| NOTE 3. Summary of Significant Accounting Policies | NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Restatement of Previously Issued Financial Statements Subsequent to the Company’s filing of its Annual Report on Form 10-Q for the six months ended June 30, 2022, with the Securities and Exchange Commission on August 11, 2022, the Company performed an evaluation of its accounting in connection with the employment agreement entered into between the Company and Ben Kaplan, the Company’s CEO. Management determined that the Original Form 10-Q does not give effect to $288,000 annual cash compensation and the issuance of a warrant (the “Warrant”) to purchase shares 5% of the fully diluted common stock outstanding of the Company. The cash compensation and Warrant was granted to the Chief Executive Officer of the Company pursuant to his consulting agreement (the “Consulting Agreement”) with the Company entered into on November 17, 2021. Management concluded on April 25, 2023 that it has identified errors in its calculation of compensation in relation to the Consulting Agreement. Accordingly, the Company restates its consolidated financial statements in this Form 10-Q/A as outlined further below and in Note 4 - Related Party Transactions . The following table sets forth the effects of the adjustments on affected items within the Company’s previously reported consolidated balance sheets for the period ended June 30, 2022. As Reported Adjustment As Restated Accrued expenses – related party - 432,000 432,000 Total current liabilities 95,631 432,000 527,631 Total liabilities 512,531 432,000 944,531 Additional paid-in capital 4,483,567 2,176,253 6,659,820 Accumulated deficit (4,275,163) (2,608,252) (6,883,415) Total stockholders’ equity 272,845 (432,000) (159,155) The following table sets forth the effects of the adjustments on affected items within the Company’s previously reported consolidated statements of operations for the three months ended June 30, 2022. As Reported Adjustment As Restated General and administrative 86,596 74,015 160,611 Total operating expenses 86,596 74,015 160,611 Loss from operations (86,596) (74,015) (160,611) Net loss before provision from income taxes (336,925) (74,015) (410,940) Net loss (336,925) (74,015) (410,940) Basic and diluted loss per share (0.02) (0.01) (0.03) The following table sets forth the effects of the adjustments on affected items within the Company’s previously reported consolidated statements of operations for the six months ended June 30, 2022. As Reported Adjustment As Restated General and administrative 992,327 290,391 1,282,718 Total operating expenses 992,327 290,391 1,282,718 Loss from operations (992,327) (290,391) (1,282,718) Net loss before provision from income taxes (1,425,259) (290,391) (1,715,650) Net loss (1,425,259) (290,391) (1,715,650) Basic and diluted loss per share (0.10) (0.02) (0.12) Additionally, please refer to Note 4. – Related Party Transactions, where the Company has included additional disclosure related to the CEO’s consulting agreement with the Company. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include the accounts of the Company and its wholly owned subsidiary, . All inter-company accounts and transactions have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification, or ASC, and Accounting Standards Updates, or ASUs, of the Financial Accounting Standards Board. Basis of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Mycotopia Therapies Inc. (“MYC”). All inter-company accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that 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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our financial statements include, when applicable, disclosures of estimates, assumptions, uncertainties, and markets that could affect our financial statements and future operations. The Effects of COVID-19 Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial markets. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change, as new events occur, and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents include bank demand deposits, marketable securities with maturities of three months or less at purchase, and money market funds that invest primarily in certificates of deposits, commercial paper and U.S. government and U.S. government agency obligations. Cash equivalents are reported at fair value. Fixed Assets and Depreciation Property, plant, and equipment are stated at cost. For financial reporting, we provide for depreciation on the straight-line method at rates based upon the estimated useful lives of the various assets. Depreciation expense was $498 and $0 for the six months ended June 30, 2022 and 2021, respectively. The estimated useful lives are as follows: buildings and improvements—30 years; machinery and equipment—10-15 years; computer software—3-5 years; vehicles—3-7 years; and land improvements—10-20 years. We assess our long-lived assets for impairment whenever there is an indicator of impairment. Impairment losses are evaluated if the estimated undiscounted cash flows from using the assets are less than carrying value. A loss is recognized when the carrying value of an asset exceeds its fair value. There were no impairment losses during the six months ended June 30, 2022 and 2021. Fair Value of Financial Instruments The Company accounts for financial instruments in accordance with ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”). ASC 820 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 Topic 718, Compensation–Stock Compensation, 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 Topic 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 Topic 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 Topic 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 Topic 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 common stock equivalents not included in the computation of earnings per share because the effect was antidilutive, were related to convertible debt and totaled 1,317,613 and 0 for the three and six months ended June 30, 2022 and 2021, respectively, and the outstanding warrants that totaled 1,667,393 and 0 for the three and 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 (“ASU”) 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”). 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. |
