| NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING
POLICIES Nature of Business MJ Harvest, Inc. (the “Company”), develops,
acquires, and distributes agricultural and horticultural tools and implements for sale primarily to growers and operators in the hemp
and cannabis retail industry. The Company owns 100% of G4 Products LLC, (“G4”) which owns intellectual property for a patented
manual Debudder product line marketed under the Original 420 Brand as the Debudder Bucket Lid and Edge (“Debudder”). The Company
also owns 100% of AgroExports LLC (“Agro”) which serves as the domestic and international distribution arm for sales of agricultural
and horticultural tools and implements. The Company operates a sales portal website, www.procannagro.com, for online sales of its products. In 2019, the Company formed AgroExports.CA ULC (“Agro
Canada”), a wholly owned Canadian subsidiary in order to facilitate online payments from sales in Canada. Sales in Canada are currently
serviced through a fulfillment center in Toronto. In the year ended May 31, 2021, the Company expanded
its focus to include a minority investment interest in PPK Investment Group, Inc. (“PPK”), a vertically integrated cannabis
company in Oklahoma that operates as a grower, harvester, processor, manufacturer and distributor of the Country Cannabis Brand of cannabis
products. The investment in PPK represents a shift in focus from an agricultural implements-based business to a broader cannabis industry
focus. The Company has continued to expand its cannabis focus in the current year with new investments in WDSY LLC and BLIP Holdings LLC,
owners of the Weedsy and BLVK brands, respectively. In the year ending May 31, 2022, the Company began
operations in Colorado under a wholly-owned Colorado corporation, Country Cannabis, Inc. (“CCCO”). CCCO is in the process
of acquiring cannabis licenses for the manufacture and distribution of products containing THC and/or THC derivatives. Pending transfer
of the licenses, the Company is operating the Colorado facility pursuant to a license agreement with the current owner of the facility. On July 18, 2022, the Company acquired manufacturing
equipment and two cannabis licenses for a cannabis manufacturing and distribution business in Cathedral City, California, CCCA. CCCA is
in the process of acquiring cannabis licenses for the manufacture and distribution of products containing THC and/or THC derivatives.
Pending transfer of the licenses, the Company is operating the California facility pursuant to a license agreement with the current owner
of the facility Basis of Presentation and Consolidation The Company’s fiscal year end is May 31. Our
unaudited financial statements have been prepared by the Company in accordance with generally accepted accounting principles in the United
States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and
footnotes required by GAAP for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting
of only normal recurring accruals) considered necessary for a fair statement of the interim financial statements have been included. Operating
results for the three-month period ended August 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal
year ending May 31, 2023. For further information refer to the financial statements
and footnotes thereto in the Company’s audited financial statements for the year ended May 31, 2022 in the Form 10-K as filed with
the Securities and Exchange Commission. The consolidated financial statements of the Company
include the accounts of the Company and its wholly owned subsidiaries Agro, G4, Agro Canada, and CCCO/CCCA. All subsidiaries were wholly
owned in the periods presented. All intercompany transactions have been eliminated. Going Concern The Company has an accumulated deficit as of August
31, 2022 of $ 12,973,694 2,486,055 Management intends to finance operating costs over
the next twelve months with cash flows from operations, private placement or public offering of common stock or debt instruments, and
when necessary, advances from directors and officers. There can be no assurance that we will be successful to procure necessary financing.
The accompanying financial statements do not include any adjustments that might be required should the Company be unable to continue as
a going concern. Use of Estimates The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. Share based compensation, impairment of long-lived assets, fair value of acquired assets, of intangible assets,
and income taxes are subject to estimates. Actual results could differ from those estimates. Reclassifications Certain prior period amounts have been reclassified to conform with the
current period presentation. New Accounting Standards In August 2020, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06 Debt with Conversion and Other Options (Subtopic
470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments
and Contracts in an Entity’s Own Equity. The update is to address issues identified as a result of the complexity associated with
applying generally accepted accounting principles for certain financial instruments with characteristics of liabilities and equity. The
update is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years and with early
adoption permitted. The Company implemented the update early on June 1, 2022 with no impact to its consolidated financial statements. In October 2021, the FASB issued ASU 2021-08, Business
Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires
entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with
ASC 2014-09, Revenue from Contracts with Customers (Topic 606). The update will generally result in an entity recognizing
contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition
date rather than at fair value. The update is effective on a prospective basis for fiscal years beginning after December 15, 2022, with
early adoption permitted. The Company will adopt the update as of June 1, 2023 and does not expect a significant impact to our consolidated
financial statements or disclosures. Other accounting standards that have been issued or
proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial
statements upon adoption. Revenue Recognition The Company generates revenue based on sales of products
and revenue is recognized when the Company satisfies its performance obligation by shipping products to our customers. Our products consist
of agricultural tools and implements, soils, and soil additives used primarily in growing and harvesting hemp and marijuana. Shipments
terms are FOB origination, and revenue is recognized when the product is delivered to the shipper by our fulfillment centers or, in the
case of drop shipments of distributed products, when the products are shipped from the manufacturer. At the time the products are delivered
to the shipper, no other performance obligations remain. Revenue is recognized in an amount that reflects the consideration that is received
in exchange for the products shipped. The Company accounts for shipping and handling activities
as a fulfillment cost and include fees received for shipping and handling as part of the transaction price. Provision for sales incentives,
discounts, and returns and allowances, if applicable, are accounted for as reductions of revenue in the period the related sales are recorded.
Sales incentives, discounts and returns and allowances were not material in the periods presented in the accompanying consolidated financial
statements. The Company had no warranty costs associated with the sales of its products in the periods presented in the accompanying consolidated
statements of operations and no provision for warranty expenses has been included. Inventory Inventory consists of purchased products and is stated
at the lower of cost or market, with cost being determined using the average cost method. Allowances for obsolete inventory are recognized
when the inventory is determined to be unsalable through the normal course of business. I nvestments Equity securities are generally measured at fair value.
Unrealized gains and losses for equity securities are included in earnings. If an equity security does not have a readily determinable
fair value, the Company may elect to measure the security at its cost minus impairment, if any, plus or minus changes resulting from observable
price changes in orderly transactions for an identical or similar investment in the same issuer. At the end of each reporting period,
the Company reassesses whether an equity security without a readily determinable fair value qualifies to be measured at cost minus impairment,
considers whether impairment indicators exist to evaluate whether the investment is impaired and, if so, records an impairment loss. Upon
sale of an equity security, the realized gain or loss is recognized in earnings. Accounting for Acquisitions Business acquisitions are recorded using the acquisition
method of accounting and, accordingly, the purchase price is allocated to the assets acquired and liabilities assumed based on their estimated
fair value as of the date of acquisition. After the purchase price has been allocated, goodwill is recorded to the extent the total consideration
paid for the acquisition, including the acquisition date fair value of contingent consideration, if any, exceeds the sum of the fair values
of the separately identifiable acquired assets and assumed liabilities. Acquisition costs for business combinations are expensed when
incurred. Acquisitions not meeting the accounting criteria
to be accounted for as a business combination are accounted for as an asset acquisition. An asset acquisition is recorded at its purchase
price, inclusive of acquisition costs, which is allocated among the acquired assets and assumed liabilities based upon their relative
fair values at the date of acquisition. The operating results of an acquisition are included
in the consolidated statements of operations from the date of acquisition. The allocation of the purchase consideration for acquisitions
can require extensive use of accounting estimates and judgments to allocate the purchase consideration to the assets acquired and liabilities
assumed based on their respective fair values. Judgment is required in determining which valuation technique should be applied. Critical
estimates in valuing certain identifiable assets include but are not limited to market comparables, expected long-term revenues; future
expected operating expenses; cost of capital; assumed attrition rates; and discount rates. Intangible Assets Intangible asset amounts are initially recognized
at the acquisition date at the fair values of the intangible assets acquired. Finite-lived intangible assets are amortized over
their useful lives. The carrying amounts of finite-lived intangible assets are evaluated for recoverability whenever events or changes
in circumstances indicate that the Company may be unable to recover the asset’s carrying amount. When there is no foreseeable limit on the period of
time over which an intangible asset is expected to contribute to the cash flows of the Company, an intangible asset is determined to have
an indefinite life. Indefinite-lived intangible assets are not amortized but tested for impairment annually or more frequently when indicators
of impairment exist. Determination of acquisition date fair values and
intangible asset impairment tests require judgment. Significant judgments required to estimate the fair value of intangible assets include
determining the appropriate valuation method, identifying market prices for similar type items, estimating future cash flows, determining
appropriate discount rates and other assumptions. Changes in estimates and assumptions or the occurrence of one or more confirming events
in future periods could cause the actual results or outcomes to materially differ from such estimates. Net Earnings (Loss) Per Share Basic earnings (loss) per share is calculated by dividing
net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated
by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During
periods in which the Company incurs losses, common stock equivalents, if any, are not considered, as their effect would be anti-dilutive.
For the three months ended August 31, 2022 and 2021, potentially dilutive common stock equivalents not included in the calculation of
diluted earnings per share because they were anti-dilutive are as follows: Schedule
of Earnings Per Share
2022 2021
Stock purchase warrants 3,000,000 3,000,000
Convertible notes 14,258,492
17,258,492 3,000,000 Share-Based Payments All transactions in which goods or services are received
for the issuance of shares of the Company’s common stock are accounted for based on the fair value of the common stock issued and
recognized when the board of directors authorizes the issuance. |
