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
Prior to January 1, 2020, the Company was in the business of providing
infrastructure assets to licensed producers, processors and retailers engaged in
the cannabis industry. Due to the restrictive regulatory and operational
challenges the Company faced in that business it was decided to pivot away from
cannabis and instead focus on opportunities in the hemp industry. The Company
plans to acquire assets such as equipment, real estate and operating entities
engaged in hemp related activities and to repurpose its existing assets for use
in hemp 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 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. The container improvements and facility power requirement issue
took 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 Note however remains in full force and effect.
During the three month period ended June 30, 2019, the Company decided to sell
the containers to generate capital to finance its own change in focus to
extraction. On August 20, 2019, the Company completed the sale of the containers
for proceeds of $100,000.
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 March 31, 2020, the Lessee was 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 Lab Co 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.
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RESULTS OF OPERATIONS
Working Capital
As of June 30, 2020
Total Current Assets $ 55,495
Total Current Liabilities (95,122 )
Working Capital (Deficit) $ (39,627 )
Cash Flows
Three months Ended
June 30, 2020
Cash Flows from (used in) Operating Activities $ (52,388 )
Cash Flows from (used in) Investing Activities
-
Cash Flows from (used in) Financing Activities 50,000
Net Increase (decrease) in Cash during period $ (2,388 )
Operating Revenues
Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019
During the three months ended June 30, 2020, the Company recorded no revenue
compared to $86,875 revenue for the three months ended June 30, 2019. The
revenue in the three months ended June 30, 2020 was for lease revenue.
Operating Expenses and Net Loss
Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019
In prior years, the Company was in the business of providing infrastructure
assets to licensed producers, processors and retailers engaged in the cannabis
industry. Due to the restrictive regulatory and operational challenges the
Company faced in that business it was decided to pivot away from cannabis and
instead focus on opportunities in the hemp industry. The Company plans to
acquire assets such as equipment, real estate and operating entities engaged in
hemp related activities and to repurpose its existing assets for use in hemp
operations. For these reasons, there has been a change in our operating expense,
and net loss.
The net loss for the three months ended June 30, 2020, was $6,087, compared to a
net loss of $101,247 for the three months ended June 30, 2019. The primary
reason for the decrease in net loss was in 2019 the Company had incurred higher
operating expenses.
The net loss for the three months ended June 30, 2020 consisted of $33,379
director fees, $7,961 for depreciation expense, $47,817 for professional fees,
and $27,846 for selling, general and administrative expense. Furthermore, the
Company recognized interest expense of $1,050, a gain of $111,181 of derivative
liability and other income of $785.
The net loss for the three months ended June 30, 2019 consisted of depreciation
of $19,711, director fees of $22,500, professional fees of $33,643 and $11,085
for selling general and administrative expense. Furthermore, interest expense of
$3,135, debt discount expense of $12,500 offset by other income of $1,327.
Liquidity and Capital Resources
At June 30, 2020, the Company's cash balance and total assets were $3,154 and
$181,836, respectively.
At June 30, 2020, the Company had total liabilities of $95,122, consisting of
$44,369 in accounts payable, $326 in accounts payable related party, $427 in
related party accrued liabilities, and $50,000 in notes payable, related party.
As at June 30, 2020, the Company had a working capital deficit of $39,627.
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Cashflow used in Operating Activities
During the three-month period ended June 30, 2020, the Company used $52,388 of
cash for Operating Activities compared to cash used for operating activities of
$72,134 for the three months ended June 30, 2019.
Cash used for operations for the three-month period ended June 30, 2020 were our
loss of $6,087 offset by depreciation of $7,962, an increase in account payable
of $39,895, a decrease in accounts payable related party of $21, a decrease of
$427 in accrued liability related party, a decrease of $111,181 in derivative
liability, increase in other receivables of $7,553, a decrease of $2,500 in
prepaids, a decrease of $5,652 in deposits and interest expense of $870.
Cash used for operations for the three-month period ended June 30, 2019, were
our loss of $101,247 offset by depreciation of $19,711, and $12,500 in original
issued discount, a decrease in account payable of $17,412, an increase in other
receivables of $11,179, an increase in interest expense of $3,315.
Cashflow used in Investing Activities
Cash provided by investing activities was $0 compared to $50,0000 for the three
months ended June 30, 2019.
Cashflow from Financing Activities
During the three-month period ended June 30, 2020, the Company obtained $0 of
cash in financing activities compared to cash used by financing activities of
$50,000 for the three months ended June 30, 2019.
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.
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