Note
1 - Organization and Basis of P
resentation
Organization
and Line of Business
Mountain
High Acquisitions Corp., formerly known as Wireless Attachments, Inc., (the “Company”) was incorporated under the
laws of the State of Colorado on September 22, 2010. The Company was originally incorporated for the purpose of developing solar
cloth membranes for outdoor active wear that covert sunlight into electrical power and that can be used for charging and/or operating
mobile devices such as the iPod and the iPhone.
The
Company is currently in the business of acquiring companies and technologies engaged in the development, production, sales and
marketing of CBD related products
On
April 30, 2015, the Company entered into a Sale and Purchase Agreement to sell Canna-Life Corporation (the "CL Agreement"),
a wholly owned subsidiary, to Evolution Equities Corporation and Alan Smith.("Purchasers") Under the terms of the CL
Agreement the Company sold 8,104,000 (100%) of its shares of Canna-Life and executed a note Payable for $80,000 to Evolutions
Equities Corporation in exchange for the extinguishment of $490,416 of debt due to the Purchasers at March 31, 2015 and $1.00
cash.
On
May 22, 2015 the Company completed the acquisition of Greenlife Botanix ("Greenlife") as detailed in the First Amendment
to the Shareholder Agreement dated February 8, 2015. The Company issued 10,000,000 restricted shares of its common stock to the
shareholders of Greenlife in exchange for their 100% interest in Greenlife. The shares were valued at the market value on the
date of issuance, $0.23, $2,300,000. The amount paid for Greenlife was recorded as Goodwill due to the start up nature of and
the minimal net assets of Greenlife at the time of acquisition. Due changes in anticipated acquisitions and the remarketing of
the Greenlife product line, the Company evaluated the book value of the asset and elected to impair the goodwill value of Greenlife
and expensed the $2,300,000 book value in the nine months ended December 31, 2015.
Going
Concern
The
accompanying consolidated 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. The Company has
incurred a net loss of $890,149, has an accumulated deficit of $6,286,863 and a working capital deficit of $572,645 as of
December 31, 2016. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern.
These consolidated financial statements do not include any adjustments that might result from the outcome of this
uncertainty. These consolidated financial statements do not include an
y adjustments relating to the recoverability and
classification of recorded asset amounts, or amounts and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern. Management plans to continue to raise capital to fund the Company’s
operations and believes that it can continue to raise equity or debt financing to support its operations until the Company is
able to generate positive cash flow from operations.
Note 2 – Summary of Significant
Accounting Policies
Basis
of Presentation
The accompanying consolidated financial statements
have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”).
The accompanying consolidated financial statements have been presented in United States Dollars ($ or “USD”). The fiscal
year end is March 31.
Principles of Consolidation
The accounts of the Company and its wholly
owned subsidiary GreenLife Botanix are included in the accompanying consolidated financial statements. All intercompany balances
and transactions were eliminated in consolidation.
Use of Estimates
The preparation of financial statements in
conformity with US GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
It is possible that accounting estimates and assumptions may be material to the Company due to the levels of subjectivity and
judgment involved.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand
and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months
or less.
Revenue Recognition
In accordance with the Securities and Exchange
Commission’s (“SEC”) Staff Accounting Bulletin No. 104,
Revenue Recognition
, the Company will recognize
revenue when it is realized or realizable and earned. The Company must meet all of the following four criteria under SAB 104 to
recognize revenue:
-
Persuasive
evidence of an arrangement exists
-
Delivery has
occurred
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The sales price
is fixed or determinable
-
Collection
is reasonably assured
Inventories
Inventories
consisting of cosmetic products are stated at the lower of cost or market. Cost is determined using the first-in, first-out method
and are adjusted to actual cost quarterly based on a physical count. Net realizable value is the estimated selling price in the
ordinary course of business, less applicable variable selling expenses.
Intangible Assets
The Company accounts for intangibles in accordance
with ASC 350, Intangible-Goodwill and Other. The Company evaluates intangibles, at a minimum, on an annual basis and whenever events
and changes in circumstances suggest that the carrying amount may not be recoverable. Impairment of intangibles is tested by comparing
the carrying amount to the fair value. The fair values are estimated using undiscounted projected net cash flows. If the carrying
amount exceeds its fair value, intangibles are considered impaired and a second step is performed to measure the amount of impairment
loss, if any. The Company evaluates the impairment of intangibles as of the end of each fiscal year or whenever events or changes
in circumstances indicate that an intangible asset’s carrying amount may not be recoverable. These circumstances include:
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a
significant decrease in the market value of an asset;
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a
significant adverse change in the extent or manner in which an asset is used; or
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an
accumulation of costs significantly in excess of the amount originally expected for the
acquisition of an asset.
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Income Taxes
The Company accounts for income taxes in accordance
with ASC Topic 740,
Income Taxes
. ASC 740 requires a company to use the asset and liability method of accounting for income
taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized
for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities
and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely
than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of enactment.
Under ASC 740, a tax position is recognized
as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with
a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50%
likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit
is recorded. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above
is reflected as a liability for unrecognized tax benefits in the balance sheets along with any associated interest and penalties
that would be payable to the taxing authorities upon examination. Applicable interest and penalties associated with unrecognized
tax benefits are classified as additional income taxes in the statements of operations. The open tax years are 2011, 2012, 2013,
2014, 2015and 2016.
The Company
has no tax positions at December 31, 2016, or March 31, 2016, for which the ultimate deductibility is highly certain but for which
there is uncertainty about the timing of such deductibility.
Basic and Diluted Loss Per Share
Earnings per share is calculated in accordance
with the ASC Topic 260,
Earnings Per Share
. Basic earnings per share is based upon the weighted average number of common
shares outstanding. Diluted earnings per share is based on the assumption that all dilutive convertible shares and stock warrants
were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, warrants are assumed
to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used
to purchase common stock at the average market price during the period. There were 604,000 warrants outstanding at December 31,
2016, which were excluded from the diluted loss per share calculation as their inclusion would be anti-dilutive.
Recent Accounting Pronouncements
Recent authoritative guidance issued by the
FASB (including technical corrections to the FASB Accounting Standards Codification), the American Institute of Certified Public
Accountants, and the SEC, did not, or are not expected to have a material effect on the Company’s consolidated financial
statements.
Note 3 – Advances from Stockholder
Alan Smith, the Company’s Chief Executive
officer and a director, has advanced money to fund the Company’s operations. The amount due to this shareholder at December
31, 2016 and March 31, 2016 was a 5% convertible note payable of $16,232 and $15,001, respectively. The $16,100 Advances from related
parties refers to an unsecured advance by the President of GreenLife Botanix, Brent McMahon. Mr. McMahon is not an officer or Director
of the Company. Mr. McMahon is a shareholder in MYHI.
Note 4 – Equity
Common Stock
The Company has authorized 250,000,000 shares
of common stock with a par value of $0.0001 per share and 250,000,000 shares of preferred stock with a par value of $0.0001 per
share.
In connection with a private placement offering
in March 2014 the Company sold 604,000 units, each unit consisting of one share of the Company’s common stock and a warrant
to purchase one share of the Company’s common stock. The warrants have an exercise price of $4.75 and expire on March 6,
2017.
During March 2015, the Company sold 420,000
restricted shares of common stock through a private placement at $0.15 per share. These shares were issued on April 14, 2015
During the year ended March 31, 2016 the Company
issued 336,667 restricted shares through a private placement at $0.15 per share.
On May 22, 2015, the Company issued 10,000,000
restricted shares to the shareholders of Greenlife Botanix pursuant to closing the Share Exchange Agreement dated February 8, 2015.
The shares were valued at the fair market trading value, $0.23, on the closing date.
The Company issued 353,600 restricted shares
to a vendor in lieu of payment of $35,360 that was owed to the vendor at March 31, 2015.
Pursuant to agreements with potential investors;
Alan Smith, CEO and a Director, retired 2,000,000 shares of MYHI. The share retirement was valued at par $0.0001 per share.
During the nine months ended December 31, 2016,
the Company converted $313,921 of Notes Payable into 20,928,015 shares of common stock at $0.015 per share per the conversion agreements.
On November 1, 2016, the Board of Directors
reviewed the share position of the officers and Directors of the Company and granted Richard Stifel, CFO and a Director, 2,500,000
restricted shares of MYHI stock at $.0001 per share. The value of the shares was $164,500 and the Company recorded an expense of
$162,000 for shares in lieu of compensation in the three months ended December 31, 2016.
Warrants
The following table summarizes the warrant
activity:
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Weighted
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Weighted
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Average
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Average
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Remaining
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Aggregate
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Number of
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Exercise
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Contractual
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Intrinsic
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Warrants
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Price $
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Life (in years)
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Value $
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Outstanding, March 31, 2015
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904,000
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$
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4.50
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Exercised
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—
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Forfeited/Canceled
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(300,000
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)
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Outstanding, December 31, 2016
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604,000
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$
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4.75
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.18
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Exercisable, December 31, 2016
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604,000
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$
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4.75
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.18
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$
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0.00
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The number and weighted average exercise prices
of all warrants outstanding as of December 31, 2016, are as follows:
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Warrants Outstanding and Exercisable
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Weighted
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Weighted
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Average
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Average
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Exercise
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Number
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Exercise
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Remaining
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Price $
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of Warrants
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Price $
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Life (Years)
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4.75
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604,000
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4.75
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.18
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604,000
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Note 5 – Income Taxes
The Company accounts for income taxes using
the asset and liability approach in accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized
based on anticipated future tax consequences, using currently enacted tax laws, attributable to temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes.
The Company has federal net operating loss
carryforwards of approximately $4,071,140, expiring in various years through 2037. The tax benefit of these net operating losses
has been offset by a full allowance for realization. The use of the net operating loss carryfowards may be limited due to the
change in control.
Income tax expense (benefit) consists of the following for the nine
months ended December 31, 2016:
Current taxes
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$
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—
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Deferred taxes
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1,457,971
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Less: valuation allowance
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(1,457,971
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Net income tax provision
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$
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—
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The Company’s effective tax rate differs from the high statutory
rate for the period ended December 31, 2016, due to the following (expressed as a percentage of pre-tax income):
Federal taxes at statutory rate
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$
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34.0
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%
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State taxes, net of federal tax benefit
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5.0
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%
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Valuation allowance
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(39.0
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)%
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Effective income tax rate
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$
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0.0
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%
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As of December 31, 2016, the components
of these temporary differences and the deferred tax asset were as follows:
Deferred Tax assets:
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Net operating loss carryforward
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$
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2,519,223
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Less: valuation allowance
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(2,519,223
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Net deferred tax assets
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$
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—
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Note 6 – Commitments and Contingencies
None
Note 7 - Notes Payable
During the Quarter ended December 31, 2016
the Company issued notes payable to private parties and converted some of these Notes Payable into restricted common stock. Each
note had interest rates of 3%-5% and had a conversion provision allowing the holder to convert the note into shares of the Company
at a discount. The discount varied from 70% of the trading value at the conversion date to the lower of 80% of the share value
on the conversion date or $0.015, this is referred to as the Beneficial Conversion Feature, "BCF". Due to the fact that
the notes could be converted immediately or any time thereafter, there is no amortization of expense, so the Company has elected
to record an expense in the current year for the difference between the "BCF and the share value on the date the note was
executed, This resulted in an expense of $285,765 for the nine months ended December 31, 2016 and an aggregate expense of $459,563
to date through December 31, 2016. During the three months ended December 31, 2016, the Company converted $151,290 of existing
Notes Payable into 10,086,000 of common stock. During the three months ended December 31, 2016, the Company also issued $44,364
of additional convertible Notes Payable.
Note 8 - Related Party Transactions
On November 1, 2016, the Board of Directors
reviewed the share position of the officers and Directors of the Company and granted Richard Stifel, CFO and a Director, 2,500,000
restricted shares of MYHI stock at $.0001 per share. The value of the shares was $164,500 and the Company recorded an expense
of $162,000 for shares in lieu of compensation in the three months ended December 31, 2016.
Note 9 – Subsequent Events
On January 24,
2017, the Company issued convertible notes payable of $115,000 to various holders. The notes have a one year term with 5% interest.
The notes may be converted at any time during the term of the note.
The conversion price
per share shall be the lesser of $0.03 per share or 80% of the lowest closing bid price of the common stock in the 15 days prior
to conversion.
On January 21, 2017, two officers and Directors
of the Company each converted $9,000.00, of principal amount of convertible notes, a total of $18,000.00 into an aggregate of
1,200,000 shares of restricted common stock, pursuant to the terms of each of their convertible notes payable from the Company.