United States securities and exchange commission logo
April 7, 2021
Kevin Duke Pitts
President
Healthy Extracts Inc.
6445 South Tenaya Way, Suite B110
Las Vegas, NV 89113
Re: Healthy Extracts
Inc.
Offering Statement
on Form 1-A
Filed March 11,
2021
File No. 024-11481
Dear Mr. Pitts:
We have reviewed your offering statement and have the following
comments. In some of
our comments, we may ask you to provide us with information so we may
better understand your
disclosure.
Please respond to this letter by amending your offering statement
and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response. After reviewing any amendment to your offering statement and
the information you
provide in response to these comments, we may have additional comments.
Form 1-A
Cover Page
1. Please disclose that
your common stock is traded on the OTCQB and disclose the trading
symbol.
Summary
Overview, page 1
2. Please disclose that
the acquisition of Ultimate Brain Nutrients, LLC ("UBN") was an
affiliated transaction
and explain why. In this regard, we note that six out of the seven
members of UBN,
including Jay Decker, were also members of BergaMet. In addition,
disclose the UBN
acquisition under Certain Relationships and Related Transactions, and
Director Independence.
Kevin Duke Pitts
FirstName LastNameKevin Duke Pitts
Healthy Extracts Inc.
Comapany
April NameHealthy Extracts Inc.
7, 2021
April 27, 2021 Page 2
Page
FirstName LastName
Corporate Information, page 3
3. Please disclose that you have a reporting obligation with the SEC
under the Exchange Act
and, if true, that you intend to meet your Regulation A reporting
obligations through the
filing of your reports under the Exchange Act.
Risk Factors, page 4
4. Please provide risk factors that discuss the material risks related to
your specific business
operations and products, including regulatory risks.
Plan of Distribution, page 15
5. Please file the subscription agreement as an exhibit.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
19
6. Please remove your disclosure that your forward-looking statements are
within the
meaning of the Section 27A of the Securities Act and Section 21E of
the Exchange Act as
these provisions do not apply to forward-looking statements made by
issuers of penny
stocks.
7. Please disclose that BergaMet generated all of your revenues in 2020.
Results of Operations for the Years Ended December 31, 2020 and 2019
Cost of Revenue, page 21
8. Explain and disclose in greater detail why your cost of revenue
significantly exceeds
revenue for the year ended December 31, 2020. In this regard, your
statement that cost of
revenue exceeded revenue because you built up your inventory of
bergamot product is
unclear. That is, as noted in your disclosure on page F-8, cost of
goods sold is recognized
when control of the promised goods is transferred to your clients.
Please advise.
Business, page 25
9. Note 11 to the financial statements indicates that UPN did not
generate any revenues for
the company in 2020. Please clarify that UPN has no employees and that
its products
consist of a portfolio of six patents, two of which are issued and
four of which are
pending. Disclose that UPN has not generated any revenues and that you
intend to
generate revenues through licensing the patents. Discuss how UPN will
develop[ ]
unique, plant-based superior health technology neuro-products that
improve brain health
outside of its current patent portfolio.
10. You disclose on page 26 that BergaMet, LLC holds the rights to
distribute BergaMet
products in the United States and Mexico. Please disclose who holds
the intellectual or
other rights to the BergaMet products. File the distribution agreement
as an exhibit.
Kevin Duke Pitts
Healthy Extracts Inc.
April 7, 2021
Page 3
Directors, Executive Officers and Corporate Governance, page 31
11. The employment agreement for Mr. Kevin Duke Pitts indicates that
he will devote 25
hours per week to the company. If Mr. Pitts works less than full time
for the company,
please disclose how much time he devotes to the company.
Certain Relationships and Related Transactions, and Director Independence, page
36
12. Please discuss all related transactions with Jay Decker, as
appropriate, including his
purchases and conversions of securities.
Consolidated Statement of Operations, page F-3
13. Please revise your statement of operations to show Impairment of
Assets as an Operating
expense.
Consolidated Statement of Cash Flows, page F-4
14. Please explain how you determined to present a cash inflow of
$1,757,310 related to the
purchase of BergaMet in 2019 and a cash outflow of $417,839 related to
the purchase of
UBN in 2020. In this regard, we note your disclosures in Note 9 on
page F-15 that you
acquired each of these entities through a share exchange agreement and
that you acquired
cash of $437,826 related to the BergaMet acquisition and negative cash
related to the
UBN acquisition. Your amounts should be cash paid in acquisitions, net
of cash received.
Please advise or revise accordingly. Refer to ASC 230-10-50-4 and
50-5.
Notes to Consolidated Financial Statements
Note 2 - Summary of Significant Accounting Policies, page F-6
15. Please provide footnote disclosures pursuant to ASC 350-30-50 related
to your
Patents/Trademarks.
Inventory, page F-7
16. Please tell us and disclose where your inventory write-off for 2019
and 2020 is presented
in your statement of operations.
Revenue Recognition, page F-8
17. We note your disclosure on page 26 that BergaMet sells its bergamot
products in capsule
form on its website and on distribution sites such as Amazon. Expand
your revenue
FirstName LastNameKevin Duke Pitts
recognition policy to explain how you recognize revenue under each of
these channels,
Comapany NameHealthy
including who you Extracts Inc. as your customer under ASC 606-10 when
you sell
have identified
April 7,through distribution
2021 Page 3 sites.
FirstName LastName
Kevin Duke Pitts
FirstName LastNameKevin Duke Pitts
Healthy Extracts Inc.
Comapany
April NameHealthy Extracts Inc.
7, 2021
April 47, 2021 Page 4
Page
FirstName LastName
Note 3 - Going Concern, page F-11
18. Please revise to include a statement that there is substantial doubt
about your ability to
continue as a going concern. Refer to ASC 205-40-50-13.
Note 11 - Business Segment Information, page F-17
19. It appears that you have not assigned your goodwill balance to a
reportable segment, but
rather present it as Corporate. Please advise. Please note goodwill
should be assigned to a
reportable segment. Refer to ASC 350-20-50.
Note 12 - Subsequent Events, page F-18
20. Please revise your disclosure to state the date through which
subsequent events have been
evaluated and the nature of this date. Refer to ASC 855-10-50-1.
Please ensure all
material subsequent events are disclosed. For example, we note the
Securities Purchase
Agreements and issued warrants in the Form 8-K dated February 12,
2021.
Exhibits
21. We note that you did not file an auditor consent with this Form 1-A.
Please note that a
consent of the independent accountants needs to be included. Refer to
paragraph 11(a)(i)
of Item 17 in Part III of the General Instructions of Form 1-A. We
will defer our review
unless the next amendment contains an auditor consent.
General
22. In Part I, Item 6 of Form 1-A, you indicate there were no unregistered
securities issued or
sold within one year. Your periodic and current reports indicate
otherwise. Please
provide the disclosure required by this item.
We will consider qualifying your offering statement at your request. If
a participant in
your offering is required to clear its compensation arrangements with FINRA,
please have
FINRA advise us that it has no objections to the compensation arrangements
prior to
qualification.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff. We also remind you that, following qualification of your
Form 1-A, Rule 257
of Regulation A requires you to file periodic and current reports, including a
Form 1-K which
will be due within 120 calendar days after the end of the fiscal year covered
by the report.
Kevin Duke Pitts
Healthy Extracts Inc.
April 7, 2021
Page 5
You may contact Ryan Rohn, Staff Accountant, at 202-551-3739 or Stephen
Krikorian,
Accounting Branch Chief, at 202-551-3488 if you have questions regarding
comments on the
financial statements and related matters. Please contact Kathleen Krebs,
Special Counsel, at
202-551-3350 or Jan Woo, Legal Branch Chief, at 202-551-3453 with any other
questions.
Sincerely,
FirstName LastNameKevin Duke Pitts
Division of
Corporation Finance
Comapany NameHealthy Extracts Inc.
Office of Technology
April 7, 2021 Page 5
cc: Brian A. Lebrecht, Esq.
FirstName LastName