Note
1 - Organization and Basis of Presentation
Organization and Line of Business
The Company is in the business of providing
infrastructure assets to licensed producers, processors and retailers engaged in the cannabis industry. The Company plans to acquire
further assets such as equipment, real estate and technologies beyond those described below through the use of cash flow generated
by operations.
In May 2017, the Company formed MYHI-AZ to
acquire equipment to service the growing cannabis industry. In September 2017, the Company entered into a consulting agreement
with D9 Manufacturing, "D9," to provide D9 customers with infrastructure equipment. Also in September 2017, MYHI-AZ purchased
2 intermodal grow containers from D9 to be used in a grow operation in Arizona. MYHI-AZ leased the grow containers to D9 for 3
years with the right to extend the lease for an additional 2 years. The lease began August 15, 2017. The lease provided for a monthly
lease rate of $20,000 a month and required advance payment for operating supplies and expenses. The monthly lease rate was recorded
as Revenue and an Account Receivable while the advances were recorded as an Other Receivable. The monthly lease payments were to
commence on harvesting of the first crop. The containers were planted in October 2017 with an expected harvest in January 2018.
The initial grow operation encountered a power failure which ultimately resulted in the loss of the crop. The loss of this crop
resulted in a deferral of collection of the lease rental payments and the operating cost payments. The power failure highlighted
electrical issues with the facility where the containers are being used and improvements to the containers that could be made.
The container improvements and facility power requirement issue took a few months to resolve.
Effective June 5, 2018, MYHI-AZ and D9 agreed
to convert the current amount due under the operating lease, representing $150,000 in lease payments and $22,294 in operating expenses,
into a $135,000 note payable, (the "Note"), with a term of 3 years and interest rate of 7% per annum, and to capitalize
$35,000 for improvements to the containers. The first payment on the Note was due October 3, 2018. The Parties also agreed to terminate
the current lease effective March 31, 2018 and replace it with a new lease beginning July 1, 2018 with lease payments of $5,000
per month beginning November 1, 2018. This replacement lease was terminated on March 31, 2019 as D9 was unable to successfully
complete a harvest due to the ongoing power problems and a shift in the focus of their company to extraction only. The Company
intends to sell the containers to generate capital to finance this change in focus and has received a $50,000 deposit from a prospective
buyer in that regard.
On August 18, 2018, the Company entered into
an Exchange Agreement (the “Exchange Agreement”) with Alchemy Capital LLC (“Alchemy”) pursuant to which
Alchemy, the sole shareholder of One Lab Co (“Labco”), agreed to exchange 100% of the capital stock of Labco for 88,000,000
restricted shares of the Company (the “MYHI Shares”). The Exchange Agreement called for the issuance of 20,000,000
MYHI Shares at Closing and 68,000,000 MYHI Shares after certain equipment under order by Labco at the time (the “Equipment”)
was delivered pursuant to a Lease Agreement (the “Lease”) between Labco and Workforce Labor Solutions, LLC (“the
Lessee”) . The Equipment consists of a state-of-the-art intermodal extraction laboratory, engineered and designed specifically
for processing cannabis. The Lease calls for monthly payments of $25,000 and has a five year term commencing November 1, 2018 with
an option to renew for a second five year term. As of July 31, 2019, the Lessee was six months in arrears on the lease. The Company
has been in constant discussion with the Lessee regarding this delinquency and hopes to resolve the matter before the end of the
current quarter.
In conjunction
with the acquisition of One Labco and its tangible assets including the Equipment and the Lease, the Company also acquired intangible
assets such as industry relationships, access to capital resources and acquisition opportunities. These intangible assets were
classified as Goodwill. MYHI issued the 88,000,000 shares of restricted common stock in accordance with the terms of the Exchange
Agreement and recorded the acquisition of the Equipment at a cost value of $159,666 and Goodwill of $4,605,134. As of March 31,
2019, the intangible asset was fully impaired.
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 $101,247 for the three months ended June
30, 2019 and has an accumulated deficit of $15,226,634. These conditions raise substantial doubt as to the Company’s ability
to continue as a going concern. These consolidated financial statements do not include any adjustments that might result from
the outcome of this uncertainty. These consolidated financial statements do not include any adjustments relating to the recoverability
and classification of recorded asset amounts, or amounts and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern. Management plans to continue to raise capital to fund the Company’s operations
and believes that it can continue to raise equity or debt financing to support its operations until the Company is able to generate
positive cash flow from operations.
Note 2 – Summary of Significant
Accounting Policies
Basis
of Presentation
The accompanying consolidated financial
statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US
GAAP”). The accompanying consolidated financial statements have been presented in United States Dollars ($ or “USD”).
The fiscal year end is March 31.
Principles of Consolidation
The accounts of the Company and its wholly–owned
subsidiaries GreenLife Botanix, MYHI-AZ and One Lab Co are included in the accompanying consolidated financial statements. All
intercompany balances and transactions were eliminated on 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
As of January 1, 2018, we adopted ASU No. 2014-09,
“Revenue from Contracts with Customers” (ASU 2014-09). Leasing revenue recognition is specifically excluded
and therefore the new standard is only applicable to service fee and consulting revenue. A five-step model has been introduced
for an entity to apply when recognizing revenue. The new guidance also includes enhanced disclosure requirements. The
guidance was effective January 1, 2018. The adoption did not have an impact on our financial statements.
Revenue represents lease revenue for the grow
containers pursuant to the Company's lease with D9 and extraction equipment lease pursuant to the Labco share exchange agreement.
For the three months ended June 30, 2019 the Company recorded no revenue.
Fixed Assets
Fixed Assets are stated at cost. Depreciation
is provided on fixed assets using the straight-line method over an estimated service life of five years for equipment.
The cost of normal maintenance and
repairs is charged to operating expenses as incurred. Material expenditures which increase the life of an asset are capitalized
and depreciated over the estimated remaining useful life of the asset.
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 2012, 2013, 2014,
2015, 2016, 2017 and 2018.
The Company
has no tax positions at June 30, 2019 and 2018, 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.
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 – Note Receivable
In May 2017, the Company formed MYHI-AZ to
acquire equipment to service the growing cannabis industry. In September 2017, the Company entered into a consulting agreement
with D9 Manufacturing, "D9," to provide D9 customers with infrastructure equipment. Also in September 2017, MYHI-AZ purchased
2 intermodal grow containers from D9 to be used in a grow operation in Arizona. MYHI-AZ leased the grow containers to D9 for 3
years with the right to extend the lease for an additional 2 years. The lease began August 15, 2017. The lease provided for a monthly
lease rate of $20,000 a month and required advance payment for operating supplies and expenses. The monthly lease rate was recorded
as Revenue and an Account Receivable while the advances were recorded as Other Receivable. The monthly lease payments were to commence
on harvesting of the first crop. The containers were planted in October 2017 with an expected harvest in January 2018. The initial
grow operation encountered a power failure which ultimately resulted in the loss of the crop. The loss of this crop resulted in
a deferral of collection of the lease rental payments and the operating cost payments. The power failure highlighted electrical
issues with the facility where the containers were being used and improvements to the containers that could be made. While the
container improvements were made, the facility power requirement issues were never fully resolved.
Effective September 11, 2018, MYHI-AZ and D9 agreed to convert the
current amount due under the operating lease, representing $150,000 in lease payments and $22,294 in operating expenses, into a
$135,000 note payable, (the "Note"), with a term of 3 years and interest rate of 7% per annum, and to capitalize $35,000
for improvements to the containers. The first payment on the Note was due October 3, 2018.
In addition, and in anticipation of the resolution of the power
issues at the grow facility, the Parties agreed to terminate the current lease effective March 31, 2018 and replace it with a new
lease beginning July 1, 2018 with lease payments of $5,000 per month beginning November 1, 2018. This replacement lease was terminated
on March 31, 2019 as D9 was unable to successfully complete a harvest due to the ongoing power problems and a shift in the focus
of their company to extraction only. The Note however remained in full force and effect.
As of
June 30, 2019, D9 was up to date with the required Note payments. The Company is confident that D9 will continue to make the re
quired
payments for the full term of the Note as D9 has entered into a partnership with Verano Holdings LLC effective February 27, 2019
for the provision of extraction services. This relationship will provide D9 with a more stable platform from which to operate
their business.
Note 4 – Fixed Assets
Fixed
assets consist of the following at June 30, 2019:
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Extraction Equipment
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$
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159,667
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Grow Equipment
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235,000
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Less: accumulated depreciation
and amortization
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(108,522
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)
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Total
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$
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286,145
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Note 5 –
Accrued liabilities
As of June 30, 2019, total accrued liabilities
consisted of $151,445. A total of $138,945 is related to a liability due to Brent McMahon for Greenlife selling and administrative
expenses. A total of $12,500 is related to Greenlife office lease expenses.
Note 6 – Equity
Common Stock
Effective June 12, 2017, the Company increased
its authorized shares of common stock to 500,000,000 shares with a par value of $0.0001 per share. The Company has 250,000,000
shares of preferred stock with a par value of $0.0001 per share.
On June 12, 2017, the Company issued 100,000
shares of Series B Convertible Preferred stock to an outside consulting firm for consulting services, valued at $109,700, which
was recorded as consulting fees in the three months ended June 30, 2017. Due to the super voting provision of the Series B Convertible
Preferred stock the Company recorded a loss on valuation of the shares of $2,084,300, the equivalent of 20,000,000 shares less
the associated consulting expense of $109,700.
During the three months ended June 30, 2019,
the Company converted $65,000 of convertible notes into 4,686,780 shares of common stock.
Note 7 - Notes Payable
At June 30, 2019, the Company had outstanding
convertible notes payable to third parties in the amount of $149,188. The notes had interest rates of 3%-12% and had a conversion
provision allowing the holder to convert each note into shares of the Company at a discount. This is referred to as the Beneficial
Conversion Feature, "BCF". Due to the fact that the notes could be converted immediately or any time thereafter, there
is no amortization of expense, so the Company has elected to record an expense in the current year for the difference between the
BCF and the share value on the date the note was executed.:
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Andrew Cervasio
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$
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11,217
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Lesser of $0.03 or 80% lowest closing bid 15 days prior to conversion
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St. George Financial
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$
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23,378
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180 days from closing at lower of 65% of avg. 2 lowest closing bid 15 days prior to conversion
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St.George Financial
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$
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114,594
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180 days from closing at lower of 65% of avg. 2 lowest closing bid 15 days prior to conversion
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$
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149,188
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Note 8 - Related Party
Transactions
Effective April 1, 2017, Alan Smith assigned
his consulting agreements and all future amounts due under the agreements to Evolution Equities Corp, "Evolution". Evolution
is a related party due to Mr. Smith's ownership interest and positions in the company. Evolution was paid $22,500 for the three
months ended June 30, 2019. Additionally, the Company has retained KWPR Group, “KWPR”, a public relations company to
assist with web site maintenance, press release preparation and social network posts. KWPR is a related party as the owner Kelly
Wood is wife to the CEO Mr. Alan Smith. As of June 30, 2019 the total fees paid to KWPR was $7,500.
Note 9 – Officer fees
As of June 30, 2019, total officer fees paid
were $22,500 to the Company’s CEO and Director.
Note 10 – Commitments and Contingencies
None.
Note 11 – Subsequent Events
None.