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MJ Harvest, Inc. – ‘10-K’ for 5/31/22

On:  Friday, 9/23/22, at 11:46am ET   ·   For:  5/31/22   ·   Accession #:  1903596-22-606   ·   File #:  0-56250

Previous ‘10-K’:  ‘10-K/A’ on 10/15/21 for 5/31/21   ·   Latest ‘10-K’:  This Filing   ·   3 References:   To:  MJ Harvest, Inc. – ‘8-K’ on 10/26/21 for 10/19/21 To:  MJ Harvest, Inc. – ‘8-K’ on 3/30/21 for 3/24/21 To:  MJ Harvest, Inc. – ‘S-1’ on 10/2/19 

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form  i 10-K

(Mark One)

[  i X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended  i  i MAY 31, 2022 / 

OR

 i []        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from _______________________ to __________________________

Commission File Number  i 333-234048

 i MJ HARVEST, INC.

(Exact name of registrant as specified in charter)

 i (954)  i 519-3115

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  [ ]  i No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ]    i No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 i Yes   [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 i Yes [X]  No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  i ☐  

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the issuer is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes  [ ]  i No [X]

The aggregate market value of the voting and non-voting common stock held by non-affiliates computed by the average bid and asked price of such common equity on November 30, 2021, was $ i 4,700,000.

As of September 23, 2022, there were  i 44,854,737 shares of the issuer’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

MJ HARVEST, INC.

TABLE OF CONTENTS TO ANNUAL REPORT ON FORM 10-K

YEAR ENDED MAY 31, 2022

Throughout this report, unless otherwise designated, the terms “we,” “us,” “our,” “the Company” and “our company” refer to MJ Harvest, Inc., a Nevada corporation, and its consolidated subsidiaries. All amounts in this report are in U.S. Dollars, unless otherwise indicated.

FORWARD-LOOKING STATEMENTS

This report on Form 10-K for the year ended May 31, 2022, contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Act of 1934, as amended (the “Exchange Act”). Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business, including our expectations regarding the potential impacts on our business of the COVID-19 pandemic, and can be identified by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements may include words such as “expect,” “anticipate,” “intend,” “believe,” “estimate,” “plan,” “target,” “strategy,” “continue,” “may,” “should,” variations of such words, or other words and terms of similar meaning. All forward-looking statements reflect our best judgment and are based on several factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Such factors include, but are not limited to, those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” sections in this report on Form 10-K, and other factors as identified from time to time in our Securities and Exchange Commission reports. Forward-looking statements are based on information available to us on the date hereof, and we do not have, and expressly disclaim, any obligation to publicly release any updates or any changes in our expectations, or any change in events, conditions, or circumstances on which any forward-looking statement is based. Our actual results and the timing of certain events could differ materially from the forward-looking statements. These forward-looking statements do not reflect the potential impact of any mergers, acquisitions, or other business combinations that had not been completed as of the date of this filing.

Part I

Item 1. Business

Company Background

MJ Harvest, Inc. was incorporated in Nevada in 2002. Our current business model is focused on building a vertically integrated cannabis company specializing in manufacturing operations, brand aggregation, and distribution of products utilizing ingredients derived from cannabis. Our current operations are centered in Colorado and California, and through a minority investment in PPK Investment Group, Inc. (“PPK”), an Oklahoma corporation, we have extended our market reach to Oklahoma, South Dakota and Arizona. We are currently working with our Oklahoma affiliate to further expand our business into Florida, Missouri, New Jersey, and New York. Our business model is constantly evolving to take into account the scope of our market presence, the brands included in our brand portfolio, and the relationships we have with our brands and our minority owned affiliates.

On August 8, 2022, we entered into an Agreement of Merger and Plan of Reorganization dated August 8, 2022 (the “Merger Agreement”) with Cannabis Sativa, Inc. (“CBDS”), to be effective on the first business day following approval of the Merger by the shareholders of MJHI and CBDS. The Merger Agreement provides for the merger of MJHI with and into CBDS, with CBDS as the surviving entity (the “Merger”). The following listing summarizes material terms of the Merger Agreement.

On October 8, 2021, we entered into to two brand development agreements with WDSY, LLC (“WDSY”) and Blip Holdings, LLC (“BLIP”) for expansion of the “WEEDSY” and “BLVK” brands into Oklahoma and South Dakota. Under the agreements, PPK will manufacture and distribute these brands in Oklahoma and South Dakota and will pay the respective companies 10% royalties on all sales of the branded products in those territories. We also acquired a 10% interest in WDSY in exchange for 377,358 shares of our common stock and a 10% interest in BLIP in exchange for 188,679 shares of our common stock. Additional shares may be due to WDSY and BLIP based on lookback valuations of both companies. The lookback valuations will be based on trailing twelve months sales for WDSY and trailing three-month sales for BLIP on the second anniversary of each agreement, or sooner if the agreements are terminated before the second anniversaries.

As of May 31, 2022, the Company owned 25% of PPK and has the option to expand the investment in PPK to 100%. PPK continues to expand its market in the industry, with further explanation in Joint Venture with Tribal Partners. On May 19, 2021, PPK entered into a cannabis joint venture agreement with the Flandreau Santee Sioux Tribe of South Dakota (“FSST”). Under the joint venture agreement, PPK opened extraction and manufacturing facilities in a building located on the FSST Reservation and manufactures products for FSST utilizing biomass grown in FSST’s existing and expanding grow operations. FSST markets their products under the Native Nations Brand. PPK currently markets its products under the Country Cannabis brand. The joint venture agreement provides that PPK and FSST will now cross market the other’s brands in their respective states. This provided an opportunity for FSST to expand its Native Nations Brand to Oklahoma and for PPK to expand its Country Cannabis Brand into South Dakota. The joint venture also provides both PPK and FSST with additional capabilities, work force, and other synergies that management believes will benefit both entities. MJHI currently participates as a minority investor in PPK and expects its involvement to increase as its PPK investment commitment grows and more capital is provided to PPK and the joint venture.

With our acquisitions in Colorado and California and our investments in PPK, WDSY and BLIP, our long-term focus has shifted to expand our operations to include vertically integrated cannabis growing operations in Colorado, California, Oklahoma, and South Dakota, and we are actively looking at markets in Arizona, Florida New Jersey, and New York as potential areas for expansion. The timing for development of these expanded operations will depend on availability of growth capital.

In addition to the tribal opportunities, we have focused much of our growth efforts on acquiring interests in, and licensing agreements with, multiple other brands of cannabis products. Currently, we offer Country Cannabis (the PPK brand), Weedsy, BLVK, and Chronic brands (our “Brand Portfolio”), and we are in active negotiations to acquire interests in, and licenses with, several other brands. This focus on brand aggregation is a cornerstone of our expansion plans. We believe that our wholesale customers, consisting primarily of dispensaries, will be more receptive to our product offerings if we offer a wide range of products and price points while building our reputation as a quality manufacturer and distributor.

Prior to 2020, we were focused on building a portfolio of best-in-class agricultural and horticultural products to benefit farmers and hobbyists in their hemp and cannabis growing operations. Our first product line consisted of the Debudder Lid and EDGE products. The Debudder is used to strip buds off stems for a variety of plants, including hemp and cannabis. The patented Debudder line is wholly owned and marketed by the Company through our e-commerce sites. In 2020, we expanded our online product offerings to include the Kalix and NPK product lines, which offer customers access to plant nutrient products. While our focus has shifted toward cannabis products, we continue to offer the Debudder and the plant nutrient products through our online marketing platforms.

We are actively seeking to acquire and/or license additional brands, acquire and/or establish additional manufacturing and distribution operations, and acquire growing operations in the coming periods. We also continue to seek out additional agricultural and horticultural implements to add to our product offerings through distribution agreements, licensing, and acquisition. In this aspect of our business, we look for agricultural implements, durable goods, and services that will benefit smaller growers of hemp and cannabis by making their growing operations more efficient. As we increase the depth of our vertical integration, we will utilize the products from our agricultural and horticultural implements division in our operations. This will allow us to perform first-hand verification of the efficacy of the products and testimonials on our experiences with the products we offer. We also believe the customer contact and feedback from small and mid-sized growers will provide a source of prospective acquisition targets and the cannabis industry matures and consolidates in our states of operation. 

Strategy and Objectives

With our investment into PPK, PPK’s cannabis joint venture relationship with FSST, and our focus on brand aggregation, MJHI intends to take advantage of significant business development opportunities. The following business divisions are either in process, under development, or are being evaluated in an effort to assemble an enterprise covering all aspects of seed to sale operations in the cannabis and hemp-based CBD sectors.

Vertically Integrated Cannabis Operations.

Through our investment in PPK and our intention to increase the investment over time to make PPK a wholly owned subsidiary, we will operate as a vertically integrated cannabis company encompassing grow operations, harvesting, processing, extraction, manufacturing, distribution, and wholesale sales of a full line of products containing THC and CBD. In addition to the FSST joint venture, the Company also signed agreements with International Business Group to produce and distribute the Chronic brand of products, WDSY LLC to produce and distribute the Weedsy brand of products, and with BLIP Holdings, LLC to produce and distribute the BLVK brand of products. The agreements include a right of first refusal to offer the Chronic brand in other markets as MJHI and PPK expand their market reach. Management believes the addition of brands to the MJHI and PPK distribution system will serve to further increase the market reach of MJHI and PPK.

As a result of our brand development efforts, we became aware of an opportunity to acquire a commercial kitchen operation in Tulsa, Oklahoma with an additional distribution facility in Oklahoma City, Oklahoma. Working with PPK, we entered into an asset acquisition agreement with AOK Ventures, Inc. to acquire the commercial kitchen operations, including a sublease on the Oklahoma City distribution facility. The acquisition was structured with PPK acquiring the assets of AOK and with the Company providing a portion of the funding for the acquisition in exchange for a 15% increase in ownership of PPK, bringing the Company’s total ownership of PPK to 25% from the original investment of 10%. The assets acquired include exclusive distribution rights to distribute the Sublime brand of products in Oklahoma with additional opportunities to expand in other states on similar terms.

Joint Venture for Manufacturing and Distribution with Tribal Partner

With our 25% of investment in PPK referenced above we felt the expanded explanation of PPK’s joint venture was worth noting. FSST is one of 574 Native American Indian tribes recognized by the United States Government. The Flandreau Santee Sioux Reservation is situated on over 5,000 acres of land located along and near the Big Sioux River in Moody County, South Dakota. The reservation facilities include the Royal River Entertainment Complex, which is the only legal casino in South Dakota with 430 gaming devices, a 300-seat entertainment and conference center, a 120-room hotel, an adjacent RV park, plus a full-service restaurant, buffet, snack bar and lounge.

FSST has been active in tribal cannabis since 2015 and has a state-of-the-art cultivation facility through which it has resumed cannabis cultivation after the legalization of cannabis in South Dakota in November 2020. The cultivation facility currently houses about 65 strains of cannabis and the Tribe has renovated an existing building to include a lab, kitchen, packaging, and a dispensary with drive-up service. FSST also has developed a full-line of 2018 Farm Bill Compliant hemp products which it sells under its trade name “Native Nations Cannabis.”

Federal recognition of the sovereign status of Native American Indian tribes under the Indian Reorganization Act of 1934 (the “Act”) allows tribes such as the Flandreau Santee Sioux Tribe to manage their own affairs, including their assets, land, and mineral rights. The Act and the ensuing legislation were intended to create a sound economic foundation for the inhabitants of the reservations. Two of the main benefits of federal recognition are exemption from payment of federal taxes and exemption from many federal and state licensing requirements applicable to non-tribal companies. As a result of these advantages, many tribes have pursued business opportunities in the gaming and tobacco industries. Now, with the growing legalization of marijuana for medicinal and adult use, we believe marijuana provides a new growth area for tribes. FSST is the first tribe to expand into the marijuana industry in South Dakota. PPK and FSST have created a unique business model that is now being offered to other tribal entities in a coordinated program to grow the Native Nations brand throughout sovereign lands.

PPK and its Chief Executive Officer, Clinton Pyatt, have now entered into an agreement with FSST to offer the tribal program to other tribes. In each instance where a tribe agrees to follow the FSST/PPK model, PPK will serve as the manufacturer on the tribal lands in exchange for a revenue sharing arrangement on retail sales revenues generated out of the tribal relationship. This also facilitates expansion of brand sales to new areas as ne tribal relationships are forged. MJHI is working closely with PPK to include the MJHI Brand Portfolio in the new tribal arrangements.

Indoor Grow Operations

The Company is evaluating several indoor grow operations for acquisition and/or joint venture operations but has not entered into any binding agreements or arrangements. Management believes that securing indoor grow operations will allow the Company’s operating divisions to access a consistent supply of biomass in the quality demanded by the Company’s customers. Management also believes that the acquisition of an existing indoor grow facility would allow the Company to rapidly generate operating cash flows as the biomass is processed by the Company’s own extraction and manufacturing concerns. As indicated above, PPK and FSST both have their own grow facilities in Oklahoma and South Dakota, respectively, which we believe positions us to apply best practices learned from our and their own operations to newly acquired locations. The Company, PPK, and FSST intend to continue to evaluate indoor grow facilities in locations where they are licensed to grow or manufacture products and in new markets where licenses to cultivate and process marijuana can be obtained at reasonable cost.

The Company is cognizant of the critical processes that must be addressed to effectively monitor and produce a quality product. Steps considered critical include cultivation monitoring, maintenance and monitoring of plant nutrients, irrigation, and lighting systems during the growing cycles, monitoring of production processes, and knowledge of the market demand for products that customers want and for which they will pay a reasonable price. Management believes all of these aspects of the business could be very efficiently driven by software applications. The Company is currently evaluating several competent software alternatives to address these critical processes and the Company expects to develop procedures and practices to obtain a competitive advantage over less sophisticated producers.

Disrupting Cannabis Distributor

Once the products are produced, the next critical phase of our strategic vision is in distribution of the products to customers where and when demanded. This is another area where management believes inventory control, data analysis to determine product demand, and delivery systems focused on getting products into the hands of the customers at the lowest delivery cost possible could be driven by software applications. The Company is currently evaluating inventory control systems, consumer data collection systems, and delivery methods to allow efficient distribution of the products to the consumer.

Traditionally, retail distribution is done through brick-and-mortar dispensaries. With the growing reach of Lyft and Uber, and similar business models, last mile delivery is a growth industry. We believe that software applications may also be applied to this aspect of the marijuana industry, and we are evaluating solutions that could disrupt the traditional brick-and-mortar dispensary distribution model at lower cost.

Farm Implements and Nutrient Products

Our goal is to become a preferred provider of agricultural and horticultural products to hemp and marijuana growers and processors. We are targeting small and medium sized commercial growers as well as the hobby farmers prevalent in many areas with recently legalized hemp and marijuana industries. We intend to continue our expansion by building distribution relationships with manufacturers of products that fit in our catalog, and by acquiring rights to manufacture and sell compatible products when those opportunities occur. In the longer term, we intend to open physical warehouse and retail locations on the east and west coasts of the United States and eventually in a central U.S. location in order to optimize logistics for our product sales and distribution efforts. As we build our product lines, we intend to become a one-stop shop for the hemp and marijuana growers looking for ways to improve yield and reduce costs of harvest and processing.

Business Concentration.

In the period ended May 31, 2022, our business in the Debudder product line was concentrated with 96% of our debudder sales going to four customers. We expect significant changes in the sources of our revenues in the coming periods and the business concentrations for the period ended May 31, 2022, may not reflect future results.

Competition

With our expansion into the vertically integrated cannabis space through our investment in PPK, we will be subject to competition for a wide range of industry participants, and we expect competition to intensify in the coming periods. We are currently evaluating our sources of direct competition in the California, Colorado, Oklahoma, and South Dakota markets where MJHI and PPK are currently operating and will report on competition experienced as we develop our history of selling products in these regions.

In our sector of farm implements and nutrient products, the direct competition for distribution of the “picks and shovels” needed by the small growers is significantly less congested. There are some retail offshoots from brick-and-mortar businesses like hydroponics shops that offer a range of tools and implements similar to the Company’s product offerings, and these businesses are likely to compete directly with the Company’s offerings. To date we are not aware of any large nationally recognized distributors of like products, and we are attempting to position ourselves as a player at the national level through online sales. There are significant hurdles to accomplishing this objective, most significantly, availability of capital to build and maintain the online information needed for a comprehensive “one-stop-shop” offering. If we are unable to find the necessary capital to build our product lines and our online presence, we are likely to face increasing competition as other players enter the market. This could have a negative impact on our ability to grow our revenues and compete effectively in the future.

Competitive Advantages

We believe our competitive advantages are derived from our ability to pursue opportunities when and where we find them without getting bogged down in the bureaucracy that a larger and more diverse business might face. As a small publicly traded company, we are able to move quickly, rapidly negotiate and document licensing and distribution agreements, and when appropriate, acquisitions.

With the acquisition of our interest in PPK and the Country Cannabis Brand, and our desire to increase our ownership of PPK to a majority position (up to 100%), we are also now seeking competitive advantages in our market areas by expanding the brand pool available to MJHI and PPK for distribution through our growing sales force. By adding brands, including Chronic, Sublime, Weedsy and BLVK, MJHI and PPK are providing additional products to offer dispensaries as a one stop shop. We expect that this will generate increased order size per sales visit and a reduction of selling cost per product across our entire distribution network.

Marketing and Distribution

Our business model now includes marketing of products to wholesale customers and actively seeking new business opportunities for expansion.

A significant part of our current business model involves manufacture and distribution of products to wholesale customers, consisting primarily of dispensaries. In order to effectively sell to these wholesale customers, MJHI and PPK have and are growing our sales force for each location/area, broken down primarily by each state in which we operate. This allows our sales teams to become familiar with the laws and regulations governing cannabis sales in their state of operation and allows each team to get to know the markets, customers, and demographics of the users. Our Brand Portfolio gives each dispensary the ability to tailor its orders to meet the demands of its retail customers in terms of product type, price point, and brand recognition. We believe there is value in calling on our customers and face-to-face visits, but we also maintain an online store and information site to provide customers with that avenue or shopping if desired.

In order to keep a steady stream of acquisition prospects and brands, we are actively searching for business opportunities in the cannabis industry. Our searches are done through word of mouth, attendance at trade shows and industry events, and by monitoring the activities in our states of operations. When we identify an interesting prospect, our CEO reaches out personally to the management team of the prospect to see if there is a basis for furthering discussions. Our management team has a long history in the industry and large networks of contacts which provide leads on business prospects. Collectively, we believe we will be able to capitalize on these various connections to build a broad-based business selling products to our customers in the cannabis space.

Historically, our product offerings have been limited to the debudder product line and additional soil enhancement products that we distribute for other manufacturers. We will continue to develop these capabilities as resources allow. Our primary marketing method for the existing products is through our online shopping site. and through a small number of distributors that offer the debudder products to their customers. We do not expect the debudder to be a significant contributor to revenues or profits in the foreseeable future, but we intend to continue our efforts to grow the business.

Manufacturing

Vertically Integrated Cannabis Operations. Through our agreements with Dragon Originals in Colorado and Satellite DIP LLC in California, we are now actively engaged in manufacturing, packaging and distribution of cannabis products in Cathedral City, California and in Denver Colorado through a sub operation agreement with PPK. Our close relationship with PPK has allowed us to supplement our manufacturing knowledge and experience with the expertise gained by PPK through many years of hands-on manufacturing, product development, quality control and packaging of similar products. Both the Colorado and California locations were start-ups requiring equipment set-up, training, process creation, and adjustments of manufacturing systems. Both locations are now producing high quality products for sale and our manufacturing processes continue to improve as our workforces becomes more seasoned and as our familiarity with the manufacturing equipment increases. We expect to continue building our integrated systems in conjunction with PPK and are focused on adopting best manufacturing practices where feasible.

Farm Implements and Nutrient Products. We are not currently manufacturing any products in our own facilities. We rely on third party manufacturers for our production runs, and currently have relationships with third party companies for the manufacturing our products, primarily with Chinese companies. We are monitoring the China tariff situation closely and will take appropriate steps to find new contract manufacturing capabilities in other countries should the China tariffs cause a significant impact on our business. Management believes that alternative manufacturers are available, both in the United States and in other industrialized nations, but it is likely that such other sources of manufacturing would only be available at increased cost. Given current gross margins on the debudder line, an increase in costs may impact the long-term viability of the debudder product line. The molds used to manufacture our products were built by Eco Molding Co., Limited in Guandong, China. We own the molds, but it is our understanding that the molds may not be transferred out of China. Consequently, if an alternate manufacturer outside of China becomes necessary, we may be forced to incur the cost of a new mold, which could further affect the viability of the debudder product line. We do not currently have any outstanding contracts with Eco Molding for production of our product and have historically operated on the basis of purchase orders. Our last order for product was for 10,000 units of the Debudder Edge product. We received our final shipment of these units during the year, and they are currently held in inventory for sale to customers. At current inventory and sales levels, we expect that another product order will be necessary in the latter half of 2023.

Intellectual Property

Our intellectual property consists of business trade secrets regarding methods of operation, product formulations, and business practices. This category is applicable across all sectors of our business, is not protected by patent or other intellectual property laws, and is held in confidence by our employees by agreement.

In the farm implements sector, we have two design patents, and several foreign patents covering our debudder products. The United States Patent and Trademark Office (“USPTO”) issued our patents on October 8, 2019. Design Patent D862180 covers the original Debudder Bucket Lid, and Design Patent D862281 covers the Debudder Edge.

Our business strategy will continue to focus on intellectual property protections when appropriate. As we research additional products to include in our product catalogue, we include an analysis of the level of protection that is available for such product as an element of our decision to pursue licensing or distribution of that product. Our preference is to license or distribute products that have intellectual property protections, either because of patent pending or patented status, or as a result of trade secrets.

We also own the domains for mjhi.com, mjharvestinc.com, and procannagro.com. We utilize mjhi.com as our primary domain, website address, and e-mail server address. Procannagro.com is our online shopping site and web-based sales tool. Mjharvestinc.com is being phased out in favor of mjhi.com but will likely be retained to protect against confusion caused by third party use if we were to abandon the domain and it became available for others.

Government Regulation

The United States federal government regulates drugs in large part through the Controlled Substances Act, or CSA. Marijuana, which is a form of cannabis, is classified as a Schedule I controlled substance. As a Schedule I controlled substance, the federal Drug Enforcement Agency, or DEA, considers marijuana to have a high potential for abuse with no currently accepted medical use in treatment in the United States (except as disclosed below for epilepsy and related syndromes) and a lack of accepted safety for use of the drug under medical supervision. According to the U.S. federal government, cannabis having a concentration of tetrahydrocannabinol, or THC, greater than 0.3% is marijuana. Cannabis with a THC content below 0.3% is classified as hemp.

The scheduling of marijuana as a Schedule I controlled substance is inconsistent with what we believe to be widely accepted medical uses for marijuana by physicians, researchers, patients, and others. Moreover, as of July 29, 2022, and despite the clear conflict with U.S. federal law, 37 states and the District of Columbia have legalized marijuana for medical use, while 19 of those states and the District of Columbia have legalized the adult-use of cannabis for recreational purposes.

As further evidence of the growing conflict between the U.S. federal treatment of cannabis and the societal acceptance of cannabis, the FDA on June 25, 2018, approved Epidiolex. Epidiolex is an oral solution with an active ingredient derived from the cannabis plant for the treatment of seizures associated with two rare and severe forms of epilepsy, Lennox-Gastaut syndrome and Dravet syndrome, in patients two years of age and older. This is the first FDA-approved drug that contains a purified substance derived from the cannabis plant. In this case, the substance is cannabidiol, or CBD, a chemical component of marijuana that does not contain the psychoactive properties of THC.

Marijuana is largely regulated at the state level in the United States. State laws regulating marijuana are in conflict with the CSA, which makes marijuana use and possession federally illegal. Although certain states and territories of the United States authorize medical or adult-use marijuana production and distribution by licensed or registered entities, under United States federal law, the possession, use, cultivation, and transfer of marijuana and any related drug paraphernalia is illegal. We are compliant with the applicable state and local laws in states where we do business, but strict compliance with state and local laws with respect to cannabis may neither absolve us of liability under United States federal law nor provide a defense to any federal criminal action that may be brought against us.

In 2013, as more and more states began to legalize medical and/or adult-use marijuana, the federal government attempted to provide clarity on the incongruity between federal law and these state-legal regulatory frameworks. Until 2018, the federal government provided guidance to federal agencies and banking institutions through a series of DOJ memoranda. The most notable of this guidance came in the form of a memorandum issued by former U.S. Deputy Attorney General James Cole on August 29, 2013, which we refer to as the Cole Memorandum.

The Cole Memorandum offered guidance to federal agencies on how to prioritize civil enforcement, criminal investigations and prosecutions regarding marijuana in all states and quickly set a standard with which marijuana-related businesses must comply. The Cole Memorandum put forth eight prosecution priorities:

On January 4, 2018, former United States Attorney General Sessions rescinded the Cole Memorandum by issuing a new memorandum to all United States Attorneys, which we refer to as the Sessions Memo. Rather than establishing national enforcement priorities particular to marijuana-related crimes in jurisdictions where certain marijuana activity was legal under state law, the Sessions Memo simply rescinded the Cole Memorandum and instructed that “[i]n deciding which marijuana activities to prosecute... with the [DOJ’s] finite resources, prosecutors should follow the well-established principles that govern all federal prosecutions.” Namely, these include the seriousness of the offense, history of criminal activity, deterrent effect of prosecution, the interests of victims, and other principles.

Merrick Garland was confirmed to serve as Attorney General in the Biden administration. US Attorney General Merrick Garland currently has no plans to reinstate the Cole Memo or pass new legislation.

Garland stated in April 2022 that cannabis prosecutions are “not an efficient use of resources given the opioid and methamphetamine epidemic that we have,” indicating that the Biden Administration has no intention of repealing Sessions’ memo. While he has made it increasingly clear that he and his administration have no plans of federally prosecuting cannabis users, decriminalization has come to a stagnant point in federal policy, although efforts at federal legalization continue.

While the Cole Memorandum will be informally adhered to and treated as precedence, there are no confirmed efforts to recodify the DOJ’s official legal stance on cannabis law. Both Republicans and Democrats are currently pushing for comprehensive federal reform. Bipartisan congressional groups have even put forth a bill aiming to amend current legislation and model cannabis regulation after existing alcohol regulations. 

Nonetheless, there is no guarantee that state laws legalizing and regulating the sale and use of marijuana will not be repealed or overturned, or that local governmental authorities will not limit the applicability of state laws within their respective jurisdictions. Unless and until the United States Congress amends the CSA with respect to marijuana (and as to the timing or scope of any such potential amendments there can be no assurance), there is a risk that federal authorities may enforce current U.S. federal law. Currently, in the absence of uniform federal guidance, as had been established by the Cole memorandum, enforcement priorities are determined by respective United States Attorneys.

We are not aware of other specific governmental regulations that impact our business. We do, however, utilize Chinese vendors for manufacturing a significant portion of the products we sell. To the extent that tariffs are imposed on imported goods manufactured in China, our pricing structure and acceptance in the marketplace may be affected. We currently stock our products through distributors in foreign countries when appropriate and ship direct from our manufacturer to the foreign distributor when such can be done at a cost savings. We intend to continue to explore ways that we can hold our costs down on the products we sell in order to minimize price sensitivity concerns with our customers.

Environmental Laws

We are not aware of any environmental laws that would limit our ability to conduct our current sales and distribution activities in their present form. As we expand our operations to participate more directly in the cannabis and hemp industries, and become a vertically integrated grower, harvester, processor, manufacturer, and distributor of cannabis and hemp products, we will likely be subject to environmental laws, including water usage, recycling, waste disposal, and similar regulations that will vary depending on the location of our facilities. We intend to address the impact of such environmental regulations when we have a specific use case to evaluate.

General Development of our Business

Our long-term plan is to increase our ownership position in PPK, grow our cannabis manufacturing and distribution businesses in Colorado and California, and acquire additional cannabis extraction, manufacturing and distribution facilities and grow operations where we can develop additional products, build our brands, research the effectiveness of such products in real world settings, and provide concrete examples of the effectiveness of the products to our customers. This step will also allow us to expand operations into biomass production, processing, and sale of products containing THC and CBD.

We also intend to focus on expansion of our cannabis operations into new states and regions through our relationship with PPK and PPK’s ability to expand through tribal relationships under the auspices of FSST.

We can offer no assurances that we will be able to accomplish any portion of our long-range vision.

Employees

Prior to the Colorado and California acquisitions, all of our day-to-day tasks were outsourced to consultants and independent contractors who provided services to us as needed and as directed by our Chief Executive Officer. With the Colorado and California acquisitions, as of September 23, 2022, we have fifteen total employees of whom are full-time, and all of whom work in our California facility. We have outsourced operations of our Colorado location to PPK and PPK employs five workers at that location. We also have five contractors regularly providing services to the Company.

Day to day operations are managed by our Chief Executive Officer and our Chief Financial Officer, and their activities are monitored by our Board of Directors. As business activities require and capital resources permit, we intend to hire employees to fulfill our Company’s needs.

Facilities

The Company has manufacturing facilities located at 4093 Jackson Street, Denver, CO 80216 and, as of July 2022, 68350 Commercial Road, Cathedral City, CA 92234. Both locations are leased and are considered adequate for the commercial manufacturing operations conducted there. Neither location has equipment that is owned or leased by us that is material to our manufacturing operations as of yearend. We do not maintain any principal executive offices for the Company.

In addition, each of our officers and directors and regularly retained contractors operate out of home or virtual offices. We are able to meet remotely as needed. In our farm implement and plant nutrients business segment, our physical products are placed at third-party fulfillment centers and are shipped direct to our customers by the fulfillment centers or drop shipped directly from the manufactures of the products we distribute.

COVID-19

The effects of the continued outbreak of COVID-19 and related government responses have and 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 September 23, 2022, there were no material adverse impacts to our 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, 2022.

Item 1A. Risk Factors

As a smaller reporting company, we have elected not to provide the information required by this item.

Item 1B. Unresolved Staff Comments.

None

Item 2. Properties

We currently lease two properties for manufacturing our products. One in Denver, Colorado. and the other in Cathedral City, California. We believe these facilities are in good condition and are suitable for the conduct of our business.

Item 3. Legal Proceedings.

The Company and PPK are plaintiffs in lawsuit against Country Cannabis, LLC of Yale, Oklahoma for trademark infringement for the use of the name “Country Cannabis”. The lawsuit was filed with the Payne County, Oklahoma Courts on February 7, 2022. The Company has motioned the Court for summary judgment in this matter and for legal fees. The motion for summary judgement is currently pending before the Court.

Item 4. Mine Safety Disclosures.

Not Applicable.

Part II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock was quoted on OTCQB beginning on February 20, 2020, under the symbol “MJHI.” Previously, the Company’s common stock was quoted on OTC Pink.

Holders of Record

On September 23, 2022, there were 44,854,737 shares of common stock held by 128 holders of record, as reported by the Company’s transfer agent. Certain shares are held in “nominee” or “street” name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number.

No Dividends

No dividends have ever been paid on our securities, and we have no current plans to pay dividends in the foreseeable future.

Equity Compensation Plan

We did not have an equity compensation plan at May 31, 2022.

Transfer Agent

Pacific Stock Transfer Co., Inc., 6725 Via Austi Parkway, Las Vegas, NV 89119, telephone (702)-361-3033, serves as the transfer agent and registrar for our common stock.

Recent Sales of Unregistered Securities

There were no unreported sales of registered securities for the last fiscal year.

Special Sales Practice Requirements with Regard to “Penny Stocks”

To protect investors from patterns of fraud and abuse that have occurred in the market for low priced securities commonly referred to as “penny stocks,” the SEC has adopted regulations that generally define a “penny stock” to be any equity security having a market price (as defined) less than $5.00 per share, or an exercise price of less than $5.00 per share, subject to certain exceptions. Our stock is subject to the “penny stock” regulations during periods in which the price is below $5.00 per share. During any such periods, broker-dealers selling our common stock are subject to additional sales practices when they sell our stock to persons other than established clients and “accredited investors.” For transactions covered by these rules, before the transaction is executed, the broker-dealer must make a special customer suitability determination, receive the purchaser’s written consent to the transaction and deliver a risk disclosure document relating to the penny stock market. The broker-dealer must also disclose the commission payable to both the broker-dealer and the registered representative taking the order, current quotations for the securities and, if applicable, the fact that the broker-dealer is the sole market maker and the broker-dealer’s presumed control over the market. Monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Such “penny stock” rules may restrict trading in our common stock and may deter broker-dealers from effecting transactions in our common stock.

Item 6. [Reserved]

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements in this Report constitute “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause such a difference include, among others, uncertainties relating to general economic and business conditions; industry trends; changes in demand for our products and services; uncertainties relating to customer plans and commitments and the timing of orders received from customers; announcements or changes in our pricing policies or that of our competitors; unanticipated delays in the development, market acceptance or installation of our products and services; changes in government regulations; availability of management and other key personnel; availability, terms and deployment of capital; relationships with third-party equipment suppliers; and worldwide political stability and economic growth. The words “believe,” “expect,” “anticipate,” “intend” and “plan” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.

Year Ended May 31, 2022 compared with the Year Ended May 31, 2021

The narrative comparison of results of operations for the years ended May 31, 2022 and 2021 is based on the following table. The table includes information on continuing operations, non-operating expenses and discontinued operations, which are discussed below.

Revenues in the year ended May 31, 2022 increased when compared to the same period in 2021. The increase is largely attributable to an intensified sales effort for Debudder products in conjunction with a move of our inventory to a new fulfillment center in California. In anticipation of the move, our sales force reached out to customers with incentives to avoid having to move the inventory and the incentive program was successful in generating a short-term increase in Debudder sales. We do not anticipate that the short-term increase in Debudder sales will be sustainable, and we expect to see a decrease in sales of farm implements and plant nutrients in the fiscal year ended May 31, 2023. In the current fiscal year, the Company also generated $25,352 in sales of cannabis products at our Colorado facility. The Colorado facility was newly opened in our fiscal fourth quarter and was in the very early stage of commencing sales activities. We expect a slow ramp up of sales of cannabis products through the remainder of calendar year 2022. Additional information on our operations is included below.

Cost of revenues as a percentage of sales increased in the year ended May 31, 2022, when compared with the same period in 2021. The increase is attributable to the costs incurred in our Colorado and California operations. In our fiscal fourth quarter, we incurred operating costs associated with setting up and documenting our manufacturing processes and producing test batches of products to verify our systems were generating expected results at our Colorado and California facilities. During this phase, we did not produce significant quantities of product for resale. The production expenses of the test batches were, however, recorded as manufacturing costs. We expect margins to improve on our cannabis product lines in the coming periods as our manufacturing processes are standardized and our need to run test batches and adjust processes decreases.

Other operating expenses increased in the year ended May 31, 2022, compared with the same period in the prior year. The increase was primarily due to an increase in officer and director compensation resulting from expansion of our board of directors and contracting with Randy Lanier, a new director, to represent the Company as Brand Ambassador. We also incurred significant promotion and advertising costs during the current year, primarily for investor relations services. General and administrative expenses increased due to our decision to further develop our cannabis business through acquisition of the Colorado and California facilities and the attendant costs of setting up geographically disbursed manufacturing operations.

Net loss from operations increased in 2022 compared with 2021. The increase in the net loss is attributable to the factors identified above.

Non-operating Expenses.

Non-operating expenses decreased in 2022 compared with 2021. In 2021, we incurred $2,906,000 in financing costs associate with a debt financing for operating capital. The notes payable giving rise to the financing fees were paid off in March 2022. Financing fees incurred in the year ended May 31, 2022 were $227,756. Interest expense increased due to notes payable being outstanding for the entire fiscal year as opposed to three months in the year ended May 31, 2021.

In the year ended May 31, 2021, we also incurred a $592,800 impairment on our investment in PPK. There was no impairment of this investment in the current year.

Discontinued Operations.

In the year ended May 31, 2021, the Company incurred a $14,151 loss on discontinued operations of a business acquired from Elevated Ag Solutions, Inc. in 2020.

In the year ended May 31, 2022, the Company expanded its operations to focus on farm implements and plant nutrients and cannabis manufacturing. In the year ended May 31, 2021, the Company operated only the farm implements and plant nutrients business.

Liquidity and Capital Resources

Cash flow used in operating activities for the year ended May 31, 2022, was $726,932 compared with $258,024 in 2021. During the period, our total cash decreased by $82,432. Cash to fund the negative cash flow from operations was derived primarily from proceeds of notes payable of $1,271,000. The decrease in our cash position at May 31, 2022, is largely attributable to the cash requirements for starting up operations in Colorado and California.

Our historic operations have not been sufficient to support the existing infrastructure, much of which is required in order to maintain public company status. On March 29, 2022, we entered into a senior debt funding transaction that allowed us to pay off an earlier debt financing and provided additional operating capital primarily for start-up operations in California.

We continue to seek out potential acquisition candidates with a focus on acquiring additional operating companies with scale sufficient to support all aspects of the Company’s operations, including the public company infrastructure. The Company is currently heavily dependent on funding through advances from related parties, but no assurances can be given that such funding will continue to be available in future periods. The debt funding matures on May 11, 2023at which time, the principal balance of the note of $2,317,198 plus accrued interest will be due.

We have maintained active operations as a manufacturer and distributor of the Debudder product line since 2018. We do not consider the Company to be a shell company as that term is defined in the Securities Act of 1933, as amended.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business.  We incurred net losses of $2,875,784 for the year ended May 31, 2022, and had an accumulated deficit of $11,974,041 as of May 31, 2022.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.  The Company may seek to raise money for working capital purposes through a public offering of its equity capital or through a private placement of equity capital or convertible debt.  It will be important for the Company to succeed in its efforts to raise capital in this manner to further its business plan in an aggressive manner.  Raising additional capital may cause dilution to current shareholders.

 Off Balance Sheet Arrangements

None

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

As a smaller reporting company, we have elected not to provide the information required by this item.

Item 8. Financial Statements

The following financial statements are being filed with this report and are located immediately following the signature page.

Financial Statements, May 31, 2022 and 2021

Item 9. Changes in and Disagreements with Accountants on Accounts and Financial Disclosure

No disagreement or reportable event requiring disclosure under this item has occurred.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of management, including the CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures as required by Exchange Act Rules 13a-15(e) as of the end of the reporting period covered by this report.  Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures, including controls and procedures designed to ensure that information required to be disclosed by us is accumulated and communicated to our management (including our CEO and CFO), were ineffective as of May 31, 2022, and that material information required to be disclosed in this report has been properly recorded, processed, summarized and reported in a timely manner. In making this determination, we reviewed the material weaknesses in internal control over financial reporting and concluded that the direct involvement of the CFO in all aspects of financial reporting addressed this concern.

Management Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system has been designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of our published financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management of the Company has assessed the effectiveness of our internal control over financial reporting as of May 31, 2022. To make this assessment, we used the criteria for effective internal control over financial reporting described in Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

As a result of our assessment, we concluded that we have material weaknesses in our internal control over financial reporting as of May 31, 2022. We identified material weaknesses resulting from a lack of segregation of duties, and management override of controls.

We plan to address the material weaknesses identified by adding additional accounting personnel and functions, and by designing additional controls over the documentation and application of technical accounting guidance to our business. We are also reviewing our practices to limit management’s ability to override controls.

Because these material weaknesses exist, management has concluded that our internal control over financial reporting as of May 31, 2022, is ineffective.

Changes in Internal Controls

There was no change in our internal control over financial reporting during the quarter ended May 31, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Part III

Item 10. Directors, Executive Officers and Corporate Governance

Directors and Executive Officers

The following table indicates the name, age, term of office and position held by each of our executive officers and directors. Jerry Cornwell resigned as a director and officer on March 9, 2022, and no longer has a position with the Company.

Certain biographical information with respect to our executive officers and directors.

Patrick Bilton, CEO, Secretary and Director manages our product development and product acquisition efforts and is focused on implementing our strategic business direction. Patrick joined MJ Harvest in 2017 as a director and has been instrumental in establishing our existing operations while also seeking to expand our business as opportunities present themselves. Patrick sold his landscape services business in 2007 and after working with the new owners over a three-year transition period, has been, since 2010 to the present, involved as a consultant in construction management, working primarily on luxury and high end residential real estate projects. Concurrently, Patrick has worked as a consultant with other public companies in their business development and merger and acquisition efforts, primarily focused on herbal and plant-based products and derivatives, including Cannabis Sativa, Inc. (OTCQB: “CBDS”). Patrick brings a wealth of practical experience and a deep understanding of the requirements of growers of hemp and cannabis crops. With Patrick’s guidance, we are developing a portfolio of tools and implements that are used in growing and harvesting crops.

Brad Herr, CFO manages our financial reporting functions, provides risk management oversight, and is a key member of the management team working closely with Patrick Bilton to evaluate and structure business opportunities as they arise. Brad is the sole owner of Nexit, Inc., a management services firm though which he offers business consulting services to the public. Brad has owned Nexit, Inc. since April 2018. He also served as CFO to SponsorsOne, Inc., another publicly traded company with emerging business opportunities until April 30, 2019. Brad graduated from the University of Montana with a Bachelor of Science Degree in Business Accounting in 1977 and a Juris Doctorate in 1983. In 2005, Mr. Herr received an MBA from Gonzaga University. Brad practiced law for 13 years focusing primarily on business representation and securities law. Brad participated as legal counsel or principal in private and public offerings raising more than $75 million over his career. In 1996, Brad left the practice of law to pursue a career in business. Brad has served as CFO, COO, President and Board Member for a number of publicly traded and private companies over the last 23 years, though other than as set forth herein, he holds no such positions at this time. Brad brings a diverse business development, accounting and legal background to his current positions.

Randy Lanier, Director, serves as our brand ambassador and offers guidance and assistance with our strategic business direction as requested by our CEO, Patrick Bilton. Randy joined MJHI in 2021. Randy’s career has included race car driving where he was the 1986 Rookie of the Year at the Indianapolis 500, the 1984 IMSA GTP Champion, and is currently a high-performance driving instructor. Randy has also worked as a behavioral health technician and treatment advocate, yoga instructor and is also an accomplished artist. Randy brings a wealth of practical experience and a deep understanding of the cannabis industry and has been utilizing his extensive contact list and network of other cannabis professionals to get the word out about MJHI’s vision.

Jason Roth, Director, sits on the Board of Directors for Next Frontier Pharmaceuticals which owns an FDA approved Cannabinoid Drug known as Syndros as well as Next Frontier Beverages based in London England.

Mr. Roth also has served since June of 2020 as Chief Executive Officer of Ackrell SPAC I, which recently announced a $904 million merger with Blackstone Products.

Previously, from its inception to October 2019 Mr. Roth was Co-Founder and served as Chief Executive Officer and Chairman of the board of directors of Mile High Labs International Inc, which was once one of the world’s largest processors of cannabis. While at Mile High Labs, Mr. Roth grew revenues from zero to nearly $100 million in the first year of business.

Mr. Roth previously served as the Chief Executive Officer of a large scale multi-national device company, was a founder and served as Senior Vice President, Commercial Director, Compliance Director and Board Member of Brooklands Inc., a medical device OEM/ODM approved by the U.S. FDA, and was a founder and served as Chief Executive Officer and Chairman of the board of directors of Safeguard Medical Technologies, a leading OEM/ODM medical device manufacturer approved by the U.S. FDA. Mr Roth holds numerous patents in the medical device sector.

David Tobias, Director is serving as President of Wild Earth Naturals, Inc., a position he has held since May 2013. In addition, Mr. Tobias is serving as the CEO, president, secretary and director of Cannabis Sativa, Inc. (“CBDS”), a fully reporting company under the Securities Exchange Act of 1934. Mr. Tobias has been a director and officer of CBDS since July of 2013. He also served as the President of Hemp, Inc. from August 2011 to January 9, 2014. Prior to that, from October 2009 until May 2011, Mr. Tobias held the position of Vice President at Medical Marijuana Inc. where he was instrumental in bringing forward and culminating the merger between CannaBank and Medical Marijuana, Inc. Within the last five years, Mr. Tobias has also served as a member of the board of directors for Grow Capital, Inc. (“GRWC”). David’s experience with many aspects of the burgeoning marijuana trade in the United States allows him to focus on business development. His extensive contacts in the cannabis industry yield frequent business opportunities which David refers to Patrick and Brad for a detailed conceptual work-up.

Rich Turasky, Director, has been in the Investment and Finance business for 30 years, investing with both private and institutional investors. He has been the managing partner in more than 100 partnerships. Additionally, as an accomplished entrepreneur Mr. Turasky has been a founding shareholder in more than a dozen operating companies. Most recently Rich was founding shareholder and since 2000 has been a board member of Next Frontier Holdings which recently acquired Benuvia Manufacturing, a leading synthetic pharmaceutical drug developer focused on pharma grade cannabinoids and psychedelics. Mr. Turasky, through Next Frontier Holdings, has also recently been a founding shareholder in various SPAC and reverse merger transactions worth nearly $2 billion.

There are no family relationships between Mr. Roth or Mr. Turacsky and any other director, executive officer or person nominated or chosen by the Company to become a director or executive officer. Except as disclosed under Item 1.01 above, there have been no transactions prior to the date of his appointment involving Mr. Roth or Mr. Turasky, or which are anticipated, that would require disclosure under Item 404(a) of Regulation S-K. As owners of Flight Venures, they will receive the compensation disclosed above under Item 1.01

Family Relationships

There are no family relationships between any of our officers and directors.

Term of Office

The term of office of each director is one year and until his or her successor is elected at the annual stockholders' meeting and is qualified. Directors are also subject to removal by the stockholders.  The term of office for each officer is for one year and until his or her successor is appointed by the board of directors and is qualified. Officers are also subject to removal by the board of directors.

Board of Directors

Our board of directors consists of five persons. Two of our current directors, Jason Roth and Rich Turasky, are "independent" within the meaning of Rule 5605(a)(3) of the NASDAQ Marketplace.  The other directors are not independent by virtue of their position as an officer of the Company or their ownership of more than 10% of the Company’s outstanding shares.

Our board of directors designated an audit committee to be comprised of two independent directors. At this time, the Company has not appointed an independent "financial expert" to serve on the audit committee and the function of the audit committee is currently being performed by the entire Board.

The board of directors has designated a compensation committee comprised of two independent directors.  At this time, the Company has not appointed independent directors to the compensation committee and the function of the compensation committee is currently being performed by the entire Board.

The Company does not have a standing nominating committee and the Company's Board of Directors performs the functions that would customarily be performed by a nominating committee.  The Board of Directors does not believe a separate nominating committee is required at this time due to the limited resources of the Company.  The Board of Directors has not established policies with regard to the consideration of director candidates recommended by security holders or the minimum qualifications of such candidates.

Director Meetings

The Company’s Board of Directors met telephonically as needed during the years ended May 31, 2022 and 2021. No regular meetings are scheduled, and the Board members have been available by phone on short notice when Board action has been required. Most actions are accomplished without a meeting and each director consents to taking action without notice. In the year ending May 31, 2023, meetings will again be held as needed. In light of the COVID-19 Pandemic, the Board intends to continue conducting meetings remotely until further notice.

Communications with Directors

Stockholders may communicate with the Board of Directors by sending written communications addressed to the Board of Directors, or any individual director, to: MJ Harvest, Inc., Attention: Corporate Secretary, 9205 W. Russell Road, Suite 240, Las Vegas, NV 89139. All communications will be compiled by the corporate secretary and forwarded to the Board of Directors or any individual director, as appropriate. In order to facilitate a response to any such communication, the Company’s Board of Directors suggests, but does not require, that any such submission include the name and contact information of the shareholder submitting the communication.

Code of Ethics

We have not adopted a Code of Ethics that applies to our executive officers, including our principal executive, financial and accounting officers. We do not believe the adoption of a code of ethics at this time would provide any meaningful additional protection to the Company because we have only two executive officers and five directors and our business operations are not complex.

During the past ten years none of our directors, executive officers, promoters, or control persons was:

Delinquent Section 16(a) Reports

On February 5, 2021, we voluntarily filed a registration statement on Form 10 to register our common stock as a class. The registration went effective on April 6, 2021, requiring the filing of a report on Form 3 by persons designated under Section 16(a) of the Exchange Act. Timely filing of the Form 3 was made by Mr. Herr and late filings were made by Messrs. Bilton, Cornwall, and Tobias. The following table sets forth the persons who failed to file on a timely basis required reports under Section 16(a) for the year ended May 31, 2022, and the number of late reports, the number of transactions that were not reported on a timely basis, and any known failure to file the required report:

Item 11. Executive Compensation

The following table sets forth certain information regarding the annual compensation paid to our principal executive officer in all capacities for the fiscal years ended May 31, 2022 and 2021, and each executive officer other than the principal executive officer whose total compensation exceeded $100,000.  No other person served as an executive officer of the Company or received total annual compensation from the Company in excess of $100,000 other than as set forth in the table.

SUMMARY COMPENSATION TABLE

All compensation reflected in the above table was paid pursuant to independent contractor agreements between the individuals listed and the Company. All stock awards were also authorized by the Board of Directors as such payments were made. During the year ended May 31, 2022, the salary and fees due Mr. Bilton and Mr. Herr were accrued but not paid due to cash flow constraints. The stock awards due to Mr. Herr were paid by issuance of common stock on a quarterly basis.

We do not have any retirement, pension or profit-sharing plans covering our officers or directors, and we are not contemplating implementing any such plans at this time.

Outstanding Equity Awards

At fiscal year end of May 31, 2021, no named executive officer held any equity award requiring disclosure under this item.

Director Compensation

During the fiscal year ended May 31, 2022, the following compensation was paid to directors, excluding the named executive officers whose compensation is disclosed above:

Our directors are generally issued shares of common stock quarterly for their service on the board of directors.  During the year ended May 31, 2022, the directors were paid $10,000 each quarter. These amounts were paid in shares of common stock of the Company except for the fees due to Mr. Bilton, which were accrued and recorded as notes payable as of May 31, 2022.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information furnished by current management and others, concerning the ownership of our common stock as of August 29, 2022, of (i) each person who is known to us to be the beneficial owner of more than 5% of our common stock; (ii) all directors and named executive officers; and (iii) our directors and executive officers as a group:

This table is based upon information supplied by officers, directors and principal stockholders and is believed to be accurate. Unless otherwise indicated in the footnotes to this table, we believe that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of our common stock subject to options, warrants, or other conversion privileges currently exercisable or convertible, or exercisable or convertible within 60 days of the date of this table, are deemed outstanding for computing the percentage of the person holding such option or warrant but are not deemed outstanding for computing the percentage of any other person. Where more than one person has a beneficial ownership interest in the same shares, the sharing of beneficial ownership of these shares is designated in the footnotes to this table. As of the date of this table, we had 44,854,737 shares outstanding.

There are no current arrangements which will result in a change in control.

Item 13. Certain Relationships and Related Transactions, and Director Independence

During the year ended May 31, 2022, the Company received additional advances totaling $257,500 from Mr. Patrick Bilton, Chief Executive Officer and director of the Company, to cover operating expenses. In addition, Mr. Bilton deferred payment of his salary and director fees in the aggregate amount of $280,000 which is recorded as payable to related party for services in the financial statements. David Tobias, a director, also advanced $1,000 to the Company in the year ended May 31, 2022. As of May 31, 2022, total advances from related parties totaled $1,821,482. This amount is comprised of $1,150,914 due to Mr. Bilton for advances to the Company, $560,000 due to Mr. Bilton for deferred salary, $81,553 due to Mr. Tobias, a director for advances to the Company, and $29,015 due to Mr. Cornwell, a director for advances to the Company. The Company has not recorded interest on these amounts. On July 8, 2022, the related parties converted an aggregate of $1,971,482 of related party advances and payables (including $150,000 in accounts payable due to Nexit, Inc., a corporation wholly owned by Brad Herr, the Company’s Chief Financial Officer) into common stock at a price of $0.187 per share or an aggregate of 10,542,682 shares.

Approval of Related Party Transactions

Related party transactions are reviewed and approved or denied by the board of directors of the Company. If the related party to a transaction is a member of the board of directors, the transaction must be approved by a majority of the board that does not include the related party.

Item 14. Principal Accounting Fees and Services

The following table presents aggregate fees that were billed or expected to be billed for the fiscal years ended May 31, 2022, and 2021, for professional services rendered by Assure CPA LLC.

“Audit Fees” represents fees for professional services provided in connection with the audit of our annual financial statements, review of financial statements included in our quarterly reports and related services normally provided in connection with statutory and regulatory filings and engagements and consents.

“Audit-Related Fees.” No audit related fees were incurred in the years ended May 31, 2022 and 2021.

“Tax Fees” consists of fees for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning.

“Other Fees” consists of fees for products and services provided by our principal accountants, other than the services reported under “Audit Fees,” “Audit-Related Fees,” or “Tax Fees” above.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

It is the policy of the Company for all work performed by our principal accountant to be approved in advance by our audit committee. Currently the Board has not appointed an audit committee and the functions of the audit committee are being performed by the Full Board. All of the services described above in this Item 14 were approved in advance by our Board of Directors.

Item 15. Exhibit and Financial Statement Schedules.

(a) Financial Statements

The following financial statements are included with this report:

(b)       Exhibits

⁽¹⁾ Incorporated by reference to Exhibits 3.1 and 3.2 of the Company’s Form S-1 Registration Statement which was declared effective on January 9, 2020.

⁽²⁾ Incorporated by reference to Exhibit 10.1 and 10.2 of the Company’s current report on Form 8-K dated March 30, 2021.

⁽³⁾ XBRL information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and is not subject to liability under those sections, is not part of any registration statement or prospectus to which it relates and is not incorporated or deemed to be incorporated by reference into any registration statement, prospectus or other document. These files will be added by amendment.

⁽⁴⁾ Incorporated by reference to Exhibit 99.1 of the Company’s current report on Form 8-K dated October 26, 2021.

Item 16. Form 10-K Summary

None

[SIGNATURES ON NEXT PAGE]

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Report of Independent Registered Public Accounting Firm

To the stockholders and the board of directors of MJ Harvest, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of MJ Harvest, Inc. (the "Company")  as of May 31, 2022 and 2021, the related consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows for each of the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of May 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The Company’s Ability to Continue as a Going Concern 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has continuing losses and accumulated deficit. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/  i Assure CPA, LLC

We have served as the Company's independent auditor since 2016.

  i 444

 i Spokane, Washington

September 23, 2022

 MJ HARVEST, INC.

 CONSOLIDATED BALANCE SHEETS

 MAY 31, 2022 AND 2021 

The accompanying notes are an integral part of these consolidated financial statements.

 MJ HARVEST, INC.

 STATEMENTS OF OPERATIONS

 FOR THE YEARS ENDED MAY 31, 2022 AND 2021

The accompanying notes are an integral part of these consolidated financial statements.

 MJ HARVEST, INC.

 STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

 FOR THE YEARS ENDED MAY 31, 2022 AND 2021