Quarterly Report (10-q)

Date : 08/13/2019 @ 7:09PM
Source : Edgar (US Regulatory)
Stock : Mountain High Acquisitions Corp. (QB) (MYHI)
Quote : 0.006  -0.0007 (-10.45%) @ 5:20PM

Quarterly Report (10-q)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

Form 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2019

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

MOUNTAIN HIGH ACQUISITIONS CORP.

 

(Exact name of registrant as specified in its charter)

 

     
Colorado 333-175825 27-3515499
(State or other jurisdiction (Commission File Number) (IRS Employer
of Incorporation)   Identification Number)

 

 

 

6501 E Greenway Parkway, #103-412

Scottsdale AZ 85254

 

 

 

(Address of principal executive offices)

 

(760) 413-3927

(Registrant’s Telephone Number)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☑No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer Accelerated Filer
       
Non-Accelerated Filer Smaller Reporting Company
       
Emerging Growth Company ☑     

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

 

As of August XX , 2019 there were 211,344,521   shares of the registrant’s $0.0001 par value common stock issued and outstanding.

     

 

 

MOUNTAIN HIGH ACQUISITIONS CORP.

QUARTERLY REPORT

PERIOD ENDED JUNE 30, 2019

 

TABLE OF CONTENTS

 

      Page No.
    PART I - FINANCIAL INFORMATION  
       
Item 1.   Financial Statements 3
       
Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations 11
       
Item 3.   Quantitative and Qualitative Disclosures About Market Risk 14
       
Item 4T.   Controls and Procedures 14
       
    PART II - OTHER INFORMATION  
       
Item 1.   Legal Proceedings 15
       
Item1A.   Risk Factors 15
       
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds 15
       
Item 3.   Defaults Upon Senior Securities 15
       
Item 4.   Mine Safety Disclosures 15
       
Item 5.   Other Information 15
       
Item 6.   Exhibits 15
       
    Signatures 16

 

Special Note Regarding Forward-Looking Statements

 

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Mountain High Acquisitions Corp. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

 

* Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "MYHI" refers to Mountain High Acquisitions Corp.

 

     

 

 

PART I - FINANCIAL INFORMATION

        

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

 

INDEX   F-1  
Consolidated Balance Sheets as of June 30, 2019 (Unaudited) and March 31, 2019   F-2  
Consolidated Statement of Operations for the Three Months Ended June 30, 2019 and June 30, 2018 (Unaudited)  

F-3

 
Consolidated Statement of Stockholders’ Equity (Deficit) from March 31, 2017 to June 30, 2019   F-4  
Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2019 and June 30, 2018 (Unaudited)   F-5  
Notes to the Consolidated Financial Statements (Unaudited)   F-6  

 

  F- 1  

 

 

MOUNTAIN HIGH ACQUISITIONS CORP.
CONSOLIDATED BALANCE SHEETS
         
    June 30,   March 31,
    2019   2019
        (Audited)
ASSETS                
                 
CURRENT ASSETS                
Cash and cash equivalents   $ 78,633     $ 767  
Accounts receivable     —         —    
Notes receivable-current     44,150       43,386  
Other receivables     —         —    
TOTAL CURRENT ASSETS     122,783       44,153  
OTHER ASSETS                
Notes receivable - long term     62,032       73,975  
TOTAL OTHER ASSETS     62,032       73,975  
FIXED ASSETS  (NET)     286,145       305,856  
TOTAL ASSETS   $ 470,960     $ 423,984  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                
                 
CURRENT LIABILITIES                
Accounts payable   $ 4,131     $ 21,544  
Accrued liabilities     151,445       151,445  
Deposit on sale of equipment     50,000       —    
Convertible notes payable, net Beneficial Conversion Feature fully recognized of $885,574     149,188       98,553  
TOTAL CURRENT LIABILITIES     354,764       271,542  
                 
STOCKHOLDERS' EQUITY (DEFICIT):                
Preferred stock, $0.0001 par value; 250,000,000 shares authorized, 100,000 and 100,000 shares issued and outstanding as of June 30, 2019 and March 31, 2019 respectively     10       10  
Common stock, $0.0001 par value; 500,000,000 shares authorized, 208,519,694 and 203,832,914 shares issued and outstanding as of June 30, 2019 and March 31, 2019 respectively     20,852       20,383  
Additional paid in capital     15,321,968       15,257,436  
Accumulated (deficit)     (15,226,634 )     (15,125,387 )
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)     116,196       152,442  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)   $ 470,960     $ 423,984  
                 
                 
The accompanying notes are an integral part of these consolidated financial statements

 

  F- 2  

 

 

MOUNTAIN HIGH ACQUISITIONS CORP.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
     
    For the Three Months ended
    June 30,
    2019   2018
Revenue   $ —       $ —    
Cost of revenue     —         —    
Gross profit     —         —    
                 
Depreciation     19,711       11,750  
Director fees     22,500       45,000  
Professional fees     33,643       —    
Selling, general and administrative expenses     11,085       40,927  
Warrant expense     —         597,000  
      86,939       694,677  
(Loss) from operations     (86,939 )     (694,677 )
                 
Debt discount expense     (12,500 )     —    
Other income (expense)     1,327       649  
Interest Expense     (3,135 )     (8,294 )
                 
Net income (loss)   $ (101,247 )   $ (702,322 )
                 
Net Income (loss) per share-basic                
Continuing operations     (0.00 )     (0.01 )
                 
Net Income (loss) per share-diluted                
Continuing operations     (0.00 )     (0.01 )
                 
Weighted average shares outstanding - basic and diluted     207,314,117       98,169,616  
                 
                 
The accompanying notes are an integral part of these consolidated financial statements

 

  F- 3  

 

MOUNTAIN HIGH ACQUISITIONS CORP.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM MARCH 31, 2017 TO JUNE  30, 2019
                             
                          Total
    Preferred Stock   Common Stock   Additional Paid-in   Accumulated   Shareholders' Equity
    Shares   Amount   Shares   Amount   Capital   Deficit   (Deficit)
Balance March 31, 2017     —         —         72,691,389       7,269       5,925,827       (6,338,799 )     (405,703 )
                                                         
Shares issued for services rendered     100,000       10       2,570,000       257       328,917       —         329,184  
                                                         
Loss on market value of Preferred shares     —         —         —         —         2,084,300       —         2,084,300  
                                                         
Note payable conversion     —         —         20,947,193       2,095       682,190       —         684,285  
                                                         
Warrants     —         —         —         —         115,100       —         115,100  
                                                         
Convertible Note Payable Beneficial Conversion Feature     —         —         —         —         471,500       —         471,500  
                                                         
Net (loss)     —         —         —         —         —         (3,351,723 )     (3,351,723 )
                                                         
Balance March 31, 2018     100,000     $ 10       96,208,582     $ 9,621     $ 9,607,834     $ (9,690,522 )     (73,057 )
                                                         
Shares issued for services rendered     —         —         80,000       8       6,072       0       6,080  
                                                         
Note payable conversion     —         —         10,099,332       1,010       289,250       0       290,260  
                                                         
Cashless warrants issued     —         —         9,500,000       950       596,050       0       597,000  
                                                         
One Lab Co contribution     —         —         —         —         159,667       —         159,667  
                                                         
One Lab Co purchase     —         —         88,000,000       8,800       4,596,334       —         4,605,134  
                                                         
Shares issued to consultant     —         —         225,000       23       10,321       —         10,344  
                                                         
Shares returned                     (280,000 )     (28 )     (8,092 )     —         (8,120 )
                                                         
Net (loss)     —         —         —         —         —         (5,434,865 )     (5,434,865 )
                                                         
Balance March 31, 2019     100,000     $ 10       203,832,914     $ 20,383     $ 15,257,436     $ (15,125,387 )   $ 152,442  
                                                         
Note payable conversion     —         —         4,686,780       469       64,532       —         65,001  
                                                         
Net (loss)     —         —         —         —         —         (101,247 )     (101,247 )
                                                         
Balance June 30, 2019     100,000     $ 10       208,519,694     $ 20,852     $ 15,321,968     $ (15,226,634 )   $ 116,196  

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

  F- 4  

 

MOUNTAIN HIGH ACQUISITIONS CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
         
   

For the Three Months ended

June 30,

    2019   2018
CASH FLOWS FROM OPERATING ACTIVITIES                
Net (loss)   $ (101,247 )     (702,322 )
Adjustment to reconcile net loss to net Cash used in operating activities:                
Depreciation and amortization     19,711       11,750  
Original issue discount     12,500       —    
Warrants expense     —         597,000  
Changes in operating assets and liabilities:                
Increase/(decrease) in accounts payable     (17,412 )     —    
(Increase)/decrease in accounts receivable             36,647  
Change in other receivables     11,179       —    
Increase/(decrease) in accrued liabilities     —         —    
Interest expense     3,135       —    
Net cash provided (used) by operating activities     (72,134 )     (56,925 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
Fixed Assets     —         (35,000 )
Deposit on sale of equipment     50,000       —    
Net cash provided by investing activities     50,000       (35,000 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
Accounts receivable converted to note receivable     —         —    
Note conversions     —         (10,262 )
Proceeds from shares for services     —         6,080  
Proceeds from borrowings     100,000       18,758  
Net cash (used) provided by financing activities     100,000       14,576  
                 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     77,866       (77,349 )
                 
CASH AND CASH EQUIVALENTS                
Beginning of the period     767       109,464  
End of the period   $ 78,633       32,115  
                 
Supplemental disclosures of cash flow information                
Taxes paid   $ —       $ —    
Interest paid   $ —       $ —    
                 
                 
The accompanying notes are an integral part of these consolidated financial statements

 

  F- 5  

 

 

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.

 

  F- 6  

 

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:

 

· a significant decrease in the market value of an asset;
· a significant adverse change in the extent or manner in which an asset is used; or
· an accumulation of costs significantly in excess of the amount originally expected for the acquisition of an asset.

 

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.

 

  F- 7  

 

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:

 

Extraction Equipment   $ 159,667  
Grow Equipment     235,000  
Less: accumulated depreciation and amortization     (108,522 )
Total   $ 286,145  

 

 

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.

  F- 8  

 

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.:

 

Andrew Cervasio   $ 11,217     Lesser of $0.03 or 80% lowest closing bid 15 days prior to conversion
St. George Financial   $ 23,378     180 days from closing at lower of 65% of avg. 2 lowest closing bid 15 days prior to conversion
St.George Financial   $ 114,594     180 days from closing at lower of 65% of avg. 2 lowest closing bid 15 days prior to conversion
    $ 149,188      

 

 

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.

 

  F- 9  

 

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION

 

FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections. We may use words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “foresee,” “estimate” and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted. You should read this report completely and with the understanding that actual future results may be materially different from what we expect. The forward-looking statements included in this report are made as of the date of this report and should be evaluated with consideration of any changes occurring after the date of this Report. We will not update forward-looking statements even though our situation may change in the future and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

 

BUSINESS OPERATIONS

 

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 and improvements to the containers that could be made. The container improvements and facility power requirement issue took a few months to resolve.

 

Effective June5, 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 an 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 $5,000.00 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.

 

Effective 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.

 

  11  

 

RESULTS OF OPERATIONS

 

Workin g Capital

 

    As of June 30, 2019
Total Current Assets   $ 122,783  
Total Current Liabilities     (354,764 )
Working Capital (Deficit)   $ (231,981 )

 

Cash Flows

   

Three months Ended

June 30, 2019

Cash Flows from (used in) Operating Activities   $ (72,134 )
Cash Flows from (used in) Investing Activities     50,000  
Cash Flows from (used in) Financing Activities     100,000  
Net Increase (decrease) in Cash during period   $ 77,866  

 

Operating Revenues

 

Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018

 

During the three months ended June 30, 2019 an d 2018, the Company recorded no revenues.

 

Operating Expenses and Net Loss

 

Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018

 

The net loss for the three months ended June 30, 2019 was $101,247 compared to a net loss of $702,322 for the three months ended June 30, 2018.

 

The loss for the three months ended June 30, 2019 consists of director fees of $22,500, other SG&A of $11,085, depreciation of $19,711, professional fees of $33,643, interest expense of $3,135 offset by $1,327 of other income and an original issued discount of $12,500.

 

The net loss for the three months ended June 30, 2018 consisted of depreciation of $11,750, director fees of $45,000, other SG&A of $40,927, warrant expense of $597,000, interest expense of $8,294 offset by $649 of other income.

 

Liquidity and Capital Resources

 

At June 30, 2019, the Company’s cash balance and total assets were $78,633 and $470,960, respectively.

 

At June 30, 2019, the Company had total liabilities of $354,764, consisting of $4,131 in accounts payable, $151,445 in accrued liabilities, $50,000 in deposit unearned, and $149,188 in convertible notes payable.

 

As at June 30, 2019, the Company had a working capital deficit of $231,981.    

 

Cashflow used in Operating Activities

 

During the three month period ended June 30, 2019, the Company used $72,134 of cash for Operating Activities compared to cash used for operating activities of $56,925 for the three months ended June 30, 2018.

 

Cash used for operations for the three month period ended June 30, 2019 were our loss of $101,247 offset by an increase in depreciation of $19,711, an increase in an original issued discount of 12,500, a decrease in accounts payable of $17,412, an increase in other receivables of $11,174, and interest expense of $3,135.

 

Cash used for operations for the three month period ended June 30, 2018 consisted of our loss of $702,322 offset by an increase in depreciation of $11,750, warrant expense of $597,000, and an increase in accounts receivable of $36,647.

 

Cashflow used in Investing Activities

 

Cash provided by investing activities as of June 30, 2019 was $50,000 compared to $35,000 for the three months ended June 30, 2018.

 

Cashflow from Financing Activities

 

During the three month period ended June 30, 2019, the Company provided $100,000 of cash in financing activities compared to cash provided by financing activities of $14,576 for the three months ended June 30, 2018.

 

  12  

 

Going Concern

 

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. No assurance can be given as to the availability of financing or on the terms thereof. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern.

 

Off-Balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

 

Future Financings

 

We will continue to rely on equity sales of our common shares and advances from our majority stockholders in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.

 

Critical Accounting Policies

 

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

 

Contractual Obligations

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

 

Recently Issued Accounting Pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

  13  

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

 

ITEM 4. Controls and Procedures

 

Disclosure Controls and Procedures

 

Based on an evaluation as of the date of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as required by Exchange Act Rule 13a-15. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2019 to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms.

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

Management’s Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate control over financial reporting (as defined in Rule 13a-15(f) promulgated under the Exchange Act. Our management assessed the effectiveness of our internal control over financial reporting as of June 30, 2019. In making this assessment management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013) (COSO) . Our management has concluded that, as of June 30, 2019, our internal control over financial reporting is effective based on these criteria.

 

Changes in Internal Control and Financial Reporting

 

There has been no change in our internal control over financial reporting identified in connection with our evaluation we conducted of the effectiveness of our internal control over financial reporting as of June 30, 2019, that occurred during our first fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  

 

This quarterly report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.

 

  14  

 

PART II—OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

 

 

ITEM 1A. RISK FACTORS

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

 

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

Quarterly Issuances:

 

None

 

Subsequent Issuances:

 

None

 

 

ITEM 3. Defaults Upon Senior Securities

 

None.

 

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

 

ITEM 5. OTHER INFORMATION

 

None.

 

 

ITEM 6. EXHIBITS

 

Exhibit

Number

  Description of Exhibit   Filing
31.1   Certification of Principal Executive Officer Pursuant to Rule 13a-14   Filed herewith.
31.2   Certification of Principal Financial Officer Pursuant to Rule 13a-14   Filed herewith.
32.1   CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act   Filed herewith.
32.2   CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act   Filed herewith.
101.INS*   XBRL Instance Document   Filed herewith.
101.SCH*   XBRL Taxonomy Extension Schema Document   Filed herewith.
101.CAL*   XBRL Taxonomy Extension Calculation Linkbase Document   Filed herewith.
101.LAB*   XBRL Taxonomy Extension Labels Linkbase Document   Filed herewith.
101.PRE*   XBRL Taxonomy Extension Presentation Linkbase Document   Filed herewith.
101.DEF*   XBRL Taxonomy Extension Definition Linkbase Document   Filed herewith.

 

  15  

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

  MOUNTAIN HIGH ACQUISITIONS CORP.
   
   
Dated:  August 13, 2019 /s/ Alan Smith                    
  By: Alan Smith
  Its: President, CEO, CFO, and Director

 

 

16  

Mountain High Acquisitions Corp. (USOTC:MYHI)
Historical Stock Chart

1 Year : From Dec 2018 to Dec 2019

Click Here for more Mountain High Acquisitions Corp. Charts.

Mountain High Acquisitions Corp. (USOTC:MYHI)
Intraday Stock Chart

Today : Friday 6 December 2019

Click Here for more Mountain High Acquisitions Corp. Charts.

Latest MYHI Messages

{{bbMessage.M_Alias}} {{bbMessage.MSG_Date}} {{bbMessage.HowLongAgo}} {{bbMessage.MSG_ID}} {{bbMessage.MSG_Subject}}

Loading Messages....


No posts yet, be the first! No {{symbol}} Message Board. Create One! See More Posts on {{symbol}} Message Board See More Message Board Posts


Your Recent History
LSE
GKP
Gulf Keyst..
LSE
QPP
Quindell
FTSE
UKX
FTSE 100
LSE
IOF
Iofina
FX
GBPUSD
UK Sterlin..
Stocks you've viewed will appear in this box, letting you easily return to quotes you've seen previously.

Register now to create your own custom streaming stock watchlist.


NYSE, AMEX, and ASX quotes are delayed by at least 20 minutes.
All other quotes are delayed by at least 15 minutes unless otherwise stated.