Form S-1 Grow Solutions Holdings, Inc.

S-1 - General form for registration of securities under the Securities Act of 1933

Published: 2015-12-03 11:56:20
Submitted: 2015-12-02
fs12015_growsolutions.htm REGISTRATION STATEMENT


ENT> S-1 1 fs12015_growsolutions.htm REGISTRATION STATEMENT

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM S-1

 

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 

GROW SOLUTIONS HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

Nevada
 
5399
 
87-0575118
(State or other Jurisdiction
of Incorporation)
 
(Primary Standard Industrial
Classification Code)
 
(I.R.S. Employer
Identification No.)

 

535 5th Avenue, 24th Floor

New York, New York 10017

(646) 863-6341

 (Address, including zip code, and telephone number,

including area code, of registrant’s principal executive offices)

 

Nevada Agency and Transfer Company

50 West Liberty Street, Suite 880

Reno, Nevada 89501

(775) 322-0626 

 (Name, address, including zip code, and te
lephone number,

including area code, of agent for service)

 

As soon as practicable after the effective date of this registration statement

(Approximate date of commencement of proposed sale to the public)

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box:  ☐

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting Company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting Company” in Rule 12b-2 of the Exchange Act. (Check one)

 

Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company

 

 

Calculation of Registration Fee

 

Title of Each Class of

Securities to be Registered

 
Amount to be Registered (1)
   
Proposed Maximum Offering Price Per Share (2)
   
Proposed Maximum Aggregate Offering Price
   
Amount of Registration Fee
 
                         
Common Stock, par value $0.001 per share
   
9,670,000
   
$
0.20
   
$
1,934,000
   
$
195.00
 
Common Stock, par value $0.001 per share, issuable upon the exercise of certain outstanding warrants
   
4,655,000
   
$
0.40
   
$
1,862,000
   
$
188.00
 

 

(1) This Registration Statement covers the resale by our selling shareholders of up to 14,325,000 shares of common stock previously issued to the selling stockholders listed herein consisting of (i) 5,015,000 shares of common stock of the Company issued for services at $0.001 per share pursuant to Section 4(a)(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated under the Securities Act of 1933, (ii) 4,655,000 shares of common stock of the Company issued pursuant to the Company’s private placement offering under Section 4(a)(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated under the Securities Act of 1933 (the “Private Placement”) and, (iii) 4,655,000 shares of common stock issuable upon exercise of certain outstanding warrants of the Company issued pursuant to the Private Placement.

 

(2) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). Our common stock has limited trading and in accordance with Rule 457; the offering price was determined by the price of the shares that were sold to our stockholders in a private placement memorandum. The selling security holders may sell their shares at a fixed price of $0.20 per share, prevailing market prices or privately negotiated prices.

  

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.

 

 

 

 

  

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission (the “SEC”) becomes effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION ON DECEMBER __, 2015

14,325,000 Shares of Common Stock

 

GROW SOLUTIONS HOLDINGS, INC.

______________________________________

 

This prospectus relates to periodic offers and sales of 14,325,000 shares of our common stock by the selling security holders.

 

The selling shareholders will offer all or part of their common stock for resale from time to time, and may sell at a fixed price of $0.20 per share, prevailing market prices or privately negotiated prices.

 

Our common stock presently has limited trading under the symbol GRSO on the OTC Markets OTCQB quotation service. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders.  There is no assurance that an active trading market for our shares will develop, or, if developed, that it will be sustained.  In the absence of a trading market or an active trading market, investors may be unable to liquidate their investment or make any profit from the investment.

 

We are an “emerging growth company” as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements. Investing in our common stock involves risks. See “Risk Factors” beginning on page 5 to read about factors you should consider before buying shares of our common stock.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete.  Any representation to the contrary is a criminal offense.

  

The date of this prospectus is ____________, 2015

 

i

 

TABLE OF CONTENTS

 

PROSPECTUS SUMMARY
  1
RISK FACTORS
  5
FORWARD-LOOKING STATEMENTS
  12
USE OF PROCEEDS
  12
DETERMINATION OF OFFERING PRICE
  12
  12
MARKET FOR OUR SECURITIES AND RELATED SHAREHOLDER MATTERS
  13
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS
  14
OUR BUSINESS
  22
MANAGEMENT
  26
EXECUTIVE COMPENSATION
  28
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  29
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  30
DESCRIPTION OF CAPITAL STOCK
  31
SELLING SHAREHOLDERS
  32
PLAN OF DISTRIBUTION
  33
LEGAL MATTERS
  34
EXPERTS
  34
INTERESTS OF NAMED EXPERTS AND COUNSEL
  34
ADDITIONAL INFORMATION
  34
INDEX TO FINANCIAL STATEMENTS
  35

____________________________

 

Please read this prospectus carefully. It describes our business, our financial condition and results of operations. We have prepared this prospectus so that you will have the information necessary to make an informed investment decision.

 

You should rely only on information contained in this prospectus. We have not authorized any other person to provide you with different information. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted. The information in this prospectus is complete and accurate as of the date on the front cover, but the information may have changed since that date.

 

ii

 

 

PROSPECTUS SUMMARY

 

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our securities. You should read the entire prospectus, including “Risk Factors” and the consolidated financial statements and the related notes before making an investment decision.

 

“We,” “us,” “our company,” “our,” “Grow Solutions” and the “Company” refer to Grow Solutions Holdings, Inc., Grow Solutions, Inc., One Love Garden Supply, LLC, and Hygrow but do not include the stockholders of Grow Solutions Holdings, Inc.

 

Corporate Information

 

Grow Solutions Holdings, Inc. (formerly LightTouch Vein & Laser, Inc.) is a corporation incorporated under the laws of the State of Nevada on May 1, 1981. The focus of the business is to provide comprehensive services within the legal cannabis industry to those growing, processing and dispensing legal cannabis and legal cannabis infused products. The Company plans to operate multiple verticals within the legal cannabis industry, consisting of but not limited to (i) financing, (ii) sales of unregulated products through retail agricultural grow stores, (iii) distribution of unregulated products, equipment and supplies to agricultural grow stores, (iv) management and consulting services, (v) real estate, (vi) licensing, and (vii) rights to proprietary, unregulated products.

 

Our business strategy is structured into various operating divisions to attain penetration within our customer base and create opportunities and customer relationships between our operating divisions. We have a team of experienced personnel in each area of our business model and our team has successfully operated legal cannabis grow operations, managed dispensaries and navigated the legal cannabis licensing process in the United States. Further, our planned retail agricultural grow stores are staffed with individuals knowledgeable in all products and growing needs.

 

Corporate History

 

Effective April 28, 2015, Grow Solutions Holdings, Inc. (formerly LightTouch Vein & Laser, Inc.) (the “Company”) entered into an Acquisition Agreement and Plan of Merger (the “Grow Solutions Agreement”) with Grow Solutions, Inc., a Delaware corporation (“Grow Solutions”) and LightTouch Vein & Laser Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of the Company (“LightTouch Acquisition”). Under the terms of the Grow Solutions Agreement, Grow Solutions merged with LightTouch Acquisition and became a wholly owned subsidiary of the Company (the “Merger”). The Grow Solutions’ shareholders and certain creditors of the Company received 44,005,000 shares of the Company’s common stock in exchange for all of the issued and outstanding shares of Grow Solutions. Following the closing of the Grow Solutions Agreement, Grow Solutions’ business became the primary focus of the Company and Grow Solutions management assumed control of the management of the Company with the former director of the Company resigning upon closing of the Agreement.

 

The Grow Solutions Agreement and related transaction documents are included as exhibits to the Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on February 19, 2015 and are hereby incorporated by reference. All references to the Grow Solutions Agreement and related transaction documents do not purport to be complete and are qualified in their entirety by the text of such exhibits.

 

Effective May 13, 2015 (the “Closing Date”), the Company entered into an Acquisition Agreement and Plan of Merger (the “OneLove Agreement’) with Grow Solutions Acquisition LLC, a Colorado limited liability company and a wholly owned subsidiary of the Company (“Grow Solutions Acquisition”), One Love Garden Supply LLC, a Colorado limited liability company (“OneLove”), and all of the members of OneLove (the “Members”). On the Closing Date, OneLove merged with Grow Solutions Acquisition and became a wholly owned subsidiary of the Company. Under the terms of the OneLove Agreement, the Members received (i) 1,450,000 shares of the Company’s common stock (the “Equity”), (ii) Two Hundred Thousand Dollars (US$200,000) (the “Cash”), and (iii) a cash flow promissory note in the aggregate principal amount of $50,000 issued by OneLove in favor of the Members (the “Cash Flow Note”), whereby each fiscal quarter, upon the Company recording on its financial statements $40,000 in US GAAP Net Income (“Net Income”) from sales of the Company’s products (the “Net Income Threshold”), the Company shall pay to the Members 33% of the Company’s Net Income generated above the Net Income Threshold. The aforementioned obligations owed under the Cash Flow Note shall extinguish upon the earlier of (i) payment(s) by Company in an amount equal to $50,000 in the aggregate or (ii) May 5, 2016 (collectively, the Cash Flow Note, the Equity, and the Cash, the “Consideration”). The Consideration provided to the Members was in exchange for all of the issued and outstanding membership interests of OneLove. Following the Closing Date, OneLove’s indoor and outdoor gardening supply business was acquired by the Company and the Company’s management assumed control of the management of OneLove with the former managing members of OneLove resigning from OneLove upon closing of the OneLove Agreement.

 

 

 1 

 

 

The OneLove Agreement and related transaction documents are included as exhibits to the Quarterly Report on Form 10-Q filed with the U.S. Securities and Exchange Commission on May 20, 2015 and are hereby incorporated by reference. All references to the OneLove Agreement and related transaction documents do not purport to be complete and are qualified in their entirety by the text of such exhibits.

  

Selected Risks Associated With Our Business

 

Our business is subject to numerous risks described in the section entitled “Risk Factors” and elsewhere in this prospectus. You should carefully consider these risks before making an investment. Some of these risks include: 

 

 
Cannabis remains illegal under federal law.  It is a schedule-I controlled substance.  Even in those jurisdictions in which the use of medical and recreational marijuana have been legalized at the state level, its use is a violation of federal law;

  

 
If we fail to comply with the rules under the Sarbanes-Oxley Act of 2002 related to disclosure controls and procedures, or, if we discover material weaknesses and other deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult;

 

 
Our industry is highly competitive, and our failure to compete effectively could adversely affect our market share, financial condition and future growth;

 

 
Adverse publicity or consumer perception of our services, products and any similar products distributed by others could harm our reputation and adversely affect our sales and revenues;

 

 
We rely on skilled personnel and, if we are unable to retain or motivate key personnel, hire qualified personnel, we may not be able to grow effectively;

 

 
If we are unable to retain key personnel, our ability to manage our business effectively and continue our growth could be negatively impacted;

 

 
Our operating results may fluctuate, which makes our results difficult to predict and could cause our results to fall short of expectations;

 

 
You may experience dilution in the event we issue common stock in the future;

 

 
Our common stock is quoted on the OTCQB which may have an unfavorable impact on our stock price and liquidity;

 

 
Nevada corporations laws limit the personal liability of corporate directors and officers and require indemnification under certain circumstances;

 

 
Future financings through debt securities may restrict our operations;

 

 
Our common stock price may be volatile and could fluctuate widely in price, which could result in substantial losses for investors;

 

 
Our common stock is subject to the SEC’s penny stock rules and as such broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be adversely affected;

 

 
A sale of a substantial number of shares of our common stock may cause the price of our common stock to decline and may impair our ability to raise capital in the future;

 

 2 

  

 

Implications of Being an Emerging Growth Company

 

We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:

 

 
A requirement to have only two years of audited financial statements and only two years of related Management Discussion and Analysis;

 

 
Exemption from the auditor attestation requirement in the assessment of the emerging growth company’s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002;

 

 
Reduced disclosure about the emerging growth company’s executive compensation arrangements; and

 

 
No non-binding advisory votes on executive compensation or golden parachute arrangements.

  

We have already taken advantage of these reduced reporting burdens in this prospectus, which are also available to us as a smaller reporting company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

In addition, Section 107 of the JOBS Act also 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 of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards. We are choosing to “opt out” of such extended transition period, and as a result, we 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. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

 

We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

 

 

 3 

 

 

Where You Can Find Us

 

The Company’s principal executive office location and mailing address is 535 5th Avenue, 24th Floor, New York, New York 10017. The Company’s phone number is (646) 863-6341.

 

The Offering

 

Shares of common stock offered by selling shareholders
 
14,325,000. Including (i) 9,670,000 shares of common stock and (ii) 4,655,000 shares of common stock underlying warrants. This number of shares represents approximately 32% of the total issued and outstanding shares.
     
Shares of common stock outstanding before the offering
 
43,796,612
     
Shares of common stock outstanding after the offering
 
48,451,612 (1)
     
Terms of the offering
 
The selling shareholders will determine when and how they will sell the securities offered in this prospectus. The selling security holders will sell at a fixed price of $0.20 per share, prevailing market prices or privately negotiated prices.
     
Use of proceeds
 
We will not receive proceeds from the resale of shares by the selling shareholders.
     
Risk Factors
 
The common stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See “Risk Factors” below.

  

(1)
There are currently 43,796,612 shares of common stock outstanding as of December 2, 2015. There will be 48,451,612 shares of common stock outstanding upon exercise of all of the outstanding warrants of the Company
.

 

 4 

 

RISK FACTORS

 

You should carefully consider the risks described below together with all of the other information included in this prospectus before making an investment decision with regard to our securities.  The statements contained in or incorporated herein that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, you may lose all or part of your investment.

 

RISKS
RELATED
TO
OUR
COMPANY
AND
OUR
INDUSTRY

 

WE ARE A DEVELOPING BUSINESS AND CAN MAKE NO ASSURANCES THAT WE WILL BE PROFITABLE.

 

We are a developing business and there can be no assurance at this time that we will operate profitably or that we will have adequate working capital to meet our obligations as they become due. Investors must consider the risks and difficulties frequently encountered by early stage companies, particularly in rapidly evolving markets. Such risks include the following:

 

 
changes in the laws of federal and state governments;

 

 
our ability to raise capital as and when we need it;
     
 
our ability to continue to develop and extend our brand identity;
     
 
our ability to anticipate and adapt to a competitive market;
     
 
our ability to effectively manage expanding operations;
     
 
the amount and timing of operating costs and capital expenditures relating to expansion of our business, operations, and infrastructure;
     
 
our ability to deliver and maintain high quality products and services;
     
 
our dependence upon key personnel; and
     
 
our dependence upon the performance of associated businesses and third parties with whom we may conduct business with or invest.
     

We cannot be certain that our business strategy will be successful or that we will successfully address these risks. In the event that we do not successfully address these risks, our business, prospects, financial condition, and results of operations could be materially and adversely affected.

 

WE HAVE A LIMITED OPERATING HISTORY AND OPERATE IN A NEW INDUSTRY, AND WE MAY NOT SUCCEED.

 

We have a limited operating history and may not succeed.  We are subject to all risks inherent in a developing business enterprise.  Our likelihood of continued success must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in the competitive and regulatory environment in which we operate. For example, the recreational and medical marijuana industry is a new industry that as a whole may not succeed, particularly should the Federal government change course and decide to prosecute those dealing in medical and recreational marijuana under Federal law.  If that happens there may not be an adequate market for our products.  As a new industry, there are not established entities whose business model we can follow or build on the success of.  Similarly, there is limited information about comparable companies available for potential investors to review in making a decision about whether to invest in the Company. Further, as the medical and recreational marijuana industry is a new market it is ripe for technological advancements that could limit or eliminate the need for our services and products.

 

You should further consider, among other factors, the risks and uncertainties encountered by companies that, like us, are in their early stages.  For example, unanticipated expenses, problems, and technical difficulties may occur and they may result in material delays in the operation of our business, in particular with respect to our services and products.  We may not successfully address these risks and uncertainties or successfully implement our operating strategies.  If we fail to do so, it could materially harm our business to the point of having to cease operations and could impair the value of our capital stock to the point investors may lose their entire investment. 

 

OUR CONTINUED SUCCESS IS DEPENDENT ON ADDITIONAL STATES LEGALIZING MEDICAL AND RECREATIONAL MARIJUANA.

 

Continued development of the medical and recreational marijuana market is dependent upon continued legislative authorization of marijuana at the state level.  Any number of factors could slow or halt the progress.  Further, progress, while encouraging, is not assured and the process normally encounters set-backs before achieving success.  While there may be ample public support for legislative proposal, key support must be created in the legislative committee or a bill may never advance to a vote.  Numerous factors impact the legislative process.  Any one of these factors could slow or halt the progress and adoption of marijuana for recreational and medical purposes, which would limit the market for our products and negatively impact our business and revenues.

 

 5 

 

THE ALTERNATIVE MEDICINE INDUSTRY FACES STRONG OPPOSITION WHICH MAY HAVE AN ADVERSE IMPACT ON OUR BUSINESS OPERATIONS.

 

It is believed by many that well-funded, significant businesses may have a strong economic opposition to the medical marijuana industry as currently formed.  We believe that the pharmaceutical industry does not want to cede control of any compound that could become a strong selling drug.  For example, medical marijuana will likely adversely impact the existing market for Marinol, the current “marijuana pill” sold by mainstream pharmaceutical companies.  Further, the medical marijuana industry could face a material threat from the pharmaceutical industry should marijuana displace other drugs or simply encroach upon the pharmaceutical industry’s market share for compounds such as marijuana and its component parts.  The pharmaceutical industry is well funded with a strong and experienced lobby that eclipses the funding of the medical marijuana movement.  Any inroads the pharmaceutical industry makes in halting or rolling back the medical marijuana movement could have a detrimental impact on the market for our products and thus on our business, operations and financial condition.

 

MARIJUANA REMAINS ILLEGAL UNDER FEDERAL LAW. EVEN IN THOSE JURISDICTIONS IN WHICH THE USE OF MEDICAL MARIJUANA HAS BEEN LEGALIZED AT THE STATE LEVEL, ITS USE AND PRESCRIPTION ARE VIOLATIONS OF FEDERAL LAW WHICH MAY DISRUPT THE ON GOING BUSINESS OF THE COMPANY.

 

Marijuana remains illegal under federal law.  It is a schedule-I controlled substance.  Even in those jurisdictions in which the use of medical and recreational marijuana have been legalized at the state level, its prescription is a violation of federal law.  The United States Supreme Court has ruled in United States v. Oakland Cannabis Buyers’ Coop. and Gonzales v. Raich that it is the federal government that has the right to regulate and criminalize cannabis, even for medical and recreational purposes.  Therefore, federal law criminalizing the use of marijuana trumps state laws that legalize its use for medicinal purposes.  At this time, the states are standing against the federal government, maintaining existing laws and passing new ones in this area.  This may be because the Obama administration has made a policy decision to allow states to implement these laws and not prosecute anyone operating in accordance with applicable state law.  However, we face another presidential election cycle in 2016, and a new administration could introduce a less favorable policy.  A change in the federal attitude towards enforcement could cripple the industry. The legal cannabis industry is our target market, and if this industry is unable to operate, we would lose the majority of our potential clients, which would have a negative impact on our business, operations and financial condition.

 

THE COMPANY may have difficulty accessing the service of banks, which may make it difficult TO conduct our business OPERATions.

 

As discussed above, the use of marijuana is illegal under federal law.  Therefore, there is a compelling argument that banks cannot accept for deposit funds from the legal cannabis industry and therefore cannot do business with the Company.  While U.S. Rep. Jared Polis (D-CO) has stated he will seek an amendment to banking regulations and laws in order to allow banks to transact business with state-authorized medical and recreational marijuana businesses, there can be no assurance his legislation will be successful, that banks will decide to do business with medical marijuana and recreational marijuana industry participants, or that in the absence of legislation state and federal banking regulators will not strictly enforce current prohibitions on banks handling funds generated from an activity that is illegal under federal law.  The potential inability of the Company to open accounts and otherwise use the service of banks may have a material adverse effect on our business operations.

 

THE SUCCESS OF OUR NEW AND EXISTING PRODUCTS AND SERVICES IS UNCERTAIN.

 

We have committed, and expect to continue to commit, significant resources and capital to develop and market existing product and service enhancements and new products and services.  These products and services are relatively untested, and we cannot assure you that we will achieve market acceptance for these products and services, or other new products and services that we may offer in the future.  Moreover, these and other new products and services may be subject to significant competition with offerings by new and existing competitors in the legal cannabis industry. In addition, new products, services and enhancements may pose a variety of technical challenges and require us to attract additional qualified employees. The failure to successfully develop and market these new products, services or enhancements could seriously harm our business, financial condition and results of operations.

 

 6 

 

OUR BUSINESS IS DEPENDENT UPON CONTINUED MARKET ACCEPTANCE BY CONSUMERS.

 

We are substantially dependent on continued market acceptance of our products and services by consumers. Although we believe that the use of our products and services in the United States will gain consumer acceptance, we cannot predict the future growth rate and size of this market.

 

IF WE ARE ABLE TO EXPAND OUR OPERATIONS, WE MAY BE UNABLE TO SUCCESSFULLY MANAGE OUR FUTURE GROWTH.

 

If we are able to expand our operations in the United States and in other countries where we believe our products and services will be successful, as planned, we may experience periods of rapid growth, which will require additional resources.  Any such growth could place increased strain on our management, operational, financial and other resources, and we will need to train, motivate, and manage employees, as well as attract management, sales, finance and accounting, international, technical, and other professionals.  In addition, we will need to expand the scope of our infrastructure and our physical resources.  Any failure to expand these areas and implement appropriate procedures and controls in an efficient manner and at a pace consistent with our business objectives could have a material adverse effect on our business and results of operations.

 

THE

COMPANY
COULD
LOSE
STRATEGIC
RELATIONSHIPS
THAT
ARE
ESSENTIAL
TO
ITS
BUSINESS.

 

The

loss
of
certain
current
strategic
relationships,
the
inability
to
find
other
strategic
partners
or
the
failure
of
the
Company’s
existing
relationships
to
achieve
meaningful
positive
results
could
harm
the
Company’s
business.
The
Company intends to rely in part on
strategic
relationships to
help
it:

 

·
maximize
adoption
of
the
Company’s
products
through
retail sales and
distribution
arrangements;

 

·
enhance
the
Company’s
brand;

 

·
expand
the
range
of
commercial
activities
based
on
the
Company’s
technology;

 

·
increase
the
performance
and
utility
of
the
Company’s
products
and
services.

 

Many of these goals are beyond the Company’s expertise. The Company anticipates that the efforts of the Company’s strategic partners will become more important as the medical and recreational legal cannabis industry matures. In addition, the efforts of the Company’s strategic partners may be unsuccessful. Furthermore, these strategic relationships may be terminated before the Company realizes any benefit.

 

The death of our former Chief Executive Officer and director could have a material adverse effect on our business.

 

Our success has been dependent on the services of our former Chief Executive Officer, John M. Phelps, Jr. On January 11, 2015, Mr. Phelps passed away. On January 19, 2015, the board of directors appointed Mr. Jeffrey W. Beverly to succeed him as the President and Director of the Company. The death of Mr. Phelps could have a material adverse effect on our business.

 

WE DEPEND UPON KEY PERSONNEL, THE LOSS OF WHICH COULD SERIOUSLY HARM OUR BUSINESS.

 

Our operating performance is substantially dependent on the continued services of our executive officers and key employees, in particular, Mr. Jeffrey W. Beverly, our President and Director.  We believe Mr. Beverly possesses valuable knowledge about and experience in the alternative medicine and recreational cannabis market, as well as a history of success in business management, and that his knowledge and relationships would be difficult to replicate.  We have not entered into an employment agreement with Mr. Beverly and, although we are considering doing so, have not acquired key-person life insurance on such executive officer.  The unexpected loss of the services of Mr. Beverly could have a material adverse effect on our business, operations, financial condition and operating results, as well as the value of our common stock.

 

 7 

 

THE

COMPANY
MAY
BE
UNABLE
TO
RESPOND
TO
THE
RAPID
TECHNOLOGICAL
CHANGE
IN
ITS
INDUSTRY
AND
SUCH
CHANGE
MAY
INCREASE
COSTS
AND
COMPETITION
THAT
MAY
ADVERSELY
AFFECT
ITS
BUSINESS.

 

Rapidly

changing
technologies,
frequent
new
product
and
service
introductions
and
evolving
industry
standards
characterize
the
Company’s
market.
The
continued
growth
of
the
Internet
and
intense
competition
in
the
Company’s
industry
exacerbate
these
market
characteristics. The Company’s
future
success
will
depend on its ability to
adapt
to
rapidly changing
technologies
by continually
improving the
performance
features
and
reliability of
its products and services.
The Company may
experience
difficulties
that
could delay
or
prevent
the
successful
development,
introduction or
marketing
of its products
and
services.
In
addition, any new enhancements
must
meet
the
requirements of its
current
and
prospective
users
and
must achieve
significant
market
acceptance. The Company
could
also
incur
substantial
costs
if it
needs
to
modify
its
products
and
services
or
infrastructures
to
adapt
to
these
changes.

 

The

Company
also
expects
that
new
competitors
may
introduce
products,
systems
or
services
that
are
directly
or
indirectly
competitive
with
the
Company.
These
competitors
may
succeed
in
developing,
products,
systems
and
services
that
have
greater
functionality
or
are
less
costly
than
the
Company’s
products,
systems
and
services,
and may be
more successful
in
marketing such
products, systems
and
services.
Technological
changes
have
lowered the cost of operating
communications
and computer
systems
and
purchasing
software.
These
changes
reduce
the
Company’s
cost
of
providing
services
but
also
facilitate
increased competition
by
reducing
competitors’
costs
in
providing
similar
services.
This competition
could
increase
price
competition
and
reduce
anticipated
profit
margins.

 

The company’s industry is highly competitive and we have less capital and resources than many of our competitors, which may give them an advantage in developing and marketing products similar to ours or make our products obsolete.

 

We are involved in a highly competitive industry where we may compete with numerous other companies who offer alternative methods or approaches, who may have far greater resources, more experience, and personnel perhaps more qualified than we do. Such resources may give our competitors an advantage in developing and marketing products similar to ours or products that make our products obsolete. There can be no assurance that we will be able to successfully compete against these other entities.

 

THE

COMPANY’S
SERVICES
ARE
NEW
AND
ITS
INDUSTRY
IS
EVOLVING
.

 

You

should
consider
the
Company’s
prospects
in
light
of
the
risks,
uncertainties
and
difficulties
frequently
encountered
by
companies
in
their
early
stage
of
development,
particularly
companies
in
the
rapidly
evolving legal cannabis industry
.
To
be
successful
in
this
industry,
the Company
must,
among
other
things:

 

develop
and
introduce
functional
and
attractive
service
offerings;

 

attract
and
maintain
a
large
base
of
consumers;

 

increase
awareness
of
the
Company
brand
and
develop
consumer loyalty;

 

establish
and
maintain
strategic
relationships with
distribution
partners
and
service
providers;

 

respond
to
competitive
and
technological
developments;

 

build
an
operations
structure
to
support
the
Company
business;
and

 

attract, retain
and motivate
qualified
personnel.

 

The

Company
cannot
guarantee
that
it
will
succeed
in
achieving
these
goals,
and
its
failure
to
do
so
would
have
a
material
adverse
effect
on
its
business,
prospects,
financial
condition
and
operating
results.

 

 8 

 

Some of the

Company’s
products
and
services
are
new
and
are
only
in
early
stages
of
commercialization.
The
Company
is
not
certain
that
these
products
and
services
will
function as
anticipated
or
be
desirable to
its intended
market.
Also,
some
of
the
Company’s
products
and
services
may
have
limited
functionalities,
which
may
limit
their appeal to consumers
and
put
the
Company
at
a
competitive
disadvantage.
If
the
Company’s
current
or
future
products
and
services
fail
to
function
properly
or if
the Company
does
not
achieve
or
sustain
market
acceptance, it
could
lose
customers or could be subject to claims which
could
have
a
material
adverse
effect
on the Company
business,
financial
condition and operating
results.

 

As

is
typical
in
a
new
and
rapidly
evolving
industry,
demand
and
market
acceptance
for
recently
introduced
products
and
services
are
subject
to
a
high
level
of
uncertainty
and
risk.
Because
the
market
for
the
Company
is new
and
evolving,
it
is
difficult to predict
with
any certainty
the
size
of this
market
and its
growth
rate, if
any.
The Company cannot
guarantee
that a
market
for
the Company
will
develop or
that
demand for Company services
will
emerge
or be
sustainable.
If
the
market
fails to develop,
develops
more
slowly than expected or
becomes
saturated
with
competitors,
the
Company’s
business,
financial
condition
and
operating results
would
be
materially
adversely affected.

 

THERE
COULD
BE
UNIDENTIFIED
RISKS INVOLVED WITH AN INVESTMENT IN OUR SECURITIES
.

 

The foregoing risk factors are not a complete list or explanation of the risks involved with an investment in the securities. Additional risks will likely be experienced that are not presently foreseen by the Company. Prospective investors must not construe this the information provided herein as constituting investment, legal, tax or other professional advice. Before making any decision to invest in our securities, you should read this entire prospectus and consult with your own investment, legal, tax and other professional advisors. An investment in our securities is suitable only for investors who can assume the financial risks of an investment in the Company for an indefinite period of time and who can afford to lose their entire investment. The Company makes no representations or warranties of any kind with respect to the likelihood of the success or the business of the Company, the value of our securities, any financial returns that may be generated or any tax benefits or consequences that may result from an investment in the Company.

 

WHILE

NO
CURRENT
LAWSUITS
ARE
FILED
AGAINST
THE
COMPANY,
THE
POSSIBILITY
EXISTS
THAT
A
CLAIM
OF
SOME
KIND
MAY
BE
MADE
IN
THE
FUTURE.

 

While
no
current
lawsuits
are
filed
against
us,
the
possibility
exists
that
a
claim
of
some
kind
may
be
made
in
the
future.
While
we
will
work
to
ensure
high
product
and
service
quality
and
accuracy,
no
assurance
can be
given
that
some
claims
for
damages
will
not
arise.
At this time we do not carry
product liability insurance.
We
cannot
make
any
assurances
that
we will obtain such product liability insurance, and if obtained, if such product liability insurance
will
completely cover any potential claims
against
the Company.

 

THE

COMPANY’S
FAILURE
TO
CONTINUE
TO
ATTRACT,
TRAIN,
OR
RETAIN
HIGHLY
QUALIFIED
PERSONNEL
COULD
HARM
THE
COMPANY’S
BUSINESS.

 

The

Company’s
success
also
depends
on
the
Company’s
ability
to
attract,
train,
and
retain
qualified
personnel,
specifically
those
with
management
and
product
development
skills.
In particular,
the
Company
must
hire
additional
skilled
personnel
to
further
the
Company’s research and
development
efforts.
Competition
for
such
personnel
is intense. If
the
Company does
not
succeed
in attracting new
personnel
or
retaining
and
motivating
the
Company’s
current
personnel,
the
Company’s
business
could
be
harmed.

 

IF
WE
FAIL
TO
ESTABLISH
AND
MAINTAIN
AN
EFFECTIVE
SYSTEM
OF
INTERNAL
CONTROL,
WE
MAY
NOT
BE
ABLE TO
REPORT
OUR
FINANCIAL
RESULTS
ACCURATELY
OR
TO
PREVENT
FRAUD.
ANY
INABILITY
TO
REPORT
AND
FILE
OUR
FINANCIAL
RESULTS
ACCURATELY
AND
TIMELY
COULD
HARM OUR REPUTATION
AND
ADVERSELY IMPACT THE FUTURE TRADING PRICE OF OUR
COMMON
STOCK.

 

Effective
internal
control
is
necessary
for
us
to
provide
reliable
financial
reports
and
prevent
fraud.
If
we
cannot
provide
reliable
financial
reports
or
prevent
fraud,
we
may
not
be
able
to
manage
our
business
as
effectively
as
we
would
if an
effective
control
environment
existed,
and
our
business
and
reputation
with
investors
may be
harmed.
As
a
result,
our
small
size
and
any
current
internal
control
deficiencies
may adversely affect
our
financial
condition,
results
of operation
and
access
to capital.

 

 9 

 

We

currently
have
insufficient
written
policies
and
procedures
for
accounting
and
financial
reporting
with
respect
to
the
requirements
and
application
of
US
GAAP
and
SEC
disclosure
requirements.
Additionally,
there
is
a
lack
of
formal
process
and
timeline
for
closing
the
books
and records at
the
end
of each reporting period
and
such weaknesses restrict
the
Company’s ability to
timely
gather,
analyze
and
report
information
relative
to
the
financial
statements.

 

Because
of
the
Company’s
limited
resources,
there
are
limited
controls
over
information
processing.
There
is
inadequate
segregation
of
duties
consistent
with
control
objectives.
Our
Company’s
management
is
composed
of
a
small
number
of
individuals
resulting
in
a
situation
where
limitations
on
segregation
of
duties exist. In
order to remedy this situation we would
need
to
hire
additional
staff.
Currently,
the Company
is
unable
to
hire
additional
staff
to facilitate
greater
segregation
of
duties
but
will
reassess its capabilities after completion of the
Offering.

 

RISKS
RELATED
TO
OUR
COMMON
STOCK

 

OUR SHARES

OF COMMON
STOCK HAVE
LIMITED
TRADING
AND
THERE
CAN
BE
NO
ASSURANCE
THAT
THERE
WILL
BE
AN
ACTIVE
MARKET
FOR
OUR
SHARES
OF
COMMON
STOCK
EITHER
NOW
OR
IN
THE
FUTURE.

 

Our shares of common stock have limited trading, and the price if traded may not reflect our value. There can be no assurance that there will be an active market for our shares of common stock either now or in the future. The market liquidity will be dependent on the perception of our operating business and any steps that our management might take to bring us to the awareness of investors. There can be no assurance given that there will be any awareness generated. Consequently, investors may not be able to liquidate their investment or liquidate it at a price that reflects the value of the business. If a more active market should develop, the price may be highly volatile. Because there may be a low price for our shares of common stock or because we are involved in the legal cannabis industry, many brokerage firms may not be willing to effect transactions in the securities. Even if an investor finds a broker willing to effect a transaction in the shares of our common stock, the combination of brokerage commissions, transfer fees, taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of such shares of common stock as collateral for any loans.

 

WE

MAY
BE
SUBJECT
TO
PENNY
STOCK
RULES
WHICH
WILL
MAKE
THE
SHARES
OF
OUR
COMMON
STOCK
MORE
DIFFICULT
TO
SELL.

 

We

may
be
subject
now
and
in
the
future
to
the
SEC’s
“penny
stock”
rules
if
our
shares
common
stock
sell
below

$5.00

per
share.
Penny
stocks generally are
equity securities
with
a
price
of
less
than $5.00. The
penny
stock
rules
require
broker-dealers
to
deliver
a
standardized
risk
disclosure
document
prepared
by
the
SEC
which
provides
information
about penny
stocks
and
the
nature
and
level
of
risks
in
the
penny
stock
market. The
broker-dealer
must
also
provide
the
customer
with
current
bid
and
offer
quotations
for
the
penny
stock,
the
compensation
of
the
broker- dealer
and
its
salesperson,
and
monthly
account statements
showing
the
market
value
of
each penny
stock
held
in the customer’s account. The
bid
and
offer
quotations,
and
the broker-dealer
and
salesperson
compensation information
must
be
given
to
the
customer orally or in
writing
prior to
completing
the transaction
and
must
be
given
to
the
customer
in
writing
before or
with
the customer’s confirmation.

 

In

addition,
the
penny
stock
rules
require
that
prior
to
a
transaction
the
broker
dealer
must
make
a
special
written
determination
that
the
penny
stock
is
a
suitable
investment
for
the
purchaser
and
receive
the
purchaser’s
written
agreement
to
the
transaction.
The penny
stock
rules are
burdensome
and
may
reduce
purchases of any offerings
and
reduce
the
trading activity
for
shares
of
our
common
stock.
As long as our shares of common stock are subject to
the
penny
stock
rules,
the
holders of
such
shares of common
stock
may
find
it
more
difficult to
sell
their
securities.

 

 10 

 

SHARES
OF
OUR
CURRENTLY
ISSUED
AND
OUTSTANDING
STOCK
MAY
BECOME
FREELY
TRADABLE
PURSUANT
TO
RULE
144
AND
MAY
DILUTE
THE
MARKET
FOR
YOUR
SHARES
AND
HAVE
A
DEPRESSIVE
EFFECT
ON
THE
PRICE
OF
THE
SHARES
OF
OUR
COMMON
STOCK.

 

A

substantial
majority
of
our
outstanding
shares
of
common
stock
are
“restricted
securities”
within
the
meaning
of
Rule
144
under
the
Securities
Act.
As
restricted
shares,
these
shares
may
be
resold
only
pursuant
to
an
effective
registration
statement or
under
the
requirements
of
Rule
144 or
other
applicable
exemptions
from
registration
under
the
Act
and
as
required
under applicable
state
securities
laws.
Rule
144 provides in
essence
that
an
Affiliate
(as
such
term
is
defined in
Rule
144(a)(1)) of
an
issuer who has
held
restricted
securities
for a period
of
at
least six
months
may,
under certain conditions,
sell
every three
months,
in
brokerage
transactions,
a
number of shares
that
does
not
exceed
the
greater
of
1%
of
a
company’s
outstanding
shares
of
common
stock
or
the
average
weekly
trading
volume
during
the
four
calendar
weeks
prior to the
sale
.
Rule
144 also permits, under certain circumstances, the sale of
securities,
without
any
limitation,
by
a
person
who
is
not
an
Affiliate
of
the
Company
and
who
has
satisfied
a
one-
year
holding
period.
A
sale
under
Rule
144
or
under
any
other
exemption
from the
Act,
if available,
or
pursuant
to
subsequent
registrations
of
our
shares
of common
stock,
may
have
a depressive
effect
upon
the
price of our shares of common
stock
in
any
active
market
that
may develop.

 

YOU

MAY
EXPERIENCE
DILUTION
OF
YOUR
OWNERSHIP
INTEREST
BECAUSE
OF
THE
FUTURE
ISSUANCE
OF
ADDITIONAL
SHARES
OF
OUR
COMMON
STOCK
AND
OUR
PREFERRED
STOCK.

 

In

the
future,
we
may
issue
our
authorized
but
previously
unissued
equity
securities,
resulting
in
the
dilution
of
the
ownership
interests
of
our
present
stockholders.
We
are
currently
authorized
to
issue
an
aggregate
of
125,000,000
shares
of
capital
stock
consisting
of
100,000,000
shares
of
common
stock,
par
value
$0.001 per share
and
25,000,000
shares
of
blank
check
preferred
stock,
par
value
$0.001 per share.

 

We

may
also
issue
additional
shares
of
our
common
stock
or
other
securities
that
are
convertible
into
or
exercisable
for
common
stock
in
connection
with
hiring
or
retaining
employees
or
consultants,
future
acquisitions,
future
sales of
our
securities
for
capital
raising
purposes,
or
for
other
business
purposes.
The
future
issuance
of
any
such
additional shares of
our
common
stock
or
other
securities
may create
downward
pressure
on
the
trading
price of
our
common
stock.
There
can
be
no
assurance
that
we
will
not
be
required
to
issue
additional
shares,
warrants
or
other
convertible
securities
in
the
future
in
conjunction
with
hiring
or
retaining
employees
or
consultants,
future
acquisitions,
future
sales
of
our
securities
for
capital
raising
purposes
or
for
other
business
purposes,
including
at
a price (or exercise prices) below the price at
which
shares of
our
common
stock
are
trading.

 

WE

DO
NOT
EXPECT
TO
PAY
DIVIDENDS
AND
INVESTORS
SHOULD
NOT
BUY
OUR
COMMON
STOCK
EXPECTING
TO
RECEIVE
DIVIDENDS.

 

We

have
not
paid
any
dividends
on
our
common
stock
in
the
past,
and
do
not
anticipate
that
we
will
declare
or
pay
any
dividends
in
the foreseeable
future.
Consequently,
investors
will
only
realize
an
economic
gain
on
their
investment
in
our
common
stock
if
the
price
appreciates.
Investors
should
not
purchase
our
common
stock expecting
to
receive
cash
dividends.
Because
we
do
not
pay
dividends,
and
there
may
be
limited
trading,
investors
may
not
have
any
manner
to
liquidate
or
receive
any payment on
their
investment.
Therefore,
our
failure
to pay
dividends
may
cause investors to
not
see
any return on
investment
even
if
we
are
successful
in
our
business operations. In addition, because
we
do
not
pay
dividends
we
may
have
trouble raising additional
funds,
which
could
affect
our
ability to expand our
business
operations.

 

 11 

 

FORWARD-LOOKING STATEMENTS

 

This prospectus contains forward-looking statements, which relate to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts” or “potential” or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” beginning on page 3 that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

 

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.  The safe harbor for forward-looking statements provided in the Private Securities Litigation Reform Act of 1995 does not apply to the offering made in this prospectus.

 

USE OF PROCEEDS

 

We will not receive any proceeds from the sale of common stock by the selling security holders. All of the net proceeds from the sale of our common stock will go to the selling security holders as described below in the sections entitled “Selling Security Holders” and “Plan of Distribution”.  We have agreed to bear the expenses relating to the registration of the common stock for the selling security holders.

 

DETERMINATION OF OFFERING PRICE

 

Since our common stock has limited trading on the OTC Markets OTCQB, the offering price of the shares of common stock was determined by the price of the common stock that was sold to our security holders pursuant to an exemption under Section 4(a)(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated under the Securities Act of 1933.

 

The offering price of the shares of our common stock does not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market.

  

In addition, there is no assurance that our common stock will trade at market prices in excess of the initial offering price as prices for the common stock in any public market which may develop will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity.

 

DILUTION

 

The common stock to be sold by the selling stockholders as provided in the “Selling Security Holders” section is common stock that is currently issued. Accordingly, there will be no dilution to our existing stockholders.

 

 12 

 

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

At this time, there is a limited public market for our shares of common stock. We can provide no assurance that a public market will materialize for our shares of common stock.

 

Holders of Capital Stock

 

As of December 2, 2015, we have approximately 138 holders of our common stock.

 

Dividends

 

Since inception we have not paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock, when issued pursuant to this offering. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors will have the discretion to declare and pay dividends in the future. Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which our Board of Directors may deem relevant.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

We presently do not have any equity based or other long-term incentive programs. In the future, we may adopt and establish an equity-based or other long-term incentive plan if it is in the best interest of the Company and our shareholders to do so.

 

 13 

 

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

  

This registration statement on Form S-1 and other reports filed by Grow Solutions Holdings, Inc. (the “Company”) from time to time with the SEC contain or may contain forward-looking statements and information that are (collectively, the “Filings”) based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the Filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks contained in the “Risk Factors” section of this registration statement on Form S-1, relating to the Company’s industry, the Company’s operations and results of operations, and any businesses that the Company may acquire. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

 

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report.

 

Overview

 

We intend for this discussion to provide information that will assist in understanding our financial statements, the changes in certain key items in those financial statements, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our financial statements.

 

Business Overview

 

Grow Solutions Holdings, Inc. is a corporation incorporated under the laws of the State of Nevada (the “Company”). The focus of the Company is to provide comprehensive services within the legal cannabis industry to those growing, processing and dispensing legal cannabis and legal cannabis related products.

 

 14 

 

The Merger

 

Effective April 28, 2015, the Company entered into an Acquisition Agreement and Plan of Merger (the “Grow Solutions Agreement”) with Grow Solutions, Inc., a Delaware corporation (“Grow Solutions”) and LightTouch Vein & Laser Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of the Company (“LightTouch Acquisition”). Under the terms of the Grow Solutions Agreement, Grow Solutions merged with LightTouch Acquisition and became a wholly owned subsidiary of the Company. The Grow Solutions’ shareholders and certain creditors of the Company received 44,005,000 shares of the Company’s common stock in exchange for all of the issued and outstanding shares of Grow Solutions. Following the closing of the Grow Solutions Agreement, Grow Solutions’ business became the primary focus of the Company and Grow Solutions management assumed control of the management of the Company with the former director of the Company resigning upon closing of the Agreement.

 

The Grow Solutions Agreement and related transaction documents are included as exhibits to the Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on February 19, 2015 and is hereby incorporated by reference. All references to the Grow Solutions Agreement and related transaction documents do not purport to be complete and are qualified in their entirety by the text of such exhibits. 

 

Results of Operations

 

For the Three Months ended September 30, 2015 and 2014

 

The following table sets forth the summary statements of operations for the three months ended September 30, 2015 and 2014:

 

   Three Months Ended 
   September 30, 2015   September 30, 2014 
         
Net Sales  $993,077   $- 
Gross profit  $287,314   $- 
Selling, general and administrative expenses  $(539,516)  $(18,085)
Other income (expense)  $27,701   $- 
Net loss  $(224,501)  $(18,085)

 

Net sales

 

Net sales increased to $993,077 during the three months ended September 30, 2015, from $0 during the three months ended September 30, 2014. The increase in net sales is primarily related to the Company executing on their expansion strategy and completing the acquisition of One Love in May 2015.

 

Gross Profit

 

The gross profit was $287,314 and $0 for the three months ended September 30, 2015 and 2014, respectively. This increase is due to the acquisition of One Love during in May 2015.

 

Selling, general and administrative expenses

 

Selling, general and administrative expenses for the three months ended September 30, 2015 and 2014 were $539,516 and $18,085, respectively. Selling, general and administrative expenses consisted primarily of professional fees incurred in connection with a private placement of equity securities and reverse merger. In addition, the Company incurred payroll expenses during the three months ended September 30, 2015 due to the operations of One Love.

 

Other income (expense)

 

Other income (expense) for the three months ended September 30, 2015 and 2014 was $27,701 and $0, respectively, and consisted primarily of the change in fair value of the derivative liabilities of $39,259 and interest expense of $(12,290) in relation to the amortization of the debt discount on the convertible note. 

 

 15 

 

Net Loss

 

As a result of the foregoing factors, the net loss for the three months ended September 30, 2015 and 2014, was $224,501 and $18,085, respectively.

 

For the Nine Months ended September 30, 2015 and the Period March 21, 2014 (Inception) through September 30, 2014

 

The following table sets forth the summary statements of operations for the nine months ended September 30, 2015 and the Period March 21, 2014 (Inception) through September 30, 2014:

 

   Nine Months Ended   For the Period March 21, 2014 (Inception) through 
   September 30, 2015   September 30, 2014 
         
Net Sales  $1,318,128   $- 
Gross profit  $347,454   $- 
Selling, general and administrative expenses  $(1,389,906)  $(20,070)
Other income (expense)  $(147,856)  $- 
Net loss  $(1,190,308)  $(20,070)

  

Net sales

 

Net sales increased to $1,318,128 during the nine months ended September 30, 2015, from $0 during the period March 21, 2014 (Inception) through September 30, 2014. The increase in net sales is primarily related to the Company executing on their expansion strategy and completing the acquisition of One Love in May 2015.

 

Gross Profit

 

The gross profit was $347,454 for the nine months ended September 30, 2015 and $0 for the period March 21, 2014 (Inception) through September 30, 2014. This increase is due to the acquisition of One Love during the nine months ended September 30, 3015.

 

Selling, general and administrative expenses

 

Selling, general and administrative expenses for the nine months ended September 30, 2015 and the period March 21, 2014 (Inception) through September 30, 2014 were $1,389,906 and $20,070, respectively. Selling, general and administrative expenses consisted primarily of professional fees incurred in connection with a private placement of equity securities and reverse merger. In addition, the Company incurred payroll expenses during the nine months ended September 30, 2015 due to the operations of One Love.

 

Other income (expense)

 

Other income (expense) for the nine months ended September 30, 2015 and for the period March 21, 2014 (Inception) through September 30, 2014 was $(147,856) and $0, respectively, and consisted primarily of the change in fair value of the derivative liabilities of $(136,298).

 

16

 

Net Loss

 

As a result of the foregoing factors, the net loss for the nine months ended September 30, 2015 and the period March 21, 2014 (Inception) through September 30, 2014, was $1,190,308 and $20,070, respectively.

 

For the year ended December 31, 2014 and December 31, 2013

 

The following table sets forth the summary statements of operations for the year ended December 31, 2014 and December 31, 2013:

 

  

For the Year Ended

December 31, 2014

  

For the Year Ended

December 31, 2013

 
Revenues  $0   $0 
General and Administrative Expenses   16,264    16,672 
Net Loss   25,772    26,611 
Basic Income (Loss) per Share   (0.06)   (0.06)
Diluted Income (Loss) per Share   (0.06)   (0.06)
Weighted Average Number of Shares Outstanding   418,895    418,895 
Weighted Average Number of Fully Diluted Shares Outstanding   418,895    418,895 

 

Revenue

 

The Company had no revenues for the fiscal year ended 2014 and 2013 as management determined the former laser and cosmetic surgery business could not be successful, particularly with new regulations impacting the industry.

 

Operating Expenses

 

The Company had operating expenses for the year ended December 31, 2014 and December 31, 2013 of $16,264 and $16,672, respectively, which was primarily attributable to professional fees due for our reporting company expenses.

 

Net Loss

 

As a result of the above factors, for the year ended December 31, 2014 and December 31, 2013, we incurred a net loss of $25,772 and $26,611, respectively. The net loss was primarily attributable to professional fees and interest expense from a related party promissory note.

 

Liquidity and Capital Resources

 

The following table summarizes total current assets, liabilities and working capital at September 30, 2015 compared to December 31, 2014:

 

   
Period Ended
       
   
September 30, 2015
   
December 31, 2014
   
Increase/

(Decrease)
 
                   
Current Assets
 
$
709,864
   
$
472,325
   
$
237,539
 
Current Liabilities
 
$
393,484
   
$
93,234
   
$
300,250
 
Working Capital
 
$
316,380
   
$
379,091
   
$
(62,711
)

 

As of September 30, 2015, we had working capital of $316,380 as compared to working capital of $379,091 as of December 31, 2014, a decrease of $62,711. The decrease in working capital is primarily attributable to a decrease in cash and increases in accounts payable and accrued expenses and a balance due to a related party. These changes were offset by increases in accounts receivable and inventories. 

 

17

  

Net Cash

 

Net cash used in operating activities for the nine months ended September 30, 2015 was $701,008 compared to $10,070 used in operations for the period March 21, 2014 (inception) through September 30, 2014. This change is primarily attributable to the net loss for the current nine month period offset by non-cash stock-based compensation, change in fair value of derivative liabilities, recapitalization, and accretion of debt discount of $410,000, $136,298, $46,150 and $10,706, respectively. These increases were offset by changes in accounts receivable, inventory and accounts payable of $40,289, $27,301 and $48,761, respectively.

 

Net cash used in investing activities during the nine months ended September 30, 2015 was $193,313. The Company utilized net cash of $178,711 to complete the acquisitions of One Love and Hygrow during the period. In addition, the Company paid $14,602 for the purchase of machinery and equipment during the nine months ended September 30, 2015. Net cash used in investing activities for the period from March 21, 2014 (inception) to September 30, 2014 was $25,000 paid for a business acquisition. 

 

Net cash provided from financing activities during the nine months ended September 30, 2015 was $721,000. During the nine months ended September 30, 2015, we received proceeds of $616,000 from the issuance of common stock in a private placement offering under Section 4(a)(2) of the Securities Act. In addition we received proceeds of $120,000 from a convertible note issued to a third party lender and paid $15,000 in debt issuance costs related to the note. During the period from March 21, 2014 to September 30, 2014 we received proceeds of $70,500 from the issuance of common stock in a private placement.

 

Liquidity

 

At September 30, 2015, the Company had a cash balance of $278,954 and for the nine months ended September 30, 2015, the Company had a net loss of $1,190,308. The Company believes it has sufficient cash on hand to meet its operating needs through the next 12 months.

  

The Acquisition

 

Effective May 13, 2015 (the “Closing Date”), the Company entered into an Acquisition Agreement and Plan of Merger (the “OneLove Agreement’) with Grow Solutions Acquisition LLC, a Colorado limited liability company and a wholly owned subsidiary of the Company (“Grow Solutions Acquisition”), One Love Garden Supply LLC, a Colorado limited liability company (“OneLove”), and all of the members of OneLove (the “Members”). On the Closing Date, OneLove merged with Grow Solutions Acquisition and became a wholly owned subsidiary of the Company. Under the terms of the OneLove Agreement, the Members received (i) 1,450,000 shares of the Company’s common stock (the “Equity”), (ii) Two Hundred Thousand Dollars (US$200,000) (the “Cash”), and (iii) a cash flow promissory note in the aggregate principal amount of $50,000 issued by OneLove in favor of the Members (the “Cash Flow Note”), whereby each fiscal quarter, upon the Company recording on its financial statements $40,000 in US GAAP Net Income (“Net Income”) from sales of the Company’s products (the “Net Income Threshold”), the Company shall pay to the Members 33% of the Company’s Net Income generated above the Net Income Threshold. The aforementioned obligations owed under the Cash Flow Note shall extinguish upon the earlier of (i) payment(s) by Company in an amount equal to $50,000 in the aggregate or (ii) May 5, 2016 (collectively, the Cash Flow Note, the Equity, and the Cash, the “Consideration”). The Consideration provided to the Members was in exchange for all of the issued and outstanding membership interests of OneLove. Following the Closing Date, OneLove’s indoor and outdoor gardening supply business was acquired by the Company and the Company’s management assumed control of the management of OneLove with the former managing members of OneLove resigning from OneLove upon closing of the OneLove Agreement.

 

18

  

Additionally, on the same date, the Company entered into a two year employment agreement (with three consecutive two year renewal options) with Michael Leago (“Leago”), a former managing member of OneLove (the “Employment Agreement”). Under the terms of the Employment Agreement, Leago serves as the Retail Grow Store Division Head and receives $65,000 per year, payable monthly on the first Monday of each month. Additionally, each fiscal quarter of 2015, upon the Company recording on its financial statements $40,000 in US GAAP gross pretax profits (the “Gross Pretax Profits”) from sales of the Retail Store Division of the Company (the “Pretax Threshold”), the Company shall pay to Leago a cash payment equal to 15% of the Company’s Gross Pretax Profits generated above the Pretax Threshold, but in any event not to exceed $150,000 of bonus for the 2015 calendar year paid to Leago.

 

The OneLove Agreement and related transaction documents are included as exhibits to the Quarterly Report on Form 10-Q filed with the U.S. Securities and Exchange Commission on May 20, 2015 and are hereby incorporated by reference. All references to the OneLove Agreement and related transaction documents do not purport to be complete and are qualified in their entirety by the text of such exhibits.

 

Joint Marketing Agreement

 

On June 29, 2015, the Company and Jasper Group Holdings, Inc. (“Jasper”), entered into a Joint Marketing Agreement (the “Joint Marketing Agreement”) whereby Jasper shall provide services related to website creation for a legal cannabis job posting platform. The website shall include an employee leasing program and allow employers, recruiters and potential employees to communicate through its platform for a fee. All potential employees will be screened with background checks by independent third parties and provided the necessary applications and related materials for individuals to become licensed in the legal cannabis industry on a state by state basis. In accordance with the terms of the Joint Marketing Agreement, Jasper shall invest all funds necessary to form the website.

 

Pursuant to the Joint Marketing Agreement, the Company issued to Jasper 250,000 common shares upon execution. Additionally, upon the transfer of ownership in the website from Jasper to the Company, the Company shall issue to Jasper an additional 500,000 shares of common stock of the Company.

 

Proceeds derived from the Company’s website shall be divided as follows: (i) the Company shall retain 75% of the gross proceeds less any sales commissions to third parties collected by the Company for all business that is generated through the website (the “Net Fees”) and pay to Jasper a commission equal to 25% of the Net Fees with payments due within 15 days of the end of each quarter (ii) the Company shall grant to Jasper a warrant for the purchase of one share of common stock of the Company, with an exercise price of $0.75 per share, for every dollar of revenue that the Company earns from the website, up to a maximum of One Million Dollars ($1,000,000).

 

The initial term of the Joint Marketing Agreement shall be for three (3) years and shall automatically renew for additional three year periods unless terminated by the Company with written notice at least 30 days prior to the expiration of the initial term, or any subsequent term.

 

Debt and Equity Financing

 

On September 2, 2015 (the “Effective Date”), Grow Solutions Holdings, Inc., a Nevada corporation (the “Company”), entered into a Securities Purchase Agreement (the “SPA”) to issue and sell a Convertible Promissory Note (the “Note” and together with the SPA, the “Transaction Documents”) to an institutional investor (the “Investor”), in the principal amount of $120,000.00 (the “Principal Amount”). Pursuant to the Transaction Documents, on or about September 3, 2015 the Company received $120,000 in funding from the Investor (the “Closing Date”). The Company’s issuance of the securities to the Investor pursuant to the SPA are exempt from registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act.

 

The Note shall mature on June 2, 2016 (the “Maturity Date”) and shall accrue interest at an annual rate equal to 12%. The Principal Amount and interest shall be paid on the Maturity Date (or sooner as provided in the Note), in cash or, in shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”). In accordance with the terms of the Note, the Investor shall be entitled to convert a portion or all of the Principal Amount and interest due and outstanding under the Note into shares of Common Stock equal to 48% of the average of the lowest three (3) trading prices during the twenty (20) trading day period ending on the latest complete trading day prior to the conversion date.

 

Additionally, on September 8, 2015, the Company sold 425,000 units, at a purchase price of $0.20 per unit to one investor (the “Subscription”). Each unit consisting of one share of the Company’s common stock, and one common stock purchase warrant. The warrants are exercisable at $0.40 per warrant into a share of the Company’s common stock and have a maturity of three years. The aggregate gross proceeds from the Subscription was $85,000.

 

19

  

Hygrow Asset Purchase

 

Effective September 23, 2015 (the “Closing Date”), Grow Solutions Holdings, Inc., a Nevada corporation (the “Company”) entered into an Asset Purchase Agreement (the “APA”) by and among One Love Garden Supply LLC, a Colorado limited liability company and a wholly owned subsidiary of the Company (“Buyer”), and D&B Industries, LLC, a Colorado limited liability company doing business as Hygrow (“Seller”). On the Closing Date, the Buyer purchased and the Seller sold all of the assets, rights, properties, and business of the Seller including certain debts of the Seller (the “Assets”). Under the terms and conditions of the APA, and for full consideration of the transfer of such Assets to the Buyer on the Closing Date, Buyer issued to Seller three hundred thousand (300,000) shares of common stock of the Company and a payment from Buyer to Seller in the amount of $5,200 in cash (the “Consideration”). Following the Closing Date, the Assets were acquired by the Buyer and the Company’s management assumed control of the management of the Seller with the former managing members of the Seller resigning from the Seller upon closing of the APA. All references to the APA do not purport to be complete and are qualified in their entirety by the text of Exhibit 10.1 hereto.

 

Off-Balance Sheet Arrangements

 

As of September 30, 2015, the Company had no off-balance sheet arrangements.

 

Going Concern

 

The consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

 

The Company is attempting to further implement its business plan and generate sufficient revenue; however, the Company's cash position may not be sufficient to support the Company's daily operations which raises substantial doubt about the Company’s ability to continue as a going concern. While the Company believes in the viability of its strategy to further implement its business plan and generate sufficient revenue and in its ability to raise additional funds by way of a public or private offering, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.

 

The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Critical Accounting Policies

 

We believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this “Management’s Discussion and Analysis of Financial Condition and Results of Operation.”

 

Goodwill

 

Goodwill represents the excess of the purchase price over the fair value of assets acquired, including other definite-lived intangible assets. Goodwill is not amortized, but reviewed annually for impairment or upon the occurrence of events or changes in circumstances that would more likely than not reduce the fair value of the reporting unit below its carrying amount. There were no impairment charges recognized during the period.

 

20

  

Derivative Liability

 

The Company evaluates its convertible debt, options, warrants or other contracts, if any, to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with paragraph 815-10-05-4 and Section 815-40-25 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated statement of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation and then the related fair value is reclassified to equity.

 

In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

 

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date.

 

The Company adopted Section 815-40-15 of the FASB Accounting Standards Codification (“Section 815-40-15”) to determine whether an instrument (or an embedded feature) is indexed to the Company’s own stock.  Section 815-40-15 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions.  

 

The Company utilizes the binomial method in order to marks market the fair value of the derivative at each balance sheet date and records the change in the fair value of the derivative as other income or expense in the consolidated statements of operations. 

 

Fair Value of Financial Instruments

 

The carrying amounts of cash, accounts payable, accrued expenses, and convertible notes payable approximate fair value due to the short-term nature of these instruments.

 

The Company measures the fair value of financial assets and liabilities based on the guidance of Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures,” which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

 

ASC 820 defines fair value 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. ASC 820 also 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. 

 

Fair value measurements are categorized using a valuation hierarchy for disclosure of the inputs used to measure fair value, which prioritize the inputs into three broad levels: 

 

 
Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

  

 
Level 2 - Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date, and include those financial instruments that are valued using models or other valuation methodologies.

  

 
Level 3 - Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

 

Equity–based compensation

 

The Company recognizes compensation expense for all equity–based payments in accordance with ASC 718 “Compensation – Stock Compensation”. Under fair value recognition provisions, the Company recognizes equity–based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.

 

Restricted stock awards are granted at the discretion of the Company. These awards are restricted as to the transfer of ownership and generally vest over the requisite service periods, typically over a five year period (vesting on a straight–line basis). The fair value of a stock award is equal to the fair market value of a share of Company stock on the grant date.

 

21

  

The fair value of an option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are inputs into the model. These assumptions are the value of the underlying share, the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is benchmarked against similar companies in a similar industry over the expected option life and other appropriate factors. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on its Common stock and does not intend to pay dividends on its Common stock in the foreseeable future. The expected forfeiture rate is estimated based on management’s best estimate. 

  

Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, our equity–based compensation could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If the Company’s actual forfeiture rate is materially different from its estimate, the equity–based compensation could be significantly different from what the Company has recorded in the current period. 

 

The Company accounts for share–based payments granted to non–employees in accordance with ASC 505-40, “Equity Based Payments to Non–Employees”. The Company determines the fair value of the stock–based payment as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete. The fair value of the equity instruments is re-measured each reporting period over the requisite service period.

 

Recent Accounting Pronouncements

 

Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

 

OUR BUSINESS

 

Overview

 

Legalization of recreational marijuana initially in Colorado and Washington and the growing number of jurisdictions with medical marijuana laws spawned a new industry in America in 2014. Under Voter approved Amendment 64, the State of Colorado became the first state to legalize the use of recreational marijuana. Colorado residents, who are at least 21 years of age with photo identification, may legally purchase as much as one ounce of marijuana in a single transaction. Non-Colorado residents, bearing the same identification, may purchase as much as one-quarter ounce. Marijuana cannot be consumed in any public space, including the shops where it was purchased. In 2015, Oregon, Alaska and the District of Columbia legalized marijuana for recreational use; however, sales currently remain banned in the District of Columbia. Additionally, 23 states have legalized marijuana for medical purposes.

 

Grow Solutions Holdings, Inc. provides products and services to the regulated legal cannabis industry. At this time, the Company currently focuses its operations in the following areas:

 

Retail Grow Stores and Distribution

 

Our business model is based on the aggressive consolidation of what we believe to be the “best of breed” operations for the retail sale and distribution of indoor and outdoor garden supplies and grow equipment, including for the legal growing of cannabis, throughout the United States, and eventually world-wide, through aggressive acquisition and consolidation of smaller businesses and organic growth of the existing business. Our growth strategy and continued success depends largely on our ability to (i) properly service our customers; (ii) acquire cash flowing, profitable companies; (iii) successfully integrate our acquisitions and eliminate operational inefficiencies; (iv) increase sales; and (v) establish and sell branded growing mediums and nutrients.

 

We plan to leverage our strengths in industry knowledge and operational experience to identify and systematically integrate a network of standalone retail grow stores. The Company’s management believes retail grow stores in the legal cannabis industry are ripe for successful consolidation. We have experience in the legal cannabis industry and we have developed a strategic plan for identifying potential acquisition targets. Management of the Company is recognized in the industry, which we believe will enable the Company to efficiently identify, negotiate and close acquisitions. We believe the consolidation of these companies will allow the consolidated group to achieve significant savings throughout the value chain due to synergies and economies of scale.

 

As a larger entity, we believe we will be able to access growth capital more easily than we would be as a single, early stage company, and we project that the synergy of multiple business units leveraging shared marketing and sales functions will further increase revenue and accelerate growth, while simultaneously reducing the cost of customer acquisition. We believe this will allow the collective group to attain an improved market share more quickly and allow capital investors to invest in a larger pool of business units, representing a greater opportunity to further seize market share.

 

22

 

One Love Garden Supply LLC

 

Effective May 13, 2015 (the “Closing Date”), the Company entered into an Acquisition Agreement and Plan of Merger (the “OneLove Agreement’) with Grow Solutions Acquisition LLC, a Colorado limited liability company and a wholly owned subsidiary of the Company (“Grow Solutions Acquisition”), One Love Garden Supply LLC, a Colorado limited liability company (“OneLove”), and all of the members of OneLove (the “Members”). On the Closing Date, OneLove merged with Grow Solutions Acquisition and became a wholly owned subsidiary of the Company.

 

One Love Garden supply located in Boulder, Colorado provides indoor and outdoor gardening supplies for all gardening needs. One Love was started by two veteran gardeners who are experts in designing productive grow rooms. The business started in 2010 and has grown to be one of Colorado's trusted sources for accurate and effective answers to grower’s questions. OneLove has one of the largest selection of quality plant nutrients in the Boulder, Colorado area. OneLove also carries “in store” extensive grow room building supplies and indoor gardening equipment. Additionally, One Love provides a full time grow room design consultant available to its customers at no cost.

The staff at OneLove focuses on indoor and outdoor gardening and is available to consult for all gardening needs including:

Teaching beginning gardeners what we believe is the most important basics necessary to succeed, we design simple user friendly systems for new gardeners that we believe will outperform many “advanced gardeners” gardens, crop after crop. 

 

Teaching the intermediate gardener ways to systemize and simplify their gardening tasks, cutting back on work time, providing consistency for your plants, automation of your environment, and how to set up environmental safety features in the event you have equipment failures that will result in crop failure, poor quality, and low yields. 

 

Talking with expert gardeners about their style of growing, type of system in place, products used, room design, and environmental control and manipulation. By doing this we can help the professional maximize efficiency and yield by streamlining consumable product, equipment and utility costs to maximize efficiency and yield. 

At this time, One Love is planning to build a new six thousand square foot building, increasing the size of our demo rooms, making the shop flow better, and improving our customers overall shopping experience.

Real Estate Leasing

 

We plan for our

real estate business to primarily include the acquisition and leasing of cultivation space and related facilities to agricultural retail stores, licensed marijuana growers and dispensary owners for their operations. We expect these facilities will range in size from 3,000 to 35,000 square feet. These facilities will only be leased to tenants that possess the requisite state licenses to operate cultivation facilities. We plan for the leases with the tenants to provide certain requirements that permit the Company to continually evaluate its tenants’ compliance with applicable laws and regulations.

  

We have identified properties that are currently under review for purchase and leaseback to licensed legal cannabis cultivators in Colorado. These projects include the purchase and leaseback of existing, currently operating facilities, as well as proposed new construction projects. We can provide no assurance that we will be able to complete any of these transactions.

 

23

 

Additionally, we plan to acquire commercial real estate and lease office space to non-regulated participants in the legal cannabis industry. These participants include media, internet, packaging, lighting, cultivation supplies, and financial services. In exchange for certain services that may be provided to these tenants, we expect to receive rental income in the form of cash. In certain cases, we may acquire equity interests or provide debt capital to these non-regulated businesses.

 

Job Posting Platform

 

On June 29, 2015, the Company and Jasper Group Holdings, Inc. entered into a Joint Marketing Agreement (the “Joint Marketing Agreement”) to provide services related to website creation for a legal cannabis job posting platform. We plan for the website to include an employee leasing program and allow employers, recruiters and potential employees to communicate through its platform for a fee. All potential employees will be screened with background checks by independent third parties and provided the necessary applications and related materials for individuals to become licensed in the legal cannabis industry on a state by state basis. In accordance with the terms of the Joint Marketing Agreement, Jasper Group Holdings, Inc. shall invest all funds necessary to form the website.

 

Consulting and Advisory

 

The Company delivers comprehensive consulting services that includes design and construction to approved and licensed legal cannabis operators, as well as assistance with licensure and related applications for potential legal cannabis operators.  The Company’s business plan is based on the future growth of the regulated legal cannabis market in the United States. The Company will provide general advisory services for business development, facilities design and construction, cultivation and retail operations, marketing and the improvement and expansion of existing operations.

 

Marketing

 

Our marketing approach is focused on working with industry participants to create awareness of the services and products we provide.
Word-of-mouth has proven to be our most valuable form of marketing.

 

Competition

 

All of the Company’s planned retail and online distribution channels will compete for customers and sales with many different companies and products that are competitive today and likely to be even more competitive in the future. Accordingly, we believe it is essential that the Company and its verticals continue to develop, improve, and refine the value propositions that are offered to its customers.

 

Competition in the legal cannabis industry is significant, as competing companies and retail grow stores continually open. With regard to competition in the California, Colorado and Washington market, there are numerous retail indoor and outdoor gardening stores that we believe will compete with the Company for business.

 

The Company’s size relative to its competition is difficult to gauge as most of our competition is privately held and does not publicly report their earnings. We do know of several competitors who own and operate more retail indoor and outdoor gardening stores than we currently do, but they are privately held and, therefore, we are unable to determine their size in terms of annual revenue.

 

We also face competition from other public companies that offer equipment and expendables. Moreover, as the negative stigma associated with some types of urban gardening such as legal cannabis plants diminishes, it is very possible that other better capitalized public and private companies may enter the market and may effectively challenge the value proposition offered by the Company. These competitors may be able to attract customers more easily because of their financial resources. Our larger competitors can also devote substantially more resources to business development and may adopt more aggressive pricing policies. We plan to compete on the strength of our multiple business verticals, product offerings, and management.

  

24

 

While our management believes that we have the opportunity to be successful in the legal cannabis industry, there can be no assurance that we will be successful in accomplishing our business initiatives, or that we will be able to maintain significant levels of revenues, or recognize net income, from the sale of our products and services.

 

Intellectual Property

 

We do not currently hold the rights to any intellectual property.

 

Regulations

 

Marijuana is a Schedule-I controlled substance and is illegal under federal law. Even in those states in which the use of marijuana has been legalized, its use remains a violation of federal law.

 

A Schedule I controlled substance is defined as a substance that has no currently accepted medical use in the United States, a lack of safety for use under medical supervision and a high potential for abuse.  The Department of Justice defines Schedule 1 controlled substances as “the most dangerous drugs of all the drug schedules with potentially severe psychological or physical dependence.”  If the federal government decides to enforce the Controlled Substances Act in the states which have legalized marijuana for recreational or medical use, persons that are charged with distributing, possessing with intent to distribute, or growing marijuana could be subject to fines and terms of imprisonment, the maximum being life imprisonment and a $50 million fine.

 

As of April 30, 2015, 23 states and the District of Columbia allow their citizens to use medical marijuana.  Additionally, cannabis has been legalized for recreational use in Washington D.C., Oregon, Washington, Colorado and Alaska.  The state laws are in conflict with the federal Controlled Substances Act, which makes marijuana use and possession illegal on a national level. The Obama administration has effectively stated that it is not an efficient use of resources to direct federal law enforcement agencies to prosecute those lawfully abiding by state-designated laws allowing the use and distribution of medical marijuana.   However, there is no guarantee that the administration will not change its stated policy regarding the low-priority enforcement of such federal laws. Additionally, any new administration that follows could change this policy and decide to enforce the federal laws strongly.  Any such change in the federal government’s enforcement of such current federal laws could cause significant financial damage to the Company and its shareholders.  While the Company does not intend to harvest, distribute or sell cannabis, the Company may be irreparably harmed by a change in enforcement by the federal or state governments or the enactment of new and more restrictive laws.

 

Employees

 

As of December 2, 2015, the Company has 15 full time employees and 5 part time employees. 

 

Facilities

 

Our principal office is located at 535 5th Avenue, 24th Floor, New York, NY 10017. Our retail location and wholly owned subsidiary One Love Garden Supply LLC is located at 3620 Walnut Street, Boulder, Colorado 80301.

 

Litigation 

 

There are no material pending legal or governmental proceedings relating to our company or properties to which we are a party, and to our knowledge there are no material proceedings to which any of our directors, executive officers or affiliates are a party adverse to us or which have a material interest adverse to us.

 

25

 

MANAGEMENT

 

Directors and Executive Officers

 

Our directors hold office until the first annual meeting of the Company’s shareholders and until their successor(s) are elected and qualified, or until their death, resignation or removal. Our officers hold office at the pleasure of our board of directors.  There are no agreements or understandings for our officer and directors to resign at the request of another person and our officer and directors are not acting on behalf of or will not act at the direction of any other person. The activities of our officer and directors are material to the operation of the Company. No other person’s activities are material to the operation of the Company. Our officer and directors, their age, position held, and duration of such are as follows:

 

Name
 
Age
 
Position
 
 
 
 
 
Jeffrey Beverly
 
46
 
President and Director
Howard Karasik
 
76
 
Director
Leslie Bocskor
 
50
 
Director
William Hayde
 
55
 
Director

 

* Hon. Randy Avon resigned as a member of the board of directors effective September 1, 2015.

 

Jeffrey Beverly, 46, President and Director

 

Mr. Beverly, age 46, has four years of experience in the cannabis industry and a total of 19 years in senior management with various corporations, including Bank of America, Northern Trust and Raymond James, Inc. From 2011 through 2014, Mr. Beverly was the Vice President of Impulse National, Inc. the creators of the StoK brand of vaporizer products. Mr. Beverly is also an attorney who has practiced law in the State of Florida.

 

Mr. Beverly has an undergraduate degree from the Ohio State University and a law degree from Chicago-Kent School of law. The board of directors believes that Mr. Beverly’s leadership skills, experience in business management and team building will be critical in supporting the Company’s growth plans.

 

Leslie Bocskor, age 50, Director

 

Mr. Bocskor, age 50, combines two years of experience in the cannabis industry and a total of 20 years in senior management in the financial industry. Since June 2000, Mr. Bocskor has served as the President of Venture Catalyst LLC, a consulting company. From February 2011 through September 2012, Mr. Bocskor was employed in the investment banking division of Network One Financial, Inc. From May 2005 through June 2011, Mr. Bocskor was Managing Partner of Lenox Hill Partners, LLC an advisory firm that focused on corporate finance and business consulting.  

 

Currently, Mr. Bocskor serves as the Chairman of the Board of The Nevada Cannabis Industry Association, a trade association working to establish an exemplary legal Cannabis Industry in the State of Nevada.  Mr. Bocskor is also Chairman of the Board for the Figment Project, an arts and cultural organization. The board of directors believes that Mr. Bocskor’s experience in the legal cannabis industry and extensive experience in the financial markets will be critical in supporting the Company’s growth plans.

 

Howard Karasik, age 76, Director

 

Mr. Karasik, age 76, is a corporate lawyer admitted to practice in the State of New York. Since receiving his law degree from the Harvard Law School, his extensive career includes his partnership in the New York firm, Sherman, Citron & Karasik, P.C. He has been involved in bankruptcy law, corporate negotiation & mediation, and all aspects of creditor and debtor matters. Mr. Karasik is a lecturer, published author, honors graduate of Brooklyn College and Harvard Law School and a member of the New York State Bar and the District of Columbia Bar.

 

26

 

William Hayde, age 55, Director.

 

Mr. Hayde, age 55, is currently a co-founder and executive vice president of Intercontinental Beverage Capital Inc. since 2013. He has been a Wall Street professional for over 25 years, in investment banking and the securities industry.  He has successfully raised a significant amount of growth and acquisition capital for middle market companies and facilitated mergers, acquisitions, financial restructurings and divestitures. Mr.
 
Hayde has insight into privately-held businesses, has assisted with strategic options, access to capital markets, and maximized value for clients.

 

Mr. Hayde is currently registered as an investment banker with Network 1 Financial Securities since January 2011. His current FINRA licenses include Series 6, 7, 24, 55 and 63 and the Investment Banking 79.

 

From 2002 through 2009, he was co-owner of Waterville Investment Research, which also operated a small hedge fund, and was sold in 2009. From 2010 through 2012, he was an officer, director and controlling shareholder of E Global Marketing and W3 Group, Inc., public entities which were successfully merged with larger public companies.

 

Prior to focusing on investment banking, Mr. Hayde was Head of Corporate Finance for Brockington Securities for over 12 years and was responsible for the firm’s underwriting activities, private placements, and initiation of trading.  From 1992 through 1995, Mr. Hayde was employed at Aegis Capital Corp., where he was responsible for compliance for all facets of the firm’s underwriting and selling group participation and developed their wholesale trading operation. Through his experience, Mr. Hayde has knowledge of FINRA, NASDAQ and other regulatory bodies and issues.  

 

Family Relationships

 

There are no family relationships among any of the directors and executive officers or any person(s) nominated or chosen by the Company to become a director or executive officer.

 

Involvement in Certain Legal Proceedings

 

Our officers and directors have not been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, nor has been a party to any judicial or administrative proceeding during the past ten years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement. Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” our Officers and directors have not been involved in any transactions with us or any of our affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

 

Code of Business Conduct and Ethics

 

The board of directors plans to adopt a code of business conduct and ethics in 2015.

 

27

 

EXECUTIVE COMPENSATION

 

Summary Compensation Table

 

The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the named persons for services rendered in all capacities during the noted periods.

 

Name and

Principal

Position(1)

 

Year

Ended

December 31

 
 

Salary

($)

 
 

Bonus

($)

 
 

Stock

Awards

($)

 
 

Option

Awards

($)

 
 

Non-Equity

Incentive

Plan

Compensation

Earnings

($)

 
 

Non-

Qualified

Deferred

Compensation

Earnings

($)

 
 

All Other

Compensation

($)

 
 

Total

($)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ed Bailey
 
 
2014
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
Former
 
 
2013
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
President, Director, Secretary and Treasurer
 
 
2012
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 

 

(1)
On April 28, 2015, Mr. Ed Bailey resigned from his position as sole officer and director of the Company. On the same date, Jeffrey Beverly was appointed as the President of the Company.

 

Outstanding Equity Awards at the End of the Fiscal Year

 

We do not have any equity compensation plans and therefore no equity awards are outstanding as of December 31, 2014.

  

2014 DIRECTOR COMPENSATION

 

Name
 
Fees Earned or Paid in Cash
($)
 
 
Stock Awards ($)(1)
 
 
Option Awards
($)
 
 
Non-Equity Incentive Plan Compensation ($)
 
 
Change in Pension Value and Non- Qualified Deferred Compensation Earnings
($)
 
 
All Other Compensation ($)
 
 
Total
($)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ed Bailey
Former President, Director, Secretary and Treasurer
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 

 

(1)
On April 28, 2015, Mr. Ed Bailey resigned from his position as sole officer and director of the Company. On the same date, Jeffrey Beverly was appointed as a director of the Company. Additionally, o
n August 3, 2015, Hon. Randy Avon, Leslie Bocskor, Howard Karasik, and William Hayde were appointed as members of the Company’s board of directors.
Effective September 1, 2015, Hon. Randy Avon resigned from his position as a director of the Company.

 
 

Bonuses and Deferred Compensation

 

We do not have any bonus, deferred compensation or retirement plan. All decisions regarding compensation are determined by our sole director.

 

28

 

Options and Stock Appreciation Rights

 

We do not currently have a stock option or other equity incentive plan. We may adopt one or more such programs in the future.

 

Payment of Post-Termination Compensation

 

We do not have change-in-control agreements with our director or executive officer, and we are not obligated to pay severance or other enhanced benefits to our executive officer upon termination of her employment.

 

Involvement in Certain Legal Proceedings

 

There have been no events under any bankruptcy act, no criminal proceedings, no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of our directors, executive officer, promoters or control persons during the past ten years.

 

Employment Agreements

 

The Company entered into a two year employment agreement (with three consecutive two year renewal options) with Michael Leago (“Leago”), a former managing member of OneLove (the “Employment Agreement”). Under the terms of the Employment Agreement, Leago serves as the Retail Grow Store Division Head and receives $65,000 per year, payable monthly on the first Monday of each month. Additionally, each fiscal quarter of 2015, upon the Company recording on its financial statements $40,000 in US GAAP gross pretax profits (the “Gross Pretax Profits”) from sales of the Retail Store Division of the Company (the “Pretax Threshold”), the Company shall pay to Leago a cash payment equal to 15% of the Company’s Gross Pretax Profits generated above the Pretax Threshold, but in any event not to exceed $150,000 of bonus for the 2015 calendar year paid to Leago.

 

Board of Directors

 

Our directors hold office until the next annual meeting of shareholders and until their successors have been duly elected and qualified. Our officers are elected by and serves at the discretion of the board of directors.

 

CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 

Transactions with Related Parties

 

None of the following persons has any direct or indirect material interest in any transaction to which we are a party since the beginning of our last fiscal year, or any currently proposed transaction, in which the Company was or is to be a participant and the amount involved exceeds $120,000:

 

(A)
Our directors or officer;
(B)
Any proposed nominee for election as our director;
(C)
Any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our shares; or
(D)
Any relative or spouse of any of the foregoing persons, or any relative of such spouse, who has the same house as such person or who is a director or officer of any parent or subsidiary of our company.

 

29

  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth certain information regarding our shares of common stock beneficially owned as of December 2, 2015 for (i) each stockholder known to be the beneficial owner of 5% or more of our outstanding shares of common stock, (ii) each named executive officer and director, and (iii) all executive officers and directors as a group.  A person is considered to beneficially own any shares: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, or (ii) of which such person has the right to acquire beneficial ownership at any time within 60 days through an exercise of stock options or warrants or otherwise. Unless otherwise indicated, voting and investment power relating to the shares shown in the table for our directors and executive officers is exercised solely by the beneficial owner or shared by the owner and the owner’s spouse or children.

 

For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock that such person has the right to acquire within 60 days of the date of this prospectus.  For purposes of computing the percentage of outstanding shares of our common stock held by each person or group of persons named below, any shares that such person or persons has the right to acquire within 60 days is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.  The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership. The percentage is calculated based on 43,796,612 shares of our common stock outstanding as of December 2, 2015.

 

Name and Address of Beneficial Owner(1)
 
Number of 

Shares 

Beneficially 

Owned(1)(2)
   
Percent of 

Class(3)
 
Roseanne Wexler
   
5,400,000
     
12.32
%
Joshua Wexler
   
5,400,000
     
12.32
%
RLJ Partners(4)
   
4,000,000
     
9.13
%
Bayside Funding LLC(5)
   
4,110,000
     
9.38
%
All Executive Officers and Directors as a Group(1)
   
1,900,000
     
4.33
%
Jeffrey Beverly
   
1,100,000
     
2.51
%
Howard Karasik
   
150,000
     
*
 
William Hayde
   
500,000
     
1.14
%
Leslie Bocskor
   
150,000
     
*
 

  

*Less than 1% 

 

(1)
Except as otherwise indicated, the persons named in this table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and to the information contained in the footnotes to this table. Unless otherwise indicated, the address of the beneficial owner is 535 5th Avenue, 24th Floor New York, NY 10017.

 

(2)
Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and also any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. There are 43,796,612 shares of common stock issued and outstanding as of December 2, 2015. There are outstanding warrants to purchase approximately 4,655,000 shares of common stock if all of the outstanding warrants are exercised.

 

(3)
Based on 43,796,612 issued and outstanding shares of common stock as of December 2, 2015.

 

(4)
The 4,000,000 shares of the Company’s common stock held by RLJ Partners is beneficially owned by Ms. Rachel Wexler.
   
(5)
The 4,110,000 shares of the Company’s common stock held by Bayside Funding LLC is beneficially owned by Mr. Mark Pagani.

 

30

 

DESCRIPTION OF CAPITAL STOCK

 

General

 

Our authorized capital stock consists of 100,000,000 shares of common stock, par value of $0.001 per share, and 25,000,000 shares of blank check preferred stock, par value of $0.001 per share. As of December 2, 2015 there were 43,796,612 shares of our common stock issued and outstanding held by 139 holders of record of our common stock, including 4,655,000 shares of common stock underlying outstanding warrants if all of the outstanding warrants are exercised.  None of our blank check preferred stock is issued and outstanding.

 

Common Stock

 

Each share of our common stock entitles its holder to one vote in the election of each director and on all other matters voted on generally by our stockholders. No share of our common stock affords any cumulative voting rights. This means that the holders of a majority of the voting power of the shares voting for the election of directors can elect all directors to be elected if they choose to do so.

 

Holders of our common stock will be entitled to dividends in such amounts and at such times as our Board of Directors in its discretion may declare out of funds legally available for the payment of dividends. We currently intend to retain our entire available discretionary cash flow to finance the growth, development and expansion of our business and do not anticipate paying any cash dividends on the common stock in the foreseeable future. Any future dividends will be paid at the discretion of our Board of Directors after taking into account various factors, including:

 

 
general business conditions;
 
 
 
 
industry practice;
 
 
 
 
our financial condition and performance;
 
 
 
 
our future prospects;
 
 
 
 
our cash needs and capital investment plans;
 
 
 
 
our obligations to holders of any preferred stock we may issue;
 
 
 
 
income tax consequences; and
 
 
 
 
the restrictions Nevada and other applicable laws and our credit arrangements then impose.

 

If we liquidate or dissolve our business, the holders of our common stock will share ratably in all our assets that are available for distribution to our stockholders after our creditors are paid in full and the holders of all series of our outstanding preferred stock, if any, receive their liquidation preferences in full.

 

Our common stock has no preemptive rights and is not convertible or redeemable or entitled to the benefits of any sinking or repurchase fund.

 

Preferred Stock

 

Our Board has the authority, within the limitations and restrictions in our certificate of incorporation, to issue 25,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series or the designation of any series, without further vote or action by the stockholders. The issuance of shares of preferred stock may have the effect of delaying, deferring or preventing a change in our control without further action by the stockholders. The issuance of shares of preferred stock with voting and conversion rights may adversely affect the voting power of the holders of our common stock, including voting rights, of the holders of our common stock. In some circumstances, this issuance could have the effect of decreasing the market price of our common stock.

 

Undesignated preferred stock may enable our Board to render more difficult or to discourage an attempt to obtain control of our company by means of a tender offer, proxy contest, merger or otherwise, and thereby to protect the continuity of our management. The issuance of shares of preferred stock may adversely affect the rights of our common stockholders. For example, any shares of preferred stock issued may rank prior to the common stock as to dividend rights, liquidation preference or both, may have full or limited voting rights and may be convertible into shares of common stock. As a result, the issuance of shares of preferred stock, or the issuance of rights to purchase shares of preferred stock, may discourage an unsolicited acquisition proposal or bids for our common stock or may otherwise adversely affect the market price of our common stock or any existing preferred stock.

 

Transfer Agent

 

Our transfer agent is InterWest Transfer Company, located at 1981 E Murray Holladay Road, #100, Salt Lake City, Utah and telephone (801) 272-0204.

 

31

 

SELLING SECURITY HOLDERS

 

The shares being offered for resale by the selling security holders consist of 14,325,000 shares of our common stock held by 18 stockholders consisting of (i) 5,015,000 shares of common stock of the Company issued for services at $0.001 per share pursuant to Section 4(a)(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated under the Securities Act of 1933, (ii) 4,655,000 shares of common stock of the Company issued pursuant to the Company’s private placement offering under Section 4(a)(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated under the Securities Act of 1933 (the “Private Placement”) and, (iii) 4,655,000 shares of common stock issuable upon exercise of certain outstanding warrants of the Company issued pursuant to the Private Placement.

 

The following table sets forth the names of the selling security holders, the number of shares of common stock beneficially owned by each of the selling stockholders as of December 1, 2015, and the number of shares of common stock being offered by the selling stockholders. The shares being offered hereby are being registered to permit public secondary trading, and the selling stockholders may offer all or part of the shares for resale from time to time. However, the selling stockholders are under no obligation to sell all or any portion of such shares nor are the selling stockholders obligated to sell any shares immediately upon effectiveness of this prospectus. All information with respect to share ownership has been furnished by the selling stockholders.

 

Full Name
 
Shares Beneficially Owned Prior to Offering
   

Shares to

be Offered

   
Amount Beneficially Owned After Offering
   
Percent Beneficially Owned After Offering
Ralph Aiello
   
100,000
     
200,000
(1)
   
0
   
*
Bayside Funding LLC
   
4,110,000
     
4,250,000
(2)
   
1,985,000
   
4.53%
Cimarron Capital LTD
   
2,200,000
     
2,200,000
     
0
   
*
Jenjus Worldwide LLC
   
500,000
     
1,000,000
(3)
   
0
   
*
JTW Grow Services
   
615,000
     
615,000
     
0
   
*
James Loures Jr.
   
500,000
     
1,000,000
(4)
   
0
   
*
Otis Fund
   
2,200,000
     
2,200,000
     
0
   
*
Mark Sarna
   
250,000
     
500,000
(5)
   
0
   
*
Gary Taffet
   
125,000
     
250,000
(6)
   
0
   
*
Brian Koslow
   
50,000
     
100,000
(7)
   
0
   
*
Paul O’Hurley
   
500,000
     
1,000,000
(8)
   
0
   
*
Daniel S. T. Lau
   
100,000
     
200,000
(9)
   
0
   
*
Peter Lau and Cecilia Soh
   
50,000
     
100,000
(10)
   
0
   
*
Timothy K. Wong
   
50,000
     
100,000
(11)
   
0
   
*
George Diamond
   
50,000
     
100,000
(12)
   
0
   
*
Joseph Abrams
   
85,000
     
170,000
(13)
   
0
   
*
Craig McGuinn II
   
85,000
     
170,000
(14)
   
0
   
*
Caesar Capital Group LLC
   
85,000
     
170,000
(15)
   
0
   
*

 

 

* Less than 1%

 

(1)
Includes 100,000 warrants to purchase shares of common stock at an exercise price of $0.40.
(2)
Includes 2,125,000 shares of common stock and 2,125,000 warrants to purchase shares of common stock at an exercise price of $0.40.
(3)
Includes 500,000 warrants to purchase shares of common stock at an exercise price of $0.40.
(4)
Includes 500,000 warrants to purchase shares of common stock at an exercise price of $0.40.
(5)
Includes 250,000 warrants to purchase shares of common stock at an exercise price of $0.40.
(6)
Includes 125,000 warrants to purchase shares of common stock at an exercise price of $0.40.
(7)
Includes 50,000 warrants to purchase shares of common stock at an exercise price of $0.40.
(8)
Includes 500,000 warrants to purchase shares of common stock at an exercise price of $0.40.
(9)
Includes 100,000 warrants to purchase shares of common stock at an exercise price of $0.40.
(10)
Includes 50,000 warrants to purchase shares of common stock at an exercise price of $0.40.
(11)
Includes 50,000 warrants to purchase shares of common stock at an exercise price of $0.40.
(12)
Includes 50,000 warrants to purchase shares of common stock at an exercise price of $0.40.
(13)
Includes 85,000 warrants to purchase shares of common stock at an exercise price of $0.40.
(14)
Includes 85,000 warrants to purchase shares of common stock at an exercise price of $0.40.
(15)
Includes 85,000 warrants to purchase shares of common stock at an exercise price of $0.40.

 

32

 

PLAN OF DISTRIBUTION

 

These dispositions will be at a specified fixed price of $0.20 per share, prevailing market prices or privately negotiated prices.

 

The distribution of the shares may be effected in one or more of the following methods:

 

 
ordinary brokers transactions, which may include long or short sales,
 
 
 
 
transactions involving cross or block trades on any securities or market where our common stock is trading, market where our common stock is trading,
 
 
 
 
through direct sales to purchasers or sales effected through agents,
 
 
 
 
through transactions in options, swaps or other derivatives (whether exchange listed of otherwise), or exchange listed or otherwise), or
 
 
 
 
any combination of the foregoing.

 

In addition, the selling stockholders may enter into hedging transactions with broker-dealers who may engage in short sales, if short sales were permitted, of shares in the course of hedging the positions they assume with the selling stockholders. The selling stockholders may also enter into option or other transactions with broker-dealers that require the delivery by such broker-dealers of the shares, which shares may be resold thereafter pursuant to this prospectus. To our best knowledge, none of the selling security holders are broker-dealers or affiliates of broker dealers.

 

We will advise the selling security holders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling security holders and their affiliates. In addition, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling security holders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling security holders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.

 

Brokers, dealers, or agents participating in the distribution of the shares may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or the purchasers of shares for whom such broker-dealers may act as agent or to whom they may sell as principal, or both (which compensation as to a particular broker-dealer may be in excess of customary commissions). Neither the selling stockholders nor we can presently estimate the amount of such compensation. We know of no existing arrangements between the selling stockholders and any other stockholder, broker, dealer or agent relating to the sale or distribution of the shares. We will not receive any proceeds from the sale of the shares of the selling security holders pursuant to this prospectus. We have agreed to bear the expenses of the registration of the shares, including legal and accounting fees, and such expenses are estimated to be approximately $25,000.

 

Notwithstanding anything set forth herein, no FINRA member will charge commissions that exceed 8% of the total proceeds of the offering.

 

33

 

LEGAL MATTERS

 

The validity of the common stock offered by this prospectus will be passed upon for us by special securities counsel.

 

EXPERTS

 

The consolidated financial statements of our company included in this prospectus and in the registration statement have been audited by KLJ & Associates, LLP, independent registered public accounting firm, and Anderson Bradshaw PLLC, independent registered public accounting firm, to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance on such report, given the authority of said firm as an expert in auditing and accounting.

 

INTERESTS OF NAMED EXPERTS AND COUNSEL

 

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.

 

ADDITIONAL INFORMATION

 

We filed with the Securities and Exchange Commission a registration statement under the Securities Act for the common stock in this offering. This prospectus does not contain all of the information in the registration statement and the exhibits and schedule that were filed with the registration statement. For further information with respect to us and our common stock, we refer you to the registration statement and the exhibits and schedule that were filed with the registration statement. Statements contained in this prospectus about the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and we refer you to the full text of the contract or other document filed as an exhibit to the registration statement. A copy of the registration statement and the exhibits and schedules that were filed with the registration statement may be inspected without charge at the Public Reference Room maintained by the Securities and Exchange Commission at 100 F Street, N.E. Washington, DC 20549, and copies of all or any part of the registration statement may be obtained from the Securities and Exchange Commission upon payment of the prescribed fee. Information regarding the operation of the Public Reference Room may be obtained by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission maintains a website that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC. The address of the website is sec.report.

 

We file periodic reports under the Exchange Act, including annual, quarterly and special reports, and other information with the Securities and Exchange Commission. These periodic reports and other information are available for inspection and copying at the regional offices, public reference facilities and website of the Securities and Exchange Commission referred to above.

 

At this time, we do not intend to register our common stock under Section 12(g) of the Exchange Act by filing a Form 8-A with the SEC. As a result, there are certain consequences to investors of the Company being a Section 15(d) registrant. As a Section 15(d) registrant, we are not required to file periodic reports if we have less than 300 holders of record for the fiscal year after the year of effectiveness. Thus, if we do not register our common stock under Section 12 by filing a Form 8-A, we may not have an ongoing periodic reporting obligation and we will not be subject to the SEC's proxy, tender offer, and short selling insider trading rules of Section 12 registrants.

 

 

34

 

 

 

Russell E. Anderson, CPA

Russ Bradshaw, CPA

William R. Denney, CPA

Kristofer Heaton, CPA

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Officers and Directors

LightTouch Vein & Laser, Inc.

 

We have audited the accompanying balance sheets of LightTouch Vein & Laser, Inc. as of December 31, 2014 and 2013, and the related statements of operations, changes in stockholders’ deficit, and cash flows for the years ended December 31, 2014 and 2013.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting, as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of LightTouch Vein & Laser, Inc. as of December 31, 2014 and 2013, and the results of its operations, and its cash flows for the years ended December 31, 2014 and 2013, in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has cash flow constraints, an accumulated deficit, and has suffered recurring losses from operations. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/Anderson Bradshaw PLLC

Salt Lake City, Utah

March 25, 2015

 

 F-1 

 

LightTouch Vein & Laser, Inc.

Balance Sheets

 

   December 31, 
   2014   2013 
Assets:        
Current assets  $-   $- 
           
Total Assets  $-   $- 
           
Liabilities and Stockholders' Deficit:          
Current liabilities:          
Accounts payable  $25,793   $33,195 
Payable to stockholders   148,739    115,565 
Total Liabilities   174,532    148,760 
           
Stockholders' deficit:          
Preferred stock, $0.001 par value, 25,000,000 shares authorized, no shares issued and outstanding   -    - 
Common stock, $0.001 par value, 100,000,000 shares authorized, 418,895 shares issued and outstanding   419    419 
Additional Paid-in capital   7,142,744    7,142,744 
Retained deficit   (7,317,695)   (7,291,923)
Total Stockholders' Deficit   (174,532)   (148,760)
Total Liabilities and Stockholders' Deficit  $-   $- 

 

See accompanying notes to financial statements.

 

 F-2 

 

LightTouch Vein & Laser, Inc.

Statements of Operations

 

   Years Ended December 31, 
   2014   2013 
         
Revenue  $-   $- 
           
Operating expenses:          
     General and Administrative Expenses   16,264    16,672 
          Total operating expenses   16,264    16,672 
Loss from operations   (16,264)   (16,672)
Other Income (Expenses):          
     Other income   3,728    - 
     Interest expense – related party   (13,236)   (9,939)
          Total Other Expense   (9,508)   (9,939)
           
Net (Loss)  $(25,772)  $(26,611)
           
Net (Loss) per common share  $(0.06)  $(0.06)
           
Weighted number of common shares outstanding   418,895    418,895 

 

See accompanying notes to financial statements.

 

 F-3 

 

LightTouch Vein & Laser, Inc.

Statements of Changes in Stockholders’ Deficit

 

   Common Stock   Paid-in   Retained   Total Equity 
   Shares   Amount   Capital   Deficit   (Deficit) 
                     
Balance at January 1, 2013   418,895   $419   $7,142,744   $(7,265,312)  $(122,149)
                          
Net Loss, year ended December 31, 2013   -    -    -    (26,611)   (26,611)
                          
Balance at December 31, 2013   418,895   $419   $7,142,744   $(7,291,923)  $(148,760)
                          
Net Loss, year ended December 31, 2014   -    -    -    (25,772)   (25,772)
                          
Balance at December 31, 2014   418,895   $419   $7,142,744   $(7,317,695)  $(174,532)

 

See accompanying notes to financial statements.

 

 F-4 

 

LightTouch Vein & Laser, Inc.

Statements of Cash Flows

 

   Years Ended December 31, 
   2014   2013 
         
Cash flows from operating activities:        
     Net loss  $(25,772)  $(26,611)
     Adjustments to reconcile net loss to net cash used by operating activities:          
         Changes in operating assets and liabilities:          
           Increase (decrease) in accounts payable   (7,402)   1,186 
           Increase (decrease) in payable to stockholders and related party   33,174    25,425 
                 Net Cash used in operating activities   -    - 
           
                 Net Cash Provided by Investing Activities   -    - 
           
                 Net Cash Provided by Financing Activities   -    - 
           
                 Net change in cash   -    - 
Cash, beginning of period   -    - 
Cash, end of period   -   $- 
           
Supplemental disclosure of cash flow information:          
     Cash paid during the period for:          
           Income taxes  $-   $- 
           Interest  $-   $- 

 

See accompanying notes to financial statements.

 

 F-5 

 

LightTouch Vein & Laser, Inc.

Notes to Financial Statements

December 31, 2014

 

Note 1: Summary of Significant Accounting Policies

 

Organization – LightTouch Vein & Laser, Inc. (the “Company”) was organized under the laws of the State of Nevada on May 1, 1981 under the name of Strachan, Inc. and during 1999, the Company changed its name to its present name. Between 1999 and 2000, the Company acquired several subsidiary corporations and conducted its business operations primarily through them. Subsequent to August 2000, financial difficulties prevented these subsidiary corporations from operating profitably and each of them ceased operations. In most cases these subsidiary corporations filed for bankruptcy in the applicable federal court, the proceedings of which lasted in some cases through 2005. At the present time the Company is seeking a business combination with an operating entity through a reverse acquisition.

 

Going Concern – The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has not conducted any revenue producing operations during the past several years, has no assets but has incurred liabilities of $174,532 as of December 31, 2014. These factors raise substantial doubt concerning the ability of the Company to continue as a going concern. The Company’s sole officer and an affiliate have paid the Company’s expenses (See Note 3.  Related Party Transactions). An amount of $148,739, which includes accrued interest, is due them as of December 31, 2014. The Company proposes to continue this method of paying for its expenses unless other capital raising means can be employed, of which there can be no assurance that such will be available. In addition, the Company is dependent on its management serving without monetary remuneration. The Company assumes that its arrangement with management will continue into the future. These financial statements do not include any adjustments that might result from a negative outcome of these uncertainties. A change in these circumstances would have a material negative effect on the Company's future.

 

Use of Estimates – These financial statements are prepared in conformity with accounting principles generally accepted in the United States of America and require that management make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. The use of estimates and assumptions may also affect the reported amounts of revenues and expenses. Actual results could differ from those estimates or assumptions.

 

(Loss) Per Common Share – The loss per share of common stock is computed by dividing the net loss during the period presented by the weighted average number of shares of common stock outstanding during that same period. There were no potential common shares outstanding during any period presented that would result in a dilution to the actual number of common shares outstanding. However, the Company may have a contingent obligation to issue additional shares based on acquisitions that the Company made of entities that became subsidiaries of the Company. Such contingent obligation has not been given consideration in computing the loss per common share (See Note 2: Capital Stock).

 

Income taxes – The Company has no deferred taxes arising from temporary differences between income for financial reporting and for income tax purposes. Deferred tax assets and liabilities are measured using enacted tax rates to taxable income in the years in which those temporary differences are expected to reverse. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.

 

At December 31, 2014, the Company has a net operating loss carry forward of approximately $172,200 that expires if unused through 2034. A deferred tax asset in the amount of $34,940 is fully offset by a valuation allowance in the same amount. The change in the valuation allowance was $2,520 and $3,990 for the years ended December 31, 2014 and 2013, respectively.  The Company’s likelihood to utilize any net operating loss carry forward from years prior to 2008 is remote as a result of its intended change in business activities and other tax regulations relating to those prior years.

 

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, on January 1, 2007.  As a result of the implementation of Interpretation 48, the Company recognized approximately no increase in the liability for unrecognized tax benefits.

 

The Company has no tax positions at December 31, 2014 and 2013 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

 

 F-6 

 

The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.  During the years ended December 31, 2014 and 2013, the Company recognized no interest and penalties.  The Company had no accruals for interest and penalties at December 31, 2014 and 2013.  

 

Tax years open to examination by the IRS are 2011 through 2014.

 

Recently Enacted Accounting Standards

 

The Company has reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its results of operation, financial position or cash flows.  Based on that review, the Company believes that none of these pronouncements will have a significant effect on its current or future earnings or operations.

 

Note 2: Capital Stock

 

Preferred Stock – The Company is authorized to issue 25,000,000 shares of preferred stock, $.001 par value, with such rights, preferences, variations and such other designations for each class or series within a class as determined by the Board of Directors. The preferred stock is not convertible into common stock, does not contain any cumulative voting privileges, and does not have any preemptive rights. No shares of preferred stock have been issued.

 

Common Stock – On August 15, 2000, the Company acquired Vanishing Point, Inc. (“Vanishing Point”) as a wholly-owned subsidiary through a triangular reorganization whereby an existing subsidiary of the Company acquired all of the Vanishing Point common stock, options to acquire common stock, warrants, and convertible notes (collectively the “Exchange Securities”) in exchange for 85,766 shares of the Company’s common stock. The conditions of the exchange require that the Exchange Securities be surrendered to the Company’s transfer agent and that payment, either in services or in a cash amount, be made to the Company. As a result of the demise of the business operations of the Company’s subsidiaries shortly after the Vanishing Point acquisition, both the terms and conditions of surrendering the Exchange Securities were not completed. The Company believes that all properly allowable issuances of the Company’s common stock for the Exchange Securities have occurred, but no assurance thereof can be given. (See Note 4: Contingent Liabilities)

 

During the year ended December 31, 2010, the sole officer of the Company converted a note in the amount of $25,000 into 250,000 shares of common stock of the Company.  The stock was valued at $0.10 per share which approximated market value.

 

Pursuant to approval of the Company’s management and shareholders on June 17, 2013, effective July 16, 2013, the Company recapitalized the issued and outstanding shares of common stock which resulted in the outstanding shares of the Company being reduced from 40,969,007 to approximately 418,895 through a reverse split of the issued and outstanding common stock on a one (1) for one hundred (100) basis, after taking into account rounding of shares. All share amounts have been adjusted to reflect the split retrospectively.

 

Note 3: Related Party Transactions

 

Commencing in 2006, the Company’s sole officer made payment of general and administrative expenses incurred by the Company and in 2007 entered into an unsecured line of credit note. This note bears interest at a rate of 18% per annum and has been extended on several occasions. Commencing in 2008, an affiliate of the Company’s sole officer made similar payment of general and administrative expenses incurred by the Company at a rate of 18% per annum. Furthermore, certain general and administrative expenses related to the Company filing its reports with the Securities and Exchange Commission have been accrued and are payable to the Company’s sole officer and affiliate.  Collectively, these amounts total $148,739 and $115,564 at December 31, 2014 and 2013, respectively. Accrued interest included in these amounts is $52,016 and $38,779 at December 31, 2014 and 2013, respectively.

 

 F-7 

 

Note 4:  Subsequent Events

 

On February 16, 2015, the Company entered into an Acquisition Agreement and Plan of Merger (the “Agreement’) with Grow Solutions, Inc., a Delaware corporation (“Grow Solutions”) and LightTouch Vein & Laser Acquisition Corporation, a wholly owned subsidiary of the Company (“LightTouch Acquisition”).  Under the terms of the Agreement, Grow Solutions will merge with LightTouch Acquisition and become a wholly owned subsidiary of the Company.  Grow Solutions’ shareholders and certain creditors of the Company (as described below) will receive up to fifty five million shares (55,000,000) of the Company’s common stock (the “Issuance Amount”) in exchange for all of the issued and outstanding shares of Grow Solutions.  Following the closing of the Agreement, Grow Solutions’ business will be the primary focus of the Company and Grow Solutions management will assume control of the management of the Company with the current director of the Company resigning upon closing of the Agreement. In accordance with the terms of the Agreement, closing shall occur upon the earlier of 60 days from February 16, 2015, or the completion of Grow Solutions audit of its financial statements.

 

Additionally, on February 16, 2015, the Company issued a convertible promissory note to Grow Solutions in the principal amount of one hundred fifty thousand dollars ($150,000) (the “Grow Note”).  The principal and interest of the Grow Note is convertible into 7,500,000 shares of the Company’s common stock.  The Company also issued convertible promissory notes to lenders and creditors of the Company in the principal amount of thirty three thousand dollars ($33,000) in the aggregate (the “Creditor Notes” and together with the Grow Note, the “Notes”), convertible into 1,650,000 shares of common stock of the Company.  All shares of common stock of the Company issued under the Notes shall be included in the Issuance Amount. Proceeds from the Notes were used to pay outstanding obligations of the Company including funds owed to the sole officer and director who had been funding the Company’s operation through various loans.  In addition to the Agreement being executed between the Company, Grow Solutions and LightTouch Acquisition, the majority shareholder agreed to sell his ownership interest in the Company which consisted of 250,000 shares of the Company’s common stock for a purchase price of one hundred thousand dollars ($100,000).  The shares represented approximately 61% of the Company’s issued and outstanding shares.

 

The Company has evaluated subsequent events pursuant to ASC Topic 855 and has determined that there are no other events that require disclosure.

 

 F-8 

 

INDEX TO FINANCIAL STATEMENTS

 

Report of Independent Registered Public Accounting Firm
F-10
Financial Statements:

 
Balance Sheet
F-11
Statement of Operations
F-12
Statement of Shareholders’ Equity
F-13
Statement of Cash Flows
F-14
Notes to Financial Statements
F-15 – F-18

 

 F-9 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and stockholders of Grow Solutions, Inc.

 

We have audited the accompanying balance sheet of Grow Solutions, Inc. as of December 31, 2014 and the related statements of operations, stockholders’ equity, and cash flows for the period March 21, 2014 (inception) to December 31, 2014. Grow Solutions, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Grow Solutions, Inc. as of December 31, 2014, and the results of its operations and its cash flows for the period March 21, 2014 (inception) through December 31, 2014 in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the entity will continue as a going concern. As discussed in Note 3 to the financial statements, the entity has suffered recurring losses from operations that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

KLJ & Associates, LLP
 
St. Louis Park, MN  
 
April 27, 2015
 

 

 F-10 

  

Grow Solutions, Inc.

Balance Sheet

December 31, 2014

 

Assets
     
Current Assets:    
Cash and cash equivalents  $452,275 
Notes receivable and accrued interest, net   20,050 
Total Assets  $472,325 
      
Liabilities and Shareholders' Deficiency
      
Current Liabilities:     
Accrued Expenses  $93,234 
      
Total Current Liabilities   93,234 
      
Commitments and contingencies     
      
Shareholder's Equity     
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding   - 
Common stock, $0.001 par value; 75,000,000 shares authorized; 46,255,000 shares issued and outstanding   46,255 
Additional paid in capital   485,745 
Accumulated deficit   (152,909)
Total Shareholders' Equity   379,091 
      
Total Liabilities and Shareholders' Equity  $472,325 

 

The accompanying notes are an integral part of these financial statements.

 

 F-11 

 

Grow Solutions, Inc.

Statement of Operations

For the Period from March 21, 2014 (Inception) to December 31, 2014

 

Net Revenue  $- 
      
General and administrative expenses   152,959 
      
Other income   50 
      
Net loss  $(152,909)
      
Net loss per ordinary share  - basic & diluted  $(0.00)
      
Weighted average ordinary shares outstanding  - basic & diluted   43,909,720 

 

The accompanying notes are an integral part of these financial statements.

 

 F-12 

 

Grow Solutions, Inc.

Statement of Changes in Shareholder's Equity

For the Period from March 21, 2014 (Inception) to December 31, 2014

 

   Common Stock   Additional Paid-In   Accumulated   Shareholder's 
   Shares   Amount   Capital   Deficit   Equity 
                     
Issuance of founders' shares   43,005,000   $43,005   $-   $-   $43,005 
Stock issued for services   1,000,000   $1,000   $9,000   $-   $10,000 
Stock issued for cash   2,250,000   $2,250   $447,750   $-   $450,000 
Contributed capital   -    -    28,995    -    28,995 
Net loss   -    -    -    (152,909)   (152,909)
                          
Balance, December 31, 2014   46,255,000   $46,255   $485,745   $(152,909)  $379,091 

 

The accompanying notes are an integral part of these financial statements.

 

 F-13 

 

Grow Solutions, Inc.

Statement of Cash Flows

For the Period from March 21, 2014 (Inception) to December 31, 2014

 

Cash Flows From Operating Activities:    
Net loss  $(152,909)
Adjustments to reconcile net loss to net cash used in operating activities:     
Interest income   (50)
Stock based compensation   10,000 
Bad debt expense   25,000 
Changes in operating assets and liabilities:     
Accrued expenses   93,234 
Net Cash Used In Operating Activities   (24,725)
      
Cash Flows From Investing Activities:     
Loan to potential acquisition candidate   (45,000)
Net Cash Used In Investing Activities   (45,000)
      
Cash Flows From Financing Activities:     
Stock issued for cash   493,005 
Contributed capital   28,995 
Net Cash Provided By Financing Activities   522,000 
      
Net change  in cash   452,275 
      
Cash at beginning of period   - 
      
Cash at end of period  $452,275 
      
Supplemental disclosures of cash flow information:     
Cash paid for interest  $- 
Cash paid for taxes  $- 

 

The accompanying notes are an integral part of these financial statements.

 

 F-14 

 

GROW SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

 

Note 1 — Organization, Plan of Business Operations and Going Concern Consideration

 

Grow Solutions, Inc. (the “Company” or “Grow Solutions”), a Delaware corporation, offers a variety of services, products, financing, technology and management consulting to the legalized cannabis industry. The Company has offices located at 641 Lexington Avenue, New York, New York 10022.

 

The focus of the Company is to provide comprehensive services within the cannabis industry to those growing, processing and dispensing marijuana and marijuana infused products. The Company plans to operate multiple verticals within the cannabis industry, consisting of but not limited to (i) financing, (ii) sales of unregulated products through retail agricultural grow stores, (iii) distribution of unregulated products, equipment and supplies to agricultural grow stores, (iv) management and consulting services, (v) real estate, (vi) licensing, and (vii) rights to proprietary, unregulated products.

 

Our business strategy is structured into various operating divisions to attain vertical penetration within our customer base and horizontally penetrate opportunities and customer relationships between our operating divisions. We have a team of experienced personnel in each area of our business model and our management team has successfully operated cannabis grow operations, managed dispensaries and navigated the cannabis State licensing process. Further, our planned retail agricultural grow stores are staffed with individuals knowledgeable in all products and growing needs.

 

Note 2 — Significant Accounting Policies

 

Basis of presentation

 

The accompanying financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

 

Cash and Cash Equivalents

 

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.

 

Fair value of financial instruments

 

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet, primarily due to their short-term nature.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted 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 expenses during the reporting period. Actual results could differ from those estimates.

 

Concentration of credit risk

 

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution which, at times, may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

 

Loss per share

 

Loss per share is computed by dividing net loss by the weighted-average number of ordinary shares outstanding during the period.

 

Income Taxes

 

The Company accounts for income taxes under ASC Topic 740 “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

 

 F-15 

 

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecoginition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company determined that the Cayman Islands is its only major tax jurisdiction. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. Since the Company was incorporated on March 21, 2014, the evaluation was performed for the upcoming 2014 tax year, which will be the only period subject to examination upon filing of appropriate tax returns. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position.

 

The Company’s policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense. There were no amounts accrued for penalties or interest as of or during the period from March 21, 2014, (inception) through December 31, 2014. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.

 

Recent Accounting Pronouncements

 

Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

 

Note 3 — Liquidity

 

At December 31, 2014, the Company had a cash balance of $472,325 and for the period from March 21, 2014 (inception) to December 31, 2014, the Company had a net loss of $152,909. Although the Company had a net loss for the period from March 21, 2014 (inception) to December 31, 2014, the Company sold 1,600,000 shares of common stock at $0.20 a unit in a private placement subsequent to December 31, 2014. The Company believes it has sufficient cash on hand to meet its operating needs through at least through April 2016.

 

Note 4 — Notes Receivable and accrued interest

 

In April 2014, the Company signed a letter of intent with Delta Entertainment Group (‘Delta”) to enter into a reverse merger transaction. In exchange for Delta’s exclusivity until the earlier of the execution of a stock exchange agreement or June 30, 2014, the Company paid Delta $25,000. Delta was to use the $25,000 to become current with its public filings. Since the stock exchange transaction was not executed by June 30, 2014, the $25,000 that the Company provided to Delta reverted to a one year note with an interest rate at 8% per annum. As of December 31, 2014, it was determined by the Company that since Delta lacked the financial resources to get current in its public filings, the collectability of the note was doubtful. Accordingly, the Company has not accrued any interest income on the note and has booked a 100% reserve against the note receivable and recorded bad debt expense of $25,000, which was a component of General and administrative expenses in the Statement of Operations.

 

In December 2014, the Company loaned $20,000 to Love Garden Supply LLC (“Love Garden”). The loan bears interest at 4% per annum, with a default interest rate of 18%. The note matures the earlier of June 30, 2015 or the consummation of the acquisition of Love Garden by the Company. Both the principal and the accrued interest on the note are payable to the Company on the maturity date. Love Garden is the grantor on the note, and the note is collateralized by all of Love Garden’s assets. As of December 31, 2014, the Company has accrued $50 in interest on this note, which was recorded as Other income in the Statement of Operations.

 

Note 5 — Shareholder’s Equity

 

Preferred Stock

 

The Company is authorized to issue 10,000,000 preferred shares with a par value of $0.001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors.

 

As of December 31, 2014, there are no preferred shares issued or outstanding.

 

Common Stock

 

The Company is authorized to issue 75,000,000 ordinary shares with a par value of $0.001 per share.

 

On March, 21, 2014, the Company issued 43,005,000 shares of stock to its founding members for $0.001 per share for total cash consideration of $43,005.

 

On August 11, 2014, the Company issued 1,000,000 shares of stock for legal services. The Company expensed $10,000 for the shares issued.

 

In November 2014, the Company issued 2,250,000 shares of common stock to investors at $0.20 a unit in connection with the private placement of the Company’s stock. In addition, the investors received 2,250,000 three year warrants with an exercise price of $0.40. Each warrant is callable by the Company upon the Company’s common stock trading at $0.60 or higher for 20 consecutive days.

 

 F-16 

 

Additional Paid in Capital

 

During 2014, several of the founding members contributed capital totaling $28,995.

 

Warrants

 

The following is a summary of the Company’s warrant activity during the period from March 21, 2014 (inception) to December 31, 2014:

 

   Warrants   Weighted Average Exercise Price   Weighted Average Remaining Contractual Life 
Outstanding – March 21, 2014   -   $-      
Granted   2,250,000    0.40      
Exercised   -    -      
Forfeited/Cancelled   -    -      
Outstanding – December 31, 2014   2,250,000   $0.40    2.86 
Exercisable – December 31, 2014   2,250,000   $0.40    2.86 

 

At December 31, 2014, the total intrinsic value of warrants outstanding and exercisable was $0.

 

Note 6 — Commitments and Contingencies

 

In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. There are no such matters as of December 31, 2014.

 

Note 7 — Income Taxes

 

As of December 31, 2014, the Company had net operating loss carry forwards of approximately $126,000 that may be available to reduce future years’ taxable income in varying amounts through 2034. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.

 

The provision for Federal income tax consists of the following:

 

   December 31, 2014 
Federal income tax benefit attributable to:    
Current Operations  $126,017 
Less: valuation allowance   (126,017)
Net provision for Federal income taxes  $- 

 

The cumulative tax effect at the expected rate of 38.6% of significant items comprising our net deferred tax amount is as follows:

 

   December 31, 2014 
Deferred tax asset attributable to:    
Net operating loss carryover  $48,680 
Less: valuation allowance   (48,680)
Net deferred tax asset  $- 

 

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of approximately $126,000 for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years.

 

 F-17 

 

Note 8 — Subsequent Events

 

Common Stock Issued to Consultants

 

On February 19, 2015, the Company issued 250,000 shares of common stock to a consulting firm for investor relations and public relations services.

 

On February 19, 2015, the Company issued 150,000 shares of common stock to a consulting firm for strategic business planning, investor relations and public relations services.

 

On February 23, 2015, the Company issued 250,000 shares of common stock to a consulting firm for strategic business planning and investor relations services.

 

Private Placement of Common Stock

 

Subsequent to December 31, 2014, the Company sold 1,600,000 shares of common stock to investors at $0.20 a unit in connection with the private placement of the Company’s stock. In addition, the investors received 1,600,000 three year warrants with an exercise price of $0.40. Each warrant is callable by the Company upon the Company’s common stock trading at $0.60 or higher for 20 consecutive days.

 

Merger Agreement

 

On February 16, 2015, LightTouch Vein and Laser, Inc., a Nevada corporation (“LightTouch”) entered into an Acquisition Agreement and Plan of Merger (the “Agreement’) with the Company and LightTouch Vein & Laser Acquisition Corporation, a wholly owned subsidiary of LightTouch (“LightTouch Acquisition”).  Under the terms of the Agreement, the Company will merge with LightTouch Acquisition and become a wholly owned subsidiary of LightTouch.   The Company’s shareholders and certain creditors of LightTouch (as described below) will receive up to fifty five million shares (55,000,000) of LightTouch’s common stock (the “Issuance Amount”) in exchange for all of the issued and outstanding shares of the Company.  Following the closing of the Agreement, the Company’s business will be the primary focus of LightTouch and the Company’s management will assume control of the management of LightTouch with the current director of LightTouch resigning upon closing of the Agreement. In accordance with the terms of the Agreement, closing shall occur upon the earlier of (i) sixty (60) days from February 16, 2015, or (ii) the completion of the Company’s audit of its financial statements.

 

Additionally, on February 16, 2015, LightTouch issued a convertible promissory note to the Company in the principal amount of $150,000 (the “Grow Note”). The principal and interest of the Grow Note is convertible into 7,500,000 shares of LightTouch’s common stock.  LightTouch also issued convertible promissory notes to lenders and creditors of LightTouch in the principal amount of $33,000 in the aggregate (the “Creditor Notes” and together with the Grow Note, the “Notes”), convertible into 1,650,000 shares of common stock of LightTouch.  All shares of common stock of LightTouch issued under the Notes shall be included in the Issuance Amount. Proceeds from the Notes were used to pay outstanding obligations of LightTouch including funds owed to the sole officer and director who had been funding LightTouch’s operation through various loans.  In addition to the Agreement being executed between LightTouch, the Company and LightTouch Acquisition, the majority shareholder agreed to sell his ownership interest in LightTouch which consisted of 250,000 shares of LightTouch’s common stock for a purchase price of $100,000.  The shares represented approximately 61% of LightTouch’s issued and outstanding shares.

 

 F-18 

 

INDEX TO FINANCIAL STATEMENTS

 

Financial Statements:
 
Condensed Consolidated Balance Sheets
F-20
Condensed Consolidated Statements of Operations
F-21
Condensed Consolidated Statement of Changes in Stockholders’ Equity
F-22
Condensed Statement of Cash Flows
F-23
Notes to Condensed Financial Statements
F-24

 

 F-19 

 

Grow Solutions Holdings, Inc.

(Formerly known as Lightouch Vein & Laser, Inc.)

Condensed Consolidated Balance Sheets

(Unaudited)

 

   September 30,   December 31, 
   2015   2014 
Assets
Assets:        
Cash  $278,954   $452,275 
Accounts receivable, net   53,654    - 
Note receivable and accrued interest   -    20,050 
Inventories, net   363,638    - 
Debt issuance costs, net   13,618    - 
Total current assets   709,864    472,325 
           
Property and Equipment, net   14,419    - 
           
Goodwill   492,620    - 
           
Total Assets  $1,216,903   $472,325 
           
Liabilities and Stockholders' Equity
           
Current Liabilities:          
Accounts payable and accrued expenses  $319,016   $93,234 
Intercompany   -    - 
Convertible notes, net of debt discount   14,468    - 
Related party payable   60,000    - 
Total current liabilities   393,484    93,234 
           
Long-term Liabilities:          
Derivative liabilities   585,106    - 
Total long-term liabilities   585,106    - 
           
Total Liabilities   978,590    93,234 
           
Commitments and contingencies          
           
Stockholders' Equity          
          
Preferred Stock, par value $0.001: 10,000,000 shares authorized; none issued and outstanding   -    - 
Common stock, $0.001 par value; 300,000,000 shares authorized; 55,021,612 and 46,225,000 shares issued and outstanding   55,022    46,255 
Additional paid in capital   1,526,508    485,745 
Accumulated deficit   (1,343,217)   (152,909)
Total Stockholders' Equity   238,313    379,091 
           
Total Liabilities and Stockholders' Equity  $1,216,903   $472,325 

 

See accompanying notes to the condensed consolidated financial statements

 

 F-20 

 

Grow Solutions Holdings, Inc.

(Formerly known as Lightouch Vein & Laser, Inc.)

Condensed Consolidated Statements of Operations

(Unaudited)

 

               For the Period from 
   For the Three Months Ended   For the Nine Months Ended   March 21, 2014 (Inception) through 
   September 30, 2015   September 30, 2014   September 30, 2015   September 30, 2014 
                 
Net Sales  $993,077   $-   $1,318,128   $- 
                     
Cost of goods sold   705,763    -    970,674    - 
                     
Gross profit   287,314    -    347,454    - 
                     
Selling, general and administrative expenses   539,516    18,085    1,389,906    20,070 
Total Selling, general and administrative   539,516    18,085    1,389,906    20,070 
                     
Loss from operations   (252,202)   (18,085)   (1,042,452)   (20,070)
                     
Other income (expense)                    
Interest Expense   (12,290)   -    (12,290)   - 
Other Income   732    -    732    - 
Change in fair value of derivative liabilities   39,259    -    (136,298)   - 
Total other income (expense)   27,701    -    (147,856)   - 
                     
Net loss  $(224,501)  $(18,085)  $(1,190,308)  $(20,070)
                     
Net loss per common share - basic and diluted  $(0.00)  $(0.00)  $(0.02)  $(0.00)
                     
Weighted average common shares outstanding - basic and diluted   53,783,315    43,005,000    53,783,315    43,005,000 

 

See accompanying notes to the condensed consolidated financial statements

 

 F-21 

 

Grow Solutions Holdings, Inc.

(Formerly known as Lightouch Vein & Laser, Inc.)

Condensed Consolidated Statement of Changes in Stockholders' Equity

For the Period from March 21, 2014 (Inception) through September 30, 2015

(unaudited)

 

   Preferred Stock   Common Stock  

Additional

Paid In

   Accumulated   Stockholders' 
   Shares   Amount   Shares   Amount   Capital   Deficit   Equity 
                             
Balance March 21, 2014 (Inception)   -   $-    -   $-   $-   $-   $- 
                                    
Common stock issued to founders   -    -    43,005,000    43,005    -    -    43,005 
                                    
Common stock issued for cash   -    -    2,250,000    2,250    447,750    -    450,000 
                                    
Contributed capital   -    -    -    -    28,995         28,995 
                                    
Common stock issued for services   -    -    1,000,000    1,000    9,000    -    10,000 
                                    
Net loss for the period March 21, 2014 (Inception) to December 31, 2014   -    -    -    -    -    (152,909)   (152,909)
                                    
Balance, December 31, 2014   -   $-    46,255,000   $46,255   $485,745   $(152,909)  $379,091 
                                    
Recapitalization   -    -    1,886,612    1,887    21,351    -    23,238 
                                    
Common stock issued for services   -    -    2,050,000    2,050    407,950    -    410,000 
                                    
Common stock and warrants issued for cash, net of derivative liability   -    -    3,080,000    3,080    283,212    -    286,292 
                                    
Common stock issued for acquisition   -    -    1,750,000    1,750    348,250    -    350,000 
                                    
Net loss for the period ended September 30, 2015                            (1,190,308)   (1,190,308)
                                    
Balance, September 30, 2015   -   $-    55,021,612   $55,022   $1,546,508   $(1,343,217)  $258,313 

 

See accompanying notes to the condensed consolidated financial statements

 

 F-22 

 

Grow Solutions Holdings, Inc.

(Formerly known as Lightouch Vein & Laser, Inc.)

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

   For the Nine Months Ended   For the Period from March 21, 2014 (Inception) through 
   September 30,
2015
   September 30,
2014
 
         
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss  $(1,190,308)  $(20,070)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation   1,115    - 
Accretion of debt issuance costs   1,382      
Accretion of debt discount   10,706    - 
Recapitalization   46,150      
Share-based compensation   410,000    10,000 
Change in fair value of derivative liabilities   136,298    - 
Changes in operating assets and liabilities:          
Accounts receivable   (40,289)   - 
Inventory   (27,301)   - 
Accounts payable and accrued expenses   (48,761)   - 
Net Cash Used In Operating Activities   (701,008)   (10,070)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Net cash paid for business acquisition   (178,711)   (25,000)
Cash paid for machinery and equipment   (14,602)   - 
Net Cash Used In Investing Activities   (193,313)   (25,000)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from issuance of common stock   616,000    70,500 
Proceeds from issuance of convertible note   120,000    - 
Cash paid for debt issuance costs   (15,000)   - 
Net Cash Provided By Financing Activities   721,000    70,500 
           
Net Increase in Cash   (173,321)   35,430 
           
Cash - Beginning of Period   452,275    - 
           
Cash - End of Period  $278,954   $35,430 
           
SUPPLEMENTARY CASH FLOW INFORMATION:          
Cash Paid During the Period for:          
Income taxes  $-   $- 
Interest  $-   $- 
           
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:          
           
Recognition of derivative liability embedded in stock purchase warrant  $255,867   $- 
Debt discount on convertible note  $116,238   $- 
Stock issued for OneLove acquisition  $29,000   $- 
Stock issued for Hygrow acquisition  $60,000   $- 

 

See accompanying notes to the condensed consolidated financial statements

 

 F-23 

 

GROW SOLUTIONS HOLDINGS, INC.

(FORMERLY KNOWN AS LIGHTOUCH VEIN & LASER, INC.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Note 1 — Organization and Operations

 

Grow Solutions Holdings, Inc. (formerly known as LightTouch Vein & Laser, Inc. and Strachan, Inc.) (the “Company”) was organized under the laws of the State of Nevada on May 1, 1981. Currently, the Company provides indoor and outdoor gardening supplies to the rapidly growing garden industry.

 

The Merger

 

Effective April 28, 2015, the Company entered into an Acquisition Agreement and Plan of Merger (the “the Merger”) with Grow Solutions, Inc., a Delaware corporation (“Grow Solutions”) and LightTouch Vein & Laser Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of the Company (“LightTouch Acquisition”). Under the terms of the Merger, Grow Solutions merged with LightTouch Acquisition and became a wholly owned subsidiary of the Company. The Grow Solutions’ shareholders and certain creditors of the Company received 44,005,000 shares of the Company’s common stock in exchange for all of the issued and outstanding shares of Grow Solutions. Following the closing of the Grow Solutions Agreement, Grow Solutions’ business became the primary focus of the Company and Grow Solutions management assumed control of the management of the Company with the former director of the Company resigning upon closing of the Agreement. Shareholders maintained 1,886,612 as part of the recapitalization.

 

As a result of the Merger, the Company discontinued its pre-Merger business. The Merger was accounted for as a “reverse merger,” and Grow Solutions, was deemed to be the accounting acquirer in the reverse merger. Consequently, the assets and liabilities and the historical operations that will be reflected in the financial statements prior to the Merger will be those of Grow Solutions and will be recorded at the historical cost basis and the consolidated financial statements after completion of the Merger will include the assets and liabilities of Grow Solutions., historical operations of the Company, and operations of the Company and its subsidiaries from the closing date of the Merger. As a result of the issuance of the shares of the Company’s Common Stock pursuant to the Merger, a change in control of the Company occurred as of the date of consummation of the Merger. The Merger is intended to be treated as a tax-free exchange under Section 368(a) of the Internal Revenue Code of 1986, as amended. All historical share amounts of the accounting acquirer were retrospectively recast to reflect the share exchange.

 

The Acquisition

 

Effective May 13, 2015 (the “Closing Date”), the Company entered into an Acquisition Agreement and Plan of Merger (the “OneLove Agreement’) with Grow Solutions Acquisition LLC, a Colorado limited liability company and a wholly owned subsidiary of the Company (“Grow Solutions Acquisition”), One Love Garden Supply LLC, a Colorado limited liability company (“OneLove”), and all of the members of OneLove (the “Members”). On the Closing Date, OneLove merged with Grow Solutions Acquisition and became a wholly owned subsidiary of the Company. Under the terms of the OneLove Agreement, the Members received (i) 1,450,000 shares of the Company’s common stock (the “Equity”), (ii) Two Hundred Thousand Dollars (US$200,000) (the “Cash”), and (iii) a cash flow promissory note in the aggregate principal amount of $50,000 issued by OneLove in favor of the Members (the “Cash Flow Note”), whereby each fiscal quarter, upon the Company recording on its financial statements $40,000 in US GAAP Net Income (“Net Income”) from sales of the Company’s products (the “Net Income Threshold”), the Company shall pay to the Members 33% of the Company’s Net Income generated above the Net Income Threshold. The aforementioned obligations owed under the Cash Flow Note shall extinguish upon the earlier of (i) payment(s) by Company in an amount equal to $50,000 in the aggregate or (ii) May 5, 2016 (collectively, the Cash Flow Note, the Equity, and the Cash, the “Consideration”). The Consideration provided to the Members was in exchange for all of the issued and outstanding membership interests of OneLove. Following the Closing Date, OneLove’s business was acquired by the Company and the Company’s management assumed control of the management of OneLove with the former managing members of OneLove resigning from OneLove upon closing of the OneLove Agreement.

 

The Company recorded the purchase of OneLove using the acquisition method of accounting as specified in ASC 805 “Business Combinations.” This method of accounting requires the acquirer to (i) record purchase consideration issued to sellers in a business combination at fair value on the date control is obtained, (ii) determine the fair value of any non-controlling interest, and (iii) allocate the purchase consideration to all tangible and intangible assets acquired and liabilities assumed based on their acquisition date fair values. Further, the Company commenced reporting the results of OneLove on a consolidated basis with those of the Company effective upon the date of the acquisition.

  

 F-24 

 

The Company consolidated OneLove as of May 13, 2015, and the results of operations of the Company include that of OneLove from May 13, 2015 through September 30, 2015.  The Company recognized net revenues attributable to OneLove of $1,318,128 and recognized income of $162,072 during the period May 13, 2015 through September 30, 2015.

  

The following table summarizes fair values of the net liabilities assumed and the allocation of the aggregate fair value of the purchase consideration, and net liabilities to assumed identifiable and unidentifiable intangible assets.

 

Purchase Consideration:     
Common stock at fair market value  $290,000 
Cash paid   200,000 
Cash flow note assumed   50,000 
Current liabilities assumed   226,624 
Total Purchase Consideration  $766,624 

 

The fair value allocation is based on management’s estimates:

 

Purchase Price Allocation    
Cash  $9,961 
Accounts receivable  $13,363 
Inventory  $342,458 
Property and equipment  $932 
Goodwill  $399,910 
Current liabilities  $(226,624)

  

As per the Acquisition agreement, the Company has paid $10,000 of the $50,000 cash flow note and as of September 30, 2015, the balance of the cash flow note is $40,000.

 

Asset Purchase Agreement

 

On September 23, 2015 (the “Closing Date”), the Company entered into an Asset Purchase Agreement (the “APA”) by and among One Love and D&B Industries, LLC, a Colorado limited liability company doing business as Hygrow. On the Closing Date, the Company purchased all of the assets, rights, properties, and business of Hygrow including certain debts of Hygrow (the “Assets”). Under the terms and conditions of the APA, and for full consideration of the transfer of such Assets to the Company on the Closing Date, the Company issued Hygrow three hundred thousand (300,000) shares of common stock of the Company and a payment to Hygrow in the amount of $5,200 in cash. Following the Closing Date the Company’s management assumed control of the management of Hygrow with the former managing members of Hygrow resigning upon closing of the APA.

 

The Company recorded the purchase of Hygrow using the acquisition method of accounting as specified in ASC 805 “Business Combinations.” This method of accounting requires the acquirer to (i) record purchase consideration issued to sellers in a business combination at fair value on the date control is obtained, (ii) determine the fair value of any non-controlling interest, and (iii) allocate the purchase consideration to all tangible and intangible assets acquired and liabilities assumed based on their acquisition date fair values. Further, the Company commenced reporting the results of Hygrow on a consolidated basis with those of the Company effective upon the date of the acquisition.

  

The following table summarizes fair values of the net liabilities assumed and the allocation of the aggregate fair value of the purchase consideration, and net liabilities to assumed identifiable and unidentifiable intangible assets.

 

Purchase Consideration:    
Common stock at fair market value  $60,000 
Cash paid   5,200 
Current liabilities assumed   47,918 
Total Purchase Consideration  $113,118 

 

 F-25 

 

The fair value allocation is based on management’s estimates:

 

Purchase Price Allocation    
Cash  $15,194 
Other assets  $5,213 
Goodwill  $92,710 
Current liabilities  $(47,918)

 

The Financing

 

Also during the period ended September 30, 2015, the Company completed a closing of a private placement offering (the “Offering”) of 2,705,000 Units, at a purchase price of $0.20 per Unit, each Unit consisting of 1 share of the Company’s common stock, and 1 stock purchase warrants. The warrants are exercisable at $0.40 per warrant into a share of the Company’s common stock and have a maturity of 3 years.

 

The aggregate gross proceeds from the closing were $541,000 (the Company recorded $332,570 for the fair value of the warrants as a derivative liability see Note 4).

  

Note 2 — Going Concern and Management’s Plan

 

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  As of September 30, 2015, the Company had a working capital of $336,380 and an accumulated deficit of $1,343,217.  The Company has a history net losses since inception. The Company believes that it has sufficient cash to fund its operations.  However, there is no assurance that the Company’s projections and estimates are accurate.  In the event that the Company does not receive anticipated proceeds operations and financings, it is possible that the Company would not have sufficient resources to continue as a going concern for the next year. In order to mitigate these risks, the Company is actively managing and controlling the Company’s cash outflows. These matters raise substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

The Company’s primary sources of operating funds since inception have been private equity, and debt and equity financings. The Company intends to raise additional capital through private debt and equity investors. The Company needs to raise additional capital in order to be able to accomplish its business plan objectives. The Company is continuing its efforts to secure additional funds through debt or equity instruments. Management believes that it will be successful in obtaining additional financing based on its history of raising funds; however, no assurance can be provided that the Company will be able to do so. There is no assurance that any funds it raises will be sufficient to enable the Company to attain profitable operations or continue as a going concern. To the extent that the Company is unsuccessful, the Company may need to curtail or cease its operations and implement a plan to extend payables or reduce overhead until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.

  

Note 3 — Summary of Significant Accounting Policies

 

Basis of presentation

  

The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”).

 

The unaudited condensed consolidated financial information furnished herein reflects all adjustments, consisting solely of normal recurring items, which in the opinion of management are necessary to fairly state the financial position of the Company and the results of its operations for the periods presented. This report should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s Form 8-K for the period from inception through December 31, 2014 filed with the Securities and Exchange Commission (the “SEC”) on May 4, 2015. The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, footnote disclosure, which would substantially duplicate the disclosure contained in the Company’s Form 8-K for the period from inception through December 31, 2014 has been omitted. The results of operations for the interim periods presented are not necessarily indicative of results for the entire year ending December 31, 2015 or any other period.

 

 F-26 

 

Principles of Consolidation

 

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary,
One Love Garden Supply LLC
. All significant intercompany accounts and transactions have been eliminated in consolidation.

  

Use of estimates and assumptions

  

The preparation of financial statements in conformity with US GAAP 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(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s).

  

Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates and assumptions affecting the financial statements were: 

  

 
(1)
Fair value of long–lived assets: Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long–lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long–lived assets are depreciated over the newly determined remaining estimated useful lives. The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under–performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.

 

 
(2)
Valuation allowance for deferred tax assets: Management assumes that the realization of the Company’s net deferred tax assets resulting from its net operating loss (“NOL”) carry–forwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry–forwards are offset by a full valuation allowance. Management made this assumption based on (a) the Company has incurred a loss, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors.
     
 
(3)
Estimates and assumptions used in valuation of equity instruments: Management estimates expected term of share options and similar instruments, expected volatility of the Company’s common shares and the method used to estimate it, expected annual rate of quarterly dividends, and risk free rate(s) to value share options and similar instruments.
 
 
 
 
(4)
Estimates and assumptions used in valuation of derivative liability: Management utilizes an option pricing model to estimate the fair value of derivative liabilities. The model includes subjective assumptions that can materially affect the fair value estimates.

 

These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

 

Management bases its estimates on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

  

 F-27 

 

Cash and Cash Equivalents

  

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. As of September 30, 2015 and December 31, 2015, the Company had cash and cash equivalents of $278,954 and $452,275, respectively. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash deposits. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”). At times, the Company’s cash and cash equivalent balances may be uninsured or in amounts that exceed the FDIC insurance limits.

  

Inventory

  

Inventory is stated at lower of cost or market using the first-in, first-out (FIFO) valuation method. Inventory was comprised of finished goods at September 30, 2015.

 

Impairment of Long-Lived Assets

 

The Company assesses the recoverability of its long-lived assets, including property and equipment, when there are indications that the assets might be impaired. When evaluating assets for potential impairment, the Company compares the carrying value of the asset to its estimated undiscounted future cash flows.  If an asset’s carrying value exceeds such estimated cash flows (undiscounted and with interest charges), the Company records an impairment charge for the difference.

 

Goodwill

 

Goodwill represents the excess of the purchase price over the fair value of the assets acquired and liabilities assumed. The Company is required to perform impairment reviews at each of its reporting units annually and more frequently in certain circumstances. The Company performs the annual assessment on December 31.

 

In accordance with ASC 350–20 “Goodwill”, the Company is able to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two–step goodwill impairment test. If the Company concludes that it is more likely than not that the fair value of a reporting unit is not less than its carrying amount it is not required to perform the two–step impairment test for that reporting unit.

 

Derivative Liability

 

The Company evaluates its debt and equity issuances to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with paragraph 815-10-05-4 and Section 815-40-25 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated statement of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation and then the related fair value is reclassified to equity.

  

In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

 

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date.

 

The Company adopted Section 815-40-15 of the FASB Accounting Standards Codification (“Section 815-40-15”) to determine whether an instrument (or an embedded feature) is indexed to the Company’s own stock.  Section 815-40-15 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions.  

 

The Company utilizes an option pricing model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The Company records the change in the fair value of the derivative as other income or expense in the consolidated statements of operations.

 

 F-28 

 

Revenue Recognition

 

The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

 

Equity–based compensation

 

The Company recognizes compensation expense for all equity–based payments in accordance with ASC 718 “Compensation – Stock Compensation". Under fair value recognition provisions, the Company recognizes equity–based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.

 

Restricted stock awards are granted at the discretion of the Company. These awards are restricted as to the transfer of ownership and generally vest over the requisite service periods, typically over a five year period (vesting on a straight–line basis). The fair value of a stock award is equal to the fair market value of a share of Company stock on the grant date.

 

The fair value of an option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are inputs into the model. These assumptions are the value of the underlying share, the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is benchmarked against similar companies in a similar industry over the expected option life and other appropriate factors. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on its Common stock and does not intend to pay dividends on its Common stock in the foreseeable future. The expected forfeiture rate is estimated based on management’s best estimate.

 

Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, our equity–based compensation could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If the Company’s actual forfeiture rate is materially different from its estimate, the equity–based compensation could be significantly different from what the Company has recorded in the current period.

 

The Company accounts for share–based payments granted to non–employees in accordance with ASC 505-40, “Equity Based Payments to Non–Employees”. The Company determines the fair value of the stock–based payment as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.  If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete. The fair value of the equity instruments is re-measured each reporting period over the requisite service period.

  

Loss Per Share

  

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, which is the case for the three months ended September 30, 2015 and 2014, the nine months ended September 30, 2015 and the period March 21, 2014 (Inception) through September 30, 2014 presented in these condensed consolidated financial statements, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.

 

 F-29 

 

The Company had the following common stock equivalents at September 30, 2015 and 2014:

 

   September 30,
2015
   September 30,
2014
 
Warrants   4,955,000    - 
Totals   4,955,000    - 

 

Subsequent events 

 

The Company has evaluated events that occurred subsequent to September 30, 2015 and through the date the financial statements were issued.

 

Recent Accounting Pronouncements

 

In February 2015, the FASB issued Accounting Standards Update No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis” (“ASU 2015-02”). The new consolidation standard changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a variable interest entity ("VIE"), and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is allowed, including early adoption in an interim period. A reporting entity may apply a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or may apply the amendments retrospectively. The Company is currently assessing the impact, if any, of the adoption of this guidance on the condensed consolidated financial statements.

 

Note 4 — Notes Receivable and accrued interest

 

In April 2014, the Company signed a letter of intent with Delta Entertainment Group (‘Delta”) to enter into a reverse merger transaction. In exchange for Delta’s exclusivity until the earlier of the execution of a stock exchange agreement or June 30, 2014, the Company paid Delta $25,000. Delta was to use the $25,000 to become current with its public filings. Since the stock exchange transaction was not executed by June 30, 2014, the $25,000 that the Company provided to Delta reverted to a one year note with an interest rate at 8% per annum. As of December 31, 2014, it was determined by the Company that since Delta lacked the financial resources to get current in its public filings, the collectability of the note was doubtful. Accordingly, the Company has not accrued any interest income on the note and has booked a 100% reserve against the note receivable.

 

Note 5 — Convertible note

 

On September 2, 2015, the Company entered into an agreement for the issuance of a convertible note to a third party lender for $120,000. The note accrues interest at 12% per annum maturing on July 2, 2016. The notes are convertible into shares of common stock at a conversion price equal to approximately 58% of the average of the lowest 3 trading prices for the common stock during the 20 day trading period ending on the latest and complete trading day prior to the conversion.

 

Derivative Analysis

 

Because the conversion feature included in the convertible note payable has full reset adjustments tied to future issuances of equity securities by the Company, it is subject to derivative liability treatment under Section 815-40-15 of the FASB Accounting Standard Codification (“Section 815-40-15”).

 

Generally accepted accounting principles require that:

 

a.  
Derivative financial instruments be recorded at their fair value on the date of issuance and then adjusted to fair value at each subsequent balance sheet date with any change in fair value reported in the statement of operations; and
   
b.  
The classification of derivative financial instruments be reassessed as of each balance sheet date and, if appropriate, be reclassified as a result of events during the reporting period then ended.

 

 F-30 

 

Upon issuance of the note, a debt discount was recorded and any difference in comparison to the face value of the note, representing the fair value of the conversion feature and the warrants in excess of the debt discount, was immediately charged to interest expense.  The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the straight-line method which approximates the interest method. The amortization of debt discount is included as a component of interest expense in the condensed consolidated statements of operations. There was unamortized debt discount of $105,532 as of September 30, 2015.

 

The fair value of the embedded conversion feature was estimated using the Black-Scholes option-pricing model. See Note 6 for the estimates and assumptions used.

  

Note 6 — Derivative Liabilities

 

In connection with the private placement transactions during the period ended September 30, 2015, the Company issued 4,955,000 warrants, to purchase common stock with an exercise price of $0.40 and a three year term. The Company identified certain put features embedded in the warrants that potentially could result in a net cash settlement in the event of a fundamental transaction, requiring the Company to classify the warrants as a derivative liability.

 

In connection with the issuance of a convertible note as discussed above in Note 5, the Company evaluated the note agreement to determine if the agreement contained any embedded components that would qualify the agreement as a derivative. The Company identified certain put features embedded in the convertible note agreement that potentially could result in a net cash settlement in the event of a fundamental transaction, requiring the Company to classify the conversion feature as a derivative liability.

  

Level 3 Financial Liabilities – Derivative convertible note and warrant liabilities

 

The following are the major categories of assets and liabilities that were measured at fair value during the nine months ended September 30, 2015, using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3):

 

  

Quoted Prices

In Active

Markets for

Identical

Liabilities

(Level 1)

  

Significant

Other

Observable

Inputs

(Level 2)

  

Significant

Unobservable

Inputs

(Level 3)

  

Balance at

September 30,

2015

 
                 
Embedded conversion feature  $--   $--   $471,660   $471,660 
Warrant liability   --    --    113,446    113,446 
September 30, 2015  $--   $--   $585,106   $585,106 

 

The following table provides a summary of the changes in fair value, including net transfers in and/or out, of all financial assets measured at fair value on a recurring basis using significant unobservable inputs during the nine months ended September 30, 2015.

 

  

Warrant

Liability

  

Embedded

Conversion

Feature

   Total 
Balance - December 31, 2014  $-   $-   $- 
Change in fair value of derivative liability   139,090    (2,792)   136,298 
Issuance of derivative warrant liabilities   332,570    -    332,570 
Included in debt discount   -    116,238    116,238 
Balance – September 30, 2015  $471,660   $113,446   $585,106 

 

The fair value of the derivative feature of the convertible notes and warrants on the issuance dates and at the balance sheet date were calculated using an option model valued with the following weighted average assumptions:

  

   September 30,
2015
Risk free interest rate  0.33% - 1.01%
Dividend yield  0.00%
Expected volatility  113% - 114%
Remaining term  0.83 – 3.00 years

 

 F-31 

 

Risk-free interest rate: The Company uses the risk-free interest rate of a U.S. Treasury Note with a similar term on the date of the grant.

 

Dividend yield: The Company uses a 0% expected dividend yield as the Company has not paid dividends to date and does not anticipate declaring dividends in the near future.

 

Volatility: The Company calculates the expected volatility of the stock price based on the corresponding volatility of the Company’s peer group stock price for a period consistent with the warrants’ expected term.

 

Remaining term: The Company’s remaining term is based on the remaining contractual maturity of the warrants. 

 

During the three and nine months ended September 30, 2015, the Company marked the derivative feature of the warrants to fair value and recorded a gain of $49,259 and a loss of $136,298, respectively, relating to the change in fair value.

 

Note 6 — Stockholders’ Equity

 

Preferred Stock

 

The Company is authorized to issue 25,000,000 shares of preferred stock, $.001 par value, with such rights, preferences, variations and such other designations for each class or series within a class as determined by the Board of Directors. The preferred stock is not convertible into common stock, does not contain any cumulative voting privileges, and does not have any preemptive rights. No shares of preferred stock have been issued.

   

Common Stock

 

During the nine months ended September 30, 2015, the Company issued 1,500,000 shares of common stock to 6 consultants for services rendered. The issuances were recorded at fair value ($0.20 per share) and the Company recognized $300,000 in stock based compensation charges.

 

On August 3, 2015, the Company issued four members of the Board of Directors an aggregate of 600,000 shares of the Company’s common stock. The issuances were recorded at fair value ($0.20 per share) and the Company recognized $110,000 in stock based compensation charges.

 

Also during the period ended September 30, 2015, the Company completed a closing of a private placement offering (the “Offering”) of 2,705,000 Units, at a purchase price of $0.20 per Unit, each Unit consisting of 1 share of the Company’s common stock, and 1 stock purchase warrants. The warrants are exercisable at $0.40 per warrant into a share of the Company’s common stock and have a maturity of 3 years.

 

The aggregate gross proceeds from the closing were $541,000 (the Company recorded $332,570 for the fair value of the warrants as a derivative liability see Note 4).

 

As a result of the OneLove Acquisition and the Hygrow Acquisition, the Company issued 1,450,000 and 300,000 shares of common stock, respectively, to consummate the acquisition.

 

 F-32 

 

Warrants

 

The following is a summary of the Company’s warrant activity during the period from January 1, 2015 to September 30, 2015:

 

   Warrants   Weighted
Average
Exercise Price
 
           
Outstanding – January 1, 2015   2,250,000   $0.40 
Exercisable – January 1, 2015   2,250,000   $0.40 
Granted   2,705,000   $0.40 
Exercised      $ 
Forfeited/Cancelled      $ 
Outstanding – September 30, 2015   4,955,000   $0.40 
Exercisable – September 30, 2015   4,955,000   $0.40 

  

As of September 30, 2015 and December, 31, 2014, the total intrinsic value of options outstanding and exercisable was $0.  

 

Note 7 — Related Party Transactions

 

As per the Acquisition agreement, fully described in Note 1, the Company has paid $10,000 of the $50,000 cash flow note and as of September 30, 2015, the balance of the cash flow note is $40,000, payable to a related party.

 

Note 8 — Commitments and Contingencies

 

Joint Marketing Agreement with Jasper Group Holdings, Inc.

 

On June 29, 2015, the Company and Jasper Group Holdings, Inc. (“Jasper”), entered into a Joint Marketing Agreement (the “Joint Marketing Agreement”) to provide services related to website creation for a legal cannabis job posting platform. The website shall include an employee leasing program and allow employers, recruiters and potential employees to communicate through its platform for a fee. All potential employees will be screened with background checks by independent third parties and provided the necessary applications and related materials for individuals to become licensed in the legal cannabis industry on a state by state basis. In accordance with the terms of the Joint Marketing Agreement, Jasper shall invest all funds necessary to form the website.

  

Pursuant to the Joint Marketing Agreement, the Company issued to Jasper 250,000 common shares upon execution, the shares were issued on July 22, 2015. Additionally, upon the transfer of ownership in the website from Jasper to the Company, the Company shall issue to Jasper an additional 500,000 shares of common stock of the Company.

 

Proceeds derived from the Company’s website shall be divided as follows: (i) the Company shall retain 75% of the gross proceeds less any sales commissions to third parties collected by the Company for all business that is generated through the website (the “Net Fees”) and pay to Jasper a commission equal to 25% of the Net Fees with payments due within 15 days of the end of each quarter (ii) the Company shall grant to Jasper a warrant for the purchase of one share of common stock of the Company, with an exercise price of $0.75 per share, for every dollar of revenue that the Company earns from the website, up to a maximum of One Million Dollars ($1,000,000).

 

The initial term of the Joint Marketing Agreement shall be for three (3) years and shall automatically renew for additional three year periods unless terminated by the Company with written notice at least 30 days prior to the expiration of the initial term, or any subsequent term.

 

Operating Lease

 

The Company assumed the OneLove lease for storefront property in Colorado, which in November 2012, OneLove extended to an additional three years to run from May 1, 2013 through April 30, 2016. The lease requires base annual rent of $60,000 and the Company’s pro-rata charges for operating expenses and taxes for the first year, with 3% increments thereafter.

 

Rent expense totaled $31,388 and $- for the nine months ended September 30, 2015 and 2014, respectively,

 

 F-33 

 

Future minimum lease payments under these non-cancelable operating leases are approximately as follows:

 

Year Ending December 31,    
2015 (remainder of year)  $15,000 
2016   20,000 
Total  $35,000 

 

Litigation

 

In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. There are no such matters as of September 30, 2015.

 

Note 9 — Subsequent Events

 

 

 F-34 

 

14,325,000 Shares of Common Stock

 

GROW SOLUTIONS HOLDINGS, INC.

______________________

 

PROSPECTUS

______________________

 

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON STOCK AND IS NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

Until _____________, all dealers that effect transactions in these securities whether or not participating in this offering may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

 

The Date of This Prospectus is ______________, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PART II — INFORMATION NOT REQUIRED IN THE PROSPECTUS

 

Item. 13  Other Expenses of Issuance and Distribution.

 

Securities and Exchange Commission registration fee
 
$
106.50
 
Federal Taxes
 
$
35
 
State Taxes and Fees
 
$
25
 
Accounting fees and expenses
 
$
25,000
 
Legal fees and expense
 
$
25,000
 
Blue Sky fees and expenses
 
$
250
 
Miscellaneous
 
$
225
 
Total
 
$
50,641.50
 

 

All amounts are estimates other than the Commission’s registration fee. We are paying all expenses of the offering listed above. No portion of these expenses will be borne by the selling shareholders. The selling shareholders, however, will pay any other expenses incurred in selling their common stock, including any brokerage commissions or costs of sale.

 

Item. 14 Indemnification of Directors and Officers.

 

Nevada Revised Statute 78.037 permits a corporation to eliminate or limit the personal liability of a director or officer to the corporation or its stockholders for damages relating to breach of fiduciary duty as a director or officer, but such a provision must not eliminate or limit the liability of a director or officer for (a) acts or omissions which involve intentional misconduct, fraud or a knowing violation of law or (b) the payment of distributions in violation of Nevada Revised Statute 78.300.

 

Nevada Revised Statutes 78.7502 provides as follows with respect to indemnification of directors, officers, employees and agents:

 

(a)
We may indemnify any person who was or is a party or is threatened to be made a party to any action, except an action by us, by reason of the fact that he is or was our director, officer, employee or agent, or is or was serving as a director, officer, employee or agent of any other person at our request, against expenses actually and reasonably incurred by him in connection with the action, suit or proceeding if he: (i) is not liable for breach of his fiduciary duties as a director or officer pursuant to Nevada Revised Statutes 78.138; and (ii) acted in good faith and in a manner which he reasonably believed to be in or not opposed to our best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

 

(b)
We may indemnify any person who was or is a party or is threatened to be made a party to any action by us, by reason of the fact that he is or was our director, officer, employee or agent, or is or was serving as a director, officer, employee or agent of any other person at our request, against expenses actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he: (i) is not liable for breach of his fiduciary duties pursuant to Nevada Revised Statutes 78.138; and (ii) acted in good faith and in a manner which he reasonably believed to be in or not opposed to our best interest.  We may not indemnify him for any claim, issue or matter as to which he has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to us or for amounts paid in settlement to us, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, he is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.

 

(c)
To the extent that our director, officer, employee or agent has been successful on the merits or otherwise in defense of any action, suit or proceeding, or in defense of any claim, issue or matter therein, we are required to indemnify him against expenses, including attorneys’ fees actually and reasonably incurred by him in connection with the defense.

 

The above-described provisions relating to the exclusion of liability and indemnification of directors and officers are sufficiently broad to permit the indemnification of such persons in certain circumstances against liabilities arising under the Securities Act.  Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors and officers and to persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

 

 II-1 

  

Item 15.  Recent Sales of Unregistered Securities.

 

The Company has sold the following securities which were not registered under the Securities Act of 1933, as amended:

 

On February 19, 2015, the Company issued 250,000 shares of common stock to a consulting firm for investor relations and public relations services.

 

On February 19, 2015, the Company issued 150,000 shares of common stock to a consulting firm for strategic business planning, investor relations and public relations services.

 

On February 23, 2015, the Company issued 250,000 shares of common stock to a consulting firm for strategic business planning and investor relations services.

 

Pursuant to the Merger effective April 28, 2015, the Company issued 43,005,000 shares of common stock at par value $0.001 per share to certain individuals for services rendered to the company. These services included corporate formation, corporate structuring, marketing and consulting services.

 

On May 13, 2015, pursuant to the OneLove Agreement, the Company issued in the aggregate 1,450,000 shares of common stock at $0.001 par value per share to the Members of OneLove as partial consideration for the transaction.

 

During the period ended June 30, 2015, the Company conducted a closing of a private placement offering of 2,025,000 units, at a purchase price of $0.20 per unit to ten investors (the “Offering”). Each unit consisting of one share of the Company’s common stock, and one common stock purchase warrant. The warrants are exercisable at $0.40 per warrant into a share of the Company’s common stock and have a maturity of three years. The aggregate gross proceeds from the closing were $405,000.

 

On September 18, 2015, the Company conducted a closing of the Offering of 1,055,000 units, at a purchase price of $0.20 per unit to nine investors. Each unit consisting of one share of the Company’s common stock, and one common stock purchase warrant. The warrants are exercisable at $0.40 per warrant into a share of the Company’s common stock and have a maturity of three years. The aggregate gross proceeds from the closing were $211,000. The Company closed the offering on September 20, 2015.

  

The foregoing securities were not registered under the Securities Act, but qualified for exemption under Section 4(a)(2) of the Securities Act. The securities were exempt from registration under Section 4(a)(2) of the Securities Act because the issuance of such securities by the Company did not involve a “public offering,” as defined in Section 4(a)(2) of the Securities Act, due to the insubstantial number of persons involved in the transaction, size of the offering, and manner of the offering and number of securities offered. The Company did not undertake an offering in which it sold a high number of securities to a high number of investors. In addition, the Investors had the necessary investment intent as required by Section 4(a)(2) of the Securities Act since they agreed to, and received, the securities bearing a legend stating that such securities are restricted pursuant to Rule 144 of the Securities Act. This restriction ensures that these securities would not be immediately redistributed into the market and therefore not be part of a “public offering.” Based on an analysis of the above factors, the Company has met the requirements to qualify for exemption under Section 4(a)(2) of the Securities Act.

 

Item 16.  Exhibits.

 

Exhibit No.
 
Description
     
3.1
 
Articles of Incorporation*
3.2
 
Bylaws*
5.1
 
Legal Opinion (to be provided)
23.1
 
Auditor Consent
23.2
 
Legal Opinion (included in Exhibit 5.1)

  

*Incorporated herein by reference to the Form SB12G filed with the U.S. Securities and Exchange Commission on February 2, 2000.

 

 II-2 

 

Item 17.  Undertakings.

 

The undersigned registrant hereby undertakes:

 

1.
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

 
(i)
To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

 

 
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

 

 
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any change to such information in the registration statement.

 

2. 
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

3. 
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 

4. 
For the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: the undersigned registrant undertakes that in a primary offering of the securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

 

 
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

 

 
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

 

 
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

 

 
(iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

 

 II-3 

 

5.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by itself is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

 

6.
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

 

 
(i)
If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 

 II-4 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Boca Raton, State of Florida on December 2, 2015.

 

 
Grow Solutions Holdings, Inc.
 
 
 
By:
/s/ Jeffrey Beverly
 
 
Jeffrey Beverly
 
 
President and Director
 
 
(Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer)

 

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

 

Name
 
Title
 
Date
         
/s/ Jeffrey Beverly
 
President and Director
 
December 2, 2015
   
(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)
   
         
/s/ Howard Karasik
 
Director
 
December 2, 2015
         
/s/ Leslie Bocskor
 
Director
 
December 2, 2015
         
/s/ William Hayde
 
Director
 
December 2, 2015

  

 

 

II-5

 
fs12015ex23i_growsolutions.htm CONSENT


> ENT> EX-23.1 2 fs12015ex23i_growsolutions.htm CONSENT

EXHIBIT 23.1

 

 

Russell E. Anderson, CPA

Russ Bradshaw, CPA

William R. Denney, CPA

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors

Grow Solutions Holdings, Inc.

535 5th Avenue, 24th Floor

New York, New York 10017

 

We hereby consent to the incorporation of our report dated March 25, 2015, with respect to the financial statements of Grow Solutions Holdings, Inc. (formerly LightTouch Vein & Laser, Inc.) for the years ended December 31, 2014 and 2013, in the Registration Statement of Grow Solutions Holdings, Inc. on Form S-1 to be filed on or about November 30, 2015. We also consent to the use of our name and the references to us included in the Registration Statement.

 

/s/ Anderson Bradshaw PLLC

Anderson Bradshaw PLLC

Salt Lake City, Utah

November 30, 2015

     
     

5296 S. Commerce Dr

Suite 300

Salt Lake City, Utah 84107

USA

(T) 801.281.4700

(F) 801.281.4701

 

 

abcpas.net

   

 

fs12015ex23ii_growsolutions.htm CONSENT


> ENT> EX-23.2 3 fs12015ex23ii_growsolutions.htm CONSENT

Exhibit 23.2

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors

Grow Solutions Holdings, Inc.

 

As independent registered public accountants, we hereby consent to the use of our audit report dated April 27, 2015, with respect to the financial statements of Grow Solutions, Inc. in Grow Solutions Holdings Inc.’s Form S-1.

 

/s/ KLJ & Associates, LLP

 

Edina, Minnesota

December 1, 2015

 

 

 

 

5201 Eden Ave

Suite 300

Edina, MN 55436

630.277.2330

Additional Files
FileSequenceDescriptionTypeSize
0001213900-15-009241.txt   Complete submission text file   4444297
grso-20150930.xml 4 XBRL INSTANCE FILE EX-101.INS 608656
grso-20150930.xsd 5 XBRL SCHEMA FILE EX-101.SCH 36229
grso-20150930_cal.xml 6 XBRL CALCULATION FILE EX-101.CAL 37509
grso-20150930_def.xml 7 XBRL DEFINITION FILE EX-101.DEF 220523
grso-20150930_lab.xml 8 XBRL LABEL FILE EX-101.LAB 362785
grso-20150930_pre.xml 9 XBRL PRESENTATION FILE EX-101.PRE 289451
$GRSO

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