Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Feb. 29, 2020 | May 15, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | MJ Harvest, Inc. | |
Entity Central Index Key | 0001789330 | |
Document Type | 10-Q | |
Document Period End Date | Feb. 29, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --05-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Emerging Growth Company | true | |
Entity Small Business | true | |
Entity Interactive Data Current | Yes | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 21,492,874 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
Balance Sheets
Balance Sheets - USD ($) | Feb. 29, 2020 | May 31, 2019 |
CURRENT ASSETS: | ||
Cash | $ 3,150 | $ 13,592 |
Accounts receivable | 100 | 9,191 |
Inventory | 43,073 | 56,205 |
Total current assets | 46,323 | 78,988 |
NON-CURRENT ASSETS: | ||
Machinery & equipment - net | 17,139 | 20,919 |
Deposits | 480 | |
Intangible assets, net | 144,584 | 150,000 |
Total non-current assets | 161,723 | 171,399 |
Total Assets | 208,046 | 250,387 |
CURRENT LIABILITIES: | ||
Accounts payable and other liabilities | 27,172 | 15,915 |
LONG-TERM LIABILITIES: | ||
Common stock payable | 100,000 | 127,125 |
Advances from related parties | 760,482 | 539,704 |
Total long-term liabilities | 860,482 | 666,829 |
Total Liabilities | 887,654 | 682,744 |
SHAREHOLDERS' DEFICIENCY | ||
Preferred stock, par value $0.0001, 5,000,000 shares authorized, no shares issued and outstanding | ||
Common stock, $0.0001 par value per share, 50,000,000 shares authorized, 20,969,659 and 18,758,739 issued and outstanding, respectively | 2,097 | 1,876 |
Additional paid in capital | 2,336,995 | 1,784,486 |
Accumulated deficit | (3,018,700) | (2,218,719) |
Total stockhoders' deficit | (679,608) | (432,357) |
Total Liabilities and Stockholders' Deficit | $ 208,046 | $ 250,387 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Feb. 29, 2020 | May 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred Stock Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock Shares Authorized | 5,000,000 | 5,000,000 |
Preferred Stock Shares Issued | 0 | 0 |
Preferred Stock Shares Outstanding | 0 | 0 |
Common Stock Par Value | $ 0.0001 | $ 0.0001 |
Common Stock Shares Authorized | 50,000,000 | 50,000,000 |
Common Stock Shares Issued | 20,969,659 | 18,758,739 |
Common Stock Shares Outstanding | 20,969,659 | 18,758,739 |
Statements of Operations
Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Feb. 29, 2020 | Feb. 28, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
Income Statement [Abstract] | ||||
REVENUE | $ 30,003 | $ 31,584 | $ 118,094 | $ 67,298 |
Cost of sales | 18,001 | 4,197 | 55,071 | 15,389 |
Gross profit | 12,002 | 27,387 | 63,023 | 51,909 |
Operating expenses: | ||||
Officer and director compensation | 110,000 | 85,250 | 372,500 | 285,250 |
General and administrative | 9,166 | 53,052 | 61,099 | 78,045 |
Impairment of intangible assets | 100,000 | |||
Professional fees and contract services | 96,053 | 71,831 | 329,405 | 247,236 |
Total operating expenses | 215,219 | 210,133 | 863,004 | 610,531 |
NET LOSS FROM OPERATIONS | (203,217) | (182,746) | (799,981) | (558,622) |
Net income attributable to non-controlling interest | (5,730) | |||
NET LOSS ATTRIBUTABLE TO MJ HARVEST, INC. | $ (203,217) | $ (203,217) | $ (799,981) | $ (558,622) |
NET LOSS PER COMMON SHARE - Basic and diluted | $ (0.01) | $ (0.01) | $ (0.04) | $ (0.03) |
WEIGHTED AVERAGE NUMBER OF COMMON | 20,192,611 | 18,148,772 | 19,500,353 | 17,849,442 |
Shareholders Equity
Shareholders Equity - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Noncontrolling Interest | Total |
Beginning Balance, Shares at May. 31, 2018 | 17,598,739 | ||||
Beginning Balance, Value at May. 31, 2018 | $ 1,760 | $ 1,418,227 | $ (1,256,448) | $ 140,645 | $ 304,184 |
Share Based Compensation, Shares | 1,080,000 | ||||
Share Based Compensation, Amount | $ 108 | 269,892 | 270,000 | ||
Acquisition of minority interest, Shares | 80,000 | ||||
Acquisition of minority interest, Value | $ 8 | 96,367 | (146,375) | (50,000) | |
Net loss | (564,352) | $ 5,730 | (558,622) | ||
Ending Balance, Shares at Feb. 28, 2019 | 18,758,739 | ||||
Ending Balance, Value at Feb. 28, 2019 | $ 1,876 | 1,784,486 | (1,820,800) | (34,438) | |
Beginning Balance, Shares at May. 31, 2019 | 18,758,739 | ||||
Beginning Balance, Value at May. 31, 2019 | $ 1,876 | 1,784,486 | (2,218,719) | (432,357) | |
Share Based Compensation, Amount | $ 170 | 425,435 | 425,605 | ||
Share issued for common stock payable, Shares | 508,500 | ||||
Share issued for common stock payable, Value | $ 51 | 127,074 | 127,125 | ||
Net loss | (799,981) | (799,981) | |||
Ending Balance, Shares at Feb. 29, 2020 | 20,969,659 | ||||
Ending Balance, Value at Feb. 29, 2020 | $ 2,097 | $ 2,336,995 | $ (3,018,700) | $ (679,608) |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 9 Months Ended | |
Feb. 29, 2020 | Feb. 28, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES : | ||
Net loss | $ (799,981) | $ (558,622) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 9,196 | 2,930 |
Share-based Compensation | 425,605 | 270,000 |
Common stock payable for compensation | 40,250 | |
Impairment of intangible assets | 100,000 | |
Changes in operating assets and liabilities | ||
Accounts receivable | 9,091 | (25,390) |
Deposits | 480 | |
Inventory | 13,132 | (33,915) |
Accounts payable and other current liabilities | 11,257 | (7,512) |
NET CASH (USED IN) OPERATING ACTIVITIES | (231,220) | (312,259) |
CASH FLOWS FROM INVESTING ACTIVITIES : | ||
Cash used in acquisiton of G4 | (50,000) | |
Purchases of machinery and equipment | (19,209) | |
NET CASH (USED IN) INVESTING ACTIVITIES | (69,209) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from advances by related parties | 220,778 | 391,605 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 220,778 | 391,605 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (10,442) | 10,137 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 13,592 | 3,277 |
CASH AND CASH EQUIVALENTS END OF YEAR | 3,150 | 13,414 |
Non-cash financing and investing activities: | ||
Stock issued for acquisiton of G4 | 20,000 | |
Shares issued for common stock payable | 127,125 | |
Shares payable for intangible assets | $ 100,000 |
NATURE OF BUSINESS AND SIGNIFIC
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Feb. 29, 2020 | |
Accounting Policies [Abstract] | |
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Nature of Business The Company develops, acquires, and distributes agricultural and horticultural tools, implements, and supplies for sale primarily to growers and operators in the hemp and cannabis space. In 2017, the Company acquired a 51% interest in G4 Products LLC, which owns the intellectual property for a manual debudder product line marketed as the Debudder Bucket Lid and Debudder Edge. The Company also organized AgroExports LLC to serve as the international distribution arm for sales of agricultural and horticultural tools and implements and created www.procannagro.com for online sales of its products. In September 2018, the Company filed a Notification of Change with FINRA and OTC Markets to obtain approval of a name change to MJ Harvest, Inc. and a change of trading symbol to MJHI. Following approval of the change by FINRA and OTC Markets, the Company filed amended and restated articles of incorporation with the State of Nevada to reflect the name change with an effective date of September 18, 2018. On December 7, 2018, the Company acquired the remaining 49% of G4 Products LLC, making it a wholly owned subsidiary. On April 10, 2019, the Company formed AgroExports.CA ULC (“Agro Canada), a wholly owned Canadian subsidiary in order to facilitate online payments in Canada. Sales in Canada are currently serviced through a fulfillment center in Toronto. Domestic and other international sales are serviced through our fulfillment center in California. On March 8, 2020, the Company closed on the acquisition of several domain names and entered into distribution agreements for a wide range of soil, soil additive products, and other products. The Company intends to operate the new web site, www.weedfarmsupply.com www.procannagro.com Basis of Presentation and Consolidation The Company’s fiscal year-end is May 31. The unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP) for interim financial information, accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the three and nine-month periods ended February 29, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending May 31, 2020. For further information refer to the financial statements and footnotes thereto in the Form S-1 filed with the SEC on October 2, 2019 and declared effective on January 9, 2020. The consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiaries AgroExports LLC (“Agro), G4 Products LLC (“G4), and AgroExports.CA ULC. G4 was a 51% owned subsidiary until December 7, 2018 and the Statements of Operations for the nine-month period ended February 28, 2019 includes the net loss of the non-controlling interest in G4 for the first two quarters of the fiscal year. All intercompany transactions have been eliminated. Going Concern The Company has an accumulated deficit of $3,018,700 which, among other factors, raises substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. On December 7, 2018, the Company acquired the 49% minority interest of G4 and G4 became a wholly owned subsidiary at that time. The intangible assets owned by G4, consisting of patents and other intangible assets relating to the Debudder Products, serve as a building block for the Company’s efforts to grow revenues. In the year ended 2019, the Company began generating operating revenue but the level of revenue from the current product line has not been sufficient to support profitable operations to date. On March 8, 2020, the Company closed on the acquisition of several domain names, including www.weedfarmsupply.com, and entered into distribution agreements for a wide range of soil and soil additive products. With this acquisition, the Company will add the soil products to its www.procannagro,com website and will assume operations of the new web site, www.weedfarmsupply.com. The Company expects to further expand its product lines and build its distribution business. Additional acquisitions and business opportunities are under consideration, but the Company has not reached agreement with any other acquisition candidates or business opportunities. Management intends to finance operating costs over the next twelve months with advances from directors and/or a private placement or public offering of common stock. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to continue as a going concern. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Share based compensation, impairment of long-lived assets, amortization of intangible assets, and income taxes are subject to estimates. Actual results could differ from those estimates. Reclassifications Certain prior period amounts have been reclassified to conform with the current period presentation. New Accounting Standards Leases: , No. 2016 - 02 Leases (Topic 842 ). The update modifies the classification criteria and requires lessees to recognize the assets and liabilities on the balance sheet for most leases longer than one year. The update is effective for fiscal years beginning after December 15, 2018, Nonemployee compensation: Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. Fair Value Measurements GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: Level 1 Level 2 Level 3 Financial Instruments The carrying amounts of cash and advances from related parties reported on the balance sheets approximate their fair value as of February 29, 2020 and May 31, 2019. Cash and cash equivalents For purposes of the statement of cash flows, the Company Revenue Recognition The Company recognizes revenue from the sale of products in accordance with ASC 606, “Revenue Recognition ● identify the contract with a customer; ● identify the performance obligations in the contract, which consist of delivery of the Product ordered and this occurs when the Product is shipped to the customer; ● determine the transaction price; ● allocate the transaction price to performance obligations in the contract; and ● recognize revenue as the performance obligation is satisfied. Provision for sales incentives, discounts and returns and allowances, if applicable, are accounted for as reductions of revenue in the period the related sales are recorded. The company had no warranty costs associated with the sales of its products in the periods presented in the accompanying Consolidated Statements of Operations and no provision for warranty expenses has been included. Inventory Inventory consists of purchased products and are stated at the lower of cost or net realizable value, with cost being determined using the average cost method. Allowances for obsolete inventory are recognized when the inventory is determined to be unsalable through the normal course of business. Inventory consists of our debudder products in 5-gallon bucket lid, 20 litter bucket lid and edge models. Machinery & Equipment Machinery and equipment consists of molds used in the manufacturing process and are recorded at cost. Maintenance, repairs, and minor replacements are expensed as incurred. Gains or losses on disposition or retirement of property and equipment are recognized in operating expenses. Depreciation is computed using the straight-line method over the estimated useful lives of the molds which is five years. Accounting for Acquisitions We recognize and measure identifiable assets acquired and liabilities assumed in acquired entities in accordance with ASC 805, Business Combinations Intangible Assets We account for intangible assets in accordance with Accounting Standards Codification 350 “Intangibles-Goodwill and Other Intangible asset amounts represent the acquisition date fair values of identifiable intangible assets acquired. The fair values of the intangible assets were determined based on the estimated fair value of the consideration paid. The carrying amounts of our definite-lived intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the Company may be unable to recover the asset’s carrying amount. Our indefinite-lived intangible assets are tested for impairment annually, or more frequently when impairment indicators exist. Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense is included as a component of cost of sales. For the three and nine-months ended February 29, 2020, the Company recognized $3,750 and $5,416, respectively, in amortization expense for its intangible assets. The Company’s intangible assets consist of patents which issued on October 8, 2019. The patents expire on varying dates and the Company is amortizing these intangible assets over 180 months commencing in October 2019. Income taxes The Company utilizes the liability method of accounting for income taxes which requires that deferred tax assets and liabilities be recorded to reflect the future tax consequences of temporary differences between the book and tax basis of various assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Additionally, deferred tax assets are evaluated, and a valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. There can be no assurance that the Company’s future operations will produce sufficient earnings so that the deferred tax asset can be fully utilized. The Company currently maintains a full valuation allowance against net deferred tax assets. Net Earnings (Loss) Per Share Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs losses, potentially dilutive common stock equivalents, if any, are not considered, as their effect would be anti-dilutive. During the periods ended February 29, 2020 and February 28, 2019, the Company had no common stock equivalents outstanding. Share-Based Payments The fair value of common shares is determined by the management by considering a number of objective and subjective factors including data from other comparable companies, sales of common shares to unrelated third parties, the fair value of services provided for shares, operating and financial performance, the lack of liquidity of capital stock and general and industry specific economic outlook, among other factors. The fair value of the underlying common shares will be determined by management until such time as the shares are listed on an established stock exchange, national market system or other quotation system and the trading volume is sufficient to support a determination that an active market exists. The Company recognizes the fair value of goods or services received in share-based payment transactions based upon the fair value of the equity instruments issued. |
BUSINESS ACQUISITIONS
BUSINESS ACQUISITIONS | 9 Months Ended |
Feb. 29, 2020 | |
Notes to Financial Statements | |
BUSINESS ACQUISITIONS | NOTE 2 – BUSINESS ACQUISITIONS G4 Products LLC. At the time of the second acquisition of the interest in G4, the assets of G4 consisted primarily of a provisional U.S. Patent application and certain other international patent applications. Several of the patents have now been approved and issued. The acquisition agreement for the initial purchase of 51% of G4 and for the follow-on acquisition of the remaining 49% interest in G4 included certain earn-out provisions that are described in Note 5 – Commitments and Contingencies. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Feb. 29, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 3 - INTANGIBLE ASSETS G4 Products LLC. For the year ended May 31, 2019, the Company performed a year-end impairment analysis of the carrying value of the patent rights. The analysis considered cost of the acquisition of the remaining non-controlling interest if G4 during the year ended May 31, 2019 and the lower than expected revenues generated from sales of its products during the year. The analysis included an evaluation of expected future revenues and earnings from the intangible assets. Management determined that a reasonable fair value for the intangible assets was $150,000 at May 31, 2019, and as a result the Company recorded an impairment loss of $178,137 for the year ended May 31, 2019. During the nine-months ended February 29, 2020, the Company acquired an additional $100,000 of intangible assets as a result of an earn-out provision due upon issuance of patents. The patents were issued on October 8, 2019 and represent the same intangible assets that were impaired at May 31, 2019. As a result, management determined that an immediate impairment equivalent to the earn-out due on issuance of the patents ($100,000) was warranted. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Feb. 29, 2020 | |
Notes to Financial Statements | |
RELATED PARTY TRANSACTIONS | NOTE 4 – RELATED PARTY TRANSACTIONS At February 29, 2020 and May 31, 2019, the Company had advances from related parties totaling $760,482 and $539,704, respectively. These amounts are classified as long-term liabilities as it is anticipated they will be settled with shares of the Company’s common stock. These amounts consisted of the following: ● As of February 29, 2020 and May 31, 2019, the Company owed Mr. Jerry Cornwell, a director, $16,515 and $15,696, respectively. ● As of February 29, 2020 and May 31, 2019, the Company owed David Tobias, a majority shareholder and director, $80,553 and $75,553, respectively. ● As of February 29, 2020 and May 31, 2019, Patrick Bilton, a director and the Company’s Chief Executive Officer, was owed $615,959 and $401,000, respectively, for advances to the Company for operating capital and an additional $47,455 at February 29, 2020 and May 31, 2019, for reimbursement of expenses paid on behalf of the Company. Collectively, Mr. Bilton is owed $663,414 and $448,455, respectively, as of February 29, 2020 and May 31, 2019. At February 29, 2020 and May 31, 2019, the Company had common stock payable totaling $100,000 and $127,125, respectively. Of these amounts, -0- and $75,000, respectively, were payable to related parties. These related party amounts consisted of the following: ● The Company had common stock payable to Mr. Bilton of -0- and $60,000 at February 29, 2020 and May 31, 2019, respectively, for services as an officer and director. ● The Company had common stock payable to Nexit, Inc, an entity solely owned by Brad Herr, Chief Financial Officer, of -0- and $15,000 at February 29, 2020 and May 31, 2019, respectively, for services as an officer of the Company. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Feb. 29, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 5 – COMMITMENTS AND CONTINGENCIES G4 Products LLC. In addition, an earn-out compensation payment of $100,000, payable in shares of the Company’s common stock, became due to Original Ventures upon the issuance of the non-provisional patent to G4, which occurred on October 8, 2019. This amount is accrued as of February 29, 2020 and is classified as common stock payable. The $100,000 was capitalized as intangible assets at the time of the accrual and immediately impaired based on the impairment analysis performed in the fiscal year ended May 31, 2019. |
SHARE CAPITAL
SHARE CAPITAL | 9 Months Ended |
Feb. 29, 2020 | |
Compensation Related Costs [Abstract] | |
SHARE CAPITAL | NOTE 6 – SHARE CAPITAL The authorized capital of the Company consists of 50,000,000 common shares with a par value of $0.0001 per share, and 5,000,000 preferred shares with a par value of $0.0001 per share. In the three and nine-month periods ended February 29, 2020 and February 28, 2019, shares of common stock were issued to related and non-related parties in consideration of services performed or assets acquired. The following table breaks out the issuances by type of transaction and by related and unrelated parties: Three months ended Nine months ended Issued to: February 29, 2020 February 29, 2020 Related parties Patrick Bilton 520,000 $ 130,000 1,060,000 $ 265,000 Brad Herr 120,000 30,000 240,000 $ 60,000 Jerry Cornwell 40,000 10,000 100,000 $ 25,000 David Tobias 40,000 10,000 100,000 $ 25,000 Total related parties 720,000 $ 180,000 1,500,000 $ 375,000 Unrelated parties 241,920 $ 60,480 710,920 $ 177,730 Total issued 961,920 $ 240,480 2,210,920 $ 552,730 Three months ended Nine months ended Issued to: February 28, 2019 February 28, 2019 Related parties Patrick Bilton 560,000 $ 140,000 560,000 $ 140,000 Brad Herr 60,000 15,000 120,000 30,000 Total related parties 620,000 $ 155,000 680,000 $ 170,000 Unrelated parties 271,000 67,750 480,000 120,000 Total issued 891,000 $ 222,750 1,160,000 $ 290,000 Common stock payable The Company had an aggregate of $100,000 of common stock payable as of February 29, 2020 which is due to Original Ventures, Inc for issuance of patents. This common stock payable will result in the issuance of 400,000 shares of common stock. The Company had an aggregate of $127,125 of common stock payable as of May 31, 2019 that resulted in the issuance of 508,500 shares of common stock in the nine-months ended February 28, 2019. Of the total, $75,000 (300,000 shares) were issued to related parties. See Note 3. Shares issued to non-related parties in the three and nine-month periods ended February 29, 2020 and February 28, 2019 were issued for services performed or assets acquired during the periods. Share based compensation expense is recognized on non-employee awards or asset acquisitions on the dates granted and based upon management’s estimate of fair value of the securities issued. The Company estimated the fair value of the common stock to be $0.25 per share at the times of issuance. |
REVENUE
REVENUE | 9 Months Ended |
Feb. 29, 2020 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
REVENUE | NOTE 7 – REVENUE The Company’s product revenue has been generated exclusively though sales of its debudder products. The Company’s customers, to which trade credit terms are extended, consist of foreign and domestic companies. For the three and nine-month periods ended February 29, 2020, total sales were $30,003 and $118,094, respectively. International sales accounted for -0- and $1,700 during the three and nine-month periods ended February 29, 2020, respectively. Shipments to one customer during the three and nine-month periods ended February 29, 2020 totaled $8,397 and $44,197, respectively, during those periods. As of February 29, 2020, there were no accounts receivable from this customer. For the three and nine-month periods ended February 28, 2019, total sales were $31,584 and $67,298, respectively. International sales were $19,781 and $19,781, respectively. In the three and nine-month periods ended February 28, 2019, domestic sales of $4,430 and $39,066, respectively, were through one distributor. When the Company acquired the remainder of G4 in December 2018, the Company ended the distributor relationship with this distributor and began servicing all domestic sales, including sales to distributors, internally. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Feb. 29, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 8 – SUBSEQUENT EVENTS Weed Farm Supply. |
NATURE OF BUSINESS AND SIGNIF_2
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Feb. 29, 2020 | |
Accounting Policies [Abstract] | |
Nature of Business | Nature of Business The Company develops, acquires, and distributes agricultural and horticultural tools, implements, and supplies for sale primarily to growers and operators in the hemp and cannabis space. In 2017, the Company acquired a 51% interest in G4 Products LLC, which owns the intellectual property for a manual debudder product line marketed as the Debudder Bucket Lid and Debudder Edge. The Company also organized AgroExports LLC to serve as the international distribution arm for sales of agricultural and horticultural tools and implements and created www.procannagro.com for online sales of its products. In September 2018, the Company filed a Notification of Change with FINRA and OTC Markets to obtain approval of a name change to MJ Harvest, Inc. and a change of trading symbol to MJHI. Following approval of the change by FINRA and OTC Markets, the Company filed amended and restated articles of incorporation with the State of Nevada to reflect the name change with an effective date of September 18, 2018. On December 7, 2018, the Company acquired the remaining 49% of G4 Products LLC, making it a wholly owned subsidiary. On April 10, 2019, the Company formed AgroExports.CA ULC (“Agro Canada), a wholly owned Canadian subsidiary in order to facilitate online payments in Canada. Sales in Canada are currently serviced through a fulfillment center in Toronto. Domestic and other international sales are serviced through our fulfillment center in California. On March 8, 2020, the Company closed on the acquisition of several domain names and entered into distribution agreements for a wide range of soil, soil additive products, and other products. The Company intends to operate the new web site, www.weedfarmsupply.com www.procannagro.com |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The Company’s fiscal year-end is May 31. The unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP) for interim financial information, accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the three and nine-month periods ended February 29, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending May 31, 2020. For further information refer to the financial statements and footnotes thereto in the Form S-1 filed with the SEC on October 2, 2019 and declared effective on January 9, 2020. The consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiaries AgroExports LLC (“Agro), G4 Products LLC (“G4), and AgroExports.CA ULC. G4 was a 51% owned subsidiary until December 7, 2018 and the Statements of Operations for the nine-month period ended February 28, 2019 includes the net loss of the non-controlling interest in G4 for the first two quarters of the fiscal year. All intercompany transactions have been eliminated. |
Going Concern | Going Concern The Company has an accumulated deficit of $3,018,700 which, among other factors, raises substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. On December 7, 2018, the Company acquired the 49% minority interest of G4 and G4 became a wholly owned subsidiary at that time. The intangible assets owned by G4, consisting of patents and other intangible assets relating to the Debudder Products, serve as a building block for the Company’s efforts to grow revenues. In the year ended 2019, the Company began generating operating revenue but the level of revenue from the current product line has not been sufficient to support profitable operations to date. On March 8, 2020, the Company closed on the acquisition of several domain names, including www.weedfarmsupply.com, and entered into distribution agreements for a wide range of soil and soil additive products. With this acquisition, the Company will add the soil products to its www.procannagro,com website and will assume operations of the new web site, www.weedfarmsupply.com. The Company expects to further expand its product lines and build its distribution business. Additional acquisitions and business opportunities are under consideration, but the Company has not reached agreement with any other acquisition candidates or business opportunities. Management intends to finance operating costs over the next twelve months with advances from directors and/or a private placement or public offering of common stock. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to continue as a going concern. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Share based compensation, impairment of long-lived assets, amortization of intangible assets, and income taxes are subject to estimates. Actual results could differ from those estimates. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform with the current period presentation. |
New Accounting Standards | New Accounting Standards Leases: , No. 2016 - 02 Leases (Topic 842 ). The update modifies the classification criteria and requires lessees to recognize the assets and liabilities on the balance sheet for most leases longer than one year. The update is effective for fiscal years beginning after December 15, 2018, Nonemployee compensation: Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. |
Fair Value Measurements | Fair Value Measurements GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: Level 1 Level 2 Level 3 |
Financial Instruments | Financial Instruments The carrying amounts of cash and advances from related parties reported on the balance sheets approximate their fair value as of February 29, 2020 and May 31, 2019. |
Cash and cash equivalents | Cash and cash equivalents For purposes of the statement of cash flows, the Company |
Revenue Recognition | Revenue Recognition The Company recognizes revenue from the sale of products in accordance with ASC 606, “Revenue Recognition ● identify the contract with a customer; ● identify the performance obligations in the contract, which consist of delivery of the Product ordered and this occurs when the Product is shipped to the customer; ● determine the transaction price; ● allocate the transaction price to performance obligations in the contract; and ● recognize revenue as the performance obligation is satisfied. Provision for sales incentives, discounts and returns and allowances, if applicable, are accounted for as reductions of revenue in the period the related sales are recorded. The company had no warranty costs associated with the sales of its products in the periods presented in the accompanying Consolidated Statements of Operations and no provision for warranty expenses has been included. |
Inventory | Inventory Inventory consists of purchased products and are stated at the lower of cost or net realizable value, with cost being determined using the average cost method. Allowances for obsolete inventory are recognized when the inventory is determined to be unsalable through the normal course of business. Inventory consists of our debudder products in 5-gallon bucket lid, 20 litter bucket lid and edge models. |
Machinery & Equipment | Machinery & Equipment Machinery and equipment consists of molds used in the manufacturing process and are recorded at cost. Maintenance, repairs, and minor replacements are expensed as incurred. Gains or losses on disposition or retirement of property and equipment are recognized in operating expenses. Depreciation is computed using the straight-line method over the estimated useful lives of the molds which is five years. |
Accounting for Acquisitions | Accounting for Acquisitions We recognize and measure identifiable assets acquired and liabilities assumed in acquired entities in accordance with ASC 805, Business Combinations |
Intangible Assets | Intangible Assets We account for intangible assets in accordance with Accounting Standards Codification 350 “Intangibles-Goodwill and Other Intangible asset amounts represent the acquisition date fair values of identifiable intangible assets acquired. The fair values of the intangible assets were determined based on the estimated fair value of the consideration paid. The carrying amounts of our definite-lived intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the Company may be unable to recover the asset’s carrying amount. Our indefinite-lived intangible assets are tested for impairment annually, or more frequently when impairment indicators exist. Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense is included as a component of cost of sales. For the three and nine-months ended February 29, 2020, the Company recognized $3,750 and $5,416, respectively, in amortization expense for its intangible assets. The Company’s intangible assets consist of patents which issued on October 8, 2019. The patents expire on varying dates and the Company is amortizing these intangible assets over 180 months commencing in October 2019. |
Income Taxes | Income taxes The Company utilizes the liability method of accounting for income taxes which requires that deferred tax assets and liabilities be recorded to reflect the future tax consequences of temporary differences between the book and tax basis of various assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Additionally, deferred tax assets are evaluated, and a valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. There can be no assurance that the Company’s future operations will produce sufficient earnings so that the deferred tax asset can be fully utilized. The Company currently maintains a full valuation allowance against net deferred tax assets. |
Net Earnings (Loss) Per Share | Net Earnings (Loss) Per Share Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs losses, potentially dilutive common stock equivalents, if any, are not considered, as their effect would be anti-dilutive. During the periods ended February 29, 2020 and February 28, 2019, the Company had no common stock equivalents outstanding. |
Share-Based Payments | Share-Based Payments The fair value of common shares is determined by the management by considering a number of objective and subjective factors including data from other comparable companies, sales of common shares to unrelated third parties, the fair value of services provided for shares, operating and financial performance, the lack of liquidity of capital stock and general and industry specific economic outlook, among other factors. The fair value of the underlying common shares will be determined by management until such time as the shares are listed on an established stock exchange, national market system or other quotation system and the trading volume is sufficient to support a determination that an active market exists. The Company recognizes the fair value of goods or services received in share-based payment transactions based upon the fair value of the equity instruments issued. |
SHARE CAPITAL (Tables)
SHARE CAPITAL (Tables) | 9 Months Ended |
Feb. 29, 2020 | |
Share Capital | |
Schedule of common stock issued | Three months ended Nine months ended Issued to: February 29, 2020 February 29, 2020 Related parties Patrick Bilton 520,000 $ 130,000 1,060,000 $ 265,000 Brad Herr 120,000 30,000 240,000 $ 60,000 Jerry Cornwell 40,000 10,000 100,000 $ 25,000 David Tobias 40,000 10,000 100,000 $ 25,000 Total related parties 720,000 $ 180,000 1,500,000 $ 375,000 Unrelated parties 241,920 $ 60,480 710,920 $ 177,730 Total issued 961,920 $ 240,480 2,210,920 $ 552,730 Three months ended Nine months ended Issued to: February 28, 2019 February 28, 2019 Related parties Patrick Bilton 560,000 $ 140,000 560,000 $ 140,000 Brad Herr 60,000 15,000 120,000 30,000 Total related parties 620,000 $ 155,000 680,000 $ 170,000 Unrelated parties 271,000 67,750 480,000 120,000 Total issued 891,000 $ 222,750 1,160,000 $ 290,000 |
NATURE OF BUSINESS AND SIGNIF_3
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | Feb. 29, 2020 | May 31, 2019 |
Nature Of Business And Significant Accounting Policies | ||
Accumulated Deficit | $ (3,018,700) | $ (2,218,719) |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Feb. 29, 2020 | May 31, 2019 |
Related Party Transactions | ||
Advances from related parties | $ 760,482 | $ 539,704 |
SHARE CAPITAL (Details)
SHARE CAPITAL (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Feb. 29, 2020 | Feb. 28, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
Share Based Compensation, Amount | $ 425,605 | $ 270,000 | ||
Patrick Bilton | ||||
Share Based Compensation, Shares | 520,000 | 560,000 | 1,060,000 | 560,000 |
Share Based Compensation, Amount | $ 130,000 | $ 140,000 | $ 265,000 | $ 140,000 |
Brad Herr | ||||
Share Based Compensation, Shares | 120,000 | 60,000 | 240,000 | 120,000 |
Share Based Compensation, Amount | $ 30,000 | $ 15,000 | $ 60,000 | $ 30,000 |
Jerry Cornwell | ||||
Share Based Compensation, Shares | 40,000 | 100,000 | ||
Share Based Compensation, Amount | $ 10,000 | $ 25,000 | ||
David Tobias | ||||
Share Based Compensation, Shares | 40,000 | 100,000 | ||
Share Based Compensation, Amount | $ 10,000 | $ 25,000 | ||
Related parties | ||||
Share Based Compensation, Shares | 720,000 | 620,000 | 1,500,000 | 680,000 |
Share Based Compensation, Amount | $ 180,000 | $ 155,000 | $ 375,000 | $ 170,000 |
Unrelated parties | ||||
Share Based Compensation, Shares | 241,920 | 271,000 | 710,920 | 480,000 |
Share Based Compensation, Amount | $ 60,480 | $ 67,750 | $ 177,730 | $ 120,000 |
Total Issued | ||||
Share Based Compensation, Shares | 961,920 | 891,000 | 2,210,920 | 1,160,000 |
Share Based Compensation, Amount | $ 240,480 | $ 222,750 | $ 552,730 | $ 290,000 |