| 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-K for the year ended December 31, 2022, with the Securities and Exchange Commission on March 30, 2023, the Company performed an evaluation of its accounting in connection with the employment agreement entered into between Mycotopia and Ben Kaplan, the Company’s CEO. Management determined that the Original Form 10-K does not give effect to the issuance of a warrant (the “Warrant”) to purchase shares 5% of the fully diluted common stock outstanding of Mycotopia. The Warrant was granted to the Chief Executive Officer of the Company pursuant to his consulting agreement (the “Consulting Agreement”) with Mycotopia 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 has restated its consolidated financial statements in this Form 10-K/A as outlined further below and in Note 4 - Related Party Transactions . For the Year Ended December 31, 2022 The following table sets forth the effects of the adjustments on affected items within the Company’s previously reported consolidated balance sheets for the year ended December 31, 2022, and includes a reclass from accounts payable and accrued expenses to accrued expenses – related party of $288,000, an increase to additional paid-in capital of $2,178,278, and an increase to accumulated deficit of $2,178,278. As Reported Reclass Adjustment As Restated Accounts payable and accrued expenses $ 623,590 $ (288,000) - $ 335,590 Accrued expenses – related party - $ 288,000 - $ 288,000 Additional paid-in capital $ 4,695,151 - $ 2,178,278 $ 6,873,429 Accumulated deficit $ (5,601,356) - $ (2,178,278) $ (7,779,634) 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 year ended December 31, 2022, and includes a decrease to general and administrative expense, total operating expenses, loss from operations and net loss of $139,583 and a decrease to basic and diluted net loss per share of $0.01. As Reported Adjustment As Restated General and administrative $ 1,875,919 $ (139,583) $ 1,736,336 Total operating expenses $ 1,875,919 $ (139,583) $ 1,736,336 Loss from operations $ (1,875,919) $ 139,583 $ (1,736,336) Net loss before provision from income taxes $ (2,751,452) $ 139,583 $ (2,611,869) Net loss $ (2,751,452) $ 139,583 $ (2,611,869) Basic and diluted loss per share $ (0.19) $ 0.01 $ (0.18) 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”). 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, or FASB. Basis of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, 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. 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 using the straight-line method at rates based upon the estimated useful lives of the various assets. Depreciation expense was $1,001 and $249 for the years ended December 31, 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 in 2022 and 2021. Fair Value of Financial Instruments The Company accounts for financial instruments in accordance with ASC 820, Fair Value Measurements and Disclosures. 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 years ended December 31, 2022 and 2021. 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 December 31, 2022 and 2021, the Company had a full valuation allowance against its deferred tax assets. We adopted ASC 740-10-25, Income Taxes—Recognition Stock Based Compensation We follow ASC 718, Compensation–Stock Compensation, Basic and Diluted Net Loss per Share (Restated) 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. 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. |
