| NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | NOTE
1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Nature
of Business MJ Harvest,
Inc. (the “Company”), develops, acquires, and distributes agricultural and horticultural tools and implements for sale primarily
to growers and operators in the hemp and cannabis retail industry. The Company owns 100% of G4 Products LLC, (“G4”) which
owns intellectual property for a patented manual debudder product line marketed under the Original 420 Brand as the Debudder Bucket Lid
and Edge. The Company also owns 100% of AgroExports LLC (“Agro”) which serves as the domestic and international distribution
arm for sales of agricultural and horticultural tools and implements. The Company operates its sales portal website, www.procannagro.com,
for online sales of its products. In
2019, the Company formed AgroExports.CA ULC (“Agro Canada“), a wholly owned Canadian subsidiary in order to facilitate
online payments from sales in Canada. Sales in Canada are currently serviced through a fulfillment center in Toronto. In
the year ending May 31, 2021, the Company expanded its focus to include a minority investment interest in PPK Investment Group,
Inc. (“PPK“) a vertically integrated cannabis company in Oklahoma that operates as a grower, harvester, processor,
manufacturer and distributor of the Country Cannabis Brand of cannabis products. The investment in PPK represents a shift in focus
from an agricultural implements based business to a broader cannabis industry focus. Basis
of Presentation and Consolidation The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP“). The Company’s fiscal year-end is May 31. The
consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiaries Agro, G4,
and Agro Canada. All intercompany transactions have been eliminated. Subsidiaries are consolidated from the date of acquisition,
that being the date on which the Company has the power to govern financial and operating policies of the entities acquired. The
financial statements of the subsidiaries are reported for the same reporting period as the parent, using consistent accounting
policies in all material respects. Going
Concern The
Company has an accumulated deficit on May 31, 2021 of $ 9,098,257 Additional
acquisitions and business opportunities are now under consideration. Management intends to finance operating costs over the next
twelve months with cash flows from operations, private placement or public offering of common stock or debt instruments, and when
necessary, advances from directors and officers. 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 for services,
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 year presentation. New
Accounting Standards In
August 2018, the Financial Accounting Standards Board (“FASB“) issued Accounting Standards Update (“ASU“)
2018-13, Fair Value Measurement (Topic 820): Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurement.
The update modifies the disclosure requirements for recurring and nonrecurring fair value measurements, primarily those surrounding
Level 3 fair value measurements and transfers between Level 1 and Level 2. The new standard is effective for fiscal years beginning
after December 15, 2019, including interim periods within that reporting period. Adoption of this update as of June 1, 2020 did
not have a material impact on the Company’s consolidated financial statements. In
November 2018, the FASB issued ASU 2018-18, Clarifying the Interaction Between Topic 808 and Topic 606 Revenue from Contracts
with Customers, which clarifies when transactions between participants in a collaborative arrangement are within the scope of
Topic 606. Adoption of this update as of June 1, 2020 did not have a material impact on the Company’s consolidated financial
statements. In
August 2020, the FASB issued ASU No. 2020-06 Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts
in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own
Equity. The update is to address issues identified as a result of the complexity associated with applying generally accepted accounting
principles for certain financial instruments with characteristics of liabilities and equity. The update is effective for fiscal
years beginning after December 15, 2021, including interim periods within those fiscal years and with early adoption permitted.
Management is evaluating the impact of this update on the Company’s consolidated financial statements. 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 At
May 31, 2021 and 2020, the Company did not have any assets or liabilities that were measured at a fair value on a recurring basis. Financial
Instruments The
carrying amounts of cash and cash equivalents, investment in PPK, and advances from related parties, reported on the consolidated balance
sheets approximate their fair value as of May 31, 2021 and 2020. The principal balance of notes payable also approximates its fair value
as of May 31, 2021. Investments Equity
securities are generally measured at fair value. Unrealized gains and losses for equity securities are included in earnings. If
an equity security does not have a readily determinable fair value, the Company may elect to measure the security at its cost
minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical
or similar investment in the same issuer. At the end of each reporting period, the Company reassesses whether an equity security
without a readily determinable fair value qualifies to be measured at cost minus impairment, considers whether impairment indicators
exist to evaluate whether the investment is impaired and, if so, records an impairment loss. Upon sale of an equity security,
the realized gain or loss is recognized in earnings. Cash
and cash equivalents The
Company considers all highly liquid investments purchased with an original maturity of three months or less when acquired to be
cash equivalents. Revenue
Recognition The
Company generates revenue based on sales of products and revenue is recognized when the Company satisfies its performance obligation
by shipping products to our customers. Our products consist of agricultural tools and implements, soils, and soil additives used
primarily in growing and harvesting hemp and marijuana. Shipments terms are FOB origination, and revenue is recognized when the
product is delivered to the shipper by our fulfillment centers or, in the case of drop shipments of distributed products, when
the products are shipped from the manufacturer. At the time the products are delivered to the shipper, no other performance obligations
remain. Revenue is recognized in an amount that reflects the consideration that is received in exchange for the products shipped. The
Company accounts for shipping and handling activities as a fulfillment cost and include fees received for shipping and handling
as part of the transaction price. 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. Sales incentives, discounts and returns and allowances
were not material in the periods presented in the accompanying consolidated financial statements. 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 is stated at the lower of cost or market, 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. Fixed
Assets Fixed
assets consist of molds used in the third-party 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 in the period of disposal. Depreciation
is computed using the straight-line method over the estimated useful lives of the molds which is five years. Accounting
for Acquisitions Business
acquisitions are recorded using the acquisition method of accounting and, accordingly, the purchase price is allocated to the
assets acquired and liabilities assumed based on their estimated fair value as of the date of acquisition. After the purchase
price has been allocated, goodwill is recorded to the extent the total consideration paid for the acquisition, including the acquisition
date fair value of contingent consideration, if any, exceeds the sum of the fair values of the separately identifiable acquired
assets and assumed liabilities. Acquisition costs for business combinations are expensed when incurred. Acquisitions
not meeting the accounting criteria to be accounted for as a business combination are accounted for as an asset acquisition. An
asset acquisition is recorded at its purchase price, inclusive of acquisition costs, which is allocated among the acquired assets
and assumed liabilities based upon their relative fair values at the date of acquisition. The
operating results of an acquisition are included in the consolidated statements of operations from the date of acquisition. The
allocation of the purchase consideration for acquisitions can require extensive use of accounting estimates and judgments to allocate
the purchase consideration to the assets acquired and liabilities assumed based on their respective fair values. Judgment is required
in determining which valuation technique should be applied. Critical estimates in valuing certain identifiable assets include
but are not limited to market comparables, expected long-term revenues; future expected operating expenses; cost of capital; assumed
attrition rates; and discount rates. Intangible
Assets Intangible
asset amounts are initially recognized at the acquisition date fair values of intangible assets acquired. Finite-lived
intangible assets are amortized over their useful lives. The carrying amounts of finite-lived intangible assets are evaluated
for recoverability whenever events or changes in circumstances indicate that the Company may be unable to recover the asset’s
carrying amount. When
there is no foreseeable limit on the period of time over which an intangible asset is expected to contribute to the cash flows
of the Company, an intangible asset is determined to have an indefinite life. Indefinite life intangible assets are not amortized
but tested for impairment annually or more frequently when indicators of impairment exist. Determination
of acquisition date fair values and intangible asset impairment tests require judgment. Significant judgments required to estimate
the fair value of intangible assets include determining the appropriate valuation method, identifying market prices for similar
type items, estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in estimates and
assumptions or the occurrence of one or more confirming events in future periods could cause the actual results or outcomes to
materially differ from such estimates. 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, common stock
equivalents, if any, are not considered, as their effect would be anti-dilutive. During the year ended May 31, 2021, the Company
had 3,000,000 no Share-Based
Payments All
transactions in which goods or services are received for the issuance of shares of the Company’s common stock are accounted
for based on the fair value of the common stock issued and recognized when the board of directors authorizes the issuance. |
