Cover
Cover - USD ($) | 12 Months Ended | ||
May 31, 2021 | Sep. 10, 2021 | Nov. 30, 2020 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | May 31, 2021 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 | ||
Current Fiscal Year End Date | --05-31 | ||
Entity File Number | 333-234048 | ||
Entity Registrant Name | MJ HARVEST, INC. | ||
Entity Central Index Key | 0001789330 | ||
Entity Tax Identification Number | 82-3400471 | ||
Entity Incorporation, State or Country Code | NV | ||
Entity Address, Address Line One | 9205 W | ||
Entity Address, Address Line Two | Russell Rd | ||
Entity Address, Address Line Three | Suite 240 | ||
Entity Address, City or Town | Las Vegas | ||
Entity Address, State or Province | NV | ||
Entity Address, Postal Zip Code | 89139 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Elected Not To Use the Extended Transition Period | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 3,170,650 | ||
Entity Common Stock, Shares Outstanding | 31,449,344 | ||
ICFR Auditor Attestation Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | May 31, 2021 | May 31, 2020 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 123,319 | $ 32,343 |
Accounts receivable | 19,216 | |
Vendor deposits | 20,000 | |
Inventory | 28,159 | 32,840 |
Total current assets | 151,478 | 104,399 |
Investment in PPK | 1,000,000 | |
Fixed assets, net | 10,839 | 15,879 |
Finite-lived intangible assets | 125,834 | 465,834 |
Indefinite-lived intangible assets | 6,000 | 25,000 |
Total Assets | 1,294,151 | 611,112 |
CURRENT LIABILITIES: | ||
Accounts payable | 181,594 | 62,801 |
Notes payable, net of discount | 350,000 | |
Other current liabilities | 35,060 | |
Total current liabilities | 531,594 | 97,861 |
Common stock payable | 100,000 | 100,000 |
Advances from related parties | 1,317,982 | 829,982 |
Total Liabilities | 1,949,576 | 1,027,843 |
STOCKHOLDERS’ EQUITY (DEFICIT): | ||
Preferred stock, par value $0.0001, 5,000,000 shares authorized, no shares issued and outstanding | ||
Common stock, $0.0001 par value per share, 100,000,000 shares authorized, 25,302,122 and 22,892,874 issued and outstanding, respectively | 2,530 | 2,289 |
Additional paid-in capital | 8,440,302 | 3,763,374 |
Accumulated deficit | (9,098,257) | (4,182,394) |
Total stockholders' equity (deficit) | (655,425) | (416,731) |
Total Liabilities and Stockholders' Equity (Deficit) | $ 1,294,151 | $ 611,112 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | May 31, 2021 | May 31, 2020 |
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 | 100,000,000 | 100,000,000 |
Common Stock Shares Issued | 25,302,122 | 22,892,874 |
Common Stock Shares Outstanding | 25,302,122 | 22,892,874 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Income Statement [Abstract] | ||
REVENUE | $ 89,186 | $ 129,975 |
COST OF REVENUE | 40,454 | 17,585 |
Gross profit | 48,732 | 112,390 |
OPERATING EXPENSES: | ||
Officer and director compensation | 535,000 | 708,000 |
General and administrative | 107,546 | 84,779 |
Impairment of intangible assets | 758,000 | |
Professional fees and contract services | 430,656 | 531,125 |
Total operating expenses | 1,073,202 | 2,081,904 |
NET LOSS FROM CONTINUING OPERATIONS | (1,024,470) | (1,969,514) |
NON-OPERATING EXPENSES | ||
Interest expense | (378,442) | |
Loan financing fees | (2,906,000) | |
Impairment on investment | (592,800) | |
Total non-operating expenses | (3,877,242) | |
GAIN (LOSS) FROM DISCONTINUED OPERATIONS | ||
Operating loss from discontnued operations | (4,151) | 5,839 |
Loss on discontinued operations | (10,000) | |
Total gain (loss) from discontinued operations | (14,151) | 5,839 |
NET LOSS | $ (4,915,863) | $ (1,963,675) |
NET LOSS PER COMMON SHARE - Basic and diluted | $ (0.21) | $ (0.10) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - Basic and diluted | 23,262,759 | 20,204,819 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Deficit) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at May. 31, 2019 | $ 1,876 | $ 1,784,486 | $ (2,218,719) | $ (432,357) |
Beginning Balance, Shares at May. 31, 2019 | 18,758,739 | |||
Acquisiton of intangible assets | $ 140 | 1,007,860 | 1,008,000 | |
Acquisiton of intangible assets,shares | 1,400,000 | |||
Share based compensation | $ 222 | 843,954 | 844,176 | |
Share based compensation,shares | 2,225,635 | |||
Shares issued for stock payable | $ 51 | 127,074 | 127,125 | |
Shares issued for stock payable,shares | 508,500 | |||
Net loss | (1,963,675) | (1,963,675) | ||
Ending balance, value at May. 31, 2020 | $ 2,289 | 3,763,374 | (4,182,394) | (416,731) |
Ending Balance, Shares at May. 31, 2020 | 22,892,874 | |||
Cancellation of shares related to Elevated | $ (130) | (336,745) | (336,875) | |
Cancellation of shares related to Elevated,shares | (1,300,000) | |||
Share based compensation | $ 99 | 358,145 | 358,244 | |
Share based compensation,shares | 989,248 | |||
Shares issued for loan financing fee | $ 120 | 1,799,880 | 1,800,000 | |
Shares issued for loan financing fee,shares | 1,200,000 | |||
Warrants issued for loan financing fee | 1,883,000 | 1,883,000 | ||
Shares issued for investment in PPK | $ 152 | 972,648 | 972,800 | |
Shares issued for investment in PPK, shares | 1,520,000 | |||
Net loss | (4,915,863) | (4,915,863) | ||
Ending balance, value at May. 31, 2021 | $ 2,530 | $ 8,440,302 | $ (9,098,257) | $ (655,425) |
Ending Balance, Shares at May. 31, 2021 | 25,302,122 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (4,915,863) | $ (1,963,675) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share based compensation | 358,244 | 844,176 |
Depreciation and amortization | 33,165 | 14,206 |
Loss on discontinued operation | 10,000 | |
Amortization of note payable discount | 350,000 | |
Loan financing fees | 2,906,000 | |
Impairment of intangible assets | 758,000 | |
Impairment of investment in PPK | 592,800 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 19,216 | (10,025) |
Deposits | 20,000 | (19,520) |
Inventory | 4,681 | 23,365 |
Accounts payable and other current liabilities | 83,733 | 81,946 |
NET CASH (USED IN) OPERATING ACTIVITIES | (538,024) | (271,527) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Acquisition of intangibles | (6,000) | |
Payment made to Elevated in unwinding (Note 10) | (10,000) | |
Convertible note receivable issued to PPK | (620,000) | |
NET CASH (USED) IN INVESTING ACTIVITIES | (636,000) | |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from notes payable | 810,000 | |
Financing fees paid in cash | (33,000) | |
Proceeds from advances from related parties | 488,000 | 290,278 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 1,265,000 | 290,278 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 90,976 | 18,751 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 32,343 | 13,592 |
CASH AND CASH EQUIVALENTS END OF YEAR | 123,319 | 32,343 |
Non cash financing and investing activities: | ||
Common stock issued for acquisition of Elevated assets | 1,008,000 | |
Cancellation of common stock returned by Elevated (Note 10) | 336,875 | |
Common stock issued for investment in PPK | 972,800 | |
Conversion of PPK note receivable to investment in PPK | 620,000 | |
Common stock to be issued for patents | 100,000 | |
Common stock issued for stock payable | $ 127,125 |
NATURE OF BUSINESS AND SIGNIFIC
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
May 31, 2021 | |
Accounting Policies [Abstract] | |
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. |
INTANGIBLES
INTANGIBLES | 12 Months Ended |
May 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLES | NOTE 2 – INTANGIBLES At May 31, 2021 and 2020, intangibles assets are: Schedule of intangible assets May 31, May 31, Intangibles 2021 2020 Finite lived intangibles Patents $ 250,000 $ 250,000 Less: Impairment of patents (100,000 ) (100,000 ) 150,000 150,000 Less: accumulated amortization (24,166 ) (9,166 ) Patents, net 125,834 140,834 Non-compete agreement 157,000 157,000 Less: impairment of non-compete (107,000 ) (107,000 ) 50,000 50,000 Less: accumulated amortization (6,900 ) — Less: adjustment for discontinued operations (43,100 ) — Non-compete agreement, net — 50,000 Customer relationships 826,000 826,000 Less: Impairment of relationships (551,000 ) (551,000 ) 275,000 275,000 Less: accumulated amortization (6,225 ) — Less: adjustment for discontinued operations (268,775 ) Customer relationships, net — 275,000 Total finite lived intangibles 125,834 465,834 Indefinite lived intangibles Domain names 31,000 25,000 Less: adjustment for discontinued operations (25,000 ) — Total domain names 6,000 25,000 Total intangibles $ 131,834 $ 490,834 Amortization expense for the year ended May 31, 2021 and 2020 was $ 15,000 9,166 13,125 The estimated aggregate amortization expense for each of the next five fiscal years ending on May 31 are as follows: Schedule of amortization of intangible assets 2022 $ 15,000 2023 $ 15,000 2024 $ 15,000 2025 $ 15,000 2025 $ 15,000 The Company assessed the fair value of the patent rights using an evaluation of expected future revenues and earnings from the intangible patent rights. This assessment resulted in no impairment charge during the years ended May 31, 2021 and 2020. On October 8, 2019, the patents were issued by the United States Patent and Trademark Office (“USPTO”) on the debudder product and the Company became obligated to pay an additional $100,000 to the inventor under contingent terms of the G4 acquisition agreement which was added to the patents carrying value. This amount for the years ended May 31, 2021 and 2020 is payable in 400,000 shares of common stock valued at $0.25 per share. On May 28, 2021, the Company acquired the domain name, MJHI.com for $6,000. The new domain name matches the Company’s stock symbol and is likely to be easier for customers and other stakeholders to remember. The domain name is an indefinite lived intangible asset and will not be amortized. As of May 31, 2021, there were no indications of impairment of this indefinite lived intangible asset. During the year ended May 31, 2020, the Company entered into an acquisition with Elevated Ag Solutions, Inc. (“Elevated”) to acquire certain intangible assets the Company expected to apply to an expanded online agricultural product line and distribution. The acquisition did not produce the expected results and the Company and Elevated entered into an agreement to unwind the acquisition on November 4, 2020. The unwinding was completed in March 2021 and the Company discontinued the operations acquired from Elevated and no longer holds any intangible assets relating to the Elevated acquisition. See Note 10. |
INVESTMENT IN PPK INVESTMENT GR
INVESTMENT IN PPK INVESTMENT GROUP, INC | 12 Months Ended |
May 31, 2021 | |
Investment In Ppk Investment Group Inc | |
INVESTMENT IN PPK INVESTMENT GROUP, INC | NOTE 3 – INVESTMENT IN PPK INVESTMENT GROUP, INC On March 24, 2021, the Company, as lender, closed a loan to PPK Investment Group, Inc. (“PPK”) in the form of a convertible note (“Note”) in the amount of $620,000. The convertible note bore interest at 6% per annum and was due on September 1, 2021. In accordance with its terms, the Company converted the Note on May 19, 2021 into a 6.2% interest in PPK. Upon conversion, the interest accrued of $5,707 through the date of conversion was forgiven. Upon conversion, a Securities Purchase Agreement dated March 24, 2021 (the “PPK Agreement”) became effective and the Company acquired an additional 3.8% interest in PPK (10% in total) for payment of $380,000 by issuance of 1,520,000 shares of restricted common stock of the Company. The fair value of shares was $972,800 based on the trading price of the Company’s shares of $0.64. The Company determined that the fair value of the 3.8% interest on the conversion date was $380,000 which was the negotiated price between the two parties. Thus, the Company recorded an impairment expense of $592,800 on the conversion date. The PPK Agreement includes a put option allowing PPK to put shares of the Company’s common stock received as part of the Company’s investment in PPK, back to the Company at $0.25 per share. The put option protects PPK against a drop in the market price of the Company’s common stock below $0.25 per share. The put option may be exercised after six months from the date of the investment on May 19, 2021. Not more than 5% of the total shares held by PPK can be put back to the Company in any calendar quarter. The put option had no value at May 31, 2021 as the Company’s common stock was trading above $0.25 on that date. The PPK Agreement gives the Company the right to increase its investment up to a 100% ownership interest in PPK, provided such increased ownership is in compliance with Oklahoma State cannabis licensing requirements. Terms of purchase for increased ownership of PPK will be similar to those as the initial acquisition with a combination of cash and shares of the Company’s common stock. After May 31, 2021, the Company increased its investment in PPK to 25%. See Note 12, Subsequent Events. The Company, pursuant to the PPK Agreement, is also obligated to pay an earnout to PPK as follows: ● The Company is required to pay additional consideration to PPK for an earnout in the event the PPK business valuation at the end of a pre-determined look back period is greater than $10,000,000. For purposes of the earnout, the valuation will be based on three times earnings before interest, taxes, depreciation, and amortization (EBITDA). If EBITDA exceeds $3,333,333 in the twelve months immediately preceding the look back date of March 31, 2023, additional consideration will be owed to PPK under the earnout in an amount sufficient to equal the earnout valuation less $10,000,000 times the percentage of PPK then owned by the Company. Such additional consideration will be paid 62% in cash and 38% in shares of the Company’s common stock. ● The Company agrees to employ Ralph Clinton Pyatt III (“Clinton Pyatt”), President of PPK, to continue his role as Chief Executive Officer and President of PPK business for a period of at least three years. ● The Company would have an option to acquire the real estate that PPK utilizes in its operations. The real estate is currently under lease to PPK by an affiliated company owned by Clinton Pyatt, the President of PPK. |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
May 31, 2021 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 4 – NOTES PAYABLE On March 22, 2021, the Company entered into agreements with AJB Capital Investments LLC (“AJB”) and SDT Holdings LLC (“SDT”) for the purchase of an aggregate of $900,000 in Promissory Notes (the “Notes”), $300,000 from AJB and $600,000 for SDT. The terms of the Notes are the same except for the dollar amounts and fees which are double for SDT compared to AJB. The terms of the Notes are described below in the aggregate. The Notes provided for an original issue discount of 10% or $90,000, payment of legal fees of $22,500, and payment of $10,500 for due diligence fees, resulting in net proceeds to the Company of $777,000. The Notes bear interest at the rate of 12% if paid on or before September 21, 2021. The Company has the right to extend the Notes for an additional six months at an interest rate of 15%, in which case the Notes would be due March 21, 2022. The Notes are secured by all assets of the Company. Interest on the notes is payable in monthly installments of $9,000 on the first of each month with the first payment due on April 1, 2021. An aggregate of $20,700 in interest was incurred and paid on the notes in the period ended May 31, 2021. The notes provide that the full amount of interest on the notes for the initial six-month term will be payable even if the notes are paid off prior to expiration of the initial term. The Company also paid a financing fee of $3,683,000 by issuance of 1,200,000 shares of its restricted common stock and 3,000,000 warrants to purchase shares that are exercisable at $0.38 per share with a three-year term expiring on March 21, 2024. The financing fee shares were valued at $1,800,000 based on the trading price of the Company’s common stock on the date of the borrowing. The warrants were valued at $1,883,000 using the Black-Scholes method based on a current stock price of $1.50 per share on the warrant issuance date, exercise price of $0.38, an expected term of three years, stock volatility of 334.5% and a discount rate of 0.32%. One half of the warrants may be redeemed for an aggregate payment of $1.00 by the Company if the notes payable are paid in full by September 22, 2021. In aggregate, financing fees and original issue discount totaled $3,806,000 which is greater than the note payable balance of $ 900,000 In aggregate, financing fees and original issue discount totalled $3,806,000 which is greater than the note payable balance of $900,000. As a result, the Company recorded a full discount of $900,000 against the balance of the note payable and is amortizing the discount over the term of the note. During the year ended May 31, 2021, the Company recognized $350,000 in amortization expense leaving an unamortized discount balance of $550,000 as of May 31, 2021. This balance will be amortized through September 2021. The remaining amount of financing fees of $2,906,000 was recognized as expense for the year ended May 31, 2021. In an event of default, the remaining principal amount of the notes plus all accrued interest and any other fees then due may be converted at the sole election of the note holders into shares of the Company’s common stock. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
May 31, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 5 – RELATED PARTY TRANSACTIONS Related party advances represent funds advanced to the Company for working capital. At May 31, 2021 and 2020, respectively, the Company had advances from related parties and balances due for expenses paid on behalf of the Company. These amounts are not subject to repayment terms, bear no interest, and are expected to be repaid to the related parties in common stock at a future date. These related party transactions and balances are set out in the following tables. Schedule of related party transactions Related Party Additions During the Related Party Payable to Related Parties for Services at May 31, 2020 Advances Services May 31, 2021 May 31, 2021 Related Parties Patrick Bilton, CEO and Director Cash Advances $ 726,414 $ 202,000 $ — $ 928,414 $ — Payable for services — 280,000 280,000 David Tobias, Director 80,553 — — 80,553 — Jerry Cornwell, Director 23,015 6,000 — 29,015 — Total for related parties $ 829,982 $ 208,000 $ 280,000 $ 1,037,982 $ 280,000 Aggregate advances from related parties $ 1,317,982 Related Party Additions During the Related Party Payable to Related May 31, 2019 Advances Services May 31, 2020 May 31, 2020 Related Parties Patrick Bilton, CEO and Director $ 448,455 $ 277,959 $ — $ 726,414 $ — David Tobias, Director 75,553 5,000 — 80,553 — Jerry Cornwell, Director 15,696 7,319 — 23,015 — Total for related parties $ 539,704 $ 290,278 $ — $ 829,982 $ — |
SHARE CAPITAL
SHARE CAPITAL | 12 Months Ended |
May 31, 2021 | |
Equity [Abstract] | |
SHARE CAPITAL | NOTE 6 – SHARE CAPITAL The authorized capital of the Company consists of 100,000,000 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. During the years ended May 31, 2021 and 2020, shares of common stock were issued to related and non-related parties for acquisitions, and services. The following table breaks out the issuances by type of transaction and by related and non-related parties: Schedule of common stock issued Year Ended May 31, 2021 Shares issued for Services & Other Shares Value Related Parties David Tobias, Director 106,974 $ 40,000 Jerry Cornwell, Director 106,974 40,000 Brad Herr, CFO 160,462 60,000 Total for related parties 374,410 140,000 Unrelated Parties Services 614,838 218,244 Investment in PPK 1,520,000 972,800 Financing fee 1,200,000 1,800,000 Cancellation (1,300,000 ) (336,875 ) Aggregate Totals May 31, 2021 2,409,248 $ 2,794,169 Year Ended May 31, 2020 Shares Issued for Stock Payable Shares Value Related Parties 300,000 $ 75,000 Unrelated Parties 208,500 52,125 Total Shares for Stock Payable 508,500 127,125 Related Parties Services Patrick Bilton, CEO and Director 1,080,001 413,000 David Tobias, Director 120,000 41,000 Jerry Cornwell, Director 120,000 41,000 Brad Herr, CFO 240,000 93,000 Total for Related Parties 1,560,001 588,000 Unrelated Parties Services 665,634 256,176 Acquisitions 1,400,000 1,008,000 Aggregate Totals May 31, 2020 4,134,135 $ 1,979,301 At May 31, 2021 and 2020, the Company had common stock payable of $100,000 and $100,000, respectively. The balance at May 31, 2021 and 2020 relates to shares issuable to the prior owners of G4 in accordance with patent approval in the year ended May 31, 2020 (Note 2). The prior owners of G4 have requested that the Company not issue the shares at this time pending resolution by the prior owners regarding outstanding issues. The Company had 3,000,000 warrants outstanding on May 31, 2021. The warrants were issued as financing fees on notes payable to AJB and SDT (See Note 4). The warrants are exercisable at $0.38 per share at any time over a three-year 3 In determining the fair value of the shares of common stock issued for services and acquisitions after February 20, 2020, the Company used the trading price of its common stock as listed on the OTCQB. The OTCQB is an active market which is considered a Level 1 input under fair value measurement accounting guidance. Prior to that date, the Company’s common stock was not traded on an active market and third-party trading volumes were low. Shares issued prior to February 20, 2020 were valued at the most recent cash sale of the common stock of $0.25 which is considered a Level 2 input. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
May 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 8 – INCOME TAXES The Company did not recognize a tax provision or benefit for the years ended May 31, 2021 and 2020 due to ongoing net losses and a valuation allowance. At May 31, 2021 and 2020, the Company had net deferred tax assets which will not be realized and are fully reserved by valuation allowances. The components of the Company’s net deferred tax assets at May 31 are as follows: Schedule of deferred tax assets 2021 2020 Deferred tax asset: Net operating loss carryforward $ 1,144,262 $ 687,163 Investment 90,438 — Intangibles 151,973 196,589 Financing fee 529,410 — Total deferred tax assets 1,916,083 883,752 Valuation allowance (1,916,083 ) (883,752 ) Net deferred tax assets $ — $ — At May 31, 2021, the Company had approximately $5,450,000 of Federal net operating losses available to carryforward. Operating losses of approximately $1,320,000 will expire in various amounts from 2035 through 2038, and approximately $4,130,000, will not expire but future usage of which is limited to 80% of taxable income in the year of usage. The reconciliation of the federal income tax rate and the Company’s tax provision (benefit) is as follows: Schedule of federal income tax rate 2021 2020 Provision (benefit) computed using the statutory rate $ (1,032,331 ) -21 % $ (412,372 ) -21 % Change in prior year estimates — 0 % (5,449 ) 0 % Change in valuation allowance 1,032,331 21 % 417,821 21 % Total income tax provision (benefit) $ — 0 % $ — 0 % The Company has analyzed its filing positions in all jurisdictions where it is required to file income tax returns and found no positions that would require a liability for uncertain income tax benefits to be recognized. The Company is subject to possible tax examinations for the fiscal years 2017 through 2020. Prior year tax attributes could be adjusted by taxing authorities. If applicable, the Company will deduct interest and penalties as interest expense on the financial statements. |
REVENUE FROM CONTINUING OPERATI
REVENUE FROM CONTINUING OPERATIONS | 12 Months Ended |
May 31, 2021 | |
Revenue From Continuing Operations | |
REVENUE FROM CONTINUING OPERATIONS | NOTE 9 – REVENUE FROM CONTINUING OPERATIONS The Company product revenue is generated though sales of its debudder products produced by third parties and distributed by the Company. The Company’s customers, to which trade credit terms are extended, consist almost exclusively of domestic companies. The following table sets out product sales and customer concentrations for the years ended May 31, 2021 and 2020. Schedule of revenues Years ended May 31, 2021 2020 Debudder product revenues $ 89,186 $ 129,975 Customer concentrations May 31, 2021 May 31, 2020 Debudder sales Customer A $ 34,285 $ 44,197 Customer B 26,130 — Customer C 13,675 — Totals $ 74,090 $ 44,197 % of total revenues 83 % 34 % All sales were domestic except for $ 4,222 1,700 No amounts were owing from the Company’s three primary customers as of May 31, 2021. As of May 31, 2020, there were $ 18,706 |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 12 Months Ended |
May 31, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | NOTE 10 – DISCONTINUED OPERATIONS As stated in Note 2, in the year ended May 31, 2021, the Company unwound its acquisition of assets from Elevated Ag Solutions, Inc. As a result of the unwinding, the net income (loss) from the Elevated business segment is included in Discontinued Operations in the statements of operations for all periods presented. As a result of the unwinding, the Company reversed the acquisition of intangible assets (see Note 2), cancelled 1,300,000 10,000 Discontinued operations operating results for the year ended May 31, 2021 compared to 2020 are reflected in the following table. OPERATING RESULTS Year Ended Year Ended May 31, 2021 May 31, 2020 Revenue $ 75,217 $ 197,916 Cost of revenue $ 66,243 192,077 Amortization $ 13,125 — Gross profit (4,151 ) 5,839 Loss on discontinued operations 10,000 — Total gain (loss) from discontinued operations $ (14,151 ) $ 5,839 |
IMPACT OF COVID-19
IMPACT OF COVID-19 | 12 Months Ended |
May 31, 2021 | |
Impact Of Covid-19 | |
IMPACT OF COVID-19 | NOTE 11 – IMPACT OF COVID-19 In March 2020, COVID-19 was declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention. Its rapid spread around the world and throughout the United States prompted many countries, including the United States, to institute restrictions on travel, public gatherings and certain business operations. These restrictions significantly disrupted economic activity in the United States and Worldwide. As of May 31, 2021 and through the date of filing of this Form 10-K, the disruption did not materially impact the Company’s financial statements. The effects of the continued outbreak of COVID-19 and related government responses could include extended disruptions to supply chains and capital markets, reduced labor availability and a prolonged reduction in economic activity. These effects could have a variety of adverse impacts to the Company, including our ability to operate. As of May 31, 2021 there were no material adverse impacts to the Registrants’ operations due to COVID-19. The economic disruptions caused by COVID-19 could also adversely impact the impairment risks for certain long-lived assets. Management evaluated these impairment considerations and determined that no such impairments occurred as of May 31, 2021. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
May 31, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12 – SUBSEQUENT EVENTS AOK Ventures LLC (“AOK”). 2,500,000 . A portion of this amount aggregating $ 2,150,000 5,972,222 0.36 Desert Hot Springs. The Company also intends to borrow $ 500,000 The third-party buyer’s acquisition is expected to close in September 2021 and the Company expects to begin operating the facility shortly thereafter. Agreement with Borders Consulting LLC. |
NATURE OF BUSINESS AND SIGNIF_2
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
May 31, 2021 | |
Accounting Policies [Abstract] | |
Nature of Business | 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 | 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 | 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 | 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 | Reclassifications Certain prior period amounts have been reclassified to conform with the current year presentation. |
New Accounting Standards | 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 | 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 | 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 | 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 | 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 | 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 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 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 | 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 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 | 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, 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 | 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. |
INTANGIBLES (Tables)
INTANGIBLES (Tables) | 12 Months Ended |
May 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Schedule of intangible assets May 31, May 31, Intangibles 2021 2020 Finite lived intangibles Patents $ 250,000 $ 250,000 Less: Impairment of patents (100,000 ) (100,000 ) 150,000 150,000 Less: accumulated amortization (24,166 ) (9,166 ) Patents, net 125,834 140,834 Non-compete agreement 157,000 157,000 Less: impairment of non-compete (107,000 ) (107,000 ) 50,000 50,000 Less: accumulated amortization (6,900 ) — Less: adjustment for discontinued operations (43,100 ) — Non-compete agreement, net — 50,000 Customer relationships 826,000 826,000 Less: Impairment of relationships (551,000 ) (551,000 ) 275,000 275,000 Less: accumulated amortization (6,225 ) — Less: adjustment for discontinued operations (268,775 ) Customer relationships, net — 275,000 Total finite lived intangibles 125,834 465,834 Indefinite lived intangibles Domain names 31,000 25,000 Less: adjustment for discontinued operations (25,000 ) — Total domain names 6,000 25,000 Total intangibles $ 131,834 $ 490,834 |
Schedule of amortization of intangible assets | Schedule of amortization of intangible assets 2022 $ 15,000 2023 $ 15,000 2024 $ 15,000 2025 $ 15,000 2025 $ 15,000 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
May 31, 2021 | |
Related Party Transactions [Abstract] | |
Schedule of related party transactions | Schedule of related party transactions Related Party Additions During the Related Party Payable to Related Parties for Services at May 31, 2020 Advances Services May 31, 2021 May 31, 2021 Related Parties Patrick Bilton, CEO and Director Cash Advances $ 726,414 $ 202,000 $ — $ 928,414 $ — Payable for services — 280,000 280,000 David Tobias, Director 80,553 — — 80,553 — Jerry Cornwell, Director 23,015 6,000 — 29,015 — Total for related parties $ 829,982 $ 208,000 $ 280,000 $ 1,037,982 $ 280,000 Aggregate advances from related parties $ 1,317,982 Related Party Additions During the Related Party Payable to Related May 31, 2019 Advances Services May 31, 2020 May 31, 2020 Related Parties Patrick Bilton, CEO and Director $ 448,455 $ 277,959 $ — $ 726,414 $ — David Tobias, Director 75,553 5,000 — 80,553 — Jerry Cornwell, Director 15,696 7,319 — 23,015 — Total for related parties $ 539,704 $ 290,278 $ — $ 829,982 $ — |
SHARE CAPITAL (Tables)
SHARE CAPITAL (Tables) | 12 Months Ended |
May 31, 2021 | |
Equity [Abstract] | |
Schedule of common stock issued | Schedule of common stock issued Year Ended May 31, 2021 Shares issued for Services & Other Shares Value Related Parties David Tobias, Director 106,974 $ 40,000 Jerry Cornwell, Director 106,974 40,000 Brad Herr, CFO 160,462 60,000 Total for related parties 374,410 140,000 Unrelated Parties Services 614,838 218,244 Investment in PPK 1,520,000 972,800 Financing fee 1,200,000 1,800,000 Cancellation (1,300,000 ) (336,875 ) Aggregate Totals May 31, 2021 2,409,248 $ 2,794,169 Year Ended May 31, 2020 Shares Issued for Stock Payable Shares Value Related Parties 300,000 $ 75,000 Unrelated Parties 208,500 52,125 Total Shares for Stock Payable 508,500 127,125 Related Parties Services Patrick Bilton, CEO and Director 1,080,001 413,000 David Tobias, Director 120,000 41,000 Jerry Cornwell, Director 120,000 41,000 Brad Herr, CFO 240,000 93,000 Total for Related Parties 1,560,001 588,000 Unrelated Parties Services 665,634 256,176 Acquisitions 1,400,000 1,008,000 Aggregate Totals May 31, 2020 4,134,135 $ 1,979,301 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
May 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred tax assets | Schedule of deferred tax assets 2021 2020 Deferred tax asset: Net operating loss carryforward $ 1,144,262 $ 687,163 Investment 90,438 — Intangibles 151,973 196,589 Financing fee 529,410 — Total deferred tax assets 1,916,083 883,752 Valuation allowance (1,916,083 ) (883,752 ) Net deferred tax assets $ — $ — |
Schedule of federal income tax rate | Schedule of federal income tax rate 2021 2020 Provision (benefit) computed using the statutory rate $ (1,032,331 ) -21 % $ (412,372 ) -21 % Change in prior year estimates — 0 % (5,449 ) 0 % Change in valuation allowance 1,032,331 21 % 417,821 21 % Total income tax provision (benefit) $ — 0 % $ — 0 % |
REVENUE FROM CONTINUING OPERA_2
REVENUE FROM CONTINUING OPERATIONS (Tables) | 12 Months Ended |
May 31, 2021 | |
Revenue From Continuing Operations | |
Schedule of revenues | Schedule of revenues Years ended May 31, 2021 2020 Debudder product revenues $ 89,186 $ 129,975 Customer concentrations May 31, 2021 May 31, 2020 Debudder sales Customer A $ 34,285 $ 44,197 Customer B 26,130 — Customer C 13,675 — Totals $ 74,090 $ 44,197 % of total revenues 83 % 34 % |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 12 Months Ended |
May 31, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
OPERATING RESULTS | OPERATING RESULTS Year Ended Year Ended May 31, 2021 May 31, 2020 Revenue $ 75,217 $ 197,916 Cost of revenue $ 66,243 192,077 Amortization $ 13,125 — Gross profit (4,151 ) 5,839 Loss on discontinued operations 10,000 — Total gain (loss) from discontinued operations $ (14,151 ) $ 5,839 |
NATURE OF BUSINESS AND SIGNIF_3
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Accumulated Deficit | $ 9,098,257 | $ 4,182,394 |
Warrant [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Anti-dilutive shares | 3,000,000 | 0 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||
Less: Impairment | $ 758,000 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (15,000) | (9,166) |
Finite-Lived Intangible Assets, Net | 125,834 | 465,834 |
Total domain names | 6,000 | 25,000 |
Total Intangibles | 131,834 | 490,834 |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite lived intangibles, gross | 250,000 | 250,000 |
Less: Impairment | (100,000) | (100,000) |
Finite lived intangibles, gross Before Accumulated Amortization | 150,000 | 150,000 |
Finite-Lived Intangible Assets, Accumulated Amortization | (24,166) | (9,166) |
Finite-Lived Intangible Assets, Net | 125,834 | 140,834 |
Non Compete Agreement [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite lived intangibles, gross | 157,000 | 157,000 |
Less: Impairment | (107,000) | (107,000) |
Finite lived intangibles, gross Before Accumulated Amortization | 50,000 | 50,000 |
Finite-Lived Intangible Assets, Accumulated Amortization | (6,900) | |
Less: adjustment for discontinued operations | (43,100) | |
Finite-Lived Intangible Assets, Net | 50,000 | |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite lived intangibles, gross | 826,000 | 826,000 |
Less: Impairment | (551,000) | (551,000) |
Finite lived intangibles, gross Before Accumulated Amortization | 275,000 | 275,000 |
Finite-Lived Intangible Assets, Accumulated Amortization | (6,225) | |
Less: adjustment for discontinued operations | (268,775) | |
Finite-Lived Intangible Assets, Net | 275,000 | |
Domain Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite lived intangibles | 31,000 | 25,000 |
Less: adjustment for discontinued operations | (25,000) | |
Total domain names | $ 6,000 | $ 25,000 |
INTANGIBLE ASSETS (Details 1)
INTANGIBLE ASSETS (Details 1) | May 31, 2021USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2022 | $ 15,000 |
2023 | 15,000 |
2024 | 15,000 |
2025 | 15,000 |
2025 | $ 15,000 |
INTANGIBLES (Details Narrative)
INTANGIBLES (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 15,000 | $ 9,166 |
Amortization expense discontinued operations | $ 13,125 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) | May 31, 2021USD ($) |
Debt Disclosure [Abstract] | |
Note payable | $ 900,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Related Party Transaction [Line Items] | ||
Related Party Advances, Beginning | $ 829,982 | $ 539,704 |
Advances | 208,000 | 290,278 |
Related Party Advances, Ending | 1,037,982 | 829,982 |
Services | 280,000 | |
Payable to Related Parties for Services | 280,000 | |
Related Party Advances, Ending | 1,037,982 | 829,982 |
Patrick Bilton, CEO and Director | ||
Related Party Transaction [Line Items] | ||
Related Party Advances, Beginning | 726,414 | 448,455 |
Advances | 202,000 | 277,959 |
Related Party Advances, Ending | 928,414 | 726,414 |
Services | 280,000 | |
Payable to Related Parties for Services | 280,000 | |
Related Party Advances, Ending | 928,414 | 726,414 |
David Tobias, Director | ||
Related Party Transaction [Line Items] | ||
Related Party Advances, Beginning | 80,553 | 75,553 |
Advances | 5,000 | |
Related Party Advances, Ending | 80,553 | 80,553 |
Services | ||
Payable to Related Parties for Services | ||
Related Party Advances, Ending | 80,553 | 80,553 |
Jerry Cornwell, Director | ||
Related Party Transaction [Line Items] | ||
Related Party Advances, Beginning | 23,015 | 15,696 |
Advances | 6,000 | 7,319 |
Related Party Advances, Ending | 29,015 | 23,015 |
Services | ||
Payable to Related Parties for Services | ||
Related Party Advances, Ending | 29,015 | $ 23,015 |
Related Party [Member] | ||
Related Party Transaction [Line Items] | ||
Payable to Related Parties for Services | $ 1,317,982 |
SHARE CAPITAL (Details)
SHARE CAPITAL (Details) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items] | ||
Shares issued for Services & Other, shares | 374,410 | |
Shares issued for Services & Other, Amount | $ 140,000 | |
Financing fee, Amount | $ 1,800,000 | |
Aggregate Totals, Shares | 2,409,248 | 4,134,135 |
Aggregate Totals, Amount | $ 2,794,169 | $ 1,979,301 |
Shares Issued for Stock Payable, shares | 508,500 | |
Shares issued for Services & Other, Amount | $ 127,125 | |
Acquisitions, amount | $ 1,008,000 | |
Related Party [Member] | ||
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items] | ||
Shares issued for Services & Other, shares | 1,560,001 | |
Shares issued for Services & Other, Amount | $ 588,000 | |
Shares Issued for Stock Payable, shares | 300,000 | |
Shares issued for Services & Other, Amount | $ 75,000 | |
Related Party [Member] | David Tobias, Director | ||
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items] | ||
Shares issued for Services & Other, shares | 106,974 | 120,000 |
Shares issued for Services & Other, Amount | $ 40,000 | $ 41,000 |
Related Party [Member] | Jerry Cornwell, Director | ||
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items] | ||
Shares issued for Services & Other, shares | 106,974 | 120,000 |
Shares issued for Services & Other, Amount | $ 40,000 | $ 41,000 |
Related Party [Member] | Brad Herr, Chief Financial Officer | ||
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items] | ||
Shares issued for Services & Other, shares | 160,462 | 240,000 |
Shares issued for Services & Other, Amount | $ 60,000 | $ 93,000 |
Related Party [Member] | Patrick Bilton, CEO and Director | ||
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items] | ||
Shares issued for Services & Other, shares | 1,080,001 | |
Shares issued for Services & Other, Amount | $ 413,000 | |
Unrelated parties | ||
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items] | ||
Services | 614,838 | 665,634 |
Services, amount | $ 218,244 | $ 256,176 |
Investment in PPK, Shares | 1,520,000 | |
Investment in PPK, Amount | $ 972,800 | |
Financing fee, Shares | 1,200,000 | |
Financing fee, Amount | $ 1,800,000 | |
Cancellation, Shares | (1,300,000) | |
Cancellation, Amount | $ (336,875) | |
Shares Issued for Stock Payable, shares | 208,500 | |
Shares issued for Services & Other, Amount | $ 52,125 | |
Acquisitions, shares | 1,400,000 | |
Acquisitions, amount | $ 1,008,000 |
SHARE CAPITAL (Details Narrativ
SHARE CAPITAL (Details Narrative) | May 31, 2021 |
Equity [Abstract] | |
Warrant term | 3 years |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | May 31, 2021 | May 31, 2020 |
Deferred tax asset: | ||
Net operating loss carryforward | $ 1,144,262 | $ 687,163 |
Investment | 90,438 | |
Intangibles | 151,973 | 196,589 |
Financing fee | 529,410 | |
Total deferred tax assets | 1,916,083 | 883,752 |
Valuation allowance | (1,916,083) | (883,752) |
Net deferred tax assets |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Provision (benefit) computed using the statutory rate | $ (1,032,331) | $ (412,372) |
Provision (benefit) computed using the statutory rate | (21.00%) | (21.00%) |
Change in prior year estimates | $ (5,449) | |
Change in prior year estimates | 0.00% | 0.00% |
Change in valuation allowance | $ 1,032,331 | $ 417,821 |
Change in valuation allowance | 21.00% | 21.00% |
Income Tax Expense (Benefit) | ||
Total income tax provision (benefit) | 0.00% | 0.00% |
REVENUE (Details)
REVENUE (Details) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Policyholder Account Balance [Line Items] | ||
Debudder sales | $ 89,186 | $ 129,975 |
Debudder Sales [Member] | ||
Policyholder Account Balance [Line Items] | ||
Debudder sales | $ 74,090 | $ 44,197 |
Concentrations | 83.00% | 34.00% |
Customer A [Member] | Debudder Sales [Member] | ||
Policyholder Account Balance [Line Items] | ||
Debudder sales | $ 34,285 | $ 44,197 |
Customer B [Member] | Debudder Sales [Member] | ||
Policyholder Account Balance [Line Items] | ||
Debudder sales | 26,130 | |
Customer C [Member] | Debudder Sales [Member] | ||
Policyholder Account Balance [Line Items] | ||
Debudder sales | $ 13,675 |
REVENUE FROM CONTINUING OPERA_3
REVENUE FROM CONTINUING OPERATIONS (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Sales | $ 89,186 | $ 129,975 |
Primary Customers [Member] | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Accounts Receivable, after Allowance for Credit Loss | 18,706 | |
International [Member] | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Sales | $ 4,222 | $ 1,700 |
DISCONTINUED OPERATIONS (Detail
DISCONTINUED OPERATIONS (Details) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | ||
Revenue | $ 75,217 | $ 197,916 |
Cost of revenue | 66,243 | 192,077 |
Amortization | 13,125 | |
Gross profit | (4,151) | 5,839 |
Loss on discontinued operations | 10,000 | |
Total gain (loss) from discontinued operations | $ (14,151) | $ 5,839 |
DISCONTINUED OPERATIONS (Deta_2
DISCONTINUED OPERATIONS (Details Narrative) | 12 Months Ended |
May 31, 2021USD ($)shares | |
Discontinued Operations and Disposal Groups [Abstract] | |
Number of share cancelled | shares | 1,300,000 |
Walk-away fee | $ | $ 10,000 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended |
Aug. 19, 2021 | May 31, 2020 | |
Subsequent Event [Line Items] | ||
Stock Issued During Period, Value, Acquisitions | $ 1,008,000 | |
Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Working Capital | $ 500,000 | |
Subsequent Event [Member] | P P K [Member] | ||
Subsequent Event [Line Items] | ||
Sublease Income | $ 2,500,000 | |
Stock Issued During Period, Shares, Acquisitions | 2,150,000 | |
Stock Issued During Period, Value, Acquisitions | $ 5,972,222 | |
Share price | $ 0.36 |