements and Disclosures", requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The Company's financial instruments consist principally of cash, accounts payable and accrued liabilities, loans payable, and amounts due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
Stock-based Compensation
The Company records stock-based compensation in accordance with ASC 718, "Compensation - Stock Compensation" and ASC 505, "Equity Based Payments to Non-Employees", using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.
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Loss Per Share
The Company computes earnings (loss) per share in accordance with ASC 260,
"Earnings per Share". ASC 260 requires presentation of both basic and diluted
earnings per share ("EPS") on the face of the income statement. Basic EPS is
computed by dividing earnings (loss) available to common shareholders
(numerator) by the weighted average number of shares outstanding (denominator)
during the period. Diluted EPS gives effect to all dilutive potential common
shares outstanding during the period using the treasury stock method and
convertible preferred stock using the if-converted method. In computing diluted
EPS, the average stock price for the period is used in determining the number of
shares assumed to be purchased from the exercise of stock options or warrants.
Diluted EPS excludes all dilutive potential shares if their effect is
anti-dilutive. As of
Comprehensive Loss
ASC 220, "Comprehensive Income", establishes standards for the reporting and display of comprehensive loss and its components in the financial statements.
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
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