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PURE HARVEST CORPORATE : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL …

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The Company’s business plan involves the acquisition of licensed medical and
recreational marijuana dispensaries, cultivation facilities and production
facilities in states which allow publicly traded companies to own and operate
dispensaries, cultivation facilities and production facilities. Depending on the
markets entered and state regulation, the Company’s plan may also include: asset
purchases, management/consulting operating agreements, or similar allowable
agreements. The Company plans to use a combination of cash, shares of common or
preferred stock, notes, or other financing vehicles to complete these
acquisitions.

 Prolific Nutrition 

On September 6, 2019, the Company acquired all of the outstanding membership
interests in Prolific Nutrition, LLC and Gratus Living, LLC (collectively “Prolific Nutrition”) for 400,000 shares of the Company’s restricted common
stock.

Prolific Nutrition and Gratus Living are Colorado-based hemp/CBD companies that
have developed and now market a line of CBD products direct to consumers.
Prolific Nutrition and Gratus Living currently offer CBD oil tincture, CBD oil
gummies, CBD oil capsules, CBD oil lotion, hemp oil and lip balm. Prolific
Nutrition and Gratus Living have also developed and now market hemp extract
dietary supplements, hemp extract capsules for pain and hemp extract pet treats
for dogs and cats.

 Love Pharm, LLC

On February 12, 2020, the Company entered into an Operating Agreement with Dr. James Rouse, MD regarding the ownership, operation, and management of Love
Pharm, LLC
. Love Pharm was organized to formulate, develop, manufacture, and
brand hemp/CBD products for sale and distribution as well as to form a
multi-channel media platform for public and patient education regarding the
endocannabinoid system utilizing Dr. Rouse’s name, public image and his
extensive experience and expertise in medicine and entrepreneurship. Under the
Operating Agreement between the Company and Dr. Rouse, the Company owns 51% of
Love Pharm and has a right of first refusal to purchase the remaining 49% of
Love Pharm from Dr. Rouse.

As of November 16, 2020 Love Pharm had not generated any revenue.

 How Smooth It Is 

On March 12, 2020 the Company entered into an agreement to acquire fifty-one
percent (51%) of the outstanding membership interests in How Smooth It Is, Inc.
(“HSII”) for $3,000,000 in cash and 7,000,000 shares of the Company’s restricted
common stock.

On July 29, 2020 the Company terminated its agreement to acquire 51% of HSII. As
a part of the termination agreement, the sole shareholder of HSII, Leonard
Cusenza
, agreed to pay the Company $2,150,000 by August 7, 2020.

The shareholder of HSII failed to pay the Company the $2,150,000 by August 7,
2020
. As a result, on August 12, 2020, the Company and the shareholder amended
the termination agreement to provide that the shareholder would pay the
$2,150,000 by August 17, 2020. If payment of $2,150,000 was not received by
August 17, 2020, the shareholder agreed to pay the Company an additional
$5,000.00 per day until the full amount was paid.

As of November __, 2020, the Company had not received any payment from the
shareholder. The amount due to the Company as of November __, 2020 was $______.

 16 Sofa King 

On March 13, 2020, the Company entered into an agreement to acquire all of the
outstanding membership interests in Sofa King Medicinal Wellness Products, LLC
(“SKM”) for 3,000,000 shares of the Company’s common stock.

On August 11, 2020, following receipt of approval of the transaction by the
Colorado Marijuana Enforcement Division, the Company closed the acquisition of
SKM and the change of ownership on SKM’s six licenses (now owned by the Company)
was completed.

SKM is a vertically integrated cannabis operator located in Dumont, CO and
recently moved its dispensary to a corner location along the busy I-70 corridor
between Denver and Colorado’s world-class ski destinations.

 EdenFlo 

On April 24, 2020, the Company acquired substantially all of the assets of
EdenFlo, LLC, a producer of CBD extracts and concentrates, for 7,000,000 shares
of the Company’s restricted common stock and the release of its obligation of a
previous promissory note in the amount of $1,650,000.

EdenFlo will join Prolific Nutrition and Love Pharm, LLC to secure and expand
the Company’s position in the national Hemp/CBD industry. EdenFlo is a
large-scale Colorado-based hemp-CBD producer and manufacturer of pure isolate
and full-spectrum hemp. EdenFlo’s wholesale isolate is made from the highest
quality ingredients, utilizing only the best extraction and distillation methods
to ensure a final product of extreme purity. Their scientific procedures used
for the remediation of THC provide the cleanest broad-spectrum (distillate) oil
available in the cannabis extraction industry. The acquisition of EdenFlo will
support the Company’s manufacturing operations by supplying the Company’s raw
materials requirements for its branded products.

 Test Kitchen 

On August 17, 2020, the Company acquired all of the outstanding shares of Test
Kitchen, Inc.
for 50,000 shares of its restricted common stock.

Test Kitchen’s only assets as of August 17, 2020 was a product containing CBD
oil. Test Kitchen filed a patent application for this product on June 12, 2020.
There can be no assurance that a patent will be issued for this product.

As of November 16, 2020 Test Kitchen had not generated any revenue and had not
conducted any operations.

Solar Cultivation Technologies, Inc.

On September 29, 2020 the Company acquired all of the assets of Solar
Cultivation Technologies, Inc.
for 1,200,792 shares of the Company’s common
stock. SCT provides commercial cannabis cultivators with solar, battery storage,
and high-efficiency lighting.

As of November 23, 2020, SCT had generated revenues of approximately $270,000
(with a gross profit of approximately $2,500) and had nominal assets and
liabilities.

 Impact of the Coronavirus 

The Company’s business could be disrupted and materially adversely affected by
the recent outbreak of COVID-19. As a result of measures imposed by the
governments in affected regions, businesses and schools have temporarily closed
due to quarantines intended to contain this outbreak. The spread of COVID-19
from China to other countries has resulted in the Director General of the World
Health Organization
declaring COVID-19 a pandemic on March 11, 2020.
International stock markets have reflected the uncertainty associated with the
slow-down in the world economies. The significant declines in the Dow Industrial
Average were also largely attributed to the effects of COVID-19. The Company is
still assessing the impact COVID-19 may have on its business, but there can be
no assurance that this analysis will enable the Company to avoid part or all of
any impact from the spread of COVID-019 or its consequences, including downturns
in business sentiment generally. The extent to which the COVID-19 pandemic and
global efforts to contain its spread will impact the Company’s operations will
depend on future developments, which are highly uncertain and cannot be
predicted at this time, and include the duration, severity and scope of the
pandemic and the actions taken to contain or treat the COVID-19 pandemic.

 17 

Capital Resources and Liquidity

On March 6, 2020, the Company borrowed $1,500,000 from an unrelated third party.
The loan is evidenced by a promissory note which bears interest at 8% per year.

 The note was due and payable as follows: ? $500,000, together with all accrued and unpaid interest, on April 13, 2020 ? $1,000,000, together with all accrued and unpaid interest, on May 6, 2020

Accrued interest will be paid in shares of the Company’s common stock based upon
a 25% discount to the ten day average closing price of the Company’s common
stock. Accrued interest will include 150,000 additional shares of the Company’s
common stock and warrants to purchase 150,000 shares of the Company’s common
stock. The warrants are exercisable at any time on or before January 1, 2025 at
a price of $2.00 per share.

The first payment of $500,000 was made on a timely basis.

On April 20, 2020, the holder of the Note agreed to extend the due date for the
$1,000,000 payment from May 6, 2020 to June 15, 2020. In consideration for
extending the repayment date for the second amount to June 15, 2020, the Company
issued the note holder 200,000 shares of its common stock, and warrants to
purchase 200,000 shares of the Company’s common stock. The warrants are
exercisable at a price of $2.00 per share and expire January 1, 2025.

On June 9, 2020, the holder of the Note agreed to extend the due date for the
$1,000,000 payment to July 15, 2020. In consideration for extending the
repayment date for the second amount to July 15, 2020, the Company issued the
note holder 200,000 shares of its common stock, and warrants to purchase 200,000
shares of the Company’s common stock. The warrants are exercisable at a price of
$2.00 per share and expire January 1, 2025. A late payment penalty of $5,000 per
day was due if the $1,000,000 was not paid by July 15, 2020.

On July 14, 2020, the holder of the Note agreed to extend the due date for the
$1,000,000 payment to August 15, 2020. In consideration for extending the
repayment date for the second amount to August 15, 2020, the Company issued the
note holder 100,000 shares of its common stock, and warrants to purchase 100,000
shares of the Company’s common stock. The warrants are exercisable at a price of
$2.00 per share and expire January 1, 2025. A late payment penalty of $5,000 per
day was due if the $1,000,000 was not paid by August 15, 2020.

In August 2020 the Company repaid the $1,000,000 loan.

On August 18, 2020 the Company entered into a Loan Agreement with an unrelated
third party. The Loan Agreement provides the Company with the option, subject to
certain conditions, to borrow up to $4,000,000 under the Loan Agreement. As of
November 16, 2020 the Company had borrowed $1,950,000 pursuant to the Loan
Agreement, which amount includes $146,250 which the Company will use to pay the
first six month’s interest on the borrowed funds. The Company used $1,000,000 of
the initial advance to repay the $1,000,000 loan described above. The funds
remaining from the initial advance will be used to purchase raw materials for
the Company’s products and for general corporate purposes. All funds borrowed
bear interest at 15% per year, are secured by substantially all of the Company’s
assets, and are due and payable on August 18, 2023. The Lender will receive two
shares of the Company’s restricted common stock for every $1.00 loaned to the
Company. At the option of the Lender, the amounts loaned to the Company may be
converted into shares of the Company’s common stock. The number of shares to be
issued will be determined by dividing the amount to be converted by the
Conversion Price. The Conversion Price is the lessor of: (1) $2.00 or (2) 75% of
the average closing price of the Company’s common stock for the 30 consecutive
trading days ending on the last business day immediately prior to the conversion
date.

 18 

On October 9, 2020, the Company borrowed $200,000 from an unrelated third party.
At the option of the lender, the loan and any accrued interest may be converted
into shares of the Company’s common stock. The number of shares of the Company’s
common stock which will be issued upon any conversion will be determined by
dividing the amount to be converted by the lesser of $0.35 or 75% of the ten day
average closing price of the Company’s common stock immediately prior to the
date of conversion. As further consideration, the Company issued 100,000 shares
of its restricted common stock to the lender.

On October 23, 2020 the Company sold 2,750,000 shares of its common stock to a
private investor for $1,000,000 ($0.3636 per share).

 Results of Operations 

Material changes in the line items in the Company’s Statement of Operations for
the three and nine months ended September 30, 2020 as compared to the same
periods last year, are discussed below:

 Increase (I) or Item Decrease (D) Reason
Operating I Increase in business activity
Expenses Interest Expense I Increase in note payable to an unrelated third party Loss on I Refinancing and payoff of notes
Extinguishment
of Notes Payable 

The factors that will most significantly affect the Company’s future operating
results will be:

 ? state by state regulatory changes with respect to marijuana in the United States; ? rescheduling of marijuana by the federal government; and ? impact of COVID-19 virus. 

Other than the forgoing the Company does not know of any trends, events or
uncertainties that have had, or are reasonably expected to have, a material
impact on its revenues or expenses.

Adjusted EBITDA, for the purposes of these financial statements, shall mean:

The Company’s loss before interest, taxes, depreciation and amortization
adjusted to exclude the impact of (a) loss on impairment of tangible or
intangible assets; (b) gain or loss on disposal of assets, including notes
receivables; (c) gain or loss from the early extinguishment, redemption or
repurchase of debt, (d) stock-based compensation expense and (e) the loss from
derivative liabilities. Adjusted EBITDA will also exclude any expenses incurred
by the Company in connection with the Company’s evaluation, pursuit, or
consummation of one or more acquisitions or transactions (which such expenses
are considered to be incurred in connection with extraordinary, unusual or
infrequently occurring events reported in the Company’s public filings).

During the three months ended September 30, 2020, EBITDA loss increased to
($369,628) from ($248,376) in the prior comparable year. During the nine months
ended September 30, 2020, EBITDA loss increase to ($1,786,144) from ($725,962)
over the prior comparable year.

 19 

Capital Resources and Liquidity

 The Company's sources and (uses) of cash for the nine months ended September 30,
2020 are shown below: 2020 2019 Cash used in operations $ (2,098,433 )$ (399,105 )
Loans and advances (1,429,725 ) (28,593 )
Net cash paid in connection with acquisition (355,315 ) -
Repayment of advances from (advances to) related
parties (116,667 ) (11,358 )
Net proceeds from note payable and convertible notes
payable 2,496,000 -
Sale of common stock 150,000 482,500
Other (24,685 ) - 

The Company does not know of any trends, demands, commitments, events or
uncertainties that will result in, or that are reasonable likely to result in,
the Company’s liquidity increasing or decreasing in any material degree.

The Company may sell additional shares of common stock and/or other securities
to raise capital for its operations. There is no assurance that the Company will
be successful in raising any additional capital.

Off Balance Sheet Arrangements

As of September 30, 2020, the Company did not have any off balance sheet
arrangements.

Critical Accounting Policies and Estimates

See Note 2 to the September 30, 2020 financial statements included as part of
this report for a description of the Company’s critical accounting policies and
estimates.

© Edgar Online, source Glimpses

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