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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 June 30, 2022

 

[ ] 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.

1 

 

 

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 August 15, 2022 the Registrant had 20,494,645 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 and six months ended June 30, 2022, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The unaudited consolidated Financial Statements should be read in conjunction with the December 31, 2021 financial statements and footnotes thereto included in the Registrant’s Form 10-K Annual Report for the year ended December 31, 2021, filed with the Securities and Exchange Commission on March 21, 2022.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

June 30, 2022 and December 31, 2021

(Unaudited)

 

   June 30,
2022
  December 31, 2021
ASSETS          
Current Assets          
Cash  $15,127   $55,351 
Deposit   1,254    2,711 
           
Total Current Assets   16,381    58,062 
           
Property, Plant and Equipment, net   116,105    90,345 
           
Total Assets  $132,486   $148,407 
           
LIABILITIES AND STOCKHOLDERS' (DEFICIT)          
Current Liabilities          
Notes payable-Current maturities  $50,000   $375,500 
Notes payable-Related party   13,306    13,306 
Accounts payable and accrued expenses   87,761    88,500 
Accounts payable and accrued expenses-Related party   8,158    7,366 
           
Total Current Liabilities   159,225    484,672 
           
Long Term Liabilities          
Notes payable-Long-Term portion   325,500       
Convertible notes payable   200,000    100,000 
           
Total Long-Term Liabilities   525,500    100,000 
           
Total Liabilities   684,725    584,672 
           
Commitments and contingencies            
           
Stockholders (Deficit)          
Preferred stock, no par value, non-voting, 5,000,000 shares authorized, 0 shares issued and outstanding at June 30, 2022 and December 31, 2021            
Common stock, no par value, 50,000,000 shares authorized; 20,494,645 and  20,461,311 issued and outstanding at June 30, 2022 and December 31, 2021   754,449    704,449 
Accumulated (Deficit)   (1,306,688)   (1,140,714)
Total Stockholders' (Deficit)   (552,239)   (436,265)
           
Total Liabilities and Stockholders' (Deficit)  $132,486   $148,407 

 

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

 

7 

 

HIGH SIERRA TECHNOLOGIES, INC.

Consolidated Condensed Statements of Operations

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

 

               

Three Months Ended

June 30,

 

Six Months Ended

June 30,

  2022   2021   2022   2021
               
Revenues  $                  -    $                   -    $                   -    $              -
                 
  Total revenues            -                 -                -             -
                 
Operating Expenses              
  Depreciation         8,837            8,838           17,674       17,675
  General and administrative      25,739          38,386      114,832      99,806
                 
  Total operating expenses     34,576          47,224      132,506    117,481
                 
(Loss) from operations      (34,576)       (47,224)        (132,506)      (117,481)
                 
Other (expense)              
  Interest (expense)    (16,946)          (14,327)          (32,676)       (28,128)
  Interest (expense)-Related party          (398)              (658)               (792)        (1,347)
                 
  Total other (expense)   (17,344)          (14,985)     (33,468)    (29,475)
                 
(Loss) before income taxes    (51,920)         (62,209)        (165,974)      (146,956)
  Income taxes                -                      -                     -                 -
                 
Net (loss)  $       (51,920)    $       (62,209)    $    (165,974)    $(146,956)
                 
(Loss) per share-Basic and diluted  $           (0.00)    $           (0.00)    $          (0.01)    $      (0.01)
                 
Weighted average shares outstanding              
  Basic and diluted   20,494,645      20,339,203     20,487,094    20,323,344

 

 

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

 

8 

 

HIGH SIERRA TECHNOLOGIES, INC.

Consolidated Statements of Stockholders' (Deficit)

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

                         
    Preferred Stock   Common Stock   Accumulated   Total Stockholders'
    Shares   Amount   Shares   Amount   (Deficit)   (Deficit)
 Balance-January 1, 2021            -    $           -    20,296,309    $   471,849    $       (824,277)    $     (352,428)
                         
 Common stock issued for services            -         -      20,000     30,000                  -       30,000
                         
 Common Stock issued for 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)
                         
 Common stock issued for cash             -           -        60,002     90,000                 -      90,000
                         
Net (loss) for the three months ended June 30, 2021             -         -              -              -       (62,209)     (62,209)
                         
 Balance-June 30, 2021          -    $    -    20,386,311   $  591,949    $   (971,233)    $  (379,284)
                         
                         
                         
    Preferred Stock   Common Stock   Accumulated   Total Stockholders'
    Shares   Amount   Shares   Amount   (Deficit)   (Deficit)
 Balance-January 1, 2022            -    $      -    20,461,311    $   704,449    $   (1,140,714)    $     (436,265)
                         
Common stock issued for cash             -          -       33,334     50,000               -       50,000
                         
Net (loss) for the three months ended March 31, 2022               -         -               -            -       (114,054)      (114,054)
                         
Balance-March 31, 2022            -          -    20,494,645    754,449     (1,254,768)      (500,319)
                         
Net (loss) for the three months ended June 30, 2022             -         -              -               -         (51,920)       (51,920)
                         
 Balance-June 30, 2022            -    $           -   20,494,645    $   754,449    $   (1,306,688)    $     (552,239)

 

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

 

9 

 

HIGH SIERRA TECHNOLOGIES, INC.

Consolidated Condensed Statements of Cash Flows

For the Six Months Ended June 30, 2022 and 2021
(Unaudited)

       
  Six Months Ended
  June 30,
  2022   2021
CASH FLOWS FROM OPERATING ACTIVITIES:      
     Net (loss)  $      (165,974)    $     (146,956)
     Adjustments to reconcile net loss to net cash used      
          in operating activities:      
             Depreciation      17,674       17,675
              Issuance of common stock for services               -      30,000
          Changes in operating assets and liabilities:      
              Decrease in deposit      1,457             -
             (Decrease)/ Increase in accounts payable and accrued expenses       (739)        361
              Increase/(decrease) in accounts payable and accrued expenses-Related party         792     (6,152)
       
             Net cash (used) in operating activities    (146,790)     (105,072)
       
CASH FLOWS FROM INVESTING ACTIVITIES:      
     Purchase of property, plant and equipment      (43,434)              -
       
             Net cash used in investing activities      (43,434)                -
       
CASH FLOWS FROM FINANCING ACTIVITIES:      
     Proceeds from exercise of warrants              -             100
     Proceeds from sale of common stock      50,000        90,000
     Proceeds from notes payable            -        50,000
    (Payments) on notes payable-Related party          -       (10,000)
     Proceeds from convertible notes payable   100,000               -
       
             Net cash provided by financing activities      150,000      130,100
       
            Net (decrease)/increase in cash    (40,224)          25,028
       
CASH AT BEGINNING PERIOD      55,351           41,770
       
CASH AT END OF PERIOD  $     15,127    $      66,798
       
SUPPLEMENTAL CASH FLOW INFORMATION:      
     Cash paid for interest  $     10,885    $      14,365
     Cash paid for income taxes $              -    $                -

 

 

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

 

10 

 

HIGH SIERRA TECHNOLOGIES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2022

 

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.

 

Basis of Presentation and Consolidation

 

The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America.

 

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

June 30, 2022

 

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, employees and directors, including stock options.

 

ASC 718 requires companies to estimate the fair value of share-based awards to employees and directors on the date of grant. 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 to twenty seven and a half 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 June 30, 2022.

 

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

June 30, 2022

 

 

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 June 30, 2022, and recorded no impairment losses during the six months ended June 30, 2022 or 2021. 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 six months ended June 30, 2022 and 2021 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

June 30, 2022

 

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 June 30, 2022, the Company had a total of 173,333 (40,000 from outstanding warrants and 133,333 from convertible notes payable) potentially dilutive shares outstanding.  As of June 30, 2021, the Company had a total of 106,666 (40,000 from outstanding warrants and 66,666 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

June 30, 2022

 

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 June 30, 2022 and December 31, 2021, property and equipment consisted of the following:

 

  Useful Lives

June 30,

2022

 

December 31,

2021

         
Equipment 5   $       176,750   $     176,750
Furniture and lab equipment 5 25,989 (1)                  -
Leasehold improvements 27.5 17,445 (1)                  -

 

Less: accumulated depreciation

 

 

(104,079)

 

 

(86,405)

    $        116,105   $       90,345

 

Depreciation expense was $17,674 and $17,675 for the six months ended June 30, 2022 and 2021, respectively.

 

1)The new facility and equipment not put into service as of the date of this filing.

 

15 

 

HIGH SIERRA TECHNOLOGIES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2022

 

NOTE 4 – Notes Payable

 

The Company’s debt consists of the following:

 

 

June

30, 2022

December 31,

2021

Notes payable, 12-16% interest, interest and principal due September 6, 2022 through August 12, 2023, unsecured. (1) $  375,500 $   375,500
     
Notes payable-Series 2 Senior Convertible Secured Promissory Notes, 8% interest, interest and principal due October 21, 2023 through February 16, 2025(2)      200,000 100,000
     
     Total due      575,500       475,500
     Current Portion       50,000       375,500
     Long-term portion  $      525,500 $     100,000

 

(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)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 $32,676 and $28,128 during the six months ended June 30, 2022 and 2021. The Company has interest accrued on the above notes in the amount of $86,865 and $75,361 at June 30, 2022 and December 31, 2021. The Company has paid $10,885 and $14,365 of the accrued interest in the six months ended June 30, 2022 and 2021.

 

NOTE 5 – Notes Payable-Related Party

 

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

 

 

June

30, 2022

December 31,

2021

Notes payable, 12% interest, interest and principal due December 31, 2022, unsecured $       13,306 $       13,306
     
     Total due         13,306          13,306
     Current Portion         13,306          13,306
     Long-term portion $                 - $                 -

 

16 

 

HIGH SIERRA TECHNOLOGIES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2022

 

During the six months ended June 30, 2021, the Company has paid back $10,000 of the loans with the President of the Company.

 

The Company has incurred an interest expense of $792 and $1,347 during the six months ended June 30, 2022 and 2021, respectively. The Company has interest accrued on the above notes in the amount of $8,158 and $7,366 at June 30, 2022 and December 31, 2021.

 

 

NOTE 6 – 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. On January 14, 2022, the Company extended the date of the offering through October 1, 2022.

 

The Company sold 60,002 shares of its common stock for gross proceeds of $90,000 under this offering during the six months ended June 30, 2021.

 

During the six months ended June 30, 2021, the Company issued 20,000 shares of its common stock for services valued at $30,000.

 

The Company sold 33,334 shares of its common stock for gross proceeds of $50,000 under this offering during the six months ended June 30, 2022.

 

17 

 

HIGH SIERRA TECHNOLOGIES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2022

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 sold $100,000 of these Notes during the six months ended June 30, 2022. The principal balance of convertible notes payable was $200,000 and $100,000 as of June 30, 2022 and December 31, 2021, respectively.

 

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. The date of this offering was extended on January 14, 2022 to July 31, 2022. The Company has decided not to extend this offering any further.

 

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 June 30, 2022, the following common stock purchase warrants were outstanding: 

    Warrants       Weighted Average Exercise Price  
Outstanding – December 31, 2021            40,000       $ .01  
Granted     -         -  
Canceled/forfeited     -         -  
Exercised     -         .01  
Outstanding – June 30, 2022     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 the six months ended June 30, 2021, 10,000 of the purchase warrants were exercised for total proceeds of $100.

 

18 

 

HIGH SIERRA TECHNOLOGIES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2022

 

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  

 

NOTE 7 – 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. Additionally, the Company has terminated its Investment Banking Agreement on November 10, 2021.

 

The Company has entered into an agreement to lease a small commercial space in Reno to be used as a Research and Development Facility. It is 1,475 square feet and the monthly rent is $1,254 plus $203 in estimated CAM charges. The lease is for one year and has options for two additional years. The Company elected to exclude from its balance sheet recognition of right of use assets and lease liabilities on leases having a term of 12 months or less (“short-term leases”). Lease expense is recognized on a straight-line basis over the lease term.

 

The Lease Agreement was amended and signed on January 30, 2022 and took effect on February 1, 2022.

 

The Company has paid $8,743 of rent expense during the six months ended June 30, 2022. The Company has expensed as repairs $2,984 due to the term of the original lease being only for a one year period.

 

NOTE 8 – Subsequent Events

 

In accordance with ASC 855-10, the Company has analyzed its operations subsequent to June 30, 2022 through the date these financial statements were issued and has determined that it has no material subsequent events to disclose in these financial statements.

 

19 

 

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 two all-encompassing Utility Patent Applications which have been filed with numerous governmental agencies in the United States, Canada and multiple other countries as is discussed below (collectively the “Utility Patent Applications”). As of the date hereof, there have been two United States Patents issued based on the Utility Patent Application as is also discussed below. As of the date hereof, the Company also has several ongoing Utility Patent Applications in the United States, Europe and Canada. 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.

20 

 

 

On August 11, 2020, the United States Patent and Trademark Office issued 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.

 

On November 17, 2020, the United States Patent and Trademark Office issued United States Patent Number 10,835,839 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.

 

On May 24, 2022, the United States Patent and Trademark Office issued United States Patent Number 11,338,222 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, 10,835,839 and 11,338,222 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, 10,835,839 and 11,338,222, Vincent C. Lombardi, President and Chief Executive Officer of the Company, has stated that “we believe the effect of the issuance of Patents Numbered 10,737,198,10, 835,839 and 11,338,222 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, 10,835,839 and 11,338,222.”

 

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 has received a second Office Action to this Amended Canadian Patent Application and, in concert with its attorneys, has recently responded to it.

 

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 44 different countries in Europe and the surrounding areas as well as Hong Kong. The Company has received a First Office Action to its European Patent Office Application Number 19743904.5. The Company and its attorneys at Oliff PLC and Astrum Element One Limited in the United Kingdom are in the process of preparing a response to it.

 

The Company has prepared and filed, on April 22, 2022, a Continuation-in-Part of Application Number 17/098,539 based on further changes to the processes referred to in Application Number 17/098,539 which should result in the Company receiving a fourth United States Patent in due time. The Company believes that the Continuation-in-Part will provide the Company additional protection of its current intellectual property portfolio.

  

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.

21 

 

 

On October 14, 2020, we entered into an exclusive Letter Agreement with Artemis Holdings, LLC pursuant to which Artemis Holdings, LLC was to assist us in maximizing the value of our patents and patents pending for odorless cannabis. Artemis was to provide a detailed market analysis of the patents and to assist with any licensing or sale of the patents. The agreement was for a period of nine months, and then it was to automatically renew for additional one month periods until either party terminates it. The Company agreed to 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. The parties mutually agreed to terminate the agreement effective April 1, 2021, and neither party owes any obligations to the other following the termination.

 

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 (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 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 10.7. This Agreement terminated on its own terms on December 31, 2021 and the parties have no further obligations to each other.

 

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 provided for commissions of 8% of monies generated by Admiral to be paid to Admiral. It also provided 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 provided 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. The Company gave notice to Admiral on October 8, 2021 that the Company is terminating the Agreement effective as of November 10, 2021, but the outstanding warrants are still in effect.

 

Vestech Securities. Inc. Finders Fee Agreement

 

On February 24, 2022, the Company entered into a non-exclusive Finders Fee Agreement (the “Agreement”) with Vestech Securities, Inc. (“Vestech”) under which Vestech will work to introduce parties to the Company who may be interested in purchasing common stock in the Company, providing capital financing and/or purchasing or licensing some, or all, of the Company’s Patented and Patent Pending technologies. The Agreement is for the period of six months and provides for a Finders Fee of 8% for capital raising transactions and a Finders Fee of 4% for Merger and Acquisitions transactions. A copy of this Agreement is attached hereto as Exhibit 10.17.

 

Possible Hemp Cigarette Business

 

High Sierra has identified a growing market place for hemp cigarettes especially those that can benefit from High Sierra’s patented and patent pending technologies. It is the intention of High Sierra to enter into this market place as soon as possible after it receives sufficient funding from its Private Placement Offerings. To that effect, the Company is now negotiating with one of the largest hemp cigarette manufacturers in the country to enter into a joint venture to produce and market a new brand of low odor hemp cigarettes. The negotiations have resulted in the execution of a non-binding Letter of Intent dated February 18, 2022, by the parties to enter into a Joint Venture to manufacture, market and distribute hemp cigarettes and hemp-based products in the United States, Canada and Mexico using its Patented and Patent Pending Technologies. The Company can offer no assurance that it will successfully raise the funds needed to enter into this market place. The Company is in the process of negotiating definitive agreements related to this Letter of Intent

 

Lease Agreement

 

The Company has two places of business. The corporate office is located at 1495 Ridgeview Drive, Suite 230A, Reno, Nevada 89519.  The space at that location rented by the Company consists of office space with a fixed monthly payment for rent and utilities. The Company is also leasing a research and development and warehousing facility located at 229 East 5th Street in Reno, Nevada 89512.

22 

 

 

On November 9, 2021, the Company entered into a Lease Agreement with 3 Squirrels, LLC to rent approximately 1,475 square feet of commercial space which the Company plans to use for research and development purposes. Due to the inability of the Landlord to deliver the Premises as called for in the Lease Agreement on time, a First Amendment to that Lease was signed on January 30, 2022 which changed some terms in the original Lease. The Lease is now for a period of one (1) year commencing February 1, 2022, and contains options for two (2) additional years. The monthly rent is $1,253.75 plus $203.50 in estimated CAM charges.

 

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; (iii) complete the transactions which are the subjects of the two letters of intent signed by the Company which include acquiring an Oregon company which specializes in hemp-related products and forming a joint venture to produce, market and distribute hemp cigarettes and hemp-based products in the United States, Canada and Mexico using the Company’s Patented and Patent Pending Technologies and (iv) begin the production and distribution of hemp cigarettes in accordance with the Letter of Intent that the Company entered into on February 18, 2022. 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 June 30, 2022 and Three Months Ended June 30, 2021

 

We have generated no revenues since inception. We hope to start earning revenues during the fiscal year ending December 31, 2022.  

 

General and administrative expenses were $25,739 for the three month period ended June 30, 2022, a decrease of $12,647 from the $38,386 of general and administrative expenses incurred during the three months ended June 30, 2021.  Most of the decrease in general and administrative expenses incurred in the later period were related to a decrease in legal and accounting costs. We incurred depreciation of $8,837 in the three months ended June 30, 2022, which is relatively the same as the $8,838 of depreciation incurred in the three month period ended June 30, 2021.

 

We incurred interest expense of $16,946 in the three months ended June 30, 2022, an increase of $2,619 from the $14,327 of interest expense incurred in the three months ended June 30, 2021. This is due to the fact that the Company increased its borrowing from unrelated parties through issuing an additional $100,000 in its Notes Payable-Series 2 Senior Convertible Secured Promissory Notes in February 2022. We incurred interest expense-related party of $398 in the three months ended June 30, 2022, a decrease of $260 from the interest expense–related party of $658 in the three months ended June 30, 2021. This is due to the fact that the Company repaid $10,000 of its notes payable-related party during the year ended December 31, 2021.

 

We incurred a net loss of $51,920 during the three months ended June 30, 2022, a decrease of $10.289 from the $62,209 net loss incurred during the three months ended June 30, 2021.  The Company’s decrease in net loss in the current period is largely due to the decrease in general and administrative expenses in the current period partially offset by modest increase in interest expense in the current period.

 

Results of Operations – Six Months Ended June 30, 2022 and Six Months Ended June 30, 2021

 

We have generated no revenues since inception. We hope to start earning revenues during the fiscal year ending December 31, 2022.  

23 

 

 

General and administrative expenses were $114,832 for the six month period ended June 30, 2022, an increase of $15,026 from the $99,806 of general and administrative expenses incurred during the six months ended June 30, 2021.  Most of the increase in general and administrative expenses incurred in the later period were for an increase in facilities lease expenses of $12,000 and market listing fees and other professional fees relating to up listing to the OTC Bulletin Board of approximately $15,000.  The Company expects to incur additional facility expenses in 2022 that are attributed to the new lease. We incurred depreciation of $17,674 in the six months ended June 30, 2022, which is relatively the same as the $17,675 of depreciation incurred in the six month period ended June 30, 2021.

 

We incurred interest expense of $32,676 in the six months ended June 30, 2022, an increase of $4,548 from the $28,128 of interest expense incurred in the six months ended June 30, 2021. This is due to the fact that the Company increased its borrowing from unrelated parties through issuing an additional $100,000 in its Notes Payable-Series 2 Senior Convertible Secured Promissory Notes in February 2022. We incurred interest expense-related party of $792 in the six months ended June 30, 2022, a decrease of $555 from the interest expense–related party of $1,347 in the six months ended June 30, 2021. This is due to the fact that the Company repaid $10,000 of its notes payable-related party during the year ended December 31, 2021.

 

We incurred a net loss of $165,974 during the six months ended June 30, 2022, an increase of $19,018 from the $146,956 net loss incurred during the six months ended June 30, 2021.  The Company’s increase in net loss in the current period is largely due to the increase in general and administrative expenses as explained above.

 

Liquidity and Capital Resources

 

At June 30, 2022, we had total current assets of $16,381 consisting of $15,127 in cash and $1,254 in a deposit. We had $159,225 in total current liabilities as of June 30, 2022. Our total current liabilities consisted of notes payable-current maturities of $50,000, notes payable-related party of $13,306, accounts payable and accrued expenses of $87,761 and accounts payable and accrued expenses-related party of $8,158. We had property, plant and equipment, net of $116,105 as of June 30, 2022. We had long term liabilities consisting of notes payable-long term portion of $325,500 and convertible notes payable of $200,000 as of June 30, 2022. 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 six months ended June 30, 2022, we had a decrease in accounts payable and accrued expenses of $739, an increase in accounts payable and accrued expenses-related party of $792, depreciation expense of $17,674 and a decrease in deposit of $1,457. When this is combined with our net loss of $165,974 for the six months ended June 30, 2022, it results in net cash used in operating activities of $146,790.

 

During the six months ended June 30, 2021, we had an increase in accounts payable and accrued expenses of $361, a decrease in accounts payable and accrued expenses – related party of $6,152, depreciation expense of $17,675 and issuance of common stock for services of $30,000. When this is combined with our net loss of $146,956 for the six months ended June 30, 2021, it results in net cash used in operating activities of $105,072.

 

In the six months ended June 30, 2022, we received proceeds from convertible notes payable of $100,000 and proceeds from the sale of common stock of $50,000 which resulted in net cash provided by financing activities of $150,000. During the same six month period we paid $43,434 for property, plant and equipment in our investing activities.

 

In the six months ended June 30, 2021, we received proceeds from the exercise of warrants of $100, proceeds from the sale of common stock of $90,000, proceeds from notes payable of $50,000 and we made a payment on notes payable – related party of $10,000 which resulted in net cash provided by financing activities of $130,100 in the same six month period.

 

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

24 

 

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

 

We had no off-balance sheet arrangements of any kind for the six month period ended June 30, 2022.

 

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. This concern is beginning to ease as vaccinations to protect against the virus have increased, and business is generally recovering throughout the country.

 

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 June 30, 2022. 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.

25 

 

 

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.

 

During the six months ended June 30, 2022, the Company sold a total of 34,334 shares of its common stock, at $1.50 per share, to one accredited investor for a total of $50,000. 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.

 

During the six months ended June 30, 2022, the Company sold $100,000 of its Notes Payable, Series 2 Convertible Secured Promissory Notes. The Notes bear interest at 8.0% per annum. The Notes may be converted during their term to shares of the Company’s common stock at the price of the securities currently offered in the offering, or $1.50 per share. The Notes 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 Notes bear a restricted legend, and the persons acquiring the shares represented that they acquired the Notes with investment intent.

 

For information concerning sales of unregistered equity securities in the three year period prior to the period covered by this report, see the Company’s Annual and Quarterly Reports on Form 10-K and Form 10-Q filed since December 31, 2018.

 

Item 3. Defaults Upon Senior Securities.

 

None; not applicable.

 

Item 4. Mine Safety Disclosures.

 

None; not applicable.

 

Item 5. Other Information.

 

None; not applicable.

 

26 

 

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*** Amended Consulting Agreement with Stanley Berk/Steven Leatherman (SBSL Consultants) and Jeff Baclet/Tom Prutzman (Consultants) dated December 28, 2020
10.8*** Form of Series 2 Senior Convertible Secured Promissory Note
10.9 Fourth Amendment to Promissory Note with Biored, N.V. dated July 29, 2022
10.10 Second Amendment to Promissory Note with Kenny L. DeMeirleir dated August 5, 2022
10.11**** Lease Agreement with 3 Squirrels, LLC dated November 9, 2021
10.12 Eleventh Amendment to Promissory Note with Larry Mamey dated June 5, 2022
10.13 Third Amendment to Promissory Note with Michael Vardakis dated July 13, 2021
10.14***** Second Amendment to Promissory Note with Vincent C. Lombardi dated June 18, 2021
10.15 Third Amendment to Promissory Note with Michael Vardakis dated July 13, 2021
10.16***** First Amendment to Lease Agreement with 3 Squirrels, LLC dated January 30, 2022
10.17 Finders Fee Agreement between the Company and Vestech Securities, Inc. dated February 24, 2022
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.PRE. Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH Inline XBRL Taxonomy Extension Schema Document
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

* 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.

 

 

**** Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2021 filed with the Securities and Exchange Commission on November 15, 2021.

 

***** Incorporated by reference from the Company’s Annual Report on Form 10-K for the period ended December 31, 2021 filed with the Securities and Exchange Commission on March 21, 2022.

27 

 

 

 

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: August 15, 2022   By: /s/ Vincent C. Lombardi
        Vincent C. Lombardi, Chief Executive Officer, President and Director

 

Date: August 15, 2022   By: /s/ Gregg W. Koechlein
        Gregg W. Koechlein, Chief Financial Officer, Chief Operating Officer, Secretary, Treasurer and Director

 

 

28 

 

Exhibit 31-1


CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Vincent C. Lombardi, certify that:


1.   I have reviewed this Quarterly Report on Form 10-Q of High Sierra Technologies, Inc.;


2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;


4.   The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Registrant and have:


a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)

evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)

disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and


5.   The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions);


a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and


b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.


Date:

August 15, 2022

  

By:

/s/ Vincent C. Lombardi

 

 

  

  

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




Exhibit 31-2


CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Gregg W. Koechlein, certify that:


1.   I have reviewed this Quarterly Report on Form 10-Q of High Sierra Technologies, Inc.;


2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;


4.   The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Registrant and have:


a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)

evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)

disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and


5.   The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions);


a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and


b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.


Date:

August 15, 2022

  

By:

/s/ Gregg W. Koechlein

  

  

  

  

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




Exhibit 32



CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002




In connection with the Quarterly Report of High Sierra Technologies, Inc. (the “Registrant”) on Form 10-Q for the period ending June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), we, Vincent C. Lombardi, Chief Executive Officer, President and Director; and Gregg W. Koechlein, Chief Financial Officer, Chief Operating Officer, Secretary, Treasurer and Director of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


(1) The Quarterly Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2) The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.


Date:

August 15, 2022

  

By:

/s/ Vincent C. Lombardi

 

 

  

  

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


Date:

August 15, 2022

  

By:

/s/ Gregg W. Koechlein

  

  

  

  

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





FOURTH AMENDMENT TO PROMISSORY NOTE


This Fourth Amendment to Promissory Note (the “Fourth Amendment”) is made by and between the parties High Sierra Technologies, Inc., a Nevada Corporation (“HSTI”) and Biored, NV, a Belgian Corporation (“Biored”) to be effective as of the 29th day of July, 2022.


WHEREAS, HSTI and Biored are parties to that certain Promissory Note dated July 30, 2019 that originally accrued interest at a rate of nine percent (9.0%) per annum (the “Note”).


WHEREAS, the Note currently has a Maturity Date, as defined in the Note, and as previously amended, of July 30, 2022.


WHEREAS, due to circumstances unforeseen by the parties to the Note, the parties to the Note now deem it to be in their mutual best interests to further extend said Maturity Date of the Note.


NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth herein, HSTI and Biored hereby covenant, promise and agree as set forth below.


1.  The Maturity Date of the Note is now extended to July 30, 2023.


2.  For this period of extension, the Note shall bear interest at a rate of twelve percent (12%) per annum.


3.  All other terms, provisions and conditions as are set forth in the Note shall remain the same and shall continue to remain in full force and effect.


IN WITNESS WHEREOF, the parties hereto have hereunto set their hands to this Fourth Amendment to be effective as of the day and date first set forth above.


 

High Sierra Technologies, Inc., a Nevada Corporation


 

By:  /s/Gregg W. Koechlein

       Gregg W. Koechlein, its Chief Operating Officer



Biored, NV, A Belgian Corporation



By:  /s/ Anna Cloof

       Anna Cloof, its President




SECOND AMENDMENT TO PROMISSORY NOTE


This Second Amendment to Promissory Note (the “Second Amendment”) is made by and between the parties High Sierra Technologies, Inc., a Nevada Corporation (“HSTI”) and Kenny L. De Meirleir (“De Meirleir”) to be effective as of this 5th day of August, 2022.


WHEREAS, HSTI and De Meirleir are parties to that certain Promissory Note dated August 12, 2020 (the “Note”).


WHEREAS, the Note currently has a Maturity Date, as defined in the Note, as previously amended, of August 12, 2022.


WHEREAS, due to circumstances unforeseen by the parties to the Note, the parties to the Note now deem it to be in their mutual best interests to extend said Maturity Date of the Note, as was previously amended.


NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth herein, HSTI and De Meirleir hereby covenant, promise and agree as set forth below.


1.  The Maturity Date of the Note is now extended to August 12, 2023.


2.  All other terms, provisions and conditions as are set forth in the Note shall remain the same and shall continue to remain in full force and effect.


IN WITNESS WHEREOF, the parties hereto have hereunto set their hands to this Second Amendment to be effective as of the day and date first set forth above.


High Sierra Technologies, Inc., a Nevada Corporation




By:  /s/ Gregg W. Koechlein

            Gregg W. Koechlein, its Chief Operating Officer




By:  /s/ Kenny L. De Meirleir

            Kenny L. De Meirleir




ELEVENTH AMENDMENT TO PROMISSORY NOTE


This Eleventh Amendment to Promissory Note (the “Eleventh Amendment”) is made by and between the parties High Sierra Technologies, Inc., a Nevada Corporation (“HSTI”) and Larry Mamey (“Mamey”) to be effective as of this 5th day of June, 2022.


WHEREAS, HSTI and Mamey are parties to that certain Promissory Note dated June 6, 2019 that originally accrued interest at a rate of nine percent (9.0%) per annum (the “Note”).


WHEREAS, HSTI and Mamey amended the Note as of December 6, 2019 by way of that certain First Amendment to Promissory Note and on March 5, 2020 by way of that certain Second Amendment to Promissory Note and on June 5, 2020 by way of that certain Third Amendment to Promissory Note and on September 5, 2020 by way of that certain Fourth Amendment to Promissory Note and on December 5, 2020 by way of that certain Fifth Amendment to Promissory Note and on March 5, 2021 by way of that certain Sixth Amendment to Promissory Note and on June 5, 2021 by way of the certain Seventh Amendment to Promissory Note and on September 5, 2021 by way of the certain Eighth Amendment to Promissory Note and on December 11, 2021 by way of the certain Ninth Amendment to Promissory Note and on February 11, 2022 by way of that certain Tenth Amendment to Promissory Note.


WHEREAS, the Note currently has a Maturity Date, as defined in the Note, as the Note has been previously amended, of June 6, 2022.


WHEREAS, due to circumstances unforeseen by the parties to the Note, the parties to the Note now deem it to be in their mutual best interests to further extend said Maturity Date of the Note.


NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth herein, HSTI and Mamey hereby covenant, promise and agree as set forth below.


1.  HSTI shall pay Mamey the sum of $1,750.00 for the interest that has accrued on the Note through June 6, 2022.


2.  The Maturity Date of the Note is now extended to September 6, 2022.


3.  For this period of extension, the Note shall bear interest at a rate of fourteen percent (14%) per annum.


4.  All other terms, provisions and conditions as are set forth in the Note shall remain the same and shall continue to remain in full force and effect.


IN WITNESS WHEREOF, the parties hereto have hereunto set their hands to this Eleventh Amendment to be effective as of the day and date first set forth above.



1






High Sierra Technologies, Inc., a Nevada Corporation




By:  /s/ Gregg W. Koechlein

            Gregg W. Koechlein, its Chief Operating Officer




By:  /s/ Larry Mamey

            Larry Mamey



2



THIRD AMENDMENT TO PROMISSORY NOTE


This Third Amendment to Promissory Note (the “Third Amendment”) is made by and between the parties High Sierra Technologies, Inc., a Nevada Corporation (“HSTI”) and Michael Vardakis (“Vardakis”) to be effective as of this 13th day of July, 2022.


WHEREAS, HSTI and Vardakis are parties to that certain Promissory Note dated December 31, 2020 in the amount of $105,500.00 (the “Note”).


WHEREAS, the Note currently has a Maturity Date, as defined in the Note, of December 31, 2021, and, as previously amended, of July 31, 2022.


WHEREAS, due to circumstances unforeseen by the parties to the Note, the parties to the Note now deem it to be in their mutual best interests to extend said Maturity Date of the Note.


NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth herein, HSTI and Vardakis hereby covenant, promise and agree as set forth below.


1.  The Maturity Date of the Note is now extended to July 31, 2023.


2.  Concurrently with the execution of this Second Amendment, HSTI shall make an interest payment in the amount of $3,692.50.


3.  All other terms, provisions and conditions as are set forth in the Note shall remain the same and shall continue to remain in full force and effect.


IN WITNESS WHEREOF, the parties hereto have hereunto set their hands to this Third Amendment to be effective as of the day and date first set forth above.


High Sierra Technologies, Inc., a Nevada Corporation




By:  /s/ Gregg W. Koechlein

            Gregg W. Koechlein, its Chief Operating Officer




By:  /s/ Michael Vardakis

            Michael Vardakis




THIRD AMENDMENT TO PROMISSORY NOTE


This Third Amendment to Promissory Note (the “Third Amendment”) is made by and between the parties High Sierra Technologies, Inc., a Nevada Corporation (“HSTI”) and Michael Vardakis (“Vardakis”) to be effective as of this 13th day of July, 2022.


WHEREAS, HSTI and Vardakis are parties to that certain Promissory Note dated December 31, 2020 in the amount of $150,000.00 (the “Note”).


WHEREAS, the Note currently has a Maturity Date, as defined in the Note, of December 31, 2021, and, as previously amended, of July 31, 2022.


WHEREAS, due to circumstances unforeseen by the parties to the Note, the parties to the Note now deem it to be in their mutual best interests to extend said Maturity Date of the Note.


NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth herein, HSTI and Vardakis hereby covenant, promise and agree as set forth below.


1.  The Maturity Date of the Note is now extended to July 31, 2023.


2.  All other terms, provisions and conditions as are set forth in the Note shall remain the same and shall continue to remain in full force and effect.


IN WITNESS WHEREOF, the parties hereto have hereunto set their hands to this Third Amendment to be effective as of the day and date first set forth above.


High Sierra Technologies, Inc., a Nevada Corporation




By:  /s/ Gregg W. Koechlein

            Gregg W. Koechlein, its Chief Operating Officer




By:  /s/ Michael Vardakis

            Michael Vardakis




[findersfeeagmt002.gif]

 

FINDERS FEE AGREEMENT

This  is  an  “Agreement”  made  by  and  between  High  Sierra  Technologies,  Inc.,1495  Ridgeview

Drive,  Suite  230A,  Reno,  NV  89519,  and  any  affiliated  companies  (the  “Company”  or  “High

Sierra”)  and  Vestech  Securities,  Inc.,11477  Olde  Cabin  Road,  St.,  St.  Louis,  Mo.  63141(the

“Finder” or “Vestech”) (together, the “Parties” and individually, a “Party”).

1. Transaction. The Company seeks a Transaction, as defined below, whereby the Company can

receive offers to purchase shares of common stock and other securities purchased through a private

placement subscription agreement (a “Capital Raising Transaction”) or other business opportunities

as further defined below (each a “Transaction”). Vestech represents to the Company that Finder has

access to sophisticated persons or entities and believes that the Finder can introduce parties interested

in a Transaction with the Company. Transaction sources can include, but not be limited to, revenue

sources, equity or debt financing sources, merger or acquisition candidates, partnering, joint ventures,

leasing or licensing transactions, lines of credit, sale of the Company, sale of the Company’s

intellectual property etc. Transaction sources also include any transactions effectuated as a result of

an introduction by parties introduced to the Company by the Finder. Company will agree to receipt of

each introduction by the Finder by email as an acknowledgement. Transactions will exclude

investments made by current shareholders, or entities and introductions to the Company made by

other parties, verified as to such to Vestech, in writing by the Company. However, if an introduction

is made by Finder and the Introduced party introduces another party or parties that then complete a

Transaction, then, the Finder shall be paid via section 5 of this agreement. The Company may reject a

proposed Transaction at its sole discretion.

2. Legal Compliance. In connection with introduction to investors, Finder shall comply with all

applicable laws and shall specifically, but not as a limitation thereof, comply with the requirements

set forth in the Securities Act of 1933, as amended. Finder represents and warrants that it has, if

needed, all requisite permits, licenses and registrations required to perform the services hereunder.

3. Nonexclusive Right. Finder shall have the non-exclusive right to introduce prospective Persons,

Entities, or potential Transactions to the Company This Agreement may be terminated by the

Company upon thirty (30) days written notice to Vestech. In the event of termination or expiration of

this Agreement, Vestech shall receive any outstanding fees. If any parties or entities are introduced to

the Company directly or indirectly by or through the Finder that enter into a Transaction within

eighteen (18) months from the date of the termination or expiration of this Agreement (the “Tail

Period”) the Company will be required to pay in accordance with paragraph 5 of this Agreement.

Finder will also receive a Fee for the duration of a Transaction, if applicable, even if this Agreement

is terminated or expired.

4. Acceptance of Transaction. The decision to accept a Transaction is in the sole discretion of the

Company. The Finder’s responsibility is limited to introducing parties interested in pursuing a

Transaction with the Company.

5. Fee. Cash and Warrants: In the event that a Transaction is accepted by the Company, and the

Company closes the Transaction, then the Company shall, within ten (10) business days of the

closing of a Transaction, pay the Finder a finder's fee as follows:

1




 

a.    Capital Raising Transactions.

Cash: In consideration of the introduction provided by the Finder, pursuant to this

Agreement, High Sierra shall pay to Finder an eight (8%) percent cash fee, of the gross

cash proceeds or other items of value (“Value” as defined in Appendix “B” attached

hereto), at the closing of the receipt of any funds raised in Capital Raising Transaction(s),

during the term of this agreement or the tail period, from introduced party(s)plus;

Warrants: As part of the first Capital Raising Transaction Completion Fee, in addition to the

cash remuneration noted in this Section 5 (a), Vestech will receive warrants to purchase

common stock in the Company in an amount equal to eight  per-cent (8%) of the number of

shares of common stock (or common stock equivalents) purchased by investors in a Capital

Raising Transaction and that the investors obtain a right to acquire through purchase,

conversion, or exercise of convertible securities issued by the Company in a Capital Raising

Transaction that closes during the term of this agreement or during the Tail Period.  As part

of each Subsequent Private Placement Financing Completion Fee, in addition to the cash

remuneration noted in this Section 5 (a), Vestech will receive warrants to purchase common

stock in the Company in an amount equal to eight (8%) percent of the number of shares of

common stock (or common stock equivalents) purchased by investors in a Capital Raising

Transaction and that the investors purchase or obtain a right to acquire through purchase,

conversion, or exercise of convertible securities issued by the Company in a Capital Raising

Transaction that closes during the term of this agreement or during the Tail Period.  All

warrants will be immediately exercisable at the price per share at which the investor acquires

or can acquire the common stock, adjusted for conversion, stock splits or other dilutive

events. In the event there is no public market for the Company’s common stock and investors

do not receive warrants in a Capital Raising Transaction, the exercise price of the warrants

due Vestech will be equal to the price per share that investors in the Capital Raising

transaction are able to purchase securities from the Company.  The warrants are deemed fully

vested, non-redeemable, non-callable, non-cancelable and will contain customary provisions

including, but not limited to, a net exercise provision, a term of five (5) years from the

closing date of the Capital Raising Transaction(s) and (assuming that  the Company has

publicly traded registered securities at the time of exercise) provisions for one demand

registration  of the underlying shares of Common Stock at the Company's expense, an

additional demand registration at the warrant holders' expense, and unlimited "piggyback"

registration rights for a period of seven years after issuance, at the Company's expense

(provided that such rights shall not apply to a registered public offering of the Company’s

common stock and further shall be subject to any underwriter’s reasonable assertion in

writing that the inclusion of such warrants in a public offering would materially impair the

marketability of such public offering)  The warrants shall further provide for: adjustment in

the number of such warrants (and the shares of Common Stock underlying such warrants) for

the entire term of the warrant, containing customary adjustments to prevent dilution in

connection with events such as for stock splits, stock dividends, combinations of shares and

recapitalizations of the Company. The warrants shall be delivered at the closing(s) in holders

names and denominations as instructed by Vestech.

.

b.   Merger & Acquisition Transactions.

(i)

Vestech  will  act  as  a  Finder  during  the  term  of  this  agreement  with

respect    to    any    Acquisition    Transaction    opportunity    and    any

2




 

Sale/Merger Transaction opportunity via a SPAC vehicle or otherwise

introduced  to  the  Company  by  Vestech.  If  an  Acquisition  Transaction

or Sale Transaction is consummated during the term of this agreement

or  the  Tail  Period  as  a  result  of  a  Vestech  introduction,  the  Company

will  pay  Vestech  a  cash  fee  (the  “M&A  Completion  Fee”)  equal  to

four  percent  (4%)  of  the  Transaction  Value  (as  defined  in  Appendix

B), at the closing of the Acquisition or Sale Transaction.

(ii)

If   an   Acquisition   Transaction   or   Sale   Transaction   opportunity

introduced   by   Vestech   is   consummated   during   the   term   of   this

agreement  or  the  tail  period,  whereby,  directly  or  indirectly,  less  than

a   fifty   percent   (50%)   interest   in   the   Company   or   the   targeted

companies,  as  the  case  may  be,  or  any  of  their  securities,  businesses,

or  assets  are  transferred  for  consideration,  or  if  a  transaction  as  a

result  of  Vestech’s  introduction  is  consummated  during  the  term  of

this  agreement  or  the  tail  period  consisting  of  a  minority  investment,

the formation of a joint venture, partnership or other business entity or

entry  into  a  strategic  alliance  (such  as  an  agreement,  relationship  or

arrangement  involving  supply,  distribution  or  sales  representation  of

products    or    services,    research    and    development,    technology,

intellectual     property,     patents,     product     licensing     or     similar

arrangement), the Company will pay Vestech a cash fee   equal to four

percent  (4%)  of  the  Transaction  Value  (as  defined  in  Appendix  B  ),

upon the occurrence of such event;

(iii)

If   an   Acquisition   Transaction   or   Sale   Transaction   opportunity

introduced   by   Vestech   is   not   consummated   and   the   Company   is

entitled  to  receive  a  “termination  fee,”  “break-up  fee,”  “topping  fee,”

or  other  form  of  compensation  during  the  term  of  this  Agreement  or

the  tail  period,  payable  in  cash  or  other  assets,  including,  but  not

limited  to,  an  option  to  purchase  securities  from  another  company

(such  cash,  securities,  including  in  the  case  of  options,  the  right  to

exercise  such  options  or  other  assets  hereinafter  referred  to  as  the

“Break-up  Fee”)  then  the  Company  shall  pay  to  Vestech  in  cash,

immediately  upon  the  Company’s  receipt  of  such  Break-up  Fee,  an

amount  equal  to  ten  percent  (10%)  of  such  Break-up  Fee  received.  In

the event that the Break-up Fee is paid to the Company  in whole or in

part   in   the   form   of   securities   or   other   assets,   the   value   of   such

securities  or  other  assets,  for  purposes  of  calculating  Vestech’s  fee,

shall  be  the  fair  market  value  thereof,  as  the  Parties  hereto  shall

mutually  agree on the day such Break-up Fee is paid to the Company;

provided   that,   if   such   Break-up   Fee   includes   securities   with   an

existing  public  trading  market,  the  value  thereof  shall  be  determined

by  the  last  sales  price  for  such  securities  on  the  last  trading  day

thereof  prior  to  such  payment.  The  securities  or  other  assets  shall  be

delivered  to  Vestech  within  ten  (10)  business  days  of  the  receipt  by

the Company of any such securities or other assets.

3




 

6. Compliance. In connection with introduction to investors or business opportunities, Finder shall

comply with all applicable laws and shall specifically, but not as a limitation thereof, comply with

the requirements set forth in the Securities Act of 1933, as amended. Finder represents and warrants

that it has, if needed, all requisite permits, licenses and registrations required to perform the services

hereunder.

7. Role as Finder. It is specifically understood that Finder is acting as a Finder only, is not acting in

violation of federal or state securities laws, and shall have no authority to enter into any

commitments on the Company's behalf, make any representations regarding the Company (apart

from making an introduction), or to negotiate the terms of a Transaction, or to hold any funds or

securities in connection with a Transaction or to perform any act which would require Finder to

violate federal or state securities laws. The consummation of any Transaction shall be separately

negotiated between the Company and the person or entity introduced to the Company by the Finder.

All information regarding the Company will be presented by the Company to any prospective person

or entity and any investment decision by the person or entity introduced by the Finder shall be solely

made by the person or entity introduced to the Company by the Finder based on representations and

information provided by the Company. Finder shall not hold itself out as an agent or representative of

the Company. In addition, the Finder agrees, acknowledges and confirms that the Finder shall not,

directly or indirectly, provide any Investor Relations services to any publicly traded entities that are

involved in any Transaction.

  8.  Term. This Agreement shall commence on the Effective Date and shall continue in effect for a

term of six (6) months (the “Term”), unless earlier terminated upon thirty (30) days written notice by

either Party or unless extended by the mutual written consent of the Parties.

 9. Non-Exclusivity. This Agreement shall not constitute an exclusive agreement by either Party.

10. Indemnification; Limitation of Liability. High Sierra hereby agrees to defend and hold

harmless the Finder, its agents, officers, consultants, and employees, and each of them, from and

against any and all claims related to this Agreement. Appendix “A” INDEMNIFICATION is

attached hereto and shall be deemed to be incorporated in, and part, of this Agreement and shall

survive termination or expiration of this Agreement until the date upon which the liability to which

any claim, or claims relating to this Agreement, is barred by all applicable statutes of limitations.

11. Miscellaneous. This Agreement constitutes the entire understanding and agreement between the

Parties hereto and their affiliates with respect to its subject matter and supersedes all prior or

contemporaneous agreements, representations, warranties and understandings of such Parties

(whether oral or written). In the event that any provision of this Agreement shall be deemed unlawful

or otherwise unenforceable, such provision shall be severed from this Agreement and the balance of

the Agreement shall continue in full force and effect. Any notice permitted, required or desired to be

given under this Agreement shall be in writing, facsimile transmission or via email and shall be

deemed to have been effectively given when delivered to the party (i) if personally delivered, or (ii)

if sent via email or facsimile, upon successful transmission to the address provide by the other Party.

No promise, inducement, representation or agreement, other than as expressly set forth herein, has

been made to or by the Parties hereto. This Agreement may be amended only by written agreement,

signed by the parties to be bound by the amendment. Evidence shall be inadmissible to show

agreement by and between such Parties to any term or condition contrary to or in addition to the

terms and conditions contained in this Agreement. This Agreement shall be construed according to

4




 

its fair meaning and not strictly for or against either Party. This Agreement may be executed in any

number of counterparts and may be delivered by facsimile or in Pdf form via email. All of these

counterparts, when assembled, shall for all purposes constitute one agreement.

12. Governing Law and Venue.  This Agreement shall be construed, and the rights and liabilities

determined, in accordance with the laws of the State of Missouri without regard to its conflicts of the

laws principles.  The Parties agree that any action or proceeding arising out of or related in any way

to this Agreement shall be brought before a State or Federal court of competent jurisdiction sitting in

the City of St. Louis, Missouri. The Company and Vestech each hereby irrevocably waive, to the

fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of

such action or proceeding. The Company and Vestech each agree that a final judgment in any such

action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the

judgment or in any other manner provided by law. The Parties hereby waive trial by jury. The Parties

hereby agree that the Company is not considered a “customer” of Vestech for purposes of FINRA

Rule 12200. This paragraph shall survive expiration or termination of this Agreement until the date

upon which the liability to which any claim relating to this Agreement is barred by all applicable

statutes of limitations.

13. Survival. All representations and warranties of the Company contained herein shall survive

the termination of this Agreement until the date upon which the liability to which any claim

relating to any such representation or warranty is barred by all applicable statutes of limitations.

The Company's obligations under Paragraphs 1, 3, 5, 10, 11, 12, 13 and Appendix “A” and “B”,

attached hereto and deemed part of this Agreement, shall survive the termination, expiration, or

supersession of this Agreement until the date upon which the liability to which any claim relating

to any such representation or warranty is barred by all applicable statutes of limitations. The

Parties agree that their respective rights, obligations and duties that by their nature extend beyond

the termination or expiration of this Agreement shall survive any termination or expiration and

remain in effect thereafter until the date upon which the liability to which any claim relating to

this Agreement is barred by all applicable statutes of limitations.

If you are in agreement with the foregoing, please execute and return an executed copy of this

Finders Fee Agreement to Vestech Securities, Inc. at asatloff@e-vestech.com with a cc to

jhuang@e-vestech.com.

IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto on

the date, or dates, set forth below.

Company: High Sierra Technologies, Inc.

Signature: /s/ Vincent C. Lombardi

By: Vincent C. Lombardi

Title: President and Chief Executive Officer

Date: February 24, 2022

1495 Ridgeview Drive, Suite 230A

Reno, NV 89519

5




 

Finder: Vestech Securities, Inc.

Signature: /s/ Averell Satloff

By:Averell Satloff

Title: Head of Investment Banking

Date: February 25, 2022

Acknowledged:

Signature /s/ John Huang

By:John Huang

Title: Chief Executive Officer

Date: February 25, 2022

11477 Olde Cabin Road, Suite 310

St. Louis, MO 63141

6


 

.

Appendix A: Indemnity Letter

To: Vestech Securities, Inc.

Gentlemen:

This letter will confirm that High Sierra Technologies Inc.(“High Sierra”) has engaged

Vestech  Securities,  Inc.  (“Finder”),  to  assist  us  as  a  Finder  only,  in  connection  with

the   matters   referred   to   in   our   letter   dated   February   24,   2022   (the   "Finders

Agreement").     In   consideration   of   Finder's   agreement   to   act   on   our   behalf   in

connection with such matters, we agree to indemnify and hold harmless Finder and its

affiliates,  and  the  respective  officers,  directors,  employees,  agents  and  representatives

of  Finder,  its  affiliates  and  each  other  person,  if  any,  controlling  Finder  or  any  of  its

affiliates  (Finder  and  each  such  other  person  being  an  "Indemnified  Person")  from

and  against  any  losses,  claims,  damages  or  liabilities  related  to,  arising  out  of  or  in

connection  with  the  engagement  (the  "Engagement")  under  the  Engagement  Letter,

and  will  reimburse  each  Indemnified  Person  for  all  expenses  (including  fees  and

expenses  of  counsel)  as  they  are  incurred  in  connection  with  investigating,  preparing,

pursuing  or  defending  any  action,  claim,  suit,  investigation  or  proceeding  related  to,

arising  out  of  or  in  connection  with  the  Engagement,  whether  or  not  pending  or

threatened  and  whether  or  not  any  Indemnified  Person  is  a  party.  We  will  not,

however,  be  responsible  for  any  losses,  claims,  damages  or  liabilities  (or  expenses

relating  thereto)  that  are  judicially  determined  in  a  judgment  not  subject  to  appeal  to

have  resulted  from  the  wrongful  conduct  or  gross  negligence  of  any  Indemnified

Person.

We   will   not,   without   Finder's   prior   written   consent,   settle,   compromise,

consent  to  the  entry  of  any  judgment  in  or  otherwise  seek  to  terminate  any  action,

claim,   suit   or   proceeding   in   respect   of   which   indemnification   may   be   sought

hereunder  (whether  or  not  any  Indemnified  Person  is  a  party  thereto)  unless  such

settlement,    compromise,    consent    or    termination    includes    a    release    of    each

Indemnified  Person  from  any  liabilities  arising  out  of  such  action,  claim,  suit  or

proceeding.     No   Indemnified   Person   seeking   indemnification,   reimbursement   or

contribution  under  this  agreement  will,  without  our  prior  written  consent,  settle,

compromise,  consent  to  the  entity  of  any  judgment  in  or  otherwise  seek  to  terminate

any   action,   claim,   suit,   investigation   or   proceeding   referred   to   in   the   preceding

paragraph.

11477 Olde Cabin Rd, Suite 310 St. Louis, MO  63141

www.e-vestech.com

Office:  314.828.2111  Fax:  314-261-9188 Member FINRA, SIPC, and Registered MSRB




 

If  the  indemnification  provided  for  in  the  first  paragraph  of  this  agreement  is

judicially  determined  to  be  unavailable  (other  than  in  accordance  with  the  third

sentence  of  the  first  paragraph  hereof)  to  an  Indemnified  Person  in  respect  of  any

losses,  claims,  damages  or  liabilities  referred  to  herein,  then,  in  lieu  of  indemnifying

such  Indemnified  Person  hereunder,  we  shall  contribute  to  the  amount  paid  or

payable  by  such  Indemnified  Person  as  a  result  of  such  losses,  claims,  damages  or

liabilities  (and  expense  relating  thereto)  (i)  in  such  proportion  as  is  appropriate  to

reflect  the  relative  benefits  to  the  applicable  Indemnified  Person,  on  the  one  hand,

and  us,  on  the  other  hand,  of  the  Engagement  or  (ii)if  the  allocation  provided  by

clause (i) above is not available, in such proportion as is appropriate to reflect not only

the  relative  benefits  referred  to  in  such  clause  (i)  but  also  the  relative  fault  of  each  of

the  applicable  Indemnified  Person  and  us,  as  well  as  any  other  relevant  equitable

considerations;  provided,  however,  that  in  no  event  shall  any  Indemnified  Person's

aggregate  contribution  to  the  amount  paid  or  payable  exceed  the  aggregate  amount  of

fees actually received by Finder under the Finders Agreement. Assuming that we have

fully  satisfied  the  amount  of  our  obligations  provided  for  herein  to  the  Indemnified

Persons,  and  the  Indemnified  Persons  shall  have  no  further  liabilities  in  connection

therewith,  then  we  may  take  control  of  any  pending  action  or  litigation  in  order  to

reduce  the  expenses  in  connection  therewith.  For  the  purposes  of  this  agreement,  the

relative  benefits  to  us  and  the  applicable Indemnified  Person  of  the  Engagement  shall

be deemed to be in the same proportion as (a) the total value paid or contemplated to

be  paid  or  received  or  contemplated  to  be  received  by  us  or  our  stockholders,  as  the

case may be, in the transaction or transactions that are the subject of the Engagement,

whether  or  not  any  such  transaction  is  consummated,  bears  to  (b)  the  fees  paid  to

Finder in connection with the Transaction.

Procedure:  Upon  obtaining  knowledge  of  any  claim  which  may  give  rise  to

indemnification  not  involving  a  Third  Party  Claim,  the  Indemnified  Person  shall,  as

promptly  as  practicable  following  the  date  the  Indemnified  Person  has  obtained  such

knowledge,  give  written  notice  (which  may  be  delivered  by  facsimile  transmission,

with   confirmation   of   receipt   by   the   receiving   party)   of   such   claim   for   which

indemnification  is  sought  (each,  a  "Claim")  to  us,  but  no  failure  to  give  such  notice

shall relieve us of any liability hereunder (except to the extent we have suffered actual,

irreversible  and  material  economic  prejudice  thereby).  The  Indemnified  Person,  at  its

cost,  shall  furnish  to  us  in  good  faith  and  in  reasonable  detail  such  information  as  the

Indemnified Person may have with respect to such Claim.

Promptly    after    receipt    by    an    Indemnified    Person    of    notice    of    the

commencement  of  any  action,  suit  or  proceeding  involving  a  Claim  by  a  third  party

(each,  a  "Third  Party  Claim")  against  it,  such  Indemnified  Person  will  give  written

notice  to  us  of  the  commencement  of  such  Third  Party  Claim,  and  shall  give  the

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Indemnifying  Party  such  information  with  respect  thereto  as  we  may  reasonably

request,  but  no  failure  to  give  such  notice  shall  relieve  us  of  any  liability  hereunder

(except  to  the  extent  we  have  suffered  actual,  irreversible  and  material  economic

prejudice  thereby).  We  shall  have  the  right,  but  not  the  obligation,  to  assume  the

defense and control the settlement of such Third Party Claim, at our cost and expense

(and  not  as  a  reduction  in  the  amount  of  indemnification  available  hereunder),  using

counsel  selected  by  us  and  reasonably  acceptable  to  the  Indemnified  Person.   If  we

satisfy  the  requirements  of  this  agreement  and  desire  to  exercise  our  right  to  assume

the  defense  and  control  the  settlement  of  such  Third  Party  Claim,  we  shall  give

written  notice  (the  "Notice")  to  the  Indemnified  Person  within  fourteen  (14)  calendar

days  of  receipt  of  notice  from  the  Indemnified  Person  of  the  commencement  of  or

assertion  of  any  Third  Party  Claim  stating  that  we  shall  be  responsible  for  such  Third

Party  Claim.  Notwithstanding  the  foregoing,  the  Indemnified  Person  shall  have  the

right:  (i)  to  assume  the  defense  and  control  the  settlement  of  a  Third  Party  Claim  and

(ii)  to  employ  separate  counsel  at  our  reasonable  expense  (provided  that  we  shall  not

be  required  to  reimburse  the  expenses  and  costs  of  more  than  one  law  firm)  and

control  its  own  defense  of  a  Third  Party  Claim  if(x)  the  named  parties  to  any  such

action  (including  any  impleaded  parties)  include  both  the  Indemnified  Person  and  us,

and  the  Indemnified  Person  shall  have  been  advised  by  counsel  that  there  are  one  or

more legal or equitable defenses  available  to the Indemnified Person that are different

from those available to us, (y) such Third Party Claim involves equitable or other non-

monetary  damages  or  in  the  reasonable  judgment  of  the  Indemnified  Person,  such

settlement   would   have   a   continuing   material   adverse   effect   on   the   Indemnified

Person's   business   (including   any   material   impairment   of   its   relationships   with

customers  and  suppliers)  or  (2)  or  in  the  reasonable  judgment  of  the  Indemnified

Person,  we  may  not  be  able  to  satisfy  fully  such  Third  Party  Claim.  In  addition,  if  we

fail  to  give  the  Indemnified  Person  the  Notice  in  accordance  with  the  terms  hereof,

the  Indemnified  Person  shall  have  the  right  to  assume  control  of  the  defense  of  and

settle  the  Third  Party  Claim  and  all  costs  incurred  in  connection  therewith  shall

constitute  damages  of  the  Indemnified  Person.    For  the  avoidance  of  doubt,  we

acknowledge  that  we  will  advance  any  retainer  fees  requited  by  legal  counsel  to  an

Indemnified  Person  simultaneously  with  the  engagement  by  such  Indemnified  Person

of such counsel, it being understood and agreed that the amount of such retainer shall

not  exceed  $25,000  and  that  such  retainer  shall  be  credited  to  fees  incurred  with  the

balance (if any) refundable to us.

If  at  any  time  after  we  assume  the  defense  of  a  Third  Party  Claim,  any  of  the

conditions  set  forth  in  the  paragraph  above  are  no  longer  satisfied,  the  Indemnified

Person  shall  have  the  same  rights  as  set  forth  above  as  if  we  never  assumed  the

defense of such claim.

11477 Olde Cabin Rd, Suite 310 St. Louis, MO  63141

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Notwithstanding  the  foregoing,  we  or  the  Indemnified  Person,  as  the  case  may

be,  shall  have  the  right  to  participate,  at  our  or  its  own  expense,  in  the  defense  of  any

Third-Party Claim that the other party is defending.

If  we  assume  the  defense  of  any  Third  Party  Claim  in  accordance  with  the

terms  hereof,  we  shall  have  the  right,  upon  30  calendar  days'  prior  written  notice  to

the  Indemnified  Person,  to  consent  to  the  entry  of  judgment  with  respect  to,  or

otherwise  settle  such  Third  Party  Claim;  provided,  however,  that  with  respect  to  such

consent  to  the  entry  of  judgment  or  settlement,  the  Indemnified  Person  will  not  have

any  liability  and  will  be  fully  indemnified  with  respect  to  all  Third  Party  Claims.

Notwithstanding  the  foregoing,  we  shall  not  have  the  right  to  consent  to  the  entry  of

judgment  with  respect  to,  or  otherwise  settle  a  Third  Party  Claim  if:  (i)  the  consent  to

judgment  or  settlement  of  such  Third  Party  Claim  involves  equitable  or  other  non-

monetary  damages  against  the  Indemnified  Person,  or  (ii)  in  the  reasonable  judgment

of  the  Indemnified  Person,  such  settlement  would  have  a  continuing  effect  on  the

Indemnified  Person's  business  (including  any  material  impairment  of  its  relationships

with  customers  and  suppliers),  without  the  prior  written  consent  of  the  Indemnified

Person.  In  addition,  the  Indemnified  Person  shall  have  the  sole  and  exclusive  right  to

settle  any  Third  Party  Claim  on  such  terms  and  conditions  as  it  deems  reasonably

appropriate,  (x)  if  we  fail  to  assume  the  defense  in  accordance  with  the  terms  hereof,

or  (y)  to  the  extent  such  Third  Party  Claim  involves  only  equitable  or  other  monetary

relief,  and  shall  have  the  right  to  settle  any  Third  Party  Claim  involving  monetary

damages with our consent, which consent shall not be unreasonably withheld.

The  provisions  of  this  agreement  shall  apply  to  the  Engagement  and  any

modification  thereof  and  shall  remain  in  full  force  and  effect  regardless  of  any

termination,  expiration,  or  the  completion  of  your  services  under  the  Engagement

Letter.

Signature Page to Indemnity Letter Follows

11477 Olde Cabin Rd, Suite 310 St. Louis, MO  63141

www.e-vestech.com

Office:  314.828.2111  Fax:  314-261-9188 Member FINRA, SIPC, and Registered MSRB




 

Signature Page to Indemnity Letter

This   letter   agreement   may   be   executed   in   counterparts   and   by   facsimile

transmission  and  shall  be  governed  by  and  construed  in  accordance  with  the  laws  of

the State of Missouri applicable to contacts executed and to be performed in that state

by a Court of proper jurisdiction sitting in St. Louis, Missouri.

Very truly yours,

High Sierra Technologies, Inc.

By: /s/ Vincent C. Lombardi

Vincent C. Lombardi, its President

ACCEPTED AND AGREED TO as of 24th of February, 2022

Vestech Securities, Inc.

By: /s/ Averell Satloff

Averell Satloff, Head of Investment Banking

Acknowledged: /s/ John Huang

John Huang, President, Vestech Securities, Inc.

11477 Olde Cabin Rd, Suite 310 St. Louis, MO  63141

www.e-vestech.com

Office:  314.828.2111  Fax:  314-261-9188 Member FINRA, SIPC, and Registered MSRB




 

 

[findersfeeagmt006.gif]

Appendix “B” to "Finders Agreement"

Definition of Legal Consideration, Transaction Value, or Value

"Legal  Consideration",  “Transaction  Value”,  or  “Value”  is  defined  as  the  total  value  of

all  property  (real  or  personal,  tangible  or  intangible),  cash,  securities,  or  other  benefits

received,  or  receivable,  by  the  Company  or  its  officers,  directors  or  shareholders,

including without limitation, the aggregate of all amounts payable or receivable pursuant

to  any  warrants,  options,  stock  appreciation  rights,  convertible  or  straight  securities,

stock  purchase  rights,  whether  or  not  vested,  including  benefits  received,  or  receivable

pursuant  to  any  merger  agreement,  joint  venture  agreements,  employment  agreements,

consulting agreements, debt assumed, covenants not to compete, earn-out or contingent

payment  rights,  or  other  similar  agreements,  arrangements  or  understandings.  Property

shall be valued at the fair market value thereof as agreed to by the parties hereto or if the

parties   are   unable   to   agree,   as   determined   by   a   mutually   acceptable   independent

appraiser,  the  cost  of  which  shall  be  borne  by  the  Company.    Securities  which  are

publicly  traded  shall  be  valued  at  the  closing  price  of  such  securities  as  reported  on  a

national exchange, NASDAQ, OTC Markets, or other recognized trading platform, if so

listed  or  quoted,  for  the  last  day  prior  to  the  closing  date  of  such  Transaction;  if  the

securities are not so listed or quoted, the securities shall be valued in the same manner as

property  described  above.   All  debt  instruments  or  evidences  thereof,  and  all  amounts

payable  or  benefits  received,  or  receivable  by  the  Company,  or  its  officers,  directors  or

shareholders pursuant to any merger agreements, joint venture agreements, employment

agreements,  consulting  agreements,  covenants  not  to  compete,  earn-out  or  contingent

payment  rights,  or  other  similar  agreements,  arrangements  or  understanding  shall  be

valued   at   the   aggregate   amount   payable   or   receivable   thereunder,   whether   such

payments  or  benefits  receivable  are  absolute  or  contingent,  and  irrespective  of  the

period or uncertainty of payment or receipt, the rate of interest, if any, or the contingent

nature thereof.

Dated: February 24, 2022

Initialed:

/s/ VL

VL

/s/ AWS   AWS

/s/ JH

JH

11477 Olde Cabin Rd, Suite 310 St. Louis, MO  63141

www.e-vestech.com

Office:  314.828.2111  Fax:  314-261-9188 Member FINRA, SIPC, and Registered MSRB