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.
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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
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.
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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.
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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.
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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 |
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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, shares authorized, shares issued and outstanding at June 30, 2022 and December 31, 2021 | ||||||||
Common stock, no par value, shares authorized; and 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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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 40,000 from outstanding warrants and from convertible notes payable) potentially dilutive shares outstanding. As of June 30, 2021, the Company had a total of (40,000 from outstanding warrants and 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.
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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. |
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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:
(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 per share during the three-year term of this Note or any extension of this Note. . The Payee shall also be issued Warrants for the purchase of common stock in the Company with a value equal to fifty percent ( %) 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 $ |
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:
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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
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 $ 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 90,000 under this offering during the six months ended June 30, 2021.
shares of its common stock for gross proceeds of $
During the six months ended June 30, 2021, the Company issued 30,000.
shares of its common stock for services valued at $
The Company sold 50,000 under this offering during the six months ended June 30, 2022.
shares of its common stock for gross proceeds of $
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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
warrants. The exercise price per share of the Common Stock under this Warrant is $ 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 | $ | . | |||||||
Granted | - | - | |||||||
Canceled/forfeited | - | - | |||||||
Exercised | - | .01 | |||||||
Outstanding – June 30, 2022 | $ | ||||||||
(1) The Company granted 100.
common stock purchase warrants in December 2020 to exercise at a purchase price of $ . During the six months ended June 30, 2021, of the purchase warrants were exercised for total proceeds of $
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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 | % | |||
Expected volatility | ~ % | |||
Risk-free interest rate | ~ % | |||
Expected life (years) | 2.71~5.00 | |||
Stock Price | $ | |||
Exercise Price | $ |
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.
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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.
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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.
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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.
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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.
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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
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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.
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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 Registrants 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 Registrants 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 Registrants internal control over financial reporting that occurred during the Registrants most recent fiscal quarter (the Registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and
5. The Registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrants auditors and the audit committee of the Registrants 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 Registrants 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 Registrants 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 Registrants 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 Registrants 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 Registrants internal control over financial reporting that occurred during the Registrants most recent fiscal quarter (the Registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and
5. The Registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrants auditors and the audit committee of the Registrants 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 Registrants 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 Registrants 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
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 Companys
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 Finders 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 Companys 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 Companys
common stock and further shall be subject to any underwriters 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 Vestechs 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 Companys 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 Vestechs 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
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
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
www.e-vestech.com
Office: 314.828.2111 Fax: 314-261-9188 Member FINRA, SIPC, and Registered MSRB
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
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