NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2020
(UNAUDITED)
NOTE 1: DESCRIPTION OF BUSINESS
GRN Holding Corporation (formerly Discovery
Gold Corporation), a Nevada corporation, (“GRN,” “the Company,” “We," "Us" or “Our’)
is a publicly-quoted shell company seeking to create value for its shareholders by seeking out acquisitions, mergers and business
combinations.
On June 20, 2019, GRN Funds, LLC, a Washington
limited liability company, and its manager and Chief Executive Officer, Justin Costello, purchased a total of 139 million shares
of the Company’s common stock representing 55.65% of its issued and outstanding shares, in a private transaction with Stephen
Flechner and David Cutler. As a result of the closing of the transaction on June 25, 2019, GRN Funds, LLC and Mr. Costello acquired
a majority of the issued shares eligible to vote. As a condition to the closing of the transaction, the Company’s Directors
Mr. Stephen Flechner and Mr. Ralph Shearing resigned, and Mr. Flechner resigned as Chief Executive Officer and President, and Mr.
Justin Costello was concurrently named Director of the Company, President and Chief Executive Officer. As a term and condition
of the transaction, Messrs. Flechner and Cutler agreed to satisfy Company outstanding liabilities totaling $111,579 and forgive
outstanding liabilities of $86,147.
On July 16, 2019, the Board of Directors met
and unanimously approved a resolution recommending an amendment to the Company’s articles of incorporation to change the
name of the Company to GRN Holding Corporation, and to file a Corporate Action Notification Form with FINRA to formally change
the Company’s name and trading symbol. The Board of Directors thereafter called for and convened a special meeting of the
stockholders. On July 16, 2019, stockholders beneficially owning a majority of the shares eligible to vote consented to the amendment
of the Company’s articles of incorporation to change its name to GRN Holding Corporation and authorized the filing of a Corporate
Action Notification Form with FINRA to formally change the Company’s name and trading symbol.
On August 19, 2019, the Company filed a formal
amendment to its articles of incorporation with the Nevada Secretary of State formally changing its name to GRN Holding Corporation.
On October 17, 2019, the Company entered into
an executive employment agreement with Justin Costello to secure his services as President, Secretary, Treasurer and Director of
the Company. The term of the agreement is for one year, which automatically renews for one-year terms. Mr. Costello agreed to an
annual salary of $1.00.
On November 5, 2019, FINRA notified the Company
of its processing and completion of the Corporate Action Notification Form to change the Company’s name to GRN Holding Corporation,
and the concurrent issuance of the new trading symbol “GRNF” that is currently listed on the OTC Markets.
NOTE 2. GOING CONCERN
Our financial statements are prepared using
accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the
realization of assets and the liquidation of liabilities in the normal course of business. We have no ongoing business or income.
For the nine months ended January 31, 2020, we reported a net loss of $268,097, and had an accumulated deficit of $8,915,193 as
of January 31, 2020. These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements
do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the
amounts and classification of liabilities that may result from the outcome of these uncertainties. Our ability to continue as a
going concern is dependent upon our ability to raise additional debt or equity funding to meet our ongoing operating expenses and
ultimately in merging with another entity with experienced management and profitable operations. No assurances can be given that
we will be successful in achieving these objectives.
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The summary of significant accounting policies
is presented to assist in the understanding of the financial statements. These policies conform to accounting principles generally
accepted in the United States of America (“US GAAP”) and have been consistently applied. The Company has elected an
April 30 year-end.
Interim Financial Statements
The accompanying unaudited interim condensed
financial statements have been prepared in accordance with US GAAP for interim financial information in accordance with Article
8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial
statements. The accompanying condensed financial statements have been prepared by the Company without audit. In the opinion
of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position,
results of operations, and cash flows at January 31, 2020 and for the related periods presented. The results for the three and
nine months ended January 31, 2020 are not necessarily indicative of the results of operations for the full year. These financial
statements and related footnotes should be read in conjunction with the financial statements and footnotes thereto for the year
ended April 30, 2019 included in the Form 10K, filed with the Securities and Exchange Commission on August 14, 2019.
Use of Estimates
The preparation
of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
We maintain
cash balances in a non-interest-bearing account that currently does not exceed federally insured limits. For the purpose of the
statements of cash flows, all highly liquid investments with a maturity of three months or less are considered to be cash equivalents.
As of January 31, 2020 and April 30, 2019, our cash balance was $0.
Fair Value Measurements
ASC Topic
820, Fair Value Measurements and Disclosures ("ASC 820"), provides a comprehensive framework for measuring fair value
and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition
of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted
prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC
820 defines the hierarchy as follows:
Level
1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types
of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities
listed on the New York Stock Exchange.
Level
2 – Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of
the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded
securities or contracts or priced with models using highly observable inputs.
Level
3 – Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities
included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective
models and forecasts used to determine the fair value of financial transmission rights.
Our financial instruments consist of bank overdraft,
accounts payable, accrued expenses - related parties and loans – related parties. The carrying amount of our bank overdraft,
accounts payable, accrued expenses- related parties and loans payable – related party approximates their fair values because
of the short-term maturities of these instruments
Related Party Transactions
A related party is generally defined as (i)
any person that holds 10% or more of our membership interests including such person's immediate families, (ii) our management,
(iii) someone that directly or indirectly controls, is controlled by or is under common control with us, or (iv) anyone who can
significantly influence our financial and operating decisions. A transaction is considered to be a related party transaction when
there is a transfer of resources or obligations between related parties. See Notes 5, 6 and 7 below for details of related party
transactions in the period presented.
Income Taxes
The provision for income taxes is computed
using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax
consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating
losses and tax credit carry-forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that
apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. We record a valuation
allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
Net Loss per Share Calculation
Basic
net loss per common share ("EPS") is computed by dividing loss available to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted
average shares outstanding, assuming all dilutive potential common shares were issued. Dilutive loss per share excludes all potential
common shares if their effect is anti-dilutive.
No potentially
dilutive debt or equity instruments were issued or outstanding during the three- and nine-month periods ended January 31,
2020 and 2019.
Recently-Issued Accounting Pronouncements
We have
reviewed all the recently-issued, but not yet effective, accounting pronouncements and do not believe any of these pronouncements
will have a material impact on our financial statements.
NOTE 4. ACCOUNTS PAYABLE AND ACCRUALS
As of January 31, 2020 and April 30, 2019,
our balance of accounts payable was $105,077 and $129,360, respectively.
Effective
June 25, 2019, as a condition of the change of control in the Company described above, our former principal shareholders agreed
to satisfy outstanding accounts payable totaling $101,579 by way of capital contributions to the Company. These capital contributions
have been recognized in additional paid in capital. Contemporaneously with these payments, creditors who were owed a total
of $125,000 agreed to accept payment of $92,619 in full and final of their liabilities. According we recognized a gain of $32,381
on the settlement of these liabilities as other income.
NOTE 5. ACCRUALS - RELATED PARTIES
As of January 31, 2020, and April 30, 2019,
our balance of accrual – related parties was $0 and $77,218, respectively.
Effective
June 25, 2019, as a condition of the change of control in the Company described above, our former principal shareholders agreed
to settle the entire outstanding balance of accruals – related parties by payment of $10,000 by way of capital contributions
to the Company and forgiveness of accruals- related parties of $77,218. Both the capital contribution of $10,000 and the forgiveness
of accruals-related parties of $77,218 have been recognized in additional paid in capital.
NOTE 6. LOANS- RELATED PARTIES
As of January 31, 2020, and April 30, 2019,
our balance of loans – related parties was $113,581 and $7,697, respectively.
Between May 1, 2019 and June 25, 2019, one
of our former principal shareholders advanced to us $1,232 to fund our working capital needs
Effective
June 25, 2019, as a condition of the change of control in the Company described above, our former principal shareholders agreed
to forgive the total balance of loans- related parties of $8,929. The forgiveness of the balance of $8,929 loan -related parties
has been recognized in additional paid in capital.
During the period from June 26, 2019 to January
31, 2020, our new principal shareholder, GRN Funds, LLC, advanced $113,581 to us by way of loan to fund our working capital requirements.
The loan was unsecured, interest free and due on demand.
NOTE 7. SHAREHOLDERS’ DEFICIT
Preferred Stock
As of January 31, 2020, and April 30, 2019,
we were authorized to issue 10,000,000 shares of preferred stock with a par value of $0.001.
As of January 31, 2020, and April 30, 2019,
no shares of preferred stock were issued and outstanding.
Common Stock
As of January 31, 2020, and April 30, 2019,
we were authorized to issue 250,000,000 shares of common stock with a par value of $0.001.
On December 9,
2019, we issued 66,666 shares of common stock to an unrelated individual for
services rendered valued at $65,999.
No other shares of common stock were issued
during the three-and nine-month periods ended January 31, 2020 and 2019.
As of January 31, 2020 and April 30, 2019,
249,843,977 and 249,777,311 shares of common stock were issued and outstanding, respectively.
Additional Paid in Capital
Effective
June 25, 2019, as a condition of the change of control in the Company described above, our former principal shareholders agreed
to satisfy outstanding accounts payable totaling approximately $101,579 and accruals- related party of $10,000 by way of capital
contributions to the Company. These capital contributions totaling $111,579 have been recognized in additional paid in capital.
In addition,
effective June 25, 2019, as a condition of the change of control in the Company described above, our former principal shareholders
agreed to forgive accruals-related parties of $77,218 and loans-related parties of $8,829. The total forgiveness of $86,147 related
party debt has been recognized in additional paid in capital.
NOTE 8. SUBSEQUENT EVENTS
The Company evaluated subsequent events after
January 31, 2020, in accordance with FASB ASC 855 Subsequent Events, through the date of the issuance of these financial
statements and has determined there have been no subsequent events for which disclosure is required.
