NOTES
TO FINANCIAL STATEMENTS
JULY
31, 2020
(UNAUDITED)
NOTE
1: DESCRIPTION OF BUSINESS
GRN
Holding 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 pursuing 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.
On
July 31, 2020, the Company announce that it had entered into a binding letter of intent to acquire Microcap Advisors, LLC. This
announcement follows the completion of due diligence earlier this year and will help to define the terms of a mutual definitive
agreement to finalize the pending acquisition. No acquisition date is set. The final terms of the material definitive agreement
are not complete. Microcap Advisors, LLC is a Nevada limited liability company. Justin Costello is a managing member. Therefore,
the transaction, once completed, will be deemed a related party transaction. The Company expects to acquire all assets and interests
of Microcap Advisors, LLC in the transaction. After the final material definitive agreement is completed and executed, the Company
will file Form 8-K and provide the required financial statements of Microcap Advisors, LLC pursuant to Regulation SX.
As
further discussed in Note 10. Subsequent Events below, on August 5, 2020, the Company announced that it had entered into
a binding letter of intent to acquire Sunshine Hemp, Inc. This announcement follows the completion of due diligence earlier this
year and will help to define the terms of a mutual definitive agreement to finalize the pending acquisition. No acquisition date
is set. The final terms of the material definitive agreement are not complete. Sunshine Hemp, Inc. is a Florida corporation. Justin
Costello is vice-president of Sunshine Hemp, Inc. Therefore, the transaction, once completed, will be deemed a related party transaction.
The Company expects to acquire all assets and interests of Sunshine Hemp, Inc. in the transaction. After the final material definitive
agreement is completed and executed, the Company will file Form 8-K and provide the required financial statements of Sunshine
Hemp, Inc. pursuant to Regulation SX.
As
further discussed in Note 10. Subsequent Events below, on August 19, 2020, the Company announced that it had entered into
a binding letter of intent to acquire Pacific Merchant Processing, Inc. This announcement follows the completion of due
diligence earlier this year and will help to define the terms of a mutual definitive agreement to finalize the pending acquisition.
No acquisition date is set. The final terms of the material definitive agreement are not complete. Pacific Merchant Processing,
Inc. is a Washington corporation. Justin Costello is governor of Pacific Merchant Processing, Inc. Therefore, the transaction,
once completed, will be deemed a related party transaction. The Company expects to acquire all assets and interests of Pacific
Merchant Processing, Inc. in the transaction. After the final material definitive agreement is completed and executed, the Company
will file Form 8-K and provide the required financial statements of Pacific Merchant Processing, Inc. pursuant to Regulation SX.
On
August 22, 2020 the Company’s Board of Directors approved an amendment to the Company’s Articles of Incorporation
designating a class of preferred stock from the Company’s ten million authorized preferred shares. The class was entitled
“Series A Preferred Stock” with 100 shares designated. The corporate action is pending filing with the Nevada Secretary
of State.
On
August 22, 2020, the Company’s Board of Directors approved an amendment to the Company’s Articles of Incorporation
increasing the Company’s authorized shares to 760,000,000 common shares, 750,000,000 being common stock and 10,000,000 being
preferred stock. The corporate action is pending filing with the Nevada Secretary of State.
On
August 22, 2020, by majority written consent of the shareholders eligible to vote, the shareholders approved an amendment to the
Company’s Articles of Incorporation increasing the Company’s authorized shares to 760,000,000 common shares, 750,000,000
being common stock and 10,000,000 being preferred stock.
As
further discussed in Note 10. Subsequent Events below, On August 28, 2020, the Company announced that it had entered into
a binding letter of intent to acquire SMLY, Inc., doing business as 7 Point Financial and 9 Square Consulting This announcement
follows the completion of due diligence earlier this year and will help to define the terms of a mutual definitive agreement to
finalize the pending acquisition. No acquisition date is set. The final terms of the material definitive agreement are not complete.
SMLY., Inc. is a California corporation. 7 Point Financial provides financial products and services for cannabis related business;
9 Square Consulting is a processing and point-of-sale equipment and software company. The Company expects to acquire all assets
and interests of SMLY, Inc. in the transaction. After the final material definitive agreement is completed and executed, the Company
will file Form 8-K and provide the required financial statements of SMLY, Inc. pursuant to Regulation SX.
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 contemplate the realization of assets and the liquidation of liabilities in the normal course of business.
We have no ongoing business or income. For the three months ended July 31, 2020, we reported a net loss of $76,742, and had an
accumulated deficit of $9,159,788 as of July 31, 2020. These conditions raise substantial doubt about our ability to continue
as a going concern. 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. The COVID-19 pandemic could have
an impact on our ability to obtain financing to fund operations. The Company is unable to predict the ultimate impact at this
time. 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.
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. The Company has not earned any revenue to date.
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 July 31, 2020 and for the related
periods presented. The results for the three months ended July 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, 2020 included in the Form 10K, filed with the Securities and Exchange Commission
on August 13, 2020.
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 July 31, 2020 and April 30, 2020, 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 prepaid expenses, accounts payable and accruals, note payable and loan – related party. The
carrying amount of our prepaid expenses, accounts payable and accruals, note payable and loan – related party approximates
their fair values because of the short-term maturities of these instruments
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.
Revenue
Recognition
Revenues
are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration
that we expect to receive in exchange for those goods or services. Once we establish revenue-generating activities, likely through
acquisition of an operating company, we intend to apply the following five steps in order to determine the appropriate amount
of revenue to be recognized as we fulfill our obligations under each of our agreements:
Step
1: Identify the contract(s) with customers
Step
2: Identify the performance obligations in the contract(s)
Step
3: Determine the transaction price
Step
4: Allocate the transaction price to performance obligations
Step
5: Recognize revenue when the entity satisfies a performance obligation
At
this time, we have not identified specific planned revenue streams.
During
the three-month periods ended July 31, 2020 and 2019, we did not recognize any revenue.
Advertising
Costs
We
expense advertising costs when advertisements occur. No advertising costs were incurred during the three-month periods ended
July 31, 2020 or 2019.
Stock-Based
Compensation
The
cost of equity instruments issued to non-employees in return for goods and services is measured by the fair value of the equity
instruments issued. Measurement date for non-employees is the grant date of the stock-based compensation. The cost of employee
services received in exchange for equity instruments is based on the grant date fair value of the equity instruments issued.
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-month periods ended July 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. PREPAID EXPENSES
As
of July 31, 2020 and April 30, 2020, our balance of prepaid expenses was $1,000 and $58,265, respectively.
Effective
February 5, 2020, we entered into financing agreement to purchase a Directors’ and Officers’ insurance policy at a
projected annual cost of $75,809, excluding finance costs. We accounted for this transaction by amortizing the anticipated annual
cost of the policy on a straight-line basis over the anticipated one-year life of the policy. On consideration, management decided
not to maintain the policy in force and the policy was cancelled for non-payment effective May 11, 2020 at which time the balance
of the unamortized prepayment was written off. The financing agreement terminated upon the Company’s decision to cancel
the policy, and the Company incurred no fees or penalties in connection with the cancellation of the financing agreement. The
difference between the carrying value of the loan of $72,090 (Note 6) and the prepaid expense balance of $58,265 resulted in a
loss on cancellation of $13,825, which has been included in Other Income (Expense) on the Statements of Operations.
Effective
July 1, 2020, we entered into a quarterly subscription to publish investor relations materials for $1,500. We accounted for this
transaction by amortizing the cost of the subscription on a straight-line basis over the three-month term of the agreement, resulting
in a prepaid publishing amount of $1,000 at July 31, 2020.
NOTE
5. ACCOUNTS PAYABLE AND ACCRUALS
As
July 31, 2020 and April 30, 2020, our balance of accounts payable and accruals was $228,048 and $197,802, respectively, and related
primarily to legal fees.
NOTE
6. NOTE PAYABLE
As
of July 31, 2020 and April 30, 2020, the balance of the note payable was $0 and $72,090, respectively.
Effective
February 5, 2020, we entered into a financing agreement to purchase a Directors’ and Officers’ insurance policy. The
policy was set to expire in February 2021. Under the terms of the financing agreement, we were required to make 9 monthly payments
of $6,374 commencing March 3, 2020.
As
of April 30, 2020, we had made a single payment of $6,374 under the terms of this agreement. Total outstanding balance on the
debt at April 30, 2020 was $72,090. During the year ended April 30, 2020, total interest paid on the note was $469. On consideration,
management decided not to maintain the policy in force and the policy was cancelled for non-payment effective May 11, 2020
and no further payments have been made under this finance agreement. The financing agreement terminated upon the Company’s
decision to cancel the policy, and the Company incurred no fees or penalties in connection with the cancellation of the financing
agreement. The difference between the carrying value of the loan of $72,090 and the related prepaid expense balance of $58,265
(Note 4) resulted in a loss on cancellation of $13,825, which has been included in Other Income (Expense) on the Statements of
Operations.
NOTE
7. LOANS- RELATED PARTIES
As
of July 31, 2020, and April 30, 2020 our balance of loans – related parties was $236,205 and $174,884, respectively.
During
the three-month period ended July 31, 2020 our principal shareholder, GRN Funds, LLC, advanced $24,884 to us by way of loan to
fund our working capital requirements.
During
the three-month period ended July 31, 2020 an entity 100% owned by our President, Secretary, Treasurer and Director, advanced
$36,437 to us by way of loan to fund our working capital requirements
Both
of these loans are unsecured, interest free and due on demand.
NOTE
8. COMMITMENTS & CONTINGENCIES
Legal
Proceedings
As
of April 30, 2020, and to date the following are pending material litigations involving claims exceeding $5,000, that individually
or in the aggregate , involves the Company, or any of its directors, officers or affiliates:
1) Dean
Huge vs. Orlando Birgrager, Erik Blum, BBVI Consulting, SA, Weiser Global Capital Markets, Ltd., GRN Holding Corporation. Case
No. A-20-814980-C; District Court for Nevada, Clark County. This action seeks damages by plaintiff Huge against BBVI, Blum and
Weiser for breach of contract having to do with a private stock sale. The Company is named, but no allegations are made against
the Company in the complaint, nor is there any prayer for relief that seeks legal damages or costs against the Company that could
reasonably be calculated as a contingent liability at this time. The Company expects this case to be dismissed without any damages
against it that would result in a reasonably determinable and reportable contingent liability.
2) CCSAC,
Inc., a California corporation and CANN DISTRIBUTORS, INC., a California corporation vs. PACIFIC BANKING CORP., a Washington corporation,
JUSTIN COSTELLO, an individual and GRN FUNDS, LLC, a Washington limited liability company. Case No. 20-cv-02102, filed in the
U.S. District Court for the Northern District of California. This case involves claims of plaintiff CCSAC and CANN against Pacific
Banking Corp. for breach of contract whereby Pacific Banking Corp. was obligated to (1) make certain tax payments on behalf of
plaintiffs; (2) pay certain vendors; and, (3) make timely payroll payments. Plaintiff alleges that: (a) it transferred $2.8 million
dollars to Pacific Banking Corp. for these purposes pursuant to contract; (b) Pacific Banking Corp. transferred the funds to GRN
Funds, LLC, the majority stockholder of the Company, and its sole manager, Justin Costello, the Company’s sole officer and
director; and (c) defendant Pacific Banking Corp. failed to make the necessary payments under contract, provide a reconciliation,
or account for the funds. Aside from breach of contract, plaintiffs seek damages for negligence, fraud, declaratory relief/indemnification
and an injunction. Damages requested by the plaintiffs include compensatory damages of $2.8 million. Plaintiffs also pray for
punitive damages. Counsel for defendants filed motions to dismiss for lack of subject-matter and personal jurisdiction and for
lack of adequate process and for sanctions. The court has not issued a case management order setting discovery and related deadlines.
Given the early stages of litigation. We are not able to reasonably determine of what amount of reportable contingent liability,
if any, may be attributable to GRN Funds, LLC or Mr. Costello as a result of this action. Mr. Costello is our sole director and
officer. He is also the manager of GRN Funds, LLC, our majority shareholder, and is an affiliate and owner of Pacific Banking
Corp.
We
were not subject to any pending material legal proceedings during the three-month periods ended July 31, 2020 and 2019 that are
likely to result in a reasonably determinable and reportable contingent liability.
Contractual
Obligations
On
October 17, 2019, the Company entered into an executive employment agreement with Justin Costello, its sole director and president,
secretary and treasurer, for a term of one year, which automatically renews for consecutive one-year terms, with an annual salary
of $1.00.
On
October 21, 2019, the Company retained Nancy Norton as legal counsel. The contract is terminable at will. The Company terminated
the contract on September 11, 2020.
NOTE
9. SHAREHOLDERS’ DEFICIT
Preferred
Stock
As
of July 31, 2020 and April 30, 2020, we were authorized to issue 10,000,000 shares of preferred stock with a par value of $0.001.
As
of July 31, 2020 and April 30, 2020, no shares of preferred stock were issued and outstanding.
Common
Stock
As
of July 31, 2020 and April 30, 2020, we were authorized to issue 250,000,000 shares of common stock with a par value of $0.001.
As
of July 31, 2020 and April 30, 2020, 249,843,977 shares of common stock were issued and outstanding.
On
August 22, 2020, our board of directors by resolution and a majority of our shareholders by written consent approved an amendment
to our articles of incorporation increasing our authorized shares from 260,000,000 to 760,000,000 shares: 750,000,000 being common
shares and 10,000,000 being preferred shares.
NOTE
10. SUBSEQUENT EVENTS
The
Company evaluated subsequent events after July 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 other than as discussed below:
Subsequent
to July 31, 2020, our principal shareholder, GRN Funds LLC, has provided a further $6,614 to us by way of loan to fund our operating
expenses.
Subsequent
to July 31, 2020, our principal shareholder, an entity 100% owned by our President, Secretary, Treasurer and Director, advanced
a further $18,218 to us by way of loan to fund our working capital requirements.
On
August 5, 2020, the Company announced that it had entered into a binding letter of intent to acquire Sunshine Hemp, Inc. This
announcement follows the completion of due diligence earlier this year and will help to define the terms of a mutual definitive
agreement to finalize the pending acquisition. No acquisition date is set. The final terms of the material definitive agreement
are not complete. Sunshine Hemp, Inc. is a Florida corporation. Justin Costello is vice-president of Sunshine Hemp, Inc. Therefore,
the transaction, once completed, will be deemed a related party transaction. Sunshine Hemp, Inc. has two hemp planting permits
from the State of Florida Department of Agriculture in connection with Florida A&M University. The acquisition includes all
assets, inventory, licenses, intellectual property and 100% equity in the business. The Company expects to acquire all assets
and interests of Sunshine Hemp, Inc. in the transaction. After the final material definitive agreement is completed and executed,
the Company will file Form 8-K and provide the required financial statements of Sunshine Hemp, Inc. pursuant to Regulation SX.
On
August 19, 2020, the Company announced that it had entered into a binding letter of intent to acquire Pacific Merchant Processing,
Inc. This announcement follows the completion of due diligence earlier this year and will help to define the terms
of a mutual definitive agreement to finalize the pending acquisition. No acquisition date is set. The final terms of the material
definitive agreement are not complete. Pacific Merchant Processing, Inc. is a Washington corporation. It provides financial services
to the cannabis industry including card processing services to state licensed producers, processors and retail locations. Justin
Costello is governor of Pacific Merchant Processing, Inc. Therefore, the transaction, once completed, will be deemed a related
party transaction. The Company expects to acquire all assets and interests of Pacific Merchant Processing, Inc. in the transaction.
After the final material definitive agreement is completed and executed, the Company will file Form 8-K and provide the required
financial statements of Pacific Merchant Processing, Inc. pursuant to Regulation SX.
On
August 22, 2020, our board of directors by resolution, and a majority of our shareholders by written consent, approved an amendment
to our articles of incorporation increasing our authorized shares from 260,000,000 to 760,000,000 shares: 750,000,000 being common
shares and 10,000,000 being preferred shares. The amendment is pending filing with the Nevada Secretary of State.
On
August 22, 2020, our board of directors designated a new class of preferred stock named Series A Preferred Stock. The total number
of designated shares are 100. The Series A Preferred Stock carries with it a voting preference in any matter presented to the
stockholders for their consideration and action, in a noticed meeting, special meeting or by written consent. The holder of the
Series “A” Preferred Stock shall be entitled to cast that number of votes equal to the total number of votes cast,
plus one share to equal to a majority of the shares eligible to vote on any matter The amendment is pending filing with the Nevada
Secretary of State.
On
August 28, 2020, the Company announced that it had entered into a binding letter of intent to acquire SMLY, Inc., doing business
as 7 Point Financial and 9 Square Consulting This announcement follows the completion of due diligence earlier this
year and will help to define the terms of a mutual definitive agreement to finalize the pending acquisition. No acquisition date
is set. The final terms of the material definitive agreement are not complete. SMLY, Inc. is a California corporation. 7 Point
Financial provides financial products and services for cannabis related business; 9 Square Consulting is a processing and point-of-sale
equipment and software company. The Company expects to acquire all assets and interests of SMLY, Inc. in the transaction. After
the final material definitive agreement is completed and executed, the Company will file Form 8-K and provide the required financial
statements of SMLY, Inc. pursuant to Regulation SX.
On
September 11, 2020, the Company terminated its at will contract with Nancy Norton for legal services.
