UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________

FORM 10-K

____________

 

☑	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Fiscal Year Ended March 31, 2017
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
	For the Transition Period from ________ to _________

 

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)
	(303) 358-3840
	(Registrant’s Telephone Number)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

 

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

 

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

 

Large Accelerated Filer ☐	Accelerated Filer ☐
Non-Accelerated Filer ☐	Smaller Reporting Company ☑

 

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

 

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant is $11,073,435 based upon the price $0.213 at which the common stock was last sold as of the last business day of the most recently completed fourth fiscal quarter, multiplied by the approximate number of shares of common stock held by persons other than executive officers, directors and five percent stockholders of the registrant without conceding that any such person is an “affiliate” of the registrant for purposes of the federal securities laws. Our common stock is traded in the over-the-counter market and quoted on the Over-The-Counter Bulletin Board under the symbol “MYHI.”

 

As of June 6, 2017 there were 84 shares of the registrant’s $0.001 par value common stock issued and outstanding.

 

Documents incorporated by reference: None

 

Table of Contents

 

		Page
	PART I
Item 1	Business	4
Item 1A	Risk Factors	5
Item 1B	Unresolved Staff Comments	5
Item 2	Properties	5
Item 3	Legal Proceedings	5
Item 4	Mine Safety Disclosures	5
	PART II
Item 5	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	6
Item 6	Selected Financial Data	6
Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operations	7
Item 7A	Quantitative and Qualitative Disclosures about Market Risk	9
Item 8	Financial Statements and Supplementary Data	10
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	22
Item 9A	Controls and Procedures	22
Item 9B	Other Information	22
	PART III
Item 10	Directors and Executive Officers and Corporate Governance	23
Item 11	Executive Compensation	26
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	27
Item 13	Certain Relationships, Related Transactions and Director Independence	28
Item 14	Principal Accounting Fees and Services	28
	PART IV
Item 15	Exhibits	29

 

FORWARD-LOOKING STATEMENTS

 This Annual Report on Form 10-K 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. These risks and uncertainties include the following:

 

•

The availability and adequacy of our cash flow to meet our requirements;

•

Economic, competitive, demographic, business and other conditions in our local and regional markets;

•

Changes or developments in laws, regulations or taxes in our industry;

•

Actions taken or omitted to be taken by third parties including our competitors, as well as legislative, regulatory, judicial and other governmental authorities;

•

Competition in our industry;

•

The loss of or failure to obtain any license or permit necessary or desirable in the operation of our business;

•

Changes in our business strategy, capital improvements or development plans;

•

The availability of additional capital to support capital improvements and development; and

•

Other risks identified in this report and in our other filings with the Securities and Exchange Commission or the SEC.

 

This report should be read 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.

 

Use of Term

 

Except as otherwise indicated by the context hereof, references in this report to “Company,” “MYHI,” “we,” “us” and “our” are references to Mountain High Acquisitions Corp.  All references to “USD” or United States Dollars refer to the legal currency of the United States of America.

 

PART I

 

ITEM 1. BUSINESS

 

History

 

The Company is currently in the business of acquiring companies and technologies engaged in the development, production, sales and marketing of CBD related products and processes

 

On April 1, 2015 the Company entered into a Share Exchange Agreement with Freedom Feed & Seed Inc. (the “FSF Share Exchange Agreement”). Pursuant to the Share Exchange Agreement, the Company acquired 75,000 (100%) shares of common stock of FSF from FSF (the “FSF Shares”) and in exchange issued 31,429,000 restricted shares of its common stock to the FSF Shareholders (the “MYHI Shares”). As a result of the Share Exchange Agreement, FSF became a wholly-owned subsidiary of the Company. The Share Exchange Agreement contained customary representations, warranties and conditions to closing. The transaction closed on May 19, 2015.

 

Subsequent to the above transaction, FSF and MYHI enter into a Rescission Agreement (the "RA") on June 30, 2015 rescinding the Exchange Agreement. As provided in the RA all MYHI shares issued to FSF were to be returned to MYHI and cancelled and MYHI was to return all FSF shares received to FSF. FSF had until August 1, 2015 to return the MYHI shares, at which point the RA granted the Secretary of MYHI the power to cancel the shares in total as attorney-in-fact for the holders of the MYHI shares. As of March 31, 2016, none of the shares had been cancelled. On April 25, 2016, 28,604,173 of the shares were returned and cancelled. A hold has been placed on the remaining 2,824,827 outstanding shares by our transfer agent.

 

On May 22, 2015 the Company completed the acquisition of Greenlife Botanix ("Greenlife") as detailed in the First Amendment to the Shareholder Agreement dated February 8, 2015. The Company issued 10,000,000 restricted shares of its common stock to the shareholders of Greenlife in exchange for their 100% interest in Greenlife. The shares were valued at the market value on the date of issuance, $0.23, 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, see the table below. Subsequent to the purchase of Greenlife the Company entered into a rescission agreement with Freedom Seed and Feed, "FSF", which impaired the integration of Greenlife and FSF into 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, 2016.

 

Property Acquisitions

 

On April 30, 2015, the Company entered into a Sale and Purchase Agreement to sell Canna-Life Corporation (the "CL Agreement") to Evolution Equities Corporation and Alan Smith.("Purchasers"). Under the terms of the CL Agreement the Company sold 8,104,000 (100%) of its shares of Canna-Life and executed a note Payable for $80,000 to Evolutions Equities Corporation in exchange for the extinguishment of $490,416 of debt due to the Purchasers at March 31, 2016 and $1.00 cash.

 

Intellectual Property

 

The Company does not own any intellectual property and has yet to incur any expenses for research and development other than as disclosed herein.

    

Employees

 

As of the date of this Report, the Company has no full-time employees or part-time employees. Our officers and directors have consulting agreements with the Company to serve in these capacities. We intend to increase the number of our employees and consultants to meet our needs as the Company grows.

 

WHERE YOU CAN GET ADDITIONAL INFORMATION

 

We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy our reports or other filings made with the SEC at the SEC’s Public Reference Room, located at 100 F Street, N.W., Washington, DC 20549. You can obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also access these reports and other filings electronically on the SEC’s web site, www.sec.gov.

 

ITEM 1A. RISK FACTORS

 

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 1B. UNRESOLVED STAFF COMMENTS

 

None.

 

ITEM 2. PROPERTIES

 

Our principal executive office is located at 6501 E Greenway Parkway, Suite 103-412, Scottsdale, AZ 85254. Currently, this space is sufficient to meet our needs. If we require additional space, we do not foresee any significant difficulties in obtaining additional space. 

 

ITEM 3. 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 4. MINE SAFETY DISCLOSURES

 

Not applicable.

PART II

ITEM 5. Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Common Stock

 

Our Common Stock is currently quoted on the OTCQB. Our Common Stock has been quoted on the OTC Bulletin Board from June 14, 2012 through March 11, 2014 under the symbol “WRSS.OB.” Effective March 12, 2014, our symbol was changed to “MYHI.OB.” Because we are quoted on the OTCQB, our securities may be less liquid, receive less coverage by security analysts and news media, and generate lower prices than might otherwise be obtained if they were listed on a national securities exchange.

 

The following table sets forth the high and low bid prices for our Common Stock per quarter for the past two years as reported by the OTC Markets based on our fiscal year end March 31. These prices represent quotations between dealers without adjustment for retail mark-up, markdown or commission and may not represent actual transactions.

 

		High	Low
Year Ended March 31, 2017
Quarter Ended March 31, 2017		0.86	0.10
Quarter Ended December 31, 2016		0.08	0.0199
Quarter Ended September 30, 2016		0.0325	0.0102
Quarter Ended June 30, 2016		0.09535	0.019
Year Ended March 31, 2016
	Quarter Ended March 31, 2016	0.0699	0.023
	Quarter Ended December 31, 2015	0.046	0.01
	Quarter Ended September 30, 2015	0.163	0.02
	Quarter Ended June 30, 2015	0.35	0.101

 

Record Holders

 

As of March 31, 2017 an aggregate of 72,691,389 shares of our Common Stock were issued and outstanding and were owned by approximately 84 holders of record, based on information provided by our transfer agent.

 

Recent Sales of Unregistered Securities

 

None.

 

Re-Purchase of Equity Securities

 

None.

 

Dividends

 

We have not paid any cash dividends on our common stock since inception and presently anticipate that all earnings, if any, will be retained for development of our business and that no dividends on our common stock will be declared in the foreseeable future. Any future dividends will be subject to the discretion of our Board of Directors and will depend upon, among other things, future earnings, operating and financial condition, capital requirements, general business conditions and other pertinent facts. Therefore, there can be no assurance that any dividends on our common stock will be paid in the future.

 

Securities Authorized for Issuance Under Equity Compensation Plans

 

The Company has not authorized any securities for issuance under an Equity Compensation Plan.

 

ITEM 6. SELECTED FINANCIAL DATA

 

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 7. Management's Discussion and Analysis oF FINANCIAL CONDITION AND rESULTS of OperationS

 

This Annual Report on Form 10-K 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.

 

RESULTS OF OPERATIONS

 

Working Capital

 

		March 31, 2017				March 31, 2016
Current Assets		$	10,399			$	94,284
Current Liabilities			416,102				540,966
Working Capital (Deficit)		$	(405,703	)		$	(445,682	)

 

Cash Flows

 

		Year ended March 31, 2017				Year ended March 31, 2016
Cash Flows from (used in) Operating Activities		$	(365,864	)		$	(355,839	)
Cash Flows from (used in) Investing Activities			—				44,592
Cash Flows from (used in) Financing Activities			341,275				346,190
Net Increase (decrease) in Cash during period		$	(24,589	)		$	34,943

 

Operating Revenues

 

During the year ended March 31, 2017 the Company had revenue of $16,374 compared to $23,057 for the year ended March 31, 2016. The revenue was for sale of cosmetic products by the Company's wholly owned subsidiary GreenLife.

 

Operating Expenses and Net Loss

 

The net loss for the year ended March 31, 2017 was $942,099 compared to a net loss of $2,938,475 for year ended March 31, 2016. The net loss for the year ended March 31, 2017 consisted of a $240,276 for beneficial conversion feature on notes payable, $162,000 for shares issued in lieu of compensation for a Director, $249,200 for consulting fees, impairment expense of $55,161, $29,455 for interest expense and $83,299 for professional fees

 

The net loss for the year ended March 31, 2016 consisted of a $2,300,000 impairment of the GreenLife purchase, $328,841 for selling and administrative expenses, a loss of $156,689 for the extinguishment of debt, note payable interest, and loss on business transaction and a $173,798 expense for recognition of a Beneficial Conversion Feature on notes payable.

 

Liquidity and Capital Resources

 

At March 31, 2017, the Company’s cash balance and other current assets was $10,399 compared to $94,284 at March 31, 2016. The decrease was due to impairment of the inventory and use of cash in the operation of the Company.

 

At March 31, 2017, the Company had total liabilities of $416,102 compared with total liabilities of $540,966 at March 31, 2016.  The decrease in total liabilities was attributed to an increase of $125,979 of accounts payable and accrued liabilities for unpaid operating costs, a decrease of $234,743 in convertible notes, and a $16,100 decrease in related parties liability.

 

At March 31, 2017, the Company had a working capital deficit of $405,703 compared to a working capital deficit of $446,682 at March 31, 2016.  

 

Cashflow from Operating Activities

 

During the year ended March 31, 2017, the Company used $365,864 of cash for operating activities compared to the use of $355,839 of cash for operating activities during the year ended March 31, 2016. The decrease in cash used for operating activities for the year ended March 31, 2017 was due to the operating loss of $942,099, reduced by $240,276 for the Beneficial Conversion Feature on notes payable, $162,000 for Director shares issued in lieu of compensation and $121,298 of balance sheet changes. The decrease in cash used for operating activities for the year ended March 31, 2016 was due to a loss of $2,938,475 reduced by the $2,300,000 non-cash fair value write off of the GreenLife purchase, $173,498 for the Beneficial Conversion Feature on notes payable and $58,838 of balance sheet changes.

 

Cashflow from Investing Activities

 

The Company did not have any cash flow impact from investing activities for the year ended March 31, 2017. The Company provided cash from investing activities for the year ended March 31, 2016 of $44,592 from the gain on the purchase of GreenLife and the gain on deposition of Canna-Life.

 

Cashflow from Financing Activities

 

During the year ended March 31, 2017, the Company received $341,275 from financing activities, $506,587 from conversion of notes payable into stock, a reduction of $410,476 in notes payable and an increase in advances from shareholders of $245,164 for additional notes payable. During the year ended March 31, 2016, the Company received $346,19 from financing activities consisting of $75,500 from the sale of restricted stock through private placements and 205,690 from the conversion of debt to convertible notes and $65,000 from outside investors, supported by convertible notes.

 

Going Concern

 

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. 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 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

 

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.

 

ITEM 7A. 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 8. Financial Statements AND SUPPLEMENTARY DATA

 

  

 

 

 

 

MOUNTAIN HIGH ACQUISITIONS CORP.

 

 

Financial Statements

 

 

For the Years Ended March 31, 2017 and March 31, 2016

 

 

 

Report of Independent Registered Public Accounting Firm	2
Consolidated Balance Sheets	3
Consolidated Statements of Operations	4
Consolidated Statements of Stockholder’s Equity (Deficit)	5
Consolidated Statements of Cash Flows	6
Notes to the Financial Statements	7

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Board of Directors and Stockholders of Mountain High Acquisitions Corp.:

 

We have audited the accompanying consolidated balance sheets of Mountain High Acquisitions Corp. (“the Company”) as of March 31, 2017 and 2016 and the related statement of operations, stockholders’ equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit. 

 

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion. 

 

In our opinion, the financial statement referred to above present fairly, in all material respects, the financial position of Mountain High Acquisitions Corp., as of March 31, 2017 and 2016, and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles in the United States of America.

 

The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the Company's internal control over financial reporting.  Accordingly, we express no such opinion.

 

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

 

 

/s/ BF Borgers CPA PC

BF Borgers CPA PC
Lakewood, CO
June 5, 2017 

 

 

MOUNTAIN HIGH ACQUISITIONS CORP.
CONSOLIDATED BALANCE SHEETS
		March 31,				March 31,
		2017				2016
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	10,399			$	34,988
Prepaid expenses			—				—
Inventory			—				59,296
TOTAL CURRENT ASSETS			10,399				94,284
TOTAL ASSETS		$	10,399			$	94,284
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable		$	23,378			$	91,344
Accrued liabilities			92,500				—
Accrued payroll			—				37,500
Convertible notes payable, net Beneficial Conversion
Feature fully recognized of $414,074			161,279				396,022
Advances from Related Parties			138,945				16,100
TOTAL CURRENT LIABILITIES			416,102				540,966
COMMITMENTS AND CONTINGENCIES			—				—
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $0.0001 par value; 250,000,000 shares authorized, nil shares issued and outstanding			—				—
Common stock, $0.0001 par value; 250,000,000 shares authorized, 72,691,389 and 33,418,934 shares issued and outstanding as of March 31, 2017 and March 31, 2016 respectively			7,269				3,342
Additional paid in capital			5,925,827				4,946,691
Accumulated (deficit)			(6,338,799	)			(5,396,715	)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)			(405,703	)			(446,682	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)		$	10,399			$	94,284
The accompanying notes are an integral part of these consolidated financial statements

 

 

MOUNTAIN HIGH ACQUISITIONS CORP.
CONSOLIDATED STATEMENT OF OPERATIONS
		Year Ended March 31,
		2017				2016
Revenue		$	16,374			$	23,057
Cost of revenue			4,135				2,204
Gross profit			12,239				20,853
Impairment			55,161				2,300,000
Director expense			162,000				—
Selling, general and administrative expenses			427,446				328,841
			644,607				2,628,841
(Loss) from operations			(632,368	)			(2,607,988	)
Interest Expense resulting from Beneficial Conversion Feature			(240,276	)			(173,798	)
Interest Expense			(29,455	)			(11,946	)
Other income (expense)			(40,000	)			(144,743	)
Net income (loss)		$	(942,099	)		$	(2,938,475	)
Net Income (loss) per share-basic
Continuing operations			(0.02	)			(0.10	)
Net Income (loss) per share-diluted
Continuing operations			(0.02	)			(0.10	)
Weighted average shares outstanding - basic and diluted			50,095,492				28,079,857
The accompanying notes are an integral part of these consolidated financial statements

 

 

MOUNTAIN HIGH ACQUISITIONS CORP.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM JANUARY 29, 2014 (INCEPTION) TO MARCH 31, 2017
																		Total
		Common Stock									Additional Paid-in				Accumulated				Shareholders’ Equity
			Shares				Amount				Capital				Deficit				(Deficit)
Shares issued for cash			8,104,000				810				610,690				—				611,500
Shares issued in connection with recapitalization/ reverse merger			15,788,000				1,579				(37,689	)			—				(36,110	)
Net (loss)			—				—				—				(133,607	)			(133,607	)
Balance March 31, 2014			23,892,000				2,389				573,001				(133,607	)			441,783
Fair value of warrants issued for services			—				—				1,257,000				—				1,257,000
Proceeds received for shares not issued			—				—				63,000				—				63,000
Shares issued in lieu of compensation			250,000				25				24,975				—				25,000
Net (loss)			—				—				—				(2,324,618	)			(2,324,618	)
Balance, March 31, 2015			24,142,000				2,414				1,917,976				(2,458,225	)			(537,835	)
Issue shares for proceeds received			420,000				42				(42	)			—				—
Private placement			503,334				51				75,449				—				75,500
Purchase GreenLife			10,000,000				1,000				2,299,000				—				2,300,000
Retire shares from reverse merger			(2,000,000	)			(200	)			200				—				—
Issue shares in lieu of payment			353,600				35				88,365				—				88,400
Sale of Canna-Life			—				—				391,945				—				391,945
Convertible Note Payable Beneficial Conversion Feature			—				—				173,798				—				173,798
Net (loss)			—				—				—				(2,938,475	)			(2,938,475	)
Balance March 31, 2016			33,418,934				3,342				4,946,691				(5,396,700	)			(446,682	)
Note payable conversion			33,772,455				3,377				503,210				—				506,587
Shares issued for services rendered			3,000,000				300				71,400				—				71,700
Shares issued in lieu of compensation			2,500,000				250				164,250				—				164,500
Convertible Note Payable Beneficial Conversion Feature			—				—				240,276				—				240,276
Net (loss)			—				—				—				(942,099	)			(942,099	)
Balance March 31, 2017			72,691,389			$	7,269			$	5,925,827			$	(6,338,799	)		$	(405,703	)
The accompanying notes are an integral part of these consolidated financial statements.

 

 

MOUNTAIN HIGH ACQUISITIONS CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
		Year Ended March 31,
		2017				2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)		$	(942,099	)		$	(2,938,475	)
Adjustment to reconcile net loss to net Cash used in operating activities:
Changes in:
Impairment Inventory Goodwill respectively			55,161				2,300,000
Advances to Affiliate			(2,500	)			50,000
Beneficial Conversion Feature on Note payable			240,276				173,798
Accounts payable			(67,966	)			(6,135	)
Extingquishment of debt			—				53,040
Director shares			162,000				—
Related parties			122,845				16,100
Inventory			—				(59,296	)
Current liabilities			66,419				55,129
Net cash provided (used) by investing activities			(365,864	)			(355,839	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of GreenLife			—				2,669
Disposition of Canna-Life			—				41,923
			—				44,592
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of shares			506,587				75,500
Proceeds from notes payable			(410,476	)			270,690
Proceeds from advances from stockholder			245,164				—
Net cash provided by financing activities			341,275				346,190
NET DECREASE IN CASH AND CASH EQUIVALENTS			(24,589	)			34,943
CASH AND CASH EQUIVALENTS
Beginning of the period			34,988				45
End of the period		$	10,399				34,988
Supplemental disclosures of cash flow information
Taxes paid		$	—			$	—
Interest paid		$	—			$	—
The accompanying notes are an integral part of these consolidated financial statements

 

 

Note 1 - Organization and Basis of Presentation

 

Organization and Line of Business

 

On May 22, 2015 the Company completed the acquisition of Greenlife Botanix ("Greenlife") as detailed in the First Amendment to the Shareholder Agreement dated February 8, 2015. The Company issued 10,000,000 restricted shares of its common stock to the shareholders of Greenlife in exchange for their 100% interest in Greenlife. The shares were valued at the market value on the date of issuance, $0.23, 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, see the table below. Subsequent to the purchase of Greenlife the Company entered into a rescission agreement with Freedom Seed and Feed, "FSF", which impaired the integration of Greenlife and FSF into 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, 2016. Greenlife started operations on September 18, 2014.

 

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 $942,099 and used cash for operations of $365,864 for the year ended March 31, 2017 and has an accumulated deficit of $6,338,799 and a working capital deficit of $405,703 as of March 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

Inventories

Inventories consisting of cosmetic products are stated at the lower of cost or market. Cost is determined using the first-in, first-out method and are adjusted to actual cost quarterly based on a physical count. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

Intangible Assets

 

The Company accounts for intangibles in accordance with ASC 350, Intangible-Goodwill and Other. The Company evaluates intangibles, at a minimum, on an annual basis and whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. Impairment of intangibles is tested by comparing the carrying amount to the fair value. The fair values are estimated using undiscounted projected net cash flows. If the carrying amount exceeds its fair value, intangibles are considered impaired and a second step is performed to measure the amount of impairment loss, if any. The Company evaluates the impairment of intangibles as of the end of each fiscal year or whenever events or changes in circumstances indicate that an intangible asset’s carrying amount may not be recoverable. These circumstances include:

 

•

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.

 

The Company recognized an impairment expense related to intangible assets during the year ended March 31, 2016 of $2,300,000.

 

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 March 31, 2017, or March 31, 2016, for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

Basic and Diluted Loss Per Share

 

Earnings per share is calculated in accordance with the ASC Topic 260, Earnings Per Share. Basic earnings per share is based upon the weighted average number of common shares outstanding. Diluted earnings per share is based on the assumption that all dilutive convertible shares and stock warrants were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. There were no warrants outstanding at March 31, 2017.

 

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

 

For the year ended March 31, 2017 $122,845 due Brent McMahon, former President of GreenLife Botanix, was reclassified to Advances from Related Parties, for an ending balance of $138,945, all of which is unsecured. Mr. McMahon is considered a related party due to his common stock holding at March 31, 2017.

 

The $16,100 Advances from related parties at March 31, 2016 refers to an unsecured advance by the former President of GreenLife Botanix, Brent McMahon.

 

Note 4 – Equity

Common Stock

 

The Company has authorized 250,000,000 shares of common stock with a par value of $0.0001 per share and 250,000,000 shares of preferred stock with a par value of $0.0001 per share.

 

During the year ended March 31, 2016 the Company issued 503,334 restricted shares through a private placement at $0.15 per share.

 

On May 22, 2015, The Company issued 10,000,000 restricted shares to the shareholders of Greenlife Botanix pursuant to closing the Share Exchange Agreement dated February 8, 2015. The shares were valued at the fair market trading value, $0.23, on the closing date.

 

The Company issued 353,600 restricted shares to a vendor in lieu of payment of $35,360 that was owed to the vendor at March 31, 2015. 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, 2016.

 

Pursuant to agreements with potential investors; 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 the consulting contract dated October 11, 2016 to Clearview Consulting for services rendered.

 

During the year ended March 31, 2017, the Company converted $506,587 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.

 

Warrants

 

On April 3, 2014, the Company’s entered into a consulting agreement with Dr. Bob Melamede. Pursuant to the consulting agreement, Dr. Melamede was to serve as a member of the Company’s newly formed Advisory Board and act as the Scientific Advisor of the Advisory Board for a term of 12 months. In exchange for Dr. Melamede’s services, he was to receive: (1) $10,000 per year, due and payable in advance; and (2) 300,000 common stock purchase warrants at an exercise price of $4.00 per share, that vested immediately. These warrants expired on April 3, 2016.

 

The fair value of the 300,000 warrants was determined to be $1,257,000 in the fiscal year ended March 31, 2015, which was recorded as “Selling, general and administrative expenses” on the accompanying consolidated statement of operations. The fair value was determined using the Black-Scholes model with the following assumptions:

 

•

Dividend yield of 0%

•

Expected volatility of 215%

•

Risk-free interest rate of 0.24%

•

Expected life of 2.0 years

The following table summarizes the warrant activity:

Weighted

Weighted

Average

Average

Remaining

Aggregate

Number of

Exercise

Contractual

Intrinsic

Warrants

Price $

Life (in years)

Value $

Outstanding, March 31, 2016

904,000

$

4.50

Exercised

—

Forfeited/Canceled

(904,000

)

Outstanding, March 31,  2017

—

Exercisable, March 31, 2017

—

 

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 $4,204,894 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 year ended March 31, 2017: 

Current taxes		$	—
Deferred taxes			329,734
Less: valuation allowance			(329,734	)
Net income tax provision		$	—

 

The Company’s effective tax rate differs from the high statutory rate for the period ended March 31, 2017, due to the following (expressed as a percentage of pre-tax income):

Federal taxes at statutory rate		$	34.0	%
State taxes, net of federal tax benefit			5.0	%
Valuation allowance			(39.0	)%
Effective income tax rate		$	0.0	%

As of March 31, 2017, the components of these temporary differences and the deferred tax asset were as follows: 

Deferred Tax assets:
Net operating loss carryforward		$	2,218,580
Less: valuation allowance			(2,218,580	)
Net deferred tax assets		$	—

 

Note 6 - Notes Payable

 

During the years ended March 31, 2016 and March 31, 2017 the Company issued convertible notes payable to private parties and converted some of its liabilities to the officers into notes payable. Each note had interest rates of 3%-5% and had a conversion provision allowing the holder to convert the note into shares of the Company at a discount. The discount varied from 70% of the trading value at the conversion date to the lower of 80% of the share value on the conversion date or $0.015 or $0.03. This is referred to as the Beneficial Conversion Feature, "BCF". Due to the fact that the notes could be converted immediately or any time thereafter, there is no amortization of expense, so the Company has elected to record an expense in the current year for the difference between the "BCF and the share value on the date the note was executed. This resulted in an expense of $2,150,098 and $173,798 for the years ended March 31, 2016 and 2016 respectively. The following details outstanding convertible notes as of March 31, 2017:

 

Mountain High Acquisitions Corp.

Convertible Notes Payable

March 31, 2017

 

Note Holder			Amount			Conversion terms
Axiom Financial, Inc.			5,050.00			Lesser of $0.03 or 80% lowest closing bid 15 days prior to conversion
Broad Winds LLC			25,250.00			Lesser of $0.03 or 80% lowest closing bid 15 days prior to conversion
Andrew Cervasio			10,091.78			Lesser of $0.03 or 80% lowest closing bid 15 days prior to conversion
Conner Preston			10,091.78			Lesser of $0.03 or 80% lowest closing bid 15 days prior to conversion
EROP Capital			10,098.63			Lesser of $0.03 or 80% lowest closing bid 15 days prior to conversion
Fourth Street Fund			10,134.38			Lesser of $0.03 or 80% lowest closing bid 15 days prior to conversion
Fourth Street Fund			3,486.10			Lesser of $0.03 or 80% lowest closing bid 15 days prior to conversion
Laurence Greshman			10,091.78			Lesser of $0.03 or 80% lowest closing bid 15 days prior to conversion
Jo Ann Davidson			12,704.38			Lesser of $0.015 or 70% lowest closing bid 15 days prior to conversion
Loma Mgmt. Partners LLC			10,095.89			Lesser of $0.03 or 80% lowest closing bid 15 days prior to conversion
Micaddan Mrkt. Consultants			10,098.63			Lesser of $0.03 or 80% lowest closing bid 15 days prior to conversion
Millennial Investments LLC			5,050.00			Lesser of $0.03 or 80% lowest closing bid 15 days prior to conversion
Paul Mannion			10,178.75			Lesser of $0.015 or 70% lowest closing bid 15 days prior to conversion
Rob Davidson			8,659.14			Lesser of $0.015 or 70% lowest closing bid 15 days prior to conversion
Saeb Jannoun Revocable Trust			20,197.26			Lesser of $0.03 or 80% lowest closing bid 15 days prior to conversion
			161,278.50

 

Note 7 - Related Party Transactions

 

On March 31, 2016, the Officers and Directors had Convertible Notes Payable of $15,000.55 to Alan Smith, CEO and Director and $51,253.42 to Richard G. Stifel, CFO and Director.

 

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 for the year ended March 31, 2017.

 

During the year ended March 31, 2017, the Officers and Directors of the Company converted $192,667 of Convertible Notes Payable into 12,844,440 shares of restricted common stock, The restricted shares issued were 4,888,958 shares, $73,335, to Richard G. Stifel, CFO and Director, and 7,955,482 shares, $119,332, to Alan Smith, CEO and Director.

 

On April 1, 2016, the Company executed consulting agreements with Alan Smith, CEO, and Richard Stifel, CFO for administrative services for the Company. Mr. Stifel and Mr. Smith were each paid $42,500 during the year ended March 31, 2017 pursuant to the agreements.

 

Note 8 – Commitments and Contingencies

 

During the year ended March 31, 2017, the Company was named in a civil lawsuit regarding the sale of Company common stock by an independent third party to another independent third party. The Company settled the lawsuit with no admission of guilt or responsibility for a payment of $10,000.

 

Note 9 – Subsequent Events

 

On May 30, 2017 the Company announced that it has entered into an agreement with D9 Manufacturing, Inc., an Arizona based company that offers a wide variety of engineering, manufacturing and consulting services to the cannabis sector.  MYHI has engaged D9 to assist in the identification, acquisition, and development of infrastructure and technology opportunities in the burgeoning cannabis market.

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

 

ITEM 9A. 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 March 31, 2017 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 March 31, 2017. 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 March 31, 2017, 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 March 31, 2017, that occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  

 

This annual 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.

 

ITEM 9B. OTHER INFORMATION

 

None.

 

PART III

 

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Identification of Director(s) and Executive Officer(s)

 

The following table sets forth the name(s) and age(s) of our current director(s) and executive officer(s):

 

Name	Age	Position(s) Held	Date of Appointment	Other Public Company Directorships Held
Alan Smith	66	President, Chief Executive Officer, Treasurer and Director	March 5, 2014	Altair International Corporation
Richard Stifel	70	Chief Financial Officer, Secretary and Director	October 1, 2014	Bridgegate Pictures Corp.

 

Term of Office

 

Each of our directors is appointed to hold office until the next annual meeting of our stockholders and until his/her respective successor is elected and qualified, or until his or her earlier death, resignation or removal. Our officers are appointed by our Board of Directors to hold office until the next annual meeting of the Board and until his/her respective successor is duly appointed and qualified, or until his or her earlier death, resignation or removal.

 

Background and Business Experience

 

The business experience during the past five years of each of the persons presently listed above as an Officer or Director of the Company is as follows:

 

Mr. Alan Smith – During the past five years, Alan Smith, has provided independent financial consulting services to a variety of startup and development stage companies in the technology, resource and consumer products sectors as President and CEO of both Avid Management Corporation and Evolution Equities Corporation. These services have included corporate reorganizations and restructuring, the development of internal systems and controls and assistance with financing in both the private and public markets. He has also been an active investor in a number of startup ventures while managing his own personal equity portfolio. Mr. Smith is a Chartered Professional Accountant (retired) and has provided audit, tax and financial consulting services to a wide variety of small to medium sized companies during his 35 year career. During this period, Mr. Smith became known for his proficiency in negotiating highly advantageous acquisitions, reorganizing operations, improving efficiencies, and establishing financial controls. The primary focus of Mr. Smith’s career however, has been the successful restructuring of companies in transition and leading the development of business plans to assist them in procurement of short to medium term financing, many through public offerings. Mr. Smith obtained his Chartered Accountant designation in 1978 from the Institute of Chartered Accountants of Ontario. He was also a member of the Institute of Chartered Accountants of British Columbia from 1980 until his retirement in 1999. Additionally, Mr. Smith earned a Master’s Degree in Business Administration in 1975 from Queen’s University at Kingston, Ontario and a Bachelor of Applied Science (Civil Engineering) in 1973, also from Queen’s University.

 

Mr. Richard Stifel – Mr. Stifel has acted as manager and founder of RGS Resources, LLC, a regional firm that specializes in providing CFO, controller, and accounting services to start-up and mid-size companies, intermittently since 2001. Mr. Stifel’s services through RGS Resources have spanned a variety of fields. From 2007 to July2012, Mr. Stifel acted as CFO, Secretary and Treasurer of Big Cat Energy Corporation, a publicly-held oil and gas service company that provides water handling solutions to the coal bed methane segment industry (BCTE). While at BCTE, Mr. Stifel implemented an SEC compliance reporting system, negotiated strategic business agreements, oversaw financial accounting and compliance with GAAP, annual budgeting, and development of accounting policies. Prior to BCTE, Mr. Stifel worked as Group Controller for AutomationSolutions International, LLC and as Vice President of Finance for Horizon Resources Corporation, a publicly held company. Mr. Stifel has a Bachelor of Science in Administration with a concentration in Accounting from Colorado State University.

 

Identification of Significant Employees

 

As of the date of this Report, the Company has no full-time employees or part-time employees, other than our officers and directors. We intend to increase the number of our employees and consultants to meet our needs as the Company grows.

 

Family Relationships

 

There are no family relationships among our officers, directors or persons nominated for such positions.

 

Involvement in Certain Legal Proceedings

During the past ten years no director, executive officer, promoter or control person of the Company has been involved in the following:

(1)

A petition under the Federal bankruptcy laws or any state insolvency law which was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;

(2)

Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

	(3)	Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
	i.	Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
	ii.	Engaging in any type of business practice; or
	iii.	Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;

(4)

Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;

(5)

Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;

(6)

Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;

	(7)	Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
	i.	Any Federal or State securities or commodities law or regulation; or
	ii.	Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
	iii.	Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

(8)

Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Audit Committee and Audit Committee Financial Expert

 

The Company does not have an audit committee or an audit committee financial expert (as defined in Item 407 of Regulation S-K) serving on its Board of Directors. All current members of the Board of Directors have sufficient financial expertise for overseeing financial reporting responsibilities. The Company has not yet employed an audit committee financial expert on its Board due to the inability to attract such a person.

 

The Company intends to establish an audit committee of the board of directors, which will consist of independent directors. The audit committee’s duties will be to recommend to the Company’s Board of Directors the engagement of an independent registered public accounting firm to audit the Company’s financial statements and to review the Company’s accounting and auditing principles. The audit committee will review the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors and independent registered public accounting firm, including their recommendations to improve the system of accounting and internal controls. The audit committee will at all times be composed exclusively of directors who are, in the opinion of the Company’s Board of Directors, free from any relationship which would interfere with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally accepted accounting principles.

 

Code of Ethics

 

The Company has not adopted a Code of Ethics because the Company has only one director, who also serves as sole executive officer of the Company and the Board of Directors chose not to reduce to writing standards designed to deter wrongdoing and promote honest and ethical conduct. The Board of Directors believes that the Company’s very small size and the limited number of personnel who are responsible for its operations make a formal Code of Ethics unnecessary.

 

Compliance with Section 16(a) of the Exchange Act

 

We do not yet have a class of equity securities registered under the Securities Exchange Act of 1934, as amended.  Hence, compliance with Section 16(a) thereof by our officers and directors is not required.

 

ITEM 11. EXECUTIVE COMPENSATION

 

Summary Compensation Table

 

The following table sets forth the compensation paid to our executive officers during the twelve month periods ended March 31, 2017 and March 31, 2016: 

 

Summary Compensation Table
Name and Principal Positions			Year				Salary ($)				Bonus ($)				Stock Awards ($)				Option Awards ($)				Non-Equity Incentive Plan Compensation ($)				Non-Qualified Deferred Compensation in Earnings ($)				All Other Compensation ($)				Total ($)
Alan Smith – President, CEO,			2017			$	0			$	0			$	0			$	0			$	0			$	0			$	58,902 (3)			$	58,902
Treasurer, and Director (1)			2016			$	0			$	0			$	0			$	0			$	0			$	0			$	0			$	0
Richard Stifel-CFO,			2017			$	0			$	0			$	0			$	0			$	0			$	0				$98,963 (4)			$	98,963
Secretary and Director (2)			2016			$	0			$	0			$	0			$	0			$	0			$	0			$	0			$	0

 

(1)

Mr. Smith was appointed as the Company’s sole Chief Executive Officer, Chief Financial, Officer, Secretary, Treasurer and Director on March 5, 2014.

(2)

Mr. Stifel was appointed as the Company's Chief Financial Officer, Secretary and a Director on October 1, 2014.

(3)

Mr. Smith received $42,500 pursuant to a consulting agreement with the Company and 1,093,465 shares of restricted common valued at $16,401 for conversion of a convertible note for funds advanced to the Company.

(4)

Mr. Stifel received $42,500 pursuant to a consulting agreement with the Company and 3,164,181 shares of restricted common stock valued at $56,463 for conversion of a convertible note for unpaid earned salary.

 

Narrative Disclosure to Summary Compensation Table

 

There are no employment contracts, compensatory plans or arrangements, including payments to be received from the Company with respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with the Company, or its subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of the Company.

 

Outstanding Equity Awards at Fiscal Year-End

 

No officer(s) or director(s) of the Company received any equity awards, or holds exercisable or unexercisable options, as of the year ended March 31, 2017.

 

Long-Term Incentive Plans

 

There are no arrangements of plans in which we provide pension, retirement or similar benefits for director(s) or executive officer(s).

 

Compensation of Directors

 

Our directors receive no extra compensation for their service on our Board of Directors.

 

Compensation Committee

 

We currently do not have a compensation committee of the Board of Directors. The Board of Directors as a whole determines executive compensation.

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth certain information concerning the number of shares of our Common Stock owned beneficially as of May 31, 2017, by: (i) each of our director(s); (ii) each of our named executive officer(s); and (iii) each person or group known by us to beneficially own more than 5% of our outstanding shares of common stock.  Unless otherwise indicated, the shareholders listed below possess sole voting and investment power with respect to the shares they own.

 

Name and Address of Beneficial Owner	Title of Class	Amount and Nature of  Beneficial Ownership (1) (#)	Percent of Class (2) (%)
Alan Smith (3) 6501 E Greenway Pkwy. #103-412 Scottsdale AZ 85254	Common	13,355,482	18.37%
Richard Stifel (4) 6501 E Greenway Pkwy., #103-412 Scottsdale AZ 85254	Common	7,038,958	9.68%
Brent McMahon 15375 Barranca Ste. A-104 Irvine CA 92867	Common	4,360,000	6.00%
All Officers and Directors as a Group (2)	Common	20,394,420	28.05%

 

(1)

The number and percentage of shares beneficially owned is determined under rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table.

 

(2)

Based on 72,691,389 issued and outstanding shares of our Common Stock as of March 31, 2017.

 

(3)

Alan Smith, an officer and director, owns 13,355,482 shares of our Common Stock.

 

(4)

Richard Stifel, an officer and director, owns 7,038,958 shares of our common stock.

 

Changes in Control

 

There are no present arrangements or pledges of the Company’s securities which may result in a change in control of the Company.

 

ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 

Related Party Transactions

 

None of the director(s) or executive officer(s) of the Company, nor any person who owned of record or was known to own beneficially more than 5% of the Company’s outstanding shares of its Common Stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the past fiscal year, or in any proposed transaction, which has materially affected or will affect the Company.

 

With regard to any future related party transaction, we plan to fully disclose any and all related party transactions in the following manner:

 

•	disclosing such transactions in reports where required;
•	disclosing in any and all filings with the SEC, where required;
•	obtaining disinterested directors consent; and
•	obtaining shareholder consent where required.

 

Director Independence

 

For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 5605(a)(2). The OTCBB on which shares of Common Stock are quoted does not have any director independence requirements. The NASDAQ definition of “Independent Director” means a person other than an Executive Officer or employee of the Company or any other individual having a relationship which, in the opinion of the Company’s Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

 

According to the NASDAQ definition, Alan Smith is not an independent director because he is also an executive officer of the Company.

 

Review, Approval or Ratification of Transactions with Related Persons

 

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 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 

		Year Ended March 31, 2017				Year Ended March 31, 2016
Audit fees		$	18,900			$	14,000
Audit-related fees		$	0			$	0
Tax fees		$	0			$	0
All other fees		$	0			$	0
Total		$	18,900			$	14,000

 

Audit Fees

 

During the fiscal year ended March 31, 2017, we incurred approximately $18,900 in fees to our principal independent accountants for professional services rendered in connection with the audit and review of our financial statements for fiscal year ended March 31, 2017.

 

During the fiscal year ended March 31, 2016, we incurred approximately $14,000 in fees to our principal independent accountants for professional services rendered in connection with the audit and review of our financial statements for fiscal year ended March 31, 2016.

 

Audit-Related Fees

 

The aggregate fees billed during the fiscal years ended March 31, 2017 and 2016 for assurance and related services by our principal independent accountants that are reasonably related to the performance of the audit or review of our financial statements (and are not reported under Item 9(e)(1) of Schedule 14A) were $nil and $nil, respectively.

 

Tax Fees

 

The aggregate fees billed during the fiscal years ended March 31, 2017 and 2016 for professional services rendered by our principal accountant tax compliance, tax advice and tax planning were $nil and $nil, respectively.

 

All Other Fees

 

The aggregate fees billed during the fiscal years ended March 31, 2017 and 2016 for products and services provided by our principal independent accountants (other than the services reported in Items 9(e)(1) through 9(e)(3) of Schedule 14A) were $18,900 and $14,000, respectively.

 

PART IV

 

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 

Exhibit Number	Description of Exhibit	Filing
31.01	Certification of Principal Executive Officer Pursuant to Rule 13a-14	Filed herewith.
31.02	Certification of Principal Financial Officer Pursuant to Rule 13a-14	Filed herewith.
32.01	CEO and 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.

*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

  

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) 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:  June 6, 2017	/s/ Alan Smith
	By: Alan Smith
	Its: President, CEO and Director
Dated: June 6, 2017	/s/ Richard G. Stifel
	By: Richard G. Stifel
	Its: CFO, Secretary and Director

 

 

Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated:

 

Dated:  June 6, 2017	/s/ Alan Smith
	By: Alan Smith
	Its: President, CEO and Director
Dated: June 6, 2017	/s/ Richard G. Stifel
	By: Richard G. Stifel
	Its: CFO, Secretary and Director

 

 

 

 

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED

 

PURSUANT TO SECTION 15(d) OF THE EXCHANGE ACT BY NON-REPORTING ISSUERS

 

1.	No annual report to security holders covering the company’s last fiscal year has been sent as of the date of this report.

 

2.	No proxy statement, form of proxy, or other proxy soliciting material relating to the company’s last fiscal year has been sent to any of the company’s security holders with respect to any annual or other meeting of security holders.

 

3.	If such report or proxy material is furnished to security holders subsequent to the filing of this Annual Report on Form 10-K, the company will furnish copies of such material to the Commission at the time it is sent to security holders.

 

 

 

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