ITEM 1.01 Entry into a Material Definitive Agreement.
On May 8, 2020, Mountain High Acquisitions Corp, ("MYHI") and Trilogy Capital
LLC ("Trilogy") entered into an Exchange Agreement (the "Exchange Agreement")
pursuant to which MYHI agreed to purchase from Trilogy all of the capital stock
of GPS Associates, Inc., a Delaware corporation ("GPS") in exchange (the
"Exchange") for 215,250,000 restricted shares of MYHI (the "MYHI Shares"). Dr.
Judy Pham is the sole member and manager of Trilogy. Dr Pham is also the sole
member and manager of Alchemy Capital, LLC ("Alchemy") which owns 53,727, 273
shares of the MYHI's Common Stock.
ITEM 2.01 Completion of Acquisition or Disposition of Assets
Reference is made to the disclosure in Item 1.01. On May 13, 2020, the Exchange
was consummated.
Background
As an interim step to assure the acquisition of GPS by MYHI, pursuant to an
Exchange Agreement dated as April 10, 2020 between Trilogy and the shareholders
of GPS (the "GPS/Trilogy Transaction"), Trilogy purchased all of the capital
stock of GPS for $300,000 and 5,000,000 shares of the common stock of MYHI
(subject to adjustment based on the future value of the MYHI shares and the
EBITDA of GPS). The 5,000,000 shares were to be delivered to the GPS
shareholders upon the consummation of the Exchange referred to in Item 1.01.
Subsequent to the closing of the GPS/Trilogy Transaction, Trilogy provided
financing to GPS for the acquisition of equipment and the purchase of raw
material inventories. Among other things, the financing enabled GPS to increase
its revenues from the sale of hand sanitizers as discussed below under
"Description of GPS" which in turn increased the valuation of GPS used by MYHI
in its purchase of GPS.
Description of GPS
GPS is a California based company engaged in the formulation, manufacturing,
branding, fulfillment and distribution of hemp-derived CBD products at its cGMP,
FDA-registered facility in Santa Ana, California. GPS's team of professionals
includes physiologists, chemists, herbalists and botanists committed to
combining high-quality organic CBD with synergistic organic, raw herbs to
produce pure, premium consumer products. All products manufactured by GPS are
tested at independent, third party laboratories to prove potency and purity.
GPS's continually expanding product offering is sold directly to consumers
online as well as through wholesale partners (both online and brick and mortar
stores) under its retail brand name, Zen Drops. The product offering includes
tinctures, salves, gummies, transdermal patches and oral thin films.
However, GPS's primary focus is manufacturing products for its white label
clients nationwide. In this regard, GPS acts as a contract manufacturer. The
labeling is with the client company's logo and branding and sold through the
client's channels to its customers.
The GPS product development team blends organic raw herbs with CBD isolate and
CBD distillate extracted from organically grown hemp to ensure safety, potency
and purity. Also, the graphic design team creates logos, labels and other
marketing assets to assist its white-label clients, the objective being to
provide the client's CBD brand with maximum visual impact in the market.
Once a white label client has approved the custom formulation and branded art
work developed by GPS, the client's new CBD product goes into production at
GPS's facility. All batches come with a certificate of analysis of the
cannabinoid breakdown from a third-party testing facility. After testing, the
products are bottled, capped, sealed and labeled with the client's custom
labels. The entire order is then packed and shipped to the white label client.
To meet the demand created by the Coronavirus pandemic, GPS has expanded its
operations to produce medical grade, alcohol-based hand sanitizer - proven to be
99.9% effective against germs. Additional production and bottling equipment has
been acquired to rapidly expand GPS's manufacturing capacity for this product
line. The hand sanitizer line is formulated to include powerful botanical
constituents such as red thyme oil, which has exceptional antiviral,
antimicrobial and antiseptic properties.
ITEM 3.02 Unregistered Sales of Equity Securities
Reference is made to Items 1.01 and 2.01. On May 13, 2020, the Exchange was
consummated. In connection therewith, MYHI issued an aggregate of 215,250,000
restricted shares of MYHI common stock to Trilogy and its designees including
the 5,000,000 shares to the GPS shareholders required under the Trilogy/GPS
Transaction as referenced in Item 2.01. All such shares were issued in reliance
on Section 4(a)(2) of the Securities Act of 1933, as amended. Such reliance was
based on the fact that the issuance of such shares did not involve a public
offering.
ITEM 5.01 Change in Contol of Registrant
Reference is made to the disclosure in Item 2.01. As a result of the issuance of
210,250,000 shares of MYHI common stock to Triology, Dr. Judy Pham, through her
ownership of Trilogy and Alchemy now beneficially owns 275,727,273 shares
representing 61.16% of the outstanding shares of common stock of MYHI.
ITEM 9.01 Financial Statements And Exhibits
(a) Financial Statements of Businesses Acquired
Audited financial statements of GPS consisting of balance sheets as of December
31, 2019 and 2018 and for the applicable interim periods and the related
statements of operations, stockholders equity and cash flows for the years and
interim periods then ended together with proforma financial statements
consisting of proforma unaudited combined balance sheets as of December 31, 2019
and interim period and unaudited proforma combined statement of operations for
the year ended December 31, 2019 and interim period will be filed pursuant to an
amendment to this Current Report on Form 8-K.
(d)
Exhibits Document Description
10.01 Exchange Agreement dated as of May 8, 2020 between MYHI and Trilogy
99.1 Press Release with respect to the acquisition of GPS Associates, Inc.
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