NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Organization and Business Activity

Mycotopia Therapies Inc, (formerly 2020 Global)(“the Company” or “Mycotopia”) headquartered in Florida, incorporated in the state of Nevada in January of 2020, and is a 100% wholly owned corporation of Ehave Inc, a public traded company. Mycotopia Therapies, Inc. promotes the study of psychedelics for the treatment of mental health issues and supports the creation of both natural and synthetic molecules for the development of appropriate treatments. The Company also intends to deploy technology from its parent company, Ehave, Inc., in the collection of research and clinical data to further the study of the effects of psychedelics in the treatment of mental health issues.

On January 19, 2021, Mycotopia Therapies, Inc. acquired  i 75.77% of the Company’s outstanding stock and there was a change in control of the board of directors. The transaction was accounted for as a reverse merger in which Mycotopia Therapies, Inc. was deemed to be the accounting acquirer and the Company the legal acquirer. As a result of the transaction the historical consolidated financial statements of the Company are presented to reflect the acquisition retroactively in the balance sheet and statement of stockholders’ equity.

NOTE 2 - GOING CONCERN

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. To date, the Company has generated no revenues, experienced negative operating cash flows and has incurred operating losses since inception. Management expects the Company to continue to fund its operations primarily through the issuance of debt or equity.

For the six months ended June 30, 2022, the Company incurred a net loss of $ i 1,425,259 and had negative cash flows from operations of $ i 259,142. At June 30, 2022, the Company had total current assets of $ i 783,377 and total current liabilities of $ i 95,631, resulting in working capital of $ i 687,746.

The Company’s existence is dependent upon management’s ability to develop profitable operations. Management is devoting substantially all of its efforts to developing its business and raising capital and there can be no assurance that the Company’s efforts will be successful. No assurance can be given that management’s actions will result in profitable operations or the resolution of its liquidity problems. The accompanying consolidated financial statements do not include any adjustments that might result should the Company be unable to continue as a going concern.  The ongoing COVID-19 pandemic contributes to this uncertainty.

In order to improve the Company’s liquidity, the Company’s management is actively pursuing additional equity financing through discussions with investment bankers and private investors. There can be no assurance that the Company will be successful in its effort to secure additional equity financing.

The financial statements do not include any adjustments relating to the recoverability of assets and the amount or classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fair Value of Financial Instruments

The Company accounts for financial instruments in accordance with ASC 820, “Fair Value Measurements and Disclosures.”, which establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below:

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 – Quoted prices in non-active markets or in active markets for similar assets or liabilities, observable inputs other than quoted prices, and inputs that are not directly observable but are corroborated by observable market data;

Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

There were no changes in the fair value hierarchy leveling during the six months ended June 30, 2022 and 2021.

Stock Based Compensation

We follow ASC 718, “Compensation–Stock Compensation,” which prescribes accounting and reporting standards for all share-based payment transactions in which employee and non-employee services are acquired. Share-based payments to employees and non-employees, including grants of stock options, are recognized as compensation expense in the financial statements based on their fair values on the grant date. That expense is recognized over the period required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

Income Taxes

The Company provides for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of June 30, 2022 and June 30, 2021, the Company had a full valuation allowance against its deferred tax assets.

We adopted ASC 740-10-25, “Income Taxes—Recognition,” which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10-25, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740-10-25 also provides guidance on derecognition, classification, interest and penalties on income taxes, and accounting in interim periods and requires increased disclosures. We had no material adjustments to our liabilities for unrecognized income tax benefits according to the provisions of ASC 740-10-25.

Basic and Diluted Net Loss per Share

Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period before giving effect to stock options, stock warrants, restricted stock units and convertible securities outstanding, which are considered to be dilutive common stock equivalents. Diluted net loss per common share is calculated based on the weighted average number of common and potentially dilutive shares outstanding during the period after giving effect to dilutive common stock equivalents. Contingently issuable shares are included in the computation of basic loss per share when issuance of the shares is no longer contingent. The number contingently issuable shares related to warrants, options, and convertible debt, which were not included in the computation of earnings per share because the effect was antidilutive, was  i 2,610,000 and  i 0 for the six months ended June 30, 2022 and 2021, respectively.

Recent Accounting Pronouncements 

Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying consolidated financial statements, other than those disclosed below.

In August 2020, the FASB issued Accounting Standards Update 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40).” ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. The ASU’s amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company is currently evaluating the impact ASU 2020-06 will have on its financial statements.

NOTE 4 – RELATED PARTY TRANSACTION

During February and April 2020, the Company entered into three term promissory notes with Ehave, Inc. (a majority shareholder) in the amounts of $25,000, $100,000, and $500,000, respectively. The notes mature two years after the issuance date and bear an interest rate of  i 1.75% per year and are currently past the maturity date and in default.  During May and June, the Company in two installments in the amounts of $400,000 and $225,000, repaid all the outstanding principal due on the three promissory notes. As of June 30, 2022 and December 31, 2021, the Company owes $ i 0 and $ i 625,000, respectively in principle related to these promissory notes. During the six months ended June 30, 2022 and June 30, 2021, the Company recorded interest expense of $ i 5,424 and $ i 3,051, respectively, in relation to these notes, and paid $ i 5,000 and $ i 0, respectively, towards the outstanding accrued interest balance. As of June 30, 2022 and December 31, 2021 the Company’s outstanding accrued interest balance related to these promissory notes was $ i 10,763 and $ i 10,339 respectively.

NOTE 5 – PROMISSORY AND CONVERTIBLE NOTES

During the six months ended June 30, 2022 and 2021, the Company issued convertible promissory notes in the principal amount of $ i 325,000 and $ i 0, respectively. In addition, the debt discount related to this note was $250,000. In accordance with the terms of the agreement, During the six months ended June 30, 2022, the Company received notice to convert two loans for an aggregate of $82,500 in principal and $1,145 in interest, into  i 83,645 shares of common stock (see Note 6).  As a result, the company As of June 30, 2022 and December 31, 2021 the Company had outstanding to various lenders as convertible promissory notes an aggregate amount of $ i 1,250,000 and $ i 1,007,500, respectively. In aggregate, as of June 30, 2022 the principal amount includes $163,500 of original issue discount, $18,000 in cash financing fees, $49,750 in non-cash financing fees (see note 6) and  i 1,305,000 warrants with an exercise price of $1.50 per share. All notes are due to mature 24 months from their respective effective date and mature beginning on August 27, 2023 through January 21, 2024 Additionally, the notes effective interest rate of the notes is 8% and are convertible into share of common stock at $1.00 per share.

The following tables reflects a summary of the outstanding principal and interest by each lender and their respective maturity date as of June 30, 2022 and December 31, 2021:

NOTE 6 – STOCKHOLDERS’ EQUITY

We are authorized to issue 100,000,000 shares of common stock, $0.001 par value, and 5,000,000 shares of preferred stock, $0.001 par value. Each share of common stock entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.

Mezzanine Equity

The Preferred Shares are recorded as mezzanine equity in accordance with ASC 480, “Distinguishing Liabilities from Equity,” at its initial net carrying value in the amount of $ i 50,000. The Series A Shares are recorded as mezzanine equity in accordance with ASC 480 because the Company may be obligated to issue a variable number of shares at a fixed price known at inception and there is no maximum number of shares that could potentially be issued upon conversion. In this instance, cash settlement would be presumed and the Series A Shares are classified as mezzanine equity in accordance with ASC 480-10-S99. Immediately upon effectiveness of the registration statement registering for resale of all the common stock issuable under the Series A Shares, all outstanding Series A Shares shall automatically convert into common stock.

During the six months ended June 30, 2022, the Company sold  i 15,000 shares of preferred stock to three shareholders for $ i 150,000 in proceeds as part under a Regulation A offering of Section 3(6) of the Securities Act of 1933.  The shares are allowed to convert into common stock by option of the holder at any time based on the fair market value of the common stock at the date of the conversion. As of June 30, 2022,  i 10,000 preferred shares with a fair value of $ i 100,000 were converted in various installments, into an aggregate  i 55,834 shares of common stock.

Conversion of Convertible Debt and Warrants to Equity

During the six months ended June 30, 2022, the Company issued  i 83,645 shares of common stock, in the aggregate, upon the conversion of convertible promissory notes and accrued interest in the amount of $ i 83,645 (see Note 5).

STOCK BASED COMPENSATION

On January 21, 2022, the Company issued  i 250,000 shares of common stock to a related party and majority shareholder, Benjamin Kaplan, as part of his compensation for services rendered in accordance with his Agreement (Note 7) for services rendered as CEO. The Company expensed $ i 750,000 in relation to this issuance.

On January 24, 2022, the Company issued  i 12,500 shares of common stock to a consultant for services rendered. The Company expensed $ i 38,188 in relation to this issuance.

On March 17, 2022, the Company issued  i 59,622 shares of common stock valued at $ i 86,250 as stock-based compensation for consulting services rendered.

Warrants Issued

During the six months ended June 30, 2022, the Company issued  i 325,000 warrants to purchase common stock as part of the convertible promissory notes discussed above in Note 5.

During the six months ended June 30, 2022, the Company issued  i 11,727 shares of common stock upon the cashless exercise of  i 16,667 warrants.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

On November 17, 2021, the Company entered into an Executive Consulting Agreement (the “Agreement”) with Benjamin Kaplan (“Kaplan”) whereby Kaplan was appointed as CEO of the Company. We hired Kaplan for an initial term of thirty-six (36) months subject to certain termination provisions, whereby the Agreement will automatically renew for an additional twelve (12) month period. We shall pay Kaplan in the following manner: (i) A consulting fee of $24,000 per month for services performed for a total compensation of $288,000 payable for each twelve (12) month period, (ii) Bonus compensation milestones by offering Kaplan a Warrant to purchase that number of shares of common stock of the Company equal to 5% of the issued and outstanding common shares, on a fully diluted basis, (iii) A significant transaction stock grant whereby Kaplan shall be granted that number of shares of common stock or a new series of preferred shares of the Company, that is convertible into common stock of the Company equal to 5% of the value of all of the consideration, including any stock, cash, or debt, of such completed transaction. As of June 30, 2022 and December 31, 2021, the Company accrued $25,000 and $50,000, respectively, related to the Agreement.

NOTE 8 – SUBSEQUENT EVENTS

The Company’s management has evaluated subsequent events occurring after June 30, 2022, the date of our most recent balance sheet, through the date our financial statements were issued.

Subsequent to the six months ended June 30, 2022, the Company converted $113,435 in outstanding principal and equity into 113,435 shares of common stock.