| Organization and Description of Business | NOTE 1 – ORGANIZATION AND DESCRIPTION
OF BUSINESS The Company was formed as a Colorado corporation
in April 2004. On December 31, 2018 the Company acquired all
of the outstanding common stock of Pure Harvest Cannabis Producers, Inc., (“PHCP”) in exchange for 17,906,016 (post-split)
shares of the Company’s common stock. The transaction was accounted for as a reverse acquisition. The accompanying consolidated
financial statements are those of PHCP prior to December 31, 2018 and exclude the financial position, results of operations, cash
flows and stockholders’ equity of the Pocket Shot Company prior to December 31, 2018. See “Reverse Acquisition”
below for additional information. As a result of the acquisition of PHCP, the
Company’s new business involves the acquisitions and operations of licensed marijuana cultivation facilities, manufacturing
facilities and dispensaries. The Company will continue to collect royalties
for licensing the Company’s patent and the trademarks in connection with manufacturing and sale of Pocket Shot branded specialty
alcohol beverage pouches. The Company changed its name to Pure Harvest
Cannabis Group, Inc. in February 2019. On March 15, 2019, shareholders owning a majority
of the Company’s outstanding shares approved the following amendments to the Company’s Articles of Incorporation: Increasing the authorized capital stock
of the Company to 250,000,000 shares of common stock, $0.01 par value, and 25,000,000 shares of preferred stock, $0.01 par value.
The preferred stock may be issued in one or more series as may be determined by the Company’s Board of Directors. The designations,
powers, rights, preferences, qualifications, restrictions and limitations of the preferred stock shall be established from time
to time by the Company’s Board of Directors; and Forward splitting the outstanding
shares of the Company’s common stock on a two-for-one basis. The Company’s accounting year end is
December 31. Reverse Acquisition On December 31, 2018 the Company (“The
Pocket Shot Company”) acquired all of the outstanding common stock of PHCP in exchange for 17,906,016 (post-split) shares
of the Company’s common stock. In addition, the shareholders of PHCP were issued warrants to purchase 17,906,016 (post-split)
shares of the Company’s common stock. The warrants have an exercise price of $4.00 per share and a life of three years. The
issuance of the warrants did not have an impact on the financial statements and was reflected similar to the shares issued to PHCP
as discussed below. The transaction was accounted for as a reverse
acquisition since: (i) the shareholders of PHCP owned the majority of the outstanding common stock of the Company after the share
exchange; (ii) a majority of the directors of the Company are also directors of PHCP; and (iii) the old officers of the Company
were replaced with officers designated by PHCP. Effective December 31, 2018, the Company’s stockholders’ equity was
retroactively recapitalized as that of PHCP, while the stockholders’ equity of the Company was recorded as being acquired
in the reverse acquisition. The Company and PHCP remain separate legal entities (with the Company as the parent of PHCP). The accompanying
consolidated financial statements are those of PHCP prior to December 31, 2018 and exclude the financial position, results of operations,
cash flows and stockholders’ equity of The Pocket Shot Company prior to December 31, 2018. All references to common stock, share and per
share amounts have been retroactively restated to reflect as if the transaction had taken place as of the beginning of the earliest
period presented. The Company’s assets and liabilities
pre- reverse acquisition:
Net Assets Acquired:
Cash $ 22,501
Accounts receivable 22,802
Inventory 63,940
Machinery & equipment 30,550
Total Assets $ 139,793
Accounts payable and other current liabilities $ 14,765
Due to related parties 11,358
Total Liabilities $ 26,123
Net Assets Acquired $ 113,670 The following summarized unaudited consolidated
pro forma information shows the results of operations of the Company had the reverse acquisition occurred on January 1, 2017: Pro-forma:
2018 2017
Revenues $ 105,869 $ 87,663
Net loss $ (103,460 ) $ (284,532 )
Net loss per common share - basic and diluted $ (0.01 ) $ (1.81 ) The summarized consolidated pro forma results
are not necessarily indicative of results which would have occurred if the reverse acquisition had been in effect for the periods
presented. Further, the summarized unaudited consolidated pro forma results are not intended to be a projection of future results. Restatement On April __, 2020, management of Pure Harvest
Cannabis Group, Inc. (the “Company”) that previously filed consolidated financial statements as of June 30, 2019 and
for the three and six months ended June 30, 2019 required restatement. In May 2019, the Company leased a property which the Company
intends to use as a marijuana retail dispensary. The initial term of the lease is for a period of three years. The Company
has an option to purchase the property at prices ranging between $1,400,000 and $1,600,000 at various dates prior to May 1, 2022.
The Company issued the landlord 400,000 shares of its post-split common stock in consideration for the option to purchase the property. At inception of the lease on May 1, 2019, the
Company should have recorded a “right of use” asset and liability due to the Company adopting Accounting Standards
Codification 842- Leases on January 1, 2019. In addition, the 400,000 shares issued for the option to purchase the property
should have been recorded as deferred rent and amortized to rent expense using the straight-line method over the term of the
lease. The following is the impact of the restatement
on the consolidated balance sheet as of June 30, 2019:
June 30, June 30,
2019 2019 Change
(as reported) (as restated)
Deferred rent $ - $ 93,333 $ 93,333
Total Current Assets 317,391 410,724 93,333
Deferred rent, net of current portion - 171,111 171,111
Right of use asset - 215,729 215,729
Total Assets $ 370,217 $ 850,390 $ 480,173
Accrued Liabilities $ - $ 75,131 $ 75,131
Total Current Liabilities 967,024 1,042,155 75,131
Right of Use Liabilities, net of Current Portion - 146,598 146,598
Total Liabilities 967,024 1,188,753 221,729
Common Stock 318,034 322,034 4,000
Additional Paid-in Capital 118,661 394,661 276,000
Accumulated Deficit (1,033,502 ) (1,055,058 ) (21,556 )
Total Stockholders’ Deficit (596,807 ) (338,363 ) 258,444
Total Liabilites and Stockholders’ Deficit $ 370,217 $ 850,390 $ 480,173 The following is the impact of the restatement
on the consolidated statements of operations for the three and six months ended June 30, 2019:
Three Months Ended
June 30, 2019 Change
(as reported) (as restated)
General and Administrative Expenses $ 483,772 $ 505,328 $ 21,556
Total Costs and Expenses 517,886 539,442 21,556
Net Loss $ (513,704 ) $ (535,260 ) $ (21,556 )
Basic and Diluted Net Loss per Common Share $ (0.02 ) $ (0.02 ) $ (0.00 )
Six Months Ended
June 30, 2019 Change
(as reported) (as restated)
General and Administrative Expenses $ 724,859 $ 746,415 $ 21,556
Total Costs and Expenses 792,714 814,269 21,556
Net Loss $ (782,188 ) $ (803,744 ) $ (21,556 )
Basic and Diluted Net Loss per Common Share $ (0.02 ) $ (0.03 ) $ (0.01 ) The following is the impact of the restatement
on the consolidated statement of cash flows for the six months ended June 30, 2019:
Six Months Ended
June 30, 2019 Change
(as reported) (as restated)
Net Loss $ (782,188 ) $ (803,744 ) $ (21,556 )
Deferred Rent - 15,556 15,556
Right of Use Asset and Liability - 6,000 6,000
Net Cash Used in Operating Activities $ (204,542 ) $ (204,542 ) $ -
Non-Cash Investing and Financing Actity Common Stock Issued in Connection with Operating Lease $ - $ 280,000 $ 280,000 See Note 5 for additional information. |
