Note
1 - Organization and Basis of Presentation
Organization and Line of Business
On May 22, 2016 the Company completed the acquisition
of Greenlife Botanix ("Greenlife") as detailed in the First Amendment to the Shareholder Agreement dated February 8,
2016. 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, for a total consideration
of $2,300,000. The amount paid for Greenlife was recorded as Goodwill due to the start up nature of Greenlife and the minimal net
assets of Greenlife at the time of acquisition. Subsequent to the purchase of Greenlife the Company executed a rescission agreement
with Freedom Seed and Feed, "FSF", which prevented Greenlife from becoming a fully integrated cosmetic company. Due to
the rescission of FSF 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 year ended March 31, 2017. Greenlife started
operations on September 18, 2014. In May 2017, the Company formed MYHI-AZ to acquire equipment to service the growing cannabis
industry. In June 2017 the Company entered into a consulting agreement with D9 Manufacturing, "D9", to provide D9 customers
with infrastructure equipment. Also in June 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 ability to extend the lease for an additional 2 years.
The lease began August 15, 2017. The lease provides for a monthly lease rate of $20,000 a month and requires advance payment for
operating supplies and expenses. The monthly lease rate is recorded as revenue and an Account Receivable while the advances are
recorded as an Other Receivable. Both amounts are due when the crop is harvested. 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 the crop has resulted in a deferral of collection of the lease rental payments and the operating cost
payments. A new crop is being planted in January 2018 with an anticipated harvest in May 2018. Due to continued operations with
D9 and potential future opportunities with D9, the Company believes the current and future receivable amounts will be collected
in full.
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 $2,919,114 and used cash for operations
of $791,398 for the nine months ended December 31, 2017 and has an accumulated deficit of $9,257,912 and a working capital deficit
of $649,575 as of December 31, 2017. These conditions raise substantial doubt as to the Company’s ability to continue as
a going concern. These consolidated financial statements do not include any adjustments that might result from the outcome of this
uncertainty. These consolidated financial statements do not include any adjustments relating to the recoverability and classification
of recorded asset amounts, or amounts and classification of liabilities that might be necessary should the Company be unable to
continue as a going concern. Management plans to continue to raise capital to fund the Company’s operations and believes
that it can continue to raise equity or debt financing to support its operations until the Company is able to generate positive
cash flow from operations.
Note 2 – Summary of Significant
Accounting Policies
Basis
of Presentation
The accompanying consolidated financial statements have been
prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). The
accompanying consolidated financial statements have been presented in United States Dollars ($ or “USD”). The fiscal
year end is March 31.
Principles of Consolidation
The accounts of the Company and its wholly–owned
subsidiary GreenLife Botanix 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
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
-
The sales price is fixed or determinable
-
Collection is reasonably assured
Revenue for FY 2018 represents lease revenue
for the grow containers pursuant to the Company's lease with D9.
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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•
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a
significant decrease in the market value of an asset;
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•
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a
significant adverse change in the extent or manner in which an asset is used; or
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•
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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, 2015, 2016 and 2017.
The
Company has no tax positions at December 31, 2017 or March 31, 2017, 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 – Advances from Related
Parties
At December 31, 2017 and March 31, 2017, $138,945
due to Brent McMahon, former President of GreenLife Botanix, was reclassified from Current Liabilities to Advances from Related
Parties. Mr. McMahon is considered a related party due to his common stock position at March 31, 2017, however his ownership position
as of December 31, 2017 is undeterminable.
Note 4 – 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.
During the year ended March 31, 2017 the Company
issued 503,334 restricted shares through a private placement at $0.15 per share.
On May 22, 2016, The Company issued 10,000,000
restricted shares to the shareholders of Greenlife Botanix pursuant to closing the Share Exchange Agreement dated February 8, 2016.
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, 2016. The shares were recorded at the fair market
value of $0.25 per share or $88,400. The difference in value, $53,040, was written off as a loss on extinguishment of debt in the
year ended March 31, 2017.
Pursuant to agreements with potential investors,
on May 12, 2015 Alan Smith, CEO and a Director, retired 2,000,000 shares he received from the reverse merger referenced above.
The share retirement was valued at par $0.0001 per share.
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 year ended March 31, 2017.
On February 23, 2017, the Company issued 3,000,000
shares of restricted common stock valued at $71,700, the fair value of the stock, pursuant to a consulting contract dated October
11, 2016 with Clearview Consulting for services rendered.
During the year ended March 31, 2017, the Company
converted $506,587287 of Convertible Notes Payable into 33,772,455 shares of restricted common stock at $0.015 per share per the
conversion agreements. Included in this conversion were $192,667 of Convertible Notes Payable for notes held by the Officers and
Directors of the Company. which were converted into 12,844,440 shares of restricted common stock, 4,888,958 shares to Richard G.
Stifel, CFO and Director and 7,955,482 shares to Alan Smith, CEO and Director.
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 to 20,000,000 less the associated
consulting expense of $109,700.
During the nine months ended December 31, 2017
the Company converted $210,910 of convertible notes payable into 8,553,838 shares of free trading common stock of the Company.
During the nine months ended December 31, 2017
the Company issued 2,430,000 shares of restricted Common Stock, pursuant to consulting agreements valued at $308,432.
Warrants
Pursuant to the Warrant to Purchase Shares
of Common Stock Agreement, dated June 30, 2017, the Company granted the right to St. George Investments LLC, to purchase at any
time on or after the Issue Date of June 30, 2017 until the date which is the last calendar day of the month in which the fifth
anniversary of the Issue Date occurs a number of fully paid and non-assessable shares of Company's common stock, par value $0.0001
per share, equal to $173,000 divided by the Market Price as of the Issue Date. The closing stock price on June 30, 2017 was $0.1273,
equating to 1,358,995 shares of common stock. The warrant was issued in connection with the Securities Purchase Agreement, dated
June 30, 2017, for $346,000. Pursuant to ASC 470-20-25-2 the company fair valued the warrants at $115,100 to be debited to debt
discount and amortized over the term of the note. The Warrants contain a ratcheting feature for future share issuances. The Company
issued shares in July 2017 for conversion of notes payable and in September 2017 for consulting agreements. These share issuances
were for convertible notes and contracts that were in existence prior to the execution of the St. George agreement and were exempt
from any ratcheting calculation.
A summary of the status of the Company’s outstanding
stock warrants and changes during the periods is presented below:
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Shares available to purchase with warrants
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Weighted
Average
Price
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Weighted
Average
Fair Value
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Outstanding, March 31, 2017
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—
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$
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—
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$
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—
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Issued
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1,358,995
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$
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.1273
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$
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.1273
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Exercised
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—
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$
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—
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$
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—
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Forfeited
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—
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$
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—
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$
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—
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Expired
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—
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$
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—
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$
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—
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Outstanding, December 31, 2017
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1,358,995
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$
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.1273
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$
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.1273
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Exercisable, December 31, 2017
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1,358,995
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$
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.1273
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$
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.1273
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Range
of Exercise Prices
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Number
Outstanding 12/31/2017
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Weighted
Average Remaining Contractual Life
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Weighted
Average Exercise Price
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$0.1273
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1,358,995
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4.68 years
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$
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0.1273
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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 $4,500,931 expiring in various years through 2037. The tax benefit of these net operating losses
has been offset by a full allowance for realization. The use of the net operating loss carryfowards may be limited due to a change
in control.
Income tax expense (benefit) consists of the following for the nine
months ended December 31, 2017:
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Current taxes
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$
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—
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Deferred taxes
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227,688
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Less: valuation allowance
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(227,688
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)
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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 nine months ended December 31, 2017, due to the following (expressed as a percentage of pre-tax income):
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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, 2017, the components of these temporary
differences and the deferred tax asset were as follows:
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Deferred Tax assets:
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Net operating loss carryforward
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$
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1,038,892
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Less: valuation allowance
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(1,038,892
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)
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Net deferred tax assets
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$
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—
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Note 6 - Notes Payable
At December 31, 2017 the Company had outstanding
convertible notes payable to third parties in the amount of $489,475. The notes had interest rates of 3%-12% and had conversion
provision allowing the holder to convert the 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. This amount cannot exceed the value of the note. This resulted
in an expense of $136,500 and $285,765 for the nine months ended December 31, 2017 and 2016 respectively. The following details
outstanding convertible notes as of December 31, 2017:
Note Holder
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Amount
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Conversion Terms
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Andrew Cervasio
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10,476.74
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Lesser of $0.03 or 80% lowest closing bid 15 days prior to conversion
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Conner Preston
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10,476.74
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Lesser of $0.03 or 80% lowest closing bid 15 days prior to conversion
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Laurence Gershman
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10,476.74
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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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391,709.78
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180 days from closing at lower of 65% of avg. 2 lowest closing bid 15 days prior to conversion or $0.15
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Power Up
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66,335.24
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180 days from closing at lowest closing bid 15 days prior to conversion
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489,475.24
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During the nine months ended December 31, 2017,
the Company borrowed $63,000 from Power Up Lending Group, which caused an event of default on the convertible notes due to St.
George Investments, "St. George". The Company cured the event of default by executing a Forbearance Agreement with St.
George in which the Company agreed to increase its obligation to St. George by $27,500, which was recorded as Forbearance Expense
in the current period and to not pursue additional funding without prior approval from St. George. St. George agreed to not accelerate
the due date of the note or to increase the interest rate of the note as a result of executing the Forbearance Agreement.
Note 7 - Related Party Transactions
On April 1, 2016, the Company executed consulting
agreements with Alan Smith, CEO, and Richard Stifel, CFO for administrative services for the Company. For the three months ended
December 31, 2016 Mr. Smith was paid $7,500 and Mr. Stifel was paid $12,500. For the 9 months ended December 31, 2016 Mr. Smith
was paid $15,000 and Mr. Stifel was paid $20,000. For the three months ended December 31, 2016 accruals for Mr. Smith and Mr. Stifel
were $22,500 each. For the 9 months ended December 31, 2016 accruals for Mr. Smith and Mr. Stifel were $60,000 each.
Effective April 1, 2017, Mr. Smith and Mr.
Stifel assigned their consulting agreements and all future amounts due under the agreement to Evolution Equities Corp, "Evolution"
and RGS Resources LLC, "RGS" respectively. Evolution and RGS are related parties due to Mr. Smith's and Mr. Stifel's
ownership interest and positions in the companies. Evolution and RGS were each paid $12,500 and $50,000 for the three months and
nine months ended 12/31/2017 respectively. For the three months ended December 31, 2017 accruals for Evolution and RGS were $22,500
each. For the 9 months ended December 31, 2017 accruals for Evolution and RGS were $67,500 each.
Note 8 – Commitments and Contingencies
None
Note 9 – Subsequent Events
On January 23, 2018, the Company executed a
convertible promissory note to St. George Investments LLC, "St. George" for $335,000 under similar terms to the previous
convertible note with St. George.