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EX-32 - 906 CERTIFICATION - High Sierra Technologies, Inc.ex32.htm
EX-31 - 302 CERTIFICATION OF GREGG W. KOECHLEIN - High Sierra Technologies, Inc.ex31-2.htm
EX-31 - 302 CERTIFICATION OF VINCENT LOMBARDI - High Sierra Technologies, Inc.ex31-1.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________


FORM 10-Q

____________________


[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended March 31, 2021


[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT


For the transition period from ____________ to____________


Commission File No. 000-52036


HIGH SIERRA TECHNOLOGIES, INC.

(Exact name of Registrant as specified in its charter)


Colorado

84-1344320

(State or Other Jurisdiction of

(I.R.S. Employer Identification No.)

incorporation or organization)

  


1495 Ridgeview Drive, Suite 230A

Reno, Nevada 89519

(Address of Principal Executive Offices)


(775) 410-4100

(Registrant’s telephone number, including area code)


 _______________________________________________

(Former name, former address and former fiscal year,

if changed since last report)


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


Securities registered pursuant to Section 12(g) of the Act: Common Stock, no par value


Indicate by check mark whether the Registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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.

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).  Yes [X]   No [  ].  


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





Large accelerated filer [  ]

Accelerated filer [  ]

Non-accelerated filer [X]

Smaller reporting company [X]

 

Emerging Growth company [X]


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.  [  ]


Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ] No [X]


APPLICABLE ONLY TO CORPORATE ISSUERS


As of May 17, 2021 the Registrant had 20,326,309 shares of common stock outstanding.



2





FORWARD-LOOKING STATEMENTS


In this Quarterly Report on Form 10-Q, references to the “Company,” “we,” “us,” “our” and words of similar import refer to High Sierra Technologies, Inc., unless the context requires otherwise.


This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this report. These factors include, among others:


·

our ability to raise capital;

·

declines in general economic conditions in the markets where we may compete;

·

unknown environmental liabilities associated with any companies or  properties we may acquire; and

·

significant competition in the markets where we may operate.


You should read any other cautionary statements made in this Quarterly Report as being applicable to all related forward-looking statements wherever they appear in this Quarterly Report. We cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate and therefore prospective investors are encouraged not to place undue reliance on forward-looking statements. You should read this Quarterly Report completely. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.




3





JUMPSTART OUR BUSINESS STARTUPS ACT DISCLOSURE

We qualify as an “emerging growth company,” as defined in Section 2(a)(19) of the Securities Act of 1933, as amended (the “Securities Act”), as amended by the Jumpstart Our Business Startups Act (the “JOBS Act”). An issuer qualifies as an “emerging growth company” if it has total annual gross revenues of less than $1.0 billion during its most recently completed fiscal year, and will continue to be deemed an emerging growth company until the earliest of:


 

the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1.0 billion or more;


 

the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement;


 

the date on which the issuer has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or


 

the date on which the issuer is deemed to be a “large accelerated filer,” as defined in Section 240.12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”).


As an emerging growth company, we are exempt from various reporting requirements. Specifically, we are exempt from the following provisions:


 

Section 404(b) of the Sarbanes-Oxley Act of 2002, which requires evaluations and reporting related to an issuer’s internal controls;


 

Section 14A(a) of the Exchange Act, which requires an issuer to seek shareholder approval of the compensation of its executives not less frequently than once every three years; and


 

Section 14A(b) of the Exchange Act, which requires an issuer to seek shareholder approval of its so-called “golden parachute” compensation, or compensation upon termination of an employee’s employment.


Under the JOBS Act, emerging growth companies may delay adopting new or revised accounting standards that have different effective dates for public and private companies until such time as those standards apply to private companies. We have elected to use the extended transition period for complying with these new or revised accounting standards. Since we will not be required to comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies, our financial statements may not be comparable to the financial statements of companies that comply with public company effective dates. If we were to elect to comply with these public company effective dates, such election would be irrevocable pursuant to Section 107 of the JOBS Act.





4




PART I


Item 1.  Financial Statements


The Financial Statements of the Registrant required to be filed with this 10-Q Quarterly Report were prepared by management together with related notes. In the opinion of management, the Financial Statements fairly present the financial condition of the Registrant and include all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Registrant’s Financial Statements. The results from operations for the three months ended March 31, 2021, are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The unaudited consolidated Financial Statements should be read in conjunction with the December 31, 2020 financial statements and footnotes thereto included in the Registrant’s Form 10-K Annual Report for the year ended December 31, 2020, filed with the Securities and Exchange Commission on April 14, 2021.


















5





HIGH SIERRA TECHNOLOGIES, INC.


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



TABLE OF CONTENTS




 

PAGE

 

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

7

 

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

8

 

 

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) (UNAUDITED)

9

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

10

 

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11

















6




HIGH SIERRA TECHNOLOGIES, INC.

Consolidated Condensed Balance Sheets

March 31, 2021 and December 31, 2020

(Unaudited)


 

 

 

March 31,

 

December 31,

 

 

 

2021

 

2020

 

ASSETS

 

 

 

 

Current Assets

 

 

 

 

 

Cash

 

 $          6,889

 

 $        41,770

 

 

 

 

 

 

 

Total Current Assets

 

               6,889

 

            41,770

 

 

 

 

 

 

Property, Plant and Equipment, net

 

           116,858

 

         125,695

 

 

 

 

 

 

 

Total Assets

 

 $        123,747

 

 $      167,465

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' (DEFICIT)

 

 

 

 

Current Liabilities

 

 

 

 

 

Notes payable

 

 $        375,500

 

 $      375,500

 

Notes payable-Related party

 

             23,306

 

            23,306

 

Accounts payable and accrued expenses

 

             76,112

 

            58,373

 

Accounts payable and accrued expenses-Related party

 

               5,904

 

            12,714

 

 

 

 

 

 

 

Total Current Liabilities

 

           480,822

 

         469,893

 

 

 

 

 

 

Long Term Liabilities

 

 

 

 

 

Notes payable

 

             50,000

 

            50,000

 

 

 

 

 

 

  

Total Liabilities

 

           530,822

 

         519,893

 

 

 

 

 

 

Commitments and contingencies

 

                        -

 

                       -

 

 

 

 

 

 

Stockholders (Deficit)

 

 

 

 

 

Preferred stock, no par value, non-voting, 5,000,000 shares

 

 

 

 

 

  authorized, 0 shares issued and outstanding at

 

 

 

 

 

  December 31, 2020 and 2019

 

                        -

 

                       -

 

Common stock, no par value, 50,000,000 shares authorized;

 

 

 

 

 

  20,326,309 and 20,296,309 issued and outstanding at

 

 

 

 

 

  March 31, 2021 and December 31, 2020

 

           501,949

 

         471,849

 

Accumulated (Deficit)

 

         (909,024)

 

        (824,277)

 

Total Stockholders' (Deficit)

 

         (407,075)

 

        (352,428)

 

 

 

 

 

 

 

Total Liabilities and Stockholders' (Deficit)

 

 $        123,747

 

 $      167,465


The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.



7




HIGH SIERRA TECHNOLOGIES, INC.

Consolidated Condensed Statements of Operations

(Unaudited)


 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

2020

 

 

 

 

 

 

Revenues

 

 $                         -

 

 $                   -

 

 

 

 

 

 

 

Total revenues

 

                            -

 

                       -

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

Depreciation

 

                   8,837

 

              8,789

 

General and administrative

 

                 61,419

 

              8,602

 

 

 

 

 

 

 

Total operating expenses

 

                 70,256

 

            17,391

 

 

 

 

 

 

(Loss) before other expenses

 

                (70,256)

 

          (17,391)

 

 

 

 

 

 

Other (expense)

 

 

 

 

 

Interest (expense)

 

                (13,801)

 

            (9,764)

 

Interest (expense)-Related party

 

                     (690)

 

            (1,058)

 

 

 

 

 

 

 

Total other (expense)

 

                (14,491)

 

          (10,822)

 

 

 

 

 

 

(Loss) before income taxes

 

                (84,747)

 

          (28,213)

 

Income taxes

 

                            -

 

                       -

 

 

 

 

 

 

Net (loss)

 

 $            (84,747)

 

 $       (28,213)

 

 

 

 

 

 

(Loss) per share-Basic and diluted

 

 $                 (0.00)

 

 $           (0.00)

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

Basic and diluted

 

         20,307,309

 

    20,189,643


The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.



8




HIGH SIERRA TECHNOLOGIES, INC.

Consolidated Condensed Statements of Stockholders' (Deficit)

For the Three Months Ended March 31, 2021 and 2020

(Unaudited)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock

 

Common Stock

 

Accumulated

 

Stockholders'

 

 

Shares

 

Amount

 

Shares

 

Amount

 

(Deficit)

 

(Deficit)

 Balance-January 1, 2020

 

            -

 

 $          -

 

  20,189,642

 

 $    237,348

 

 $       (518,766)

 

 $    (281,418)

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net (loss) for the three months ended March 31, 2020

 

            -

 

      -

 

             -

 

                     -

 

            (28,213)

 

  (28,213)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance-March 31, 2020

 

          -

 

 $          -

 

        20,189,642

 

 $    237,348

 

 $       (546,979)

 

 $   (309,631)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance-January 1, 2021

 

          -

 

 $          -

 

        20,296,309

 

 $    471,849

 

 $       (824,277)

 

 $   (352,428)

 

 

 

 

 

 

 

 

 

 

 

 

 

 Common stock issued for services

 

            -

 

       -

 

               20,000

 

          30,000

 

                         -

 

            30,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 Proceeds from exercise of warrants

 

          -

 

      -

 

               10,000

 

               100

 

                         -

 

                 100

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net (loss) for the three months ended March 31, 2021

 

           -

 

       -

 

            -

 

                     -

 

            (84,747)

 

      (84,747)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance-March 31, 2021

 

       -

 

 $          -

 

        20,326,309

 

 $    501,949

 

 $       (909,024)

 

 $   (407,075)

 

The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

 

9


 


HIGH SIERRA TECHNOLOGIES, INC.

Consolidated Condensed Statements of Cash Flows

(Unaudited)


 

Three Months Ended

 

March 31,

 

2021

 

2020

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

     Net (loss)

 $        (84,747)

 

 $      (28,213)

     Adjustments to reconcile net loss to net cash used

 

 

 

          in operating activities:

 

 

 

             Depreciation

               8,837

 

          8,789

              Issuance of common stock for services

             30,000

 

             -

          Changes in assets and liabilities:

 

 

 

              Increase in accounts payable and accrued expenses

             17,739

 

     10,832

             (Decrease)/increase in accounts payable and accrued expenses-Related party

             (6,810)

 

       1,058

 

 

 

 

             Net cash (used) in operating activities

           (34,981)

 

     (7,534)

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

             Net cash used in investing activities

                        -

 

               -

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

     Proceeds from exercise of warrants

                  100

 

               -

     Proceeds from issuance of notes payable

                        -

 

     2,600

 

 

 

 

             Net cash provided by financing activities

                  100

 

        2,600

 

 

 

 

             Net increase/(decrease) in cash

           (34,881)

 

       (4,934)

 

 

 

 

CASH AT BEGINNING PERIOD

             41,770

 

      5,207

 

 

 

 

CASH AT END OF PERIOD

 $            6,889

 

 $                273

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

     Cash paid for interest

 $            5,250

 

 $            4,500

     Cash paid for income taxes

 $                    -

 

 $                    -


The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.



10



HIGH SIERRA TECHNOLOGIES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2021


NOTE 1- Summary of History and Significant Accounting Policies


Nature of Operations


Gulf & Orient Steamship Company, LTD. (“Gulf” or the “Company”) was incorporated in the State of Colorado on May 9, 1996. Gulf originally intended to engage in the business of marine transportation.   


On December 31, 2018, Gulf entered into a Share Exchange Agreement with High Sierra Technologies, Inc., a Nevada corporation (“High Sierra”), and all of its shareholders.  The shareholders of High Sierra were issued shares of the Gulf’s common stock on a one for one share basis in exchange for their shares of High Sierra’s common stock.  High Sierra became a wholly-owned subsidiary of Gulf in the business combination.  The Share Exchange was treated as a reverse merger and recapitalization, and as a result, the consolidated financial statements are presented under successor entity reporting, with an inception date of August 6, 2018.  Subsequently Gulf’s name was changed to High Sierra Technologies, Inc.


High Sierra Technologies, Inc., the wholly-owned subsidiary, was incorporated in the State of Nevada on August 6, 2018. It was formed with the intention that it would become the assignee, owner and licensor of certain Intellectual Property (the “Intellectual Property”) that was, prior to assignment, the property of Vincent C. Lombardi, Ph.D., who is an officer, director and co-founder of the subsidiary.  The subsidiary was further formed with the goal that it would continue to develop and expand its intellectual property portfolio with an emphasis on the recreational cannabis industry as well as the industrial hemp industry.


Through its subsidiary, the Company is a start-up that develops patents and other products used in the processing of cannabis, including industrial hemp, and will license these technologies to companies in the industry.  The Company will likely incur research and development expenses in the future and intends to develop a policy regarding the same. The Company was growing industrial hemp on a 200-acre property it leased in McDermitt, Nevada and incurred expenses in relation to this project and the failure of the crop during 2019.  


Basis of Presentation and Consolidation

 

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements and should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020.

 

In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of financial statements for the interim period, have been included.


The Company consolidates its subsidiaries in accordance with ASC 810, and specifically ASC 810-10-15-8 which states, "[t]he usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, or over 50% of the outstanding voting shares of another entity is a condition pointing toward consolidation." All inter-company transactions have been eliminated during consolidation.


Concentration of Risk


The Company places its cash and temporary cash investments with established financial institutions.  At times, such cash and investments may be in excess of the FDIC insurance limit.





11




HIGH SIERRA TECHNOLOGIES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2021


Cash and Cash Equivalents


The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.  


Stock-based Compensation


The Company records stock-based compensation in accordance with ASC 718, Compensation - Stock Based Compensation which requires the measurement and recognition of compensation expense based on grant date fair values for all share-based awards made to third parties, non-employees, employees and directors, including stock options.


ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The Company uses the Black-Scholes option-pricing model as its method of determining fair value. This model is affected by the Company's stock price as well as assumptions regarding a number of subjective variables. These subjective variables include but are not limited to the Company's expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of operations over the requisite service period.


Long-lived Assets


Long-lived assets are stated at cost.  Maintenance and repairs are expensed as incurred.  Depreciation is determined using the straight-line method over the estimated useful lives of the assets, which is five years.


Where an impairment of a property’s value is determined to be other than temporary, impairment for the estimated potential loss is recorded to adjust the property to its net realizable value.


When items of building or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in the results of operations.  The Company does not have any long-lived tangible assets, which are considered impaired as of March 31, 2021 and December 31, 2020.


The Company applies the provisions of ASC 360-10, Property, Plant and Equipment, where applicable to all long-lived assets. ASC 360-10 addresses accounting and reporting for impairment and disposal of long-lived assets. The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with ASC 360-10. ASC 360-10 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.



12




HIGH SIERRA TECHNOLOGIES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2021



Intangible Assets


Goodwill and intangible assets are reviewed for potential impairment in accordance with ASC 350, Intangibles - Goodwill and Other, whenever events or circumstances indicate that their carrying amounts may not be recoverable.  The Company had no such intangibles at March 31, 2021 and December 31, 2020, and recorded no impairment losses during the three months ended March 31, 2021 and 2020.  The Company currently writes off all costs related to any intangible assets it has or is acquiring to current operating expenses.


Revenue Recognition


The Company applies ASC 606, Revenue from Contracts with Customers. Under ASC 606, the Company will recognize revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue as each performance obligation is satisfied.


Advertising


Advertising costs are expensed as incurred.  Advertising expenses for the three months ended March 31, 2021 and 2020 were $0.


Fair Value of Financial Instruments


The Company adopted ASC 820, Fair Value Measurements and Disclosures, which provides a framework for measuring fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The standard also expands disclosures about instruments measured at fair value and establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:


Level 1 — Quoted prices for identical assets and liabilities in active markets;

Level 2 — Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.


Use of Estimates


The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ materially from those estimates.







13




HIGH SIERRA TECHNOLOGIES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2021


Emerging Growth Company Critical Accounting Policy Disclosure


The Company qualifies as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.   As an emerging grown company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has chosen to “opt out” of such extended transition period, and as a result, the Company will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies.


Income Taxes


The Company accounts for income taxes under ASC 740-10-30, Income Taxes. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.  Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.


The Company adopted ASC 740-10-25, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.  Under ASC 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement.  ASC 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.  The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of ASC 740-10-25.


Loss Per Share


Net loss per common share is computed pursuant to ASC 260-10-45, Earnings Per Share.  Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period, unless their effect is anti-dilutive due to continuing losses.  As of March 31, 2021, the Company had a total of 73,333 (40,000 from outstanding warrants and 33,333 from convertible notes payable) potentially dilutive shares outstanding.  


Recent Accounting Pronouncements


We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations or financial position.




14




HIGH SIERRA TECHNOLOGIES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2021


NOTE 2 – Financial Condition and Going Concern


The Company’s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company has sustained operating losses during the current year and may not achieve the level of profitable operations to sustain its activities. These factors raise substantial doubt as to its ability to obtain debt and/or equity financing and achieve profitable operations.


Management intends to raise additional operating funds through equity and/or debt offerings.  However, there can be no assurance management will be successful in its endeavors.  Ultimately, the Company will need to achieve profitable operations in order to continue as a going concern.


There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support its working capital requirements.  To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital.  No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company.  If adequate working capital is not available to the Company, it may be required to curtail its operations.


NOTE 3 – Property and Equipment


At March 31, 2021 and December 31, 2020, property and equipment consisted of the following:


 

Useful Lives

March 31,

2021

 

December31, 2020

 

 

 

 

 

Equipment

    5

  $         176,750

 

$        176,750


Less: accumulated depreciation

 


(59,892)

 


 (51,055)

 

 

$         116,858

 

$        125,695


Depreciation expense was $8,837 and $8,789 for the three months ended March 31, 2021 and 2020, respectively.




15




HIGH SIERRA TECHNOLOGIES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2021


NOTE 4 – Notes Payable


The Company’s debt consists of the following:


 

March

31, 2021

December 31, 2020

Notes payable, 12-16% interest, interest and principal due June 6, 2021 through August 12, 2021, unsecured(1)(2)

$     375,500

$   375 ,500

 

 

 

Notes payable-Series 2 Senior Convertible Secured Promissory Notes, 8% interest, interest and principal due October 21, 2023 through November 2, 2023(3)

50,000

         50,000

 

 

 

     Total due

425,500

      425,500

     Current Portion

375,500

      375,500

     Long-term portion

$       50,000

$       50,000


(1)

 One note for $50,000 includes as an additional return on the debt a 3% interest in the Gross Crop Yield from the Company’s hemp crop in McDermitt, NV.  No accrual has been made for this interest due to failure of crop and no proceeds received from a Gross Crop Yield.  This note was purchased by another note holder and the additional return from a Gross Crop Yield was eliminated.

(2)

All notes that have become due to the date of this report have been extended to a future due date, as per above date ranges.

(3)

The Series 2 Notes contain certain automatic and voluntary conversion provisions.  The Payee shall have the option to voluntarily convert this Note to shares of the common stock of the Company, at any time during the Term of this Note, or any extension of the note.  The shares so converted shall be at the price of the securities being currently offered in the Offering, or $1.50.  The Payee shall also be issued Warrants for the purchase of common stock in the Company with a value equal to fifty percent (50%) of the face amount of this Note and effective as of the date of any Conversion to shares of common stock in the Company.  Such Warrants shall be priced at $1.50 per share during the three-year term of this Note or any extension of this Note.


The Company has incurred an interest expense of $13,801 and $9,764 during the three months ended March 31, 2021 and 2020.  The Company has interest accrued on the above notes in the amount of $40,536 and $31,985 at March 31, 2021 and December 31, 2020.


NOTE 5 – Notes Payable-Related Party


The Company’s related party debt consists of the following:

 

March

31, 2021

December 31, 2020

Notes payable, 12% interest, interest and principal due June 30, 2021, unsecured

$       23,306

$       23,306

 

 

 

     Total due

        23,306

23,306

     Current Portion

        23,306

23,306

     Long-term portion

$                 -

$                 -

 

16

HIGH SIERRA TECHNOLOGIES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2021


During the three months ended March 31, 2021, the Company has not borrowed or paid back any loans with the President of the Company.


The Company has incurred an interest expense of $690 and $1,058 during the three months ended March 31, 2021 and 2020, respectively.  The Company has interest accrued on the above notes in the amount of $5,904 and $12,714 at March 31, 2021 and December 31, 2020.


NOTE 6 – Income Taxes


The Company adopted the provisions of ASC 740-10. ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements. ASC 740-10 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. The application of income tax law is inherently complex. Laws and regulation in this area are voluminous and are often ambiguous. As such, we are required to make many subjective assumptions and judgments regarding the income tax exposures. Interpretations and guidance surrounding income tax laws and regulations change over time. As such, changes in the subjective assumptions and judgments can materially affect amounts recognized in the balance sheets and statements of income.


The Company has no unrecognized tax benefit, which would affect the effective tax rate if recognized. There has been no significant change in the unrecognized tax benefit during the three months ended March 31, 2021.


We classify interest and penalties arising from the underpayment of income taxes in the statement of income under general and administrative expenses. As of March 31, 2021, we had no accrued interest or penalties related to uncertain tax positions.


Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.





17




HIGH SIERRA TECHNOLOGIES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2021


The components of deferred income tax assets (liabilities) at March 31, 2021, were as follows:


As of March 31, 2021:

 

 

 

 

 

Balance

Rate

Tax


Federal loss carryforward


$834,524


        21%


$      175,250

Valuation allowance

 

 

       (175,250)

       Deferred tax asset

 

 

$                  -


Due to the passage of the “Tax Cuts and Jobs Act” on December 20, 2017 the rate of the U.S. Federal Income Tax dropped from 34% to 21%, which is a flat percentage tax rate used for the calculation of the deferred income tax assets.


The new law also changes the rules on NOL carry forward. The 20-year limitation was eliminated, giving the taxpayer the ability to carry forward losses indefinitely. However, utilization of NOL carry forwards arising after January 1, 2018, will now be limited to 80 percent of taxable income.


The income tax provision differs from the amount on income tax determined by applying the U.S. federal income tax rate of 21% to pretax income from continuing operations for the three months ended March 31, 2021 due to the following:


 

 

2021

 

 

 

 

 

Income tax (benefit) expense

$

 (17,797)

 

Increase in valuation allowance

 

          17,797

 

Provision for income taxes

$

             -

 


NOTE 7 – Capital Changes


Offering of Securities


Common stock


We are offering a maximum of 2,000,000 Shares of common stock (“Shares”) exclusively to “accredited investors”.  There is no minimum number of Shares to be sold pursuant to this offering other than the minimum purchase requirement. The offering price is $1.50 per Share ($3,000,000).  This offering became effective February 4, 2020 and was amended February 1, 2021 to extend the date of the offering through May 1, 2022.


The Company did not sell any securities under this offering during the three months ended March 31, 2021.


The Company issued 20,000 shares of its common stock for services valued at $30,000.



18




HIGH SIERRA TECHNOLOGIES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2021


Secured Convertible Notes


Additionally, we are offering up to $1,000,000 in Series 2 Senior Convertible Secured Promissory Notes exclusively to “accredited investors”.  The Notes will be in a minimum face amount/increment of $10,000 for a term of three years and shall bear interest at a rate at eight Percent (8%) per annum.  The Notes will automatically convert to Common Stock of the Company if the Company has received $1,000,000 from its offering or any other source or sources at a conversion price of $1.50 per share. The Notes can also be voluntarily converted by the holder. The Payee shall also be issued Warrants for the purchase of common stock in the Company with a value equal to fifty percent (50%) of the face amount of the Note and effective as of the date of any Conversion to shares of common stock in the Company.  Such Warrants shall be priced at $1.50 per share during the three-year term of the Note or any extension of the Note.


The Company did not sell any of these Notes during the three months ended March 31, 2021.


These securities have not been registered with the United States Securities and Exchange Commission or with any state securities agency.  These securities are being offered pursuant to exemptions from the registration requirements of the Securities Act of 1933, as amended pursuant to Rule 506 of Regulation D, and from the registration requirements of the securities laws of the states in which the securities will be offered.  The securities are subject to certain restrictions on resale and may be resold only as permitted under applicable federal and state securities laws.


Warrants


Under an Investment Banking Agreement, the Company issued 50,000 warrants.  The exercise price per share of the Common Stock under this Warrant is $.01 and is fully vested on the Issue Date and is non-cancellable nor non-redeemable.


Common Stock Purchase Warrants

 

As of March 31, 2021, the following common stock purchase warrants were outstanding:

 

 

 

Warrants

 

 

 

Weighted Average Exercise Price

 

Outstanding – December 31, 2020

 

 

       50,000

 

 

 

$

.01

 

Granted

 

 

-

 

 

 

 

-

 

Canceled/forfeited

 

 

-

 

 

 

 

-

 

Exercised

 

 

(10,000)

 

 

 

 

.01

 

Outstanding – March 31, 2021

 

 

40,000

 

 

 

$

.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) The Company granted 50,000 common stock purchase warrants in December 2020 to exercise at a purchase price of $.01.  During 2021, 10,000 of the purchase warrants were exercised.  

 



19




HIGH SIERRA TECHNOLOGIES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2021


The fair value of the outstanding common stock purchase warrants was calculated using the Black-Scholes option-pricing model with the following assumptions at the measurement date(s):

 

 

 

Measurement date

 

Dividend yield

 

 

0%

 

Expected volatility

 

97.90~172.75%

 

Risk-free interest rate

 

0.16~1.72%

 

Expected life (years)

 

2.71~5.00

 

Stock Price

 

 

$1.50

 

Exercise Price

 

 

$0.01

 


The Company recorded $74,500 to general and administrative expense for the value of the warrants granted in 2020.


NOTE 8 – Related party transactions


The Company paid $7,500 in services to a related party for services accrued at December 31, 2020.


NOTE 9 – Contingencies, Commitments, Legal Matters and Consulting Agreements


Management of the Company has conducted a diligent search and concluded that there were no commitments, contingencies, or legal matters pending at the balance sheet dates, other than what has been disclosed below. The Company has cancelled one Consulting Agreements for the marketing of its securities.


On May 13, 2019, the Company entered into an Agricultural Lease for approximately 200 acres in Northern Nevada to plant its Hemp Grow for 2019.  The Company is no longer operating under this Agricultural Lease. Thus there are no contingent liabilities thereunder.


The term of the lease is for five years commencing May 18, 2019 through May 17, 2024.


There are no minimum fixed monthly payments due on this lease, but an annual participation bonus in an amount equal to fifteen percent of the gross crop yield from the leasehold properties.  The Gross Crop Yield is defined by the actual amount received from the crop harvest less all expenses derived from the growing, processing and sale of the crop harvested from the Property.  


The Company is solely responsible for all crop care, labor, irrigation, insurance, taxes, repairs and maintenance of the crop, equipment and other costs of planting, raising and harvesting of crops.  The Company is responsible for all other miscellaneous cost to grow and take it to market. As the Company is no longer engaged in the activities contemplated by the Agricultural Lease, the Company is no longer subject to any such liabilities.


Due to the lease payments being variable, the Company has not recorded a right of use asset or lease liability on the balance sheet and will recognize the variable lease payments in the period when the obligation for those payments has occurred in accordance with ASC 842, Leases.


No gross crop yields have been achieved by the Company to date, and therefore no lease payments have been made or required under the lease terms.  The Hemp Grow farming activities were ceased at the end of 2019 and the leased property is not currently being used by the Company.




20




HIGH SIERRA TECHNOLOGIES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2021


NOTE 10 – Subsequent Events


In accordance with ASC 855-10, the Company has analyzed its operations subsequent to March 31, 2021 through the date these financial statements were issued and has determined that it does not have any material subsequent events to disclose in these financial statements except the extension of the Company’s offering mentioned in Note 7 through May 1, 2022.






 



21




Item 2.  Management’s Discussions and Analysis of Financial Condition and Results of Operations.


Forward-looking Statements


Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words “may,” “would,” “could,” “should,” “expects,” “projects,” “anticipates,” “believes,” “estimates,” “plans,” “intends,” “targets” or similar expressions.


Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.


Accordingly, results actually achieved may differ materially from expected results in these statements.  Forward-looking statements speak only as of the date they are made.  We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.


Company Business - Intellectual Property


The Company’s business is now focused on the business of its wholly-owned subsidiary, High Sierra Technologies, Inc. (“High Sierra”).  High Sierra was incorporated in the State of Nevada in August of 2018.  It was formed with the intention that it would become the assignee, owner and licensor of certain Intellectual Property that was, prior to assignment, the property of Vincent C. Lombardi, Ph.D. (the “Intellectual Property”) who is an officer, director and co-founder of High Sierra.  High Sierra was further formed with the goal that it would continue to develop and expand its intellectual property portfolio with an emphasis on the recreational cannabis industry as well as the industrial hemp industry.


The current Intellectual Property portfolio consists of all of the rights, title and interest that Dr. Lombardi had in certain two Provisional Patent Applications (collectively, the “Applications”).  Assignments of both of these applications, which assign their ownership to High Sierra, have been filed with the United States Patent & Trademark Office. The Applications have since been incorporated into and converted into a single all-encompassing Utility Patent Application which has been filed with numerous governmental agencies in the United States, Canada and multiple other countries as is discussed below (collectively the “Utility Patent Applications”). For important information concerning the Company’s Intellectual Property, please refer to the Company’s most recent Annual Report on Form 10-K.


On March 25, 2020, the Company received an International Preliminary Report of Patentability for its Patent Cooperation Treaty Application Number PCT/US2019/014778, CANNABIS PRODUCTS MODIFIED BY REMOVING VOLATILE ORGANIC COMPOUNDS AND ADDING VOLATILE UNSATURATED HYDROCARBONS, in which Claims Numbered 1-84 were characterized as novel and Claims Numbered 1-17, 63-70, 83 and 84 were characterized as inventive steps.


On June 5, 2020, the United States Patent and Trademark Office, by way of an Office Action dated May 29, 2020, notified the Company that Claims Numbered 1-17, 63-70 and 83-84 of Patent Application Number 16/255,157, CANNABIS PRODUCTS MODIFIED BY REMOVING VOLATILE ORGANIC COMPOUNDS AND ADDING VOLATILE UNSATURATED HYDROCARBONS, were now allowed.  These are four of the seven main claims in Patent Application Number 16/255,157.  In response to this, the Company’s outside Patent Counsel, Oliff PLC, has filed an Amendment to Patent Application Number 16/255,157 so that these Claims can be issued a formal Notice of Allowance which would then lead to the issuance of a Utility Patent for these Claims.  As a result of this action by our attorneys at Oliff PLC, on June 19, 2020, the United States Patent and Trademark Office issued a formal Notice of Allowance and Fee(s) Due which will allow the Utility Patent to be issued once the fees are paid. This Patent was issued as United States Patent Number 10,737,198 on August 11, 2020.  The Company’s attorneys at Oliff PLC also prepared a Continuation Application for Claims Numbered 18-62 and 71-82 so that the Company can continue to prosecute these Claims separately.  This Continuation Application has resulted in the issuance of United States Patent Number 10,835,829 on November 17, 2020.




22




On July 23, 2020, the Company received an Issue Notification from the United States Patent and Trademark Office stating that, on August 11, 2020, the United States Patent and Trademark Office will issue United States Patent Number 10,737,198 to the Company as assignee of Application Number 16/255.157, CANNABIS PRODUCTS MODIFIED BY REMOVING VOLATILE ORGANIC COMPOUNDS AND ADDING VOLATILE UNSATURATED HYDROCARBONS, filed by Vincent Lombardi, one of the founders of the Company and its current President and Chief Executive Officer.


Now United States Patent Numbers 10,737,198 and 10,835,839 have been formally issued, the Company intends to begin actively marketing and licensing its patented technologies in both the cannabis and hemp market spaces as well as pursuing its own uses of its patented technologies in relation to various end user products that can benefit from its patented technologies.  In regards to the issuance of United States Patents Numbered 10,737,198 and 10.835,839, Vincent C. Lombardi, President and Chief Executive Officer of the Company, has stated that “we believe the effect of the issuance of Patents Numbered 10,737, 198 and 10, 835,839 is that it will allow the Company to be able to effectively control the marketplace for low, or no, odor cannabis and hemp products in the United States which will allow the Company to start generating licensing revenue from the technology disclosed in United States Patents Numbered 10,737,198 and 10,835,839.”


The Company has received a First Office Action on its Canadian Patent Application Number 3,031,123, CANNABIS PRODUCTS MODIFIED BY REMOVING VOLATILE ORGANIC COMPOUNDS AND ADDING VOLATILE UNSATURATED HYDROCARBONS, and that its attorneys at Oliff PLC and Bereskin & Parr in Canada have responded to it.  The Company has also recently amended its Canadian Patent Application so that it accurately reflects the claims embodied in United States Patents Numbered 10,737,198 and 10,835,839 as well as the Continuation Application Number 17,098/539 filed on November 16, 2020.


The Company’s outside Patent Counsel, Oliff PLC  has completed the Application to the European Patent Office  (“EPO”) based on Patent Cooperation Treaty Application Number PCT/US2019/014778, CANNABIS PRODUCTS MODIFIED BY REMOVING VOLATILE ORGANIC COMPOUNDS AND ADDING VOLATILE UNSATURATED HYDROCARBONS.  It has been filed as European Patent Office Application Number 19743904.5. The Company has also recently amended its EPO Application so that it accurately reflects the claims embodied in United States Patents Numbered 10,737,198 and 10,835,839 as well as the Continuation Application Number 17,098/539 filed on November 16, 2020. This EPO Application, as amended, will allow the Company to simultaneously prosecute its PCT Application in a total of 38 different countries in Europe and the surrounding areas as well as Hong Kong.


Marketing Plans to License the Intellectual Property


High Sierra is now marketing the licensing of its technology in states in the U.S. where cannabis and/or hemp has been legalized both for medicinal and/or recreational use.  It also plans to use a similar marketing strategy in all provinces in Canada which has legalized both the medicinal and recreational uses of cannabis as of October 17, 2018. Hemp has long been legal in Canada. High Sierra is targeting entities that are licensed to produce, process and/or manufacture cannabis and/or hemp related products.  High Sierra also believes that its technology will be of interest to tobacco companies in the United States, Canada and other places if those companies choose to enter the cannabis and/or hemp marketplaces as the legalization of cannabis and/or hemp progresses.


On October 14, 2020, we entered into an exclusive Letter Agreement with Artemis Holdings, LLC pursuant to which Artemis Holdings, LLC is to assist us in maximizing the value of our patents and patents pending for odorless cannabis.  Artemis is to provide a detailed market analysis of the patents and to assist with any licensing or sale of the patents.  The agreement is for a period of nine months, and then it automatically renews for additional one month periods until either party terminates it.  The Company will pay Artemis a fee of $5,000 per month during the term, and a transaction fee of 7.5% of the gross proceeds of any transaction (sale, license, etc.) arranged by Artemis.  A copy of the Letter Agreement is attached to our Quarterly Report on Form 10-Q for the period ended September 30, 2020 as Exhibit 10.22.


Consulting Agreement


On August 14, 2020, we entered into a non-exclusive Consulting Agreement with Stanley Berk/Steven Leatherman (“SBSL Consultants”) and Jeff Baclet/Tom Prutzman (“Consultants”) pursuant to which the SBSL Consultants and other Consultants agreed to review short term and long term business forecasts for the Company, review documents for due diligence purposes, seek out private and public funding for the Company, and seek out potential licensing partners and potential buyers of the Company’s intellectual property.  They referred the Company to Artemis Holdings, LLC.  See above. The term of the Agreement was for six months. The Company agreed to pay a consulting fee of $7,500 per month



23




(to be deferred until the Company has raised at least $500,000), and 5.0% of funds raised from any source brought to the Company by the Consultants.  The Consultants were also granted warrants to purchase 5.0% of the securities sold in such fundraising at the same price, which is exercisable for a period of 5 years.  This August 14, 2020 Consulting Agreement was amended on December 28, 2020 to now be effective as of January 1, 2021.  Under the terms of this amendment the term of the Agreement became one year ending on December 31, 2021. The consulting fees were reduced to $1,200.00 per month, a potential bonus of $45,000 was incorporated, the referral fees were reduced to 2% and the warrants to be issued were set at to 2.5% of the value of certain transactions caused by Admiral Investment Banking and 2% of the value of certain transactions caused by Artemis Holdings Group, LLC. A copy of the Amended Consulting Agreement is attached to our Annual Report for the year ended December 31, 2020 as Exhibit 10.8.   


Admiral Investment Banking Agreement


On December 28, 2020 the Company entered into an Agreement with Admiral Investment Banking (“Admiral”) to market our Private Placement Offering of 2,000,000 shares of common stock to accredited investors.  The Agreement is for the period of one year and has certain renewal provisions. The Agreement provides for commissions of 8% of monies generated by Admiral to be paid to Admiral. It also provides for an override of 2% to be payable to Admiral in the event of the inclusion of another broker/dealer in a transaction. The Agreement also provides for the issuance of warrants to Admiral or its principals in certain instances if so designated by Admiral.  The warrants are exercisable at $0.01 per share for a period of five (5) years after the issuance date and cover a total of 50,000 shares.


Plan of Operation


Our plan of operation for the next 12 months is to: (i) market the licensing of the Company’s technology in states in the U.S. where cannabis and/or hemp has been legalized for medicinal and/or recreational use, and in the Canadian provinces; and (ii) seek to raise additional equity funding so that the Company may pursue the construction and operation of a facility to produce and market hemp cigarettes to be located in Northern Nevada.   During the next 12 months, our cash requirements include expenses to market our technology; expenses to construct and operate a facility to produce and market hemp cigarettes to be located in Northern Nevada; the payment of our SEC reporting filing expenses, including associated legal and accounting fees; and costs incident to maintaining our good standing as a corporation in our state of organization.  We anticipate that we will need to raise additional equity funds to successfully commence and operate a facility to produce and market hemp cigarettes.  We have no commitments to raise any additional funds at the present time, and we can offer to assurances that we will be able to raise additional funds on terms acceptable to the Company.


Results of Operations – Three Months Ended March 31, 2021 and Three Months Ended March 31, 2020


We have generated no revenues since inception. We hope to start earning revenues during the present fiscal year ending December 31, 2021.  


General and administrative expenses were $61,419 for the three month period ended March 31, 2021, an increase of $52,817 from the $8,602 of general and administrative expenses incurred during the three months ended March 31, 2020.  Most of the increase in general and administrative expenses incurred in the later period were for the issuance of shares for services and for legal fees for the prosecution of its various patent applications in the United States, Canada and Europe.  We incurred depreciation of $8,837 in the three months ended March 31, 2021, an increase of $48 from the $8,789 of depreciation incurred in the three month period ended March 31, 2020.  


We incurred interest expense of $13,801 in the three months ended March 31, 2021 compared to $9,764 of interest expense incurred in the three months ended March 31, 2020.  This is due to the fact that the Company increased its borrowing from unrelated parties after the period ended March 31, 2020.  We incurred interest expense-related party of $690 in the three months ended March 31, 2021 and we incurred interest expense–related party of $1,058 in the three months ended March 31, 2020.  This is due to the fact that the Company repaid some of its notes payable-related party after March 31, 2020.


We incurred a net loss of $84,747 during the three months ended March 31, 2021, an increase of $56,534 from the $28,213 net loss incurred during the three months ended March 31,2020.  The Company’s increase in net loss in the current period is largely due to the increase in administrative expenses in the later period.





 

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Liquidity and Capital Resources


We had total current assets of $6,889 consisting entirely of cash, and $480,822 in total current liabilities as of March 31, 2021. Our total current liabilities consisted of notes payable $375,500, notes payable-related party of $23,306, accounts payable and accrued expenses of $76,112 and accounts payable and accrued expenses-related party of $5,904.  We had property, plant and equipment, net of $116,858 as of March 31, 2021. See our Plan of Operation above for information about our cash requirements for the next 12 months.


The cash flows from operating activities consisted of the following: During the three months ended March 31, 2021, we had an increase in accounts payable and accrued expenses of $17,739, a decrease in accounts payable and accrued expenses-related party of $6,810, depreciation expense of $8,837 and issuance of common stock for services of $30,000.  When this is combined with our net loss of $84,747 for the three months ended March 31, 2021, it results in net cash used in operating activities of $34,981.


During the three months ended March 31, 2020, we had an increase in accounts payable and accrued expenses of $10,832, we had an increase in accounts payable and accrued expenses – related party of $1,058 and had depreciation of $8,789. When this is subtracted from our net loss of $28,213 for the three months ended March 31 2020, it results in net cash used in operating activities of $7,534.


In the three months ended March 31, 2021, we received proceeds from the exercise of warrants of $100 which resulted in net cash provided by financing activities of $100 in the same three month period.  When combined with the $34,981 net cash used in operating activities, it results in a net decrease in cash of $34,881 in the three months ended March 31, 2021.


We received proceeds from an increase in notes payable of $2,600 during the three months ended March 31, 2020 which increased our net cash provided by financing activities by $2,600.  When combined with the $7,534 net cash used in operating activities during the three months ended March 31, 2020, it results in a net decrease in cash during the three months ended March 31, 2020 of $4,934.


Going Concern


The Company’s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company has sustained operating losses during the current year-to-date and may not achieve the level of profitable operations to sustain its activities.  These factors raise substantial doubt as to its ability to obtain debt and/or equity financing and achieve profitable operations.


Management intends to raise additional operating funds from the planned sale of our hemp farming equipment, and from raising funds through equity and/or debt offerings to fund operations for the next 12 months.  However, there can be no assurance management will be successful in its endeavors. Ultimately, the Company will need to achieve profitable operations in order to continue as a going concern.


There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support its working capital requirements.  To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital.  No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company.  If adequate working capital is not available to the Company it may be required to curtail its operations.


Emerging Growth Company Critical Accounting Policy Disclosure

The Company qualifies as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.  As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company may elect to take advantage of the benefits of this extended transition period in the future.


Off-Balance Sheet Arrangements



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We had no off-balance sheet arrangements of any kind for the three month period ended March 31, 2021.


Potential Impact of COVID-19


The Company is concerned that the COVID-19 virus may impact the Company’s ability to raise additional equity capital due to the uncertainty of the virus’ effects on the economy and capital markets, which may make potential investors less likely to invest during the pandemic. This may affect the Company’s ability to raise equity capital to meet its financial obligations, implement its business plan and continue as a going concern.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk.


Not required.


Item 4.  Controls and Procedures.


Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2021. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls over financial reporting, our Chief Executive Officer concluded that our disclosure controls and procedures were not effective.  Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.


Changes in internal control over financial reporting


Our management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has concluded there were no significant changes in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


PART II - OTHER INFORMATION


Item 1. Legal Proceedings.


None; not applicable.


Item 1A.  Risk Factors.


Not required.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.


On February 26, 2021, the Company issued 10,000 shares of its restricted common stock to its Vice President Jeffrey M. Pogol, and 10,000 shares of its restricted common stock to another service provider, for services rendered which were valued at $2,000 each.  On the same day, the Company issued 10,000 shares of its restricted common stock to Mark Beloyan, a principal of Tradespot Markets and Admiral Investment Banking, pursuant to the exercise of a warrant at an exercise price of $0.01 per share. The shares were issued in reliance on the exemption in Section 4(2) of the Securities Act of 1933 for transactions not involving any public offering.  The certificates representing the shares bear a restricted legend, and the persons acquiring the shares represented that they acquired the shares with investment intent.



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Item 3. Defaults Upon Senior Securities.


None; not applicable.


Item 4. Mine Safety Disclosures.


None; not applicable.


Item 5. Other Information.


None; not applicable.




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Item 6. Exhibits.


Exhibit No.

Identification of Exhibit

3.1*

Articles of Incorporation filed May 9, 1996

3.2*

Amended and Restated Articles of Incorporation

3.3*

By-Laws

10.1*

Promissory Note with Larry Mamey dated June 6, 2019

10.2*

Promissory Note with Biored N.V., a Belgian corporation, dated July 30, 2019

10.3**

Promissory Note with Kenny L. DeMeirleir dated August 12, 2020

10.4***

Promissory Note with Michael Vardakis dated December 31, 2020

10.5***

Promissory Note with Vincent C. Lombardi dated December 31, 2020

10.6***

Promissory Note with Michael Vardakis dated December 31, 2020

10.7**

Letter Agreement with Artemis Holdings Group, LLC dated October 14, 2020

10.8***

Amended Consulting Agreement with Stanley Berk/Steven Leatherman (SBSL Consultants) and Jeff Baclet/Tom Prutzman (Consultants) dated December 28, 2020

10.9***

Form of Series 2 Senior Convertible Secured Promissory Note

10.10***

Sixth Amendment to Promissory Note with Larry Mamey dated March 5, 2021

14*

Code of Ethics

31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act provided by Vincent C. Lombardi, Chief Executive Officer, President and Director.

31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act provided by Gregg W. Koechlein, Chief Financial Officer, Chief Operating Officer, Secretary, Treasurer and Director.

32

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 provided by Vincent C. Lombardi, Chief Executive Officer, President and Director; and Gregg W. Koechlein, Chief Financial Officer, Chief Operating Officer, Secretary, Treasurer and Director.

101.INS

XBRL Instance Document

101.PRE.

XBRL Taxonomy Extension Presentation Linkbase

101.LAB

XBRL Taxonomy Extension Label Linkbase

101.DEF

XBRL Taxonomy Extension Definition Linkbase

101.CAL

XBRL Taxonomy Extension Calculation Linkbase

101.SCH

XBRL Taxonomy Extension Schema


* Incorporated by reference from the Company’s Amendment No. 2 to its Registration Statement on Form S-1 filed with the Securities and Exchange Commission on August 7, 2019.


** Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2020 filed with the Securities and Exchange Commission on November 20, 2020.


*** Incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission on April 14, 2021.





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SIGNATURES


Pursuant to the requirements 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


High Sierra Technologies, Inc.


Date:

May 17, 2021

  

By:

/s/ Vincent C. Lombardi

  

  

  

  

Vincent C. Lombardi, Chief Executive Officer, President and Director


Date:

May 17, 2021

  

By:

/s/ Gregg W. Koechlein

  

  

  

  

Gregg W. Koechlein, Chief Financial Officer, Chief Operating Officer, Secretary, Treasurer and Director




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